New Thinking About Layoffs and RIFs

Thursday, August 6, 2009 by Tripp Babbitt
OK, I’ll come clean.  It really isn’t "new" thinking.  I got it from The New Economics written by W, Edwards Deming.  In the United States, the dividend is the last thing cut (typically).  We will lay off people before cutting the dividend.  In Japan, the worker is the last to take the hit and rarely do they cut positions.  Consider what Deming outlined in the steps Japanese companies take (from The New Economics):
  1. Cut the dividend.  Maybe cut it out.
  2. Reduce the salaries and bonuses of top management.
  3. Further reduction for top management.
  4. Last of all, the rank and file are asked to help out.  People that do not need to work may take a furlough.  People that can take an early retirement may do so, now.
  5. Finally, if necessary, a cut in pay for those that stay, but no one loses a job.

Wow, quite a difference than the thinking in the US.  First sign of trouble with most US companies and the heads start rolling.  Can this be good for our overall economy or the state of our nation.  All those folks that complain about the inefficiency of the government we keep forcing people to use the government for unemployment checks, food stamps, medicaid, etc.  And by the way, more houses get foreclosed on and lessen our property values.

Toyota continues to stave off layoffs.  Who will be better off when the economy comes back?  The company that laid off a bunch of people and have to rehire and train or the company that hung on to workers?  Seems like a simulation game I played while getting my MBA.

I hear conversations from executives saying that we only laid-off the "dead wood" so this gave us a chance to clean house.  So, in the words of W. Edwards Deming, "Did you hire the wrong people or just kill’em?"  Meaning what part of your system hired the wrong people or is your system so poorly put together that no one could survive it.  Regardless, maybe executives should find a better leadership strategy.  With all the waste I see in organizations maybe a better idea for business cost reduction is finding better ways to manage and design the work.

Leave me a comment. . . I can take it!  Click on comments below.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

 

The Curious Case of John Seddon

Thursday, August 6, 2009 by Tripp Babbitt

In my life, I have had the pleasure of meeting some very famous people.  I went to Hanover College with Woody Harrelson.  I met many Indy 500 race car drivers like A.J. Foyt, Al Unser, Sr., Mark Donahue, Swede Savage, and Tom Sneva.  When I went to the ’93 Ryder Cup, I remember during a practice round striking up a conversation with the late Payne Stewart.

But the most memorable people I have had the pleasure of talking to are W. Edwards Deming and John Seddon.  I can safely say there are more differences than similarities between these two.  Dr. Deming had long forgotten probably more than I will ever know and he was not so dynamic in his delivery, but his message was undeniable.  More importantly, he pretty much said during his 4-day seminar that everything I had learned in my MBA program was well . . . wrong.  John Seddon on the other hand very spicy.  Likes to mix it up, calls them as he sees them and very dynamic . . . a stone that gathers no moss.

Long before I first met John Seddon, I read his book Freedom from Command and Control.  An excellent book, but John was not a statistician like Deming.  In a matter of fact, he is an occupational psychologist by education.  I was skeptical as any psychologist I had met in the US was usually associated with organizational development . . . and to quote Jerry Seinfeld "not that there is anything wrong with that."  Just my previous experience was that he probably would be having clients give group hugs and kick balloons to develop teamwork.  The book itself laid to rest quickly those thoughts.  So, like anyone curious enough to learn more, I flew to the UK and met him.

The first thing you learn is that John rarely beats around the bush.  He is hard-hitting and brutally honest.  More importantly, he is in unwavering in his message that to improve service thinking has to change for business improvement to be effective and sustainable.  This was the fourth leg of the System of Profound Knowledge that Deming didn’t have much of a background in.  John Seddon had spent time understanding Deming (and Taiichi Ohno), not from a book, but from practical research on why change management programs failed.  His application of Deming and Ohno had advanced the thinking.  Something that TQM, Six Sigma, Lean or Lean Six Sigma in the US has failed to do.  The problem was tools were preventing learning.  And management thinking has failed to advance as process improvement made things better for a while leading to unsustained business improvement.

The Deming User’s group I had been President of in Indianapolis ultimately shut the doors.  I am afraid that as great a man as Deming was he was never able to get the thinking to "stick."  The thinking was replaced by tools or arguments over what Deming said that really did little for us to advance the thinking.  Let’s give John Seddon of the UK some credit for doing what other great minds have failed to do . . . advance the thinking.

Leave me a comment. . . I can take it!  Click on comments below.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt

 


Frederick Winslow Taylor: The Functional Separation of Work

Thursday, August 6, 2009 by Tripp Babbitt

I have multiple blog posts on this subject, but decided it was time to devote a post just to this topic.  This thinking has dominated our collective US psyche for a century.  We don’t even recognize it, because it is the way we do business and organize our government agencies.  It is like breathing, we don’t have to think about it . . . we just do it.  If you ever want to screw someone up in golf, just ask them if they "breath in or out" on their backswing.  They start thinking about it and the result is they lose concentration.  Try it.

Systems thinking is an improvement over Frederick Taylor’s scientific management theory.  The functional separation of work of scientific management leads to what W. Edwards Deming called "sub-optimization" or when we optimize each function we don’t get a good end-to-end (system) result. 

One of the problems I have with outsourcing is that we take a function (call center typically) and try to optimize it by getting the "experts in that area" to do it.  Sounds plausible, but systems don’t react that way.  Some of my readers take exception (outsource vendors) and this isn’t to say that outsourcing is all bad, but the assumptions it will reduce costs are bad.  Unless the outsource vendor understands how to optimize a system and not a function all is lost.

The same can be said for those pursuing a shared services strategy.  If we combine call centers or back office functions we will reduce costs (or at least the visible ones).  Again, sounds plausible, but most of the time the organization winds up increasing the total/end-to-end costs to the system.  No savings and in a management paradox these moves increase costs.

Our best bet is to decrease costs by understanding our organizations as systems.  This will require that I ask you (my readers), Do you breath in or out on your backswing?  Maybe a break in our concentration is just the remedy for better thinking.

Leave me a comment. . . I can take it!  Click on comments below.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.


The Wall Street Journal’s Story on Starbucks and “Lean”

Tuesday, August 4, 2009 by Tripp Babbitt

Okay, I am glad that Starbucks is recovering and they have found efficiency in "lean."  But such articles (The Wall Street Journal’s article, "Latest Starbucks Buzzword: ‘Lean’ Japanese Techniques") should come with a warning label as people need to understand that copying Starbucks will be a huge mistake.  Lean manufacturing tools and the pursuit of the customer experience do not always go together.  Lean tools tackle the customer experience as an efficiency problem and some times it is and some times it isn’t.  Think about it . . . does every service organization want their customers flying in and out of their business as fast as possible?  I don’t think so.

Working with a bank in North Dakota I found that large groups of customers like to come in and stand around, eat cookies, have a cup of coffee, some conversation.  Could you imagine someone rushing them out the door in this setting?  The point is your service organization may need something different than Starbucks.  A Service company shouldn’t start to go nuts on "lean", "six sigma" or "lean six sigma" tools . . . like I know will happen anyway. 

"Lean" manufacturing tools really don’t transfer very well to service industry anyway (see: Lean Manufacturing is Not for Service Organizations).  The variety of demand gets in the way.  Although Starbucks is almost a "pseudo-manufacturing line" they will miss opportunities if they just have the "lean team" do the work for them.  They would be better off understanding the customer demand and purpose and allowing the front-line to figure out ways to absorb the variety of demand.  Business improvement need to be unique to each organization and their customers, demands, structure, management thinking, work design, technology, etc. it is what makes you different.  Copying will only lead to trouble.

So before every service organization runs around with stop watches and spaghetti maps, can we stop and think first before implementing "lean" manufacturing tools in service?

Leave me a comment. . . I can take it!  Click on comments below.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.
 


A Fundamental Thinking Problem

Friday, July 31, 2009 by Tripp Babbitt
I have been a part of many "discussions" this week.  Most of them around my posts that challenge conventional wisdom on things such as best practices, targets and incentives.  I usually find that people conclude that organizations just aren’t using it (technology, measures, rewards, etc.) right or people are to blame (stupid people).  When I suggest it may have to do something with the way we think about the design and management of work . . .  the response is some variation of "no, that isn’t it."

But that is it!
We are putting all of our resources into the wrong things. Like:
  • inspection and monitoring believing they make quality services
  • the belief that economies of scale will reduce costs
  • the belief incentives will motivate people
  • leaders need visions
  • managers need targets
  • technology to drive change

Businesses and government have become dysfunctional based on flawed thinking.  A better way to think about the design of work . . . we reference as systems thinking.  By taking people to the work and getting knowledge we can show them new ways to improve and it exposes problems to the way they currently think.  It is that shift in thinking, but egos and position get in the way.  The (typical) US mindset inhibits us from admitting mistakes in our thinking and moving on.  One is left to ask,"How could I have been so wrong about the design and management of work?"  It is to admit failure from some people’s mindset.

The Better way, you may never have heard of
The ability to discard thoughts of failure in favor of learning is a fine line.  Can we not learn or was that only for when we were in college?  The management paradox of new thinking may be the decider.


The above table offers a change to the fundamental thinking we have all been taught as the best way.  Our only hope is to continue to improve the way we think about the design and management of work.  There will always be a better way to do something.

The wonderful thing that happens as we change thinking is that we are given the ability to improve exponentially.  The improvements are large and will give any organization employing it an unprecedented competitive advantage in improving service, cutting costs, improving culture and innovation opportunities.

Looking for strategic change management that gives you wholesale business improvement requires a change to the fundamental thinking about work and how irt is managed.

Leave me a comment. . . I can take it!  Click on comments below.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

 

Why “Best Practice” Suffocates Thinking and Innovation

Wednesday, July 29, 2009 by Tripp Babbitt

Talk about overused phrases in business . . . the phrase "best practice" is at the top of my list.  Annoyed by a word that can immediately shut down the brain.  While doing bank management consulting the Fortune 500 company I contracted with threw this word out consistently in discussions with customers.  "This is best practice to process applications this way" or "You really don’t want something different this is best practice", and often I would stand in disbelief as the banking customer or prospect actually believed it.  Rarely was there any evidence to support the "best practice", but even if there was, what purpose would it serve?

One thing drilled into my head through W. Edwards Deming, Taiichi Ohno and application is that organizations should never blindly copy.  The minute I heard that a bank was copying another bank I knew trouble would be found in time.  All systems/companies are as unique as each individual.  They have different structures, work design, management thinking, workers, skills, constraints, customers, demands, etc. And copying a process or idea from another company does not guarantee success and my experience is that either it flops or new ideas and thinking is stifled.

So What’s the Big Deal?
Simple, "best practice", copying and standard work and the like don’t allow the absorption of the variety of demand offered by service.  I love the Olympia Restaurant skit from Saturday Night Live (click here to watch).  This to me is what I see in service organizations.  They have built systems with "best practices" that don’t allow the customer to pull value.  It’s much simpler to code software, have standard work and scripts as the bean counters will say, "we saved money!"  Customer demands have variety and they say, "I’ll go somewhere else to get my demands satisfied." 

Taiichi Ohno built Toyota to handle variety of demand and in service the variety of demand is even greater.  Ohno understood that costs were not in "economies of scale" (another best practice), but that in a management paradox, costs were in demand and flow (economies of flow).  He understood that focus on flow reduced costs, focus on costs and costs will rise.  Further, by taking a systems thinking approach I have found that things like "best practices" inhibit flow.

Taking approaches such as "best practice" allow people to quit thinking and start doing.  But the approach Deming and Ohno pursued was that there was always a better way . . . so why stop thinking?  Each unique system has  everything you need to know to make it better.  There is no reason to seek a best practice, copying or benchmarking.

Our approach is to begin by getting knowledge in your system, but starting with "check." Check allows an organization to understand the "what and why" of current performance or get knowledge about their own unique system.  It is a better way.

Leave me a comment. . . I can take it!  Click on comments below.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

 

Big Companies are Really . . . Shhhhhh . . . Small Governments

Tuesday, July 28, 2009 by Tripp Babbitt
I have worked with many different Fortune 500 companies in my career and the one item that they all seem to love is bureaucracy.  They have become small governments and some of them actual exceed the GDP of some countries.  So, why does it come as a surprise that they desire the same bureaucratic ways as government.  The sad part is many small companies lose the advantage they have over these behemoths by trying to become more like them.  The endless copying, project plans, cost/benefit analysis, targets, appraisals, inspection, monitoring, milestones, deliverables, technology, scripts, procedures, etc. become more entrapping than enabling to the small systems.  Yet, time after time I see companies trying to emulate the best practices of the big companies.  All the while in the pursuit of saving money these companies just keep adding expenses that offer little and usually no hope of a profitable return.

When you look at the reasons big companies operate the way they do, you will find flawed thinking around their actions.  They include:
  • Scientific Management Theory – The functional separation of work by department and unit with individual and group financial and performance targets.  All leading to sub-optimization and worse performance and lower morale.
  • Separating the decision making from the work – Big companies make decisions without knowledge about the work they manage, instead relying on reports and anecdotal evidence.
  • Technology – Because they never actually understand or see the work in big companies executives and managers require more and more technology to "control" the work and their pursuit of knowledge only winds up giving them information . . . not knowledge (let’s not confuse the two).
  • Productivity – Big companies are all about activity, they see activity as something to measure and keep track of when in reality it only adds waste.  Workers in big companies running around with procedures to write, project plans, PowerPoints, check lists, etc. to make sure the work is controlled, inspected and monitored.  While the people on the front-line doing the real work are left with "checking their brains at the door."
This isn’t an exhaustive list, but you get the idea.  So why do companies that are small and mid-sized follow these companies blindly. . . "We want to be big (and stupid) like the big companies."  I have talked about economies of scale being trumped by economies of flow which levels the playing field for organizations of all sizes.  But a new leadership strategy for companies of all sizes is required.  Business improvement doesn’t require most (if not all) the non-sense that big companies (aka small government) purport be required as most of it
is just waste.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

US Healthcare: A View from a Systems Thinker

Tuesday, July 28, 2009 by Tripp Babbitt
I wouldn’t consider myself a complete novice in healthcare as I have been a patient, consultant to State medicaid and the CIO for State medicaid.  I have not done much with private insurance other than being a consumer.  I did over the weekend watch Michael Moore’s Sicko which by no means makes him (or me) an expert in private insurance, but did bring up some fundamental questions regarding private insurance.  An appearance from former New York Mayor Rudy Giuliani brought up even more questions around both private and public healthcare.

As a consultant that redesigns the work of organizations from the outside-in, I am always interested in what seems to be missing as the consumer of services or in consultant speak "What matters" to the consumer.  As a consumer problems are always associated with the hassle of billing or even understanding the billing for as long as I have had insurance.  The sense of what I owe is always fuzzy with endless "updates" from my insurance provider.  Typically, with the message of we have submitted this to your insurance carrier.  This process seems to take months to clear itself and depending on your level of understanding one may be able to decipher all (rarely) or some of it.

Later in life I have developed a "chronic" condition is Crohn’s disease.  This condition has pushed me out of the mainstream (and would surmise Michael Moore would say "profitable") pool of the insured.  I have to say this brings up question in my mind about the "profit motive" in healthcare, what good does insurance become when the healthy are the only ones that can be accepted?  I was able to enter a state pool program that in essence is forced to carry me and my condition.  But the scenario rings in Michael Moore’s Sicko where private insurance in its pursuit of profit declines the unhealthy and looks for ways to deny claims to remain profitable.  These are the same "system conditions" found in other businesses that actually increase costs and not reduce them.

Now looking inside-out from a Medicaid vendor.  Medicaid had different issues than private insurance.  Medicaid seemed to change with political parties and what their emphasis was for the new administration.  A behemoth budget item in any State, billions are being spent.  Most talk seemed to center on "controlling costs" which I have learned since that trying to control costs in a management paradox increases them.  Most of this controlling involves the call for new technology or ways to track expenses, something that has always increased costs and not reduced them.

Medicaid and Medicare are both highly outsourced rather you call it "privatization" or not.  Vendors to run the technology, surveillance and utilization review, pharmacy, audits, etc. that add millions (if not billions) to the program.  To me the problem is that none of the systems are designed with knowledge.  They are designed function by function based on FW Taylor’s scientific management theory where our attempt to decrease costs by function, increases the end-to-end costs as government requires more monitoring and inspection to insure that the pieces fit.  Add political ideology to this and you have a recipe for sub-optimization.

Rudy Giuliani’s bend was that all things are inefficient just that public healthcare is more inefficient.  This left more questions in my mind.  How can one draw a conclusion like this based on what data?  I always find politicians on both sides to be very anecdotal by nature and loose with the facts regardless of party.  I was left asking myself about the government solution for healthcare vs. the private insurnace solution for healthcare.

So, left with a systems thinking perspective I have two sub-optimizing systems.  One that is run by the government and the other run by the private sector each wrought with problems in the design.  Both have been designed to increase costs and promote waste because they have not been designed as an end-to-end system with knowledge of customer demands. 

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

Skeuomorphs

Saturday, July 25, 2009 by Tripp Babbitt
Peter Scholtes passed away on July 11th.  I remember attending (at least) two of his seminars that he put on in Indianapolis.  He was a very approachable and kind man that wrote two books that were classics . . . The Team Handbook and The Leader’s Handbook

Skeuomorph was a name he presented in The Leader’s Handbook as "an activity or artifact that continues in use long after its original purpose has disappeared."  The example that was used was the granddaughter asking the grandmother why her mother cuts the shank of the ham to put it in the oven when the original purpose for doing so was because the ovens were smaller when the grandmother cooked.  But the tradition continued from generation to generation even though the purpose for doing so had long disappeared.  Similar traditions in business have long been followed even though the purpose has long been proven to be old thinking, but still followed.  Let’s look at the list:
  • targets and other management by results techniques
  • incentives, rewards and performance appraisals for managing people
  • reliance on inspection for quality
  • paying attention to the individual will improve performance of the organization
  • financial and productivity measures used to drive improvement
  • scientific management theory
  • making decisions about the work separate from the work
  • using financial reports as a way to improve the business
  • believing manufacturing and service can be treated the same when variety of demand separates the two
  • copying another organization’s processes and methods for best practice
There are many more than the above list, the problem is we need to break the tradition of poor thinking that is wasting resources.  The skeuomorphs have become like a bad tic that is uncontrollable, but the leadership strategy is to continue to ignore the thinking problem that prevails.  Something like in Hans Christian Andersen’s The Emperor’s New Suit . . . who will be the first to tell the emperor that he has no clothes?

We are not the first to travel down this path: W. Edwards Deming, Taiichi Ohno, John Seddon and many others like Peter Scholtes spent their careers trying to change the thinking for a better path to prosperity and profitability.  But it is a road less traveled with much work left to do.  In memory of Peter Scholtes, the path he cleared for many will be long remembered and God willing . . . . eventually widened and paved.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

Public Sector: A War Rages in the UK

Thursday, July 23, 2009 by Tripp Babbitt

A war rages in the UK between the the elements of change and improvement vs. status quo and entrenchment.  The battle between command and control thinking vs. a systems thinking approach.  As a friend once told me the government "holds the gold and he who holds the gold rules."  Maybe . . . but he who rules foolishly doesn’t rule long.  For this reason I am happy that David Walker (Audit Commission) lashed out against John Seddon. 

This will shine light on the larger battle and I am afraid that David Walker’s first attempt at a rebuttal shows the unwillingness (or at least engagement in logical debate) to relent to new and better thinking.  As a partner to John Seddon and being from the United States, I am waiting to see how this plays out.  My own battles here in the States with government management have been wrought with the same attitude of "not invented here."  Public sector innovation in thinking doesn’t seem to be an invitation accepted by those that are entrenched in the status quo.

Mr. Seddon’s attack on the Audit Commission is based on real evidence of the foolishness of the activities.  Some of the things he cites as problems:
  • The use of targets making the performance worse making them the defacto purpose rather than the customer.  Always people are focused inward vs. outward.
  • Raising new specifications for compliance without knowledge to do so.
  • The assumption that shared services will reduce costs. This thinking based on economies of scale rather than economies of scale.
  • The waste of money by preparing for inspections and obviously supported and recognized by the comments at the Local Government Chronicle.

In turn he is asking the Audit Commission to:
  • Reign back its activities to following the money.
  • Limit inspectors to one question: "What measures are you using to understand and improve performance?"
  • Put measures and method with the local authorities to promote innovation and responsibility.
I am hopeful that Mr. Seddon prevails in his argument with the support of his country in transforming government management and thinking.  This would break free the iceberg of better thinking and innovation in many countries including mine . . . the US.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

Throwing Technology at the Problem

Tuesday, July 21, 2009 by Tripp Babbitt
You see it every day in the newspaper somewhere.  A failed public sector innovation project that attempted to use technology as the tool to achieve efficiency.  Not that the private sector doesn’t have the same problem it just doesn’t make the newspaper as often.  But when things go awry in the public sector . . . everyone knows.

The problem starts with the call by stakeholders (newspapers, executives, legislators, etc.) to:
  • Automate a manual system
  • Replace "old" technology or an antiquated system
  • Reduce costs
I have never found these to be good places to start in the public or private sector.  The technology companies are all too willing to accommodate the request with either custom or pre-packaged "solutions" that will make things all better.  They usually don’t and in most cases make things worse.  With great waste the consumers of these solutions are left to the contract they negotiated for satisfaction.  Sometimes I  have even seen technology companies give away technology to satisfy a dissatisfied customer . . . just what a company needs is more of a mess as a "solution."

Yet, public and private sector companies still keep coming back to buy more.  Hoping against hope that the holy grail of technology will save them yet.  The constant product stream from technology companies helps facilitate this false hope with always a new generation of products that surely will be better than the last disaster.

Technology to me is a supporting function, but some how . . . some way it has become the focus of improving organizations.  This doesn’t mean that technology is devoid of value, but it is certainly not a place to begin business improvement. 

The better place to begin is to understand customer demand and purpose, accumulating measures related to customer purpose and redesigning service to absorb the variety of demand that service offers.  Once we understand the work, then we can talk about pulling technology to enable the system to perform better.  Sometimes manual is OK and a better way than expensive and entrapping technology.  I rarely see this deployed for several reasons:
  1. Technology becomes the solution and everything has to "fit";
  2. Standard work/process/procedure and best practice make coding easier, but does not allow for the absorption of the variety of demand received;
  3. Viewing customer demand from the inside-out rather than outside-in;
  4. Schedules and due dates are achieved to satisfy completion requirements; and
  5. Public and private sector organizations just don’t think this way.
I don’t know what the future holds, but I am hopeful that organizations quit throwing technology at the problem.  They haven’t been able to spend as much on technology during this recession (some worse off than others).  Most are or should be looking for better thinking around how technology is deployed.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

Can I Have Extra Celery Instead of Fries? No?!!

Wednesday, July 15, 2009 by Tripp Babbitt
Yesterday, I went to a Buffalo Wild Wings to meet a friend of mine.  I had decided on the wings, celery and fries combo.  Only I didn’t want the fries, so I requested extra celery ( keeps the weight down).  The response was shocking . . . my waiter responded, "Our computer doesn’t allow us to put in extra celery, would you like a salad instead?"

Wow!  This person now becomes my example of how entrapping technology can become at service companies.  Yet, I see this everywhere with standardization done to make software coding easier, "standard work" and "5S" accomplished with "Lean tools", scripts, standard product offerings, SOP, etc.  Systems designed to make life easier for management, the vendor, etc. but incapable of absorbing the variety of demand that service offers.  Customers left shaking their head as to why they can’t get what they want, even when it is just extra celery.

Be it bank management consulting or customer service consulting the theme runs through most service organizations that I have worked with.  A strong belief that these standardizing activities actually save money when in reality they drive customers away or at least left scratching their heads.

Some people will say we have a people problem here.  Really?  The system was built to entrap and this person didn’t know how to deal with the variety.  I don’t know why the system entrapped the waiter, could be they have had shrinkage in the celery inventory or other areas or some management dictate that all orders have to be in the computer would probably be my first guesses.  But I am sure there was something in the system that didn’t allow me to get my "extra" celery (what we refer to as system conditions) and the individual was following orders that conflicted with my demand.

Standardization in service as a place to start is misplaced.  Organizations "saving money" may be losing customers or may be promoting other dysfunctional activities that add costs.  We believe a better "systems thinking" way is to understand customer demand by going to the work and finding out "what matters" to the customer and designing a system against demand.  Don’t you?

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

Indiana State Welfare Eligibility: Time to Turn Lemons into Lemonade

Wednesday, July 8, 2009 by Tripp Babbitt
At this point everyone understand the debacle of the Indiana Welfare Eligibility program run by IBM and its partners.  Currently as it stands there are no winners in this situation.  All the stakeholders IBM (and its partners), applicants/recipients, FSSA, executive/legislative branches of Indiana government and most of all taxpayers.  The damage has been done and each of the above stakeholders stand to lose something of value.  So . . . as much as we may dislike our situation, we need IBM to succeed.  After all, they are now in the best position to improve things and save taxpayers from more wasted money.  Here is a suggested formula for turning lemons into lemonade and what each stakeholder should be asking for:

The Taxpayer.  There is one thing the taxpayer needs . . . transparency.  If things are going well we don’t need transparency, but when things are going badly we need to be both educated and informed on what is happening.  So here is what the taxpayer should be asking for:
  1. The corrective Action Plan submitted by the vendor IBM.
  2. The measures with operational definitions that will be the indicators that things are getting better (or worse).
  3. The criteria for keeping or cancelling the contract.
  4. The FSSA plan if the contract is terminated.
The Governor and Legislators.  Other than making sure the taxpayers get the above four items . . . nothing.  They don’t understand the system enough to legislate improvements and audits at this point will just add costs and more confusion.  One thing that might be helpful is to have a small group of legislators that would take some phone calls and walk the process end-to-end so they can speak intelligently about what is actually happening instead of hearing anecdotal testimony alone.  Note: I did this as CIO for FSSA and it was eye-opening. 

FSSA.  Three things:
  1. What are the criteria for cancelling the contract?
  2. If you are forced to terminate the contract, what is the plan?
  3. Lessons learned.  We have a learning opportunity here.  What have we learned that we can leverage moving forward for the State of Indiana (regardless of party affiliation).
IBM and partners.  I have spent some time gathering information from reporters, legislators, caseworkers and recipients/applicants acquired from many different mediums from many different states.  It will not do us any good to pick through all the detail, but I have some basic elements that should be addressed.  Learned from my Vanguard partners in the UK, here is how to turn lemons into lemonade:
  1. Study the demand.  The calls coming into the Marion call center is a good place to start understand the type and frequency of the demand.  Understand whether these demands are statistically predictable or not.  The demands should be separated into value and failure demands.  Failure demands are all follow-ups, repeat calls, chase calls for status, or any failure to do something or do something right for the applicant/recipient.  The failure demand % of calls should be one number to pay attention to and reported to FSSA, legislators, the Governor and the taxpayer.  You will need to engage the call center worker for this activity, they understand the demands better than a report or manager.
  2. Understand the value created by type of demand.  Examine the current response to each type of demand.  Rate the response in terms of value created for the applicant/recipient at the point of transaction (where the applicant/recipient meets the call center).
  3. Understand the flow and eliminate the waste.  How the applicant/recipient demand is dealt with through the system.  Is the demand dealt with in one-stop or handed-off?  Map the flow, walking it end-to-end (from the customer perspective) identifying the waste.  Eliminate the waste.
Lemons to get rid of:
  • Unnecessary forms, paperwork and reports
  • Handling progress chasing requests
  • Working with unreliable or inaccurate information
  • Dealing with mis-routed phone calls and documents
  • Inspection, logging, batches and queuing
  • Duplication
  • Dealing with problems caused by hand-offs
  • Obtaining authorization
  • Firefighting – Symptoms rather than causes
  • Targets and incentives (pay per call)
  • Entrapping technology
  • Standard work and scripts that don’t absorb variety of demand
The one lesson I hope any state will learn is that technology should not be pushed, it needs to be pulled.  Just because the system is manual doesn’t mean that an automated system is better.  We need to improve the systems (structure, work design, measures, management thinking, constraints, etc.) and then pull in technology as needed. 

One former case worker pointed out to me that although the previous system was labor intensive working with the applicant/recipient allowed a relationship to develop.  This was important in helping to head off fraud or gaming the system something that a report or data can’t do.  The new system (not just the technology) separated the work with more hand-offs, quotas and focus on efficiency that was misguided.  I recognized this as scientific management theory and the functional separation of work that leads to sub-optimization and waste.  Every piece optimized does not make a good end-to-end system.

My wish for all stakeholders is that the Indiana Welfare Eligibility system works well moving forward and whatever system that comes out of this will serve the State well and be more than just doing the wrong thing, righter.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.



Failure Demand Elimination: Systems Thinking at Work

Tuesday, July 7, 2009 by Tripp Babbitt
In Freedom from Command and Control, John Seddon (of Vanguard Consulting, my UK partners) outlined two types of demand that can occur at the point of transaction.  Value demand and failure demand.  They are distinguished by the nature of customer demand and simply are those demands we want (value) and demands we don’t want (failure).  So what exactly is failure demand? John Seddon wrote that "failure demand is demand caused by a failure to do something or do something right for the customer."  If you miss or show up late for an appointment, the follow-up with one or more calls, poor service, forms or websites poorly designed or other activities that could be prevented we have failure demand. 

Failure demand is often overlooked because command and control thinking has most service organizations focusing on productivity which relates to how fast we can process something.  We take the phone call or other encounter as something to do an activity if you will and not necessarily something that can be prevented.  Failure demand changes this thinking, so I encourage organizations to know this percentage with the numerator being the number of failure demand contacts and the denominator being the total number of contacts. 

Probably the best place to conduct this exercise is with the call center where metrics are easily gathered, just don’t use your existing call data or your number will be tainted.  You must work with the front-line and listen to the calls with them to discern failure demand.

Here is what I can tell you about what you may find.  Our consultants have found that failure demand runs between 25 – 75% in private industry and in the public sector it can be as high as 90%.  So, any number you get in that range is typical, but it presents a tremendous opportunity to improve.

There is more to improving your organization with systems thinking than just knowing the failure demand percentage.  However, this will arm you with a new metric to help size up the possibilities for business improvement. 

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

Call Centers and Systems Thinking

Tuesday, July 7, 2009 by Tripp Babbitt

The first thing any call center has to overcome is the functional separation of work.  Scientific management theory if you will. Frederick Taylor started all this.  Separate the work into functions and maximize each function.  The problem is it worked for a long time and now that there is better thinking organizations have trouble shifting to the new thinking.  Call centers were not exempt from this thinking.  They became a function.  The call center has its own set of measures and processes to navigate.

As a systems thinking consulting company, we see no reason that the call center should be any less a part of the system in which they belong.  The call center can provide vital customer information and when used appropriately can be the place of innovation and creativity.  Instead they are viewed as a function that has to be optimized with AHT (Average Handle Time) and other measures of productivity.  These are no more than handcuffs to the organization as a whole.  Targets become blinders to the ability to improve service.

The call center contains information that is readily malleable enough to become knowledge when we view organizations as systems.  A lot of customer demand, especially failure demand (problems, chase calls, missed appointments, etc.) enters the call center.  This is information to make business improvement.  Instead we find organizations looking for ways to reduce talk time rather than possibly increase it to make sure we get an understanding of customer demands and ultimately optimize the system.

New measures and new thinking would not only raise the stature of call centers as part of the system, but can provide tremendous opportunity to an organization that recognizes the possibilities when we look at our organizations as systems rather than functions.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

Trust at the Point of Transaction

Tuesday, July 7, 2009 by Tripp Babbitt

I don’t know about most of my readers, but I have a tendency to trust people from the beginning.  I take them at their word, now this may seem gullible and naive to some.  I want to assure you when I listen to people and I know what they are saying is BS I give no quarter . . . the Romans would be proud.  However, in those gray areas of uncertainty based on my knowledge I have to rely on someone with knowledge.  I find a lot of people rarely let me down.  Organizations on the other hand make a habit out of it.

So, what makes an individual trustworthy not trustworthy when they become part of an organization.  As customers, don’t we trust that our waiter is doing his or her best to service our needs?  I rarely find an individual that is not doing their best that doesn’t mean they always succeed.  Yes . . . I am annoyed when the wrong food or cold soup hits the table.  Was that really my waiters fault?  Easy scapegoat for many, not for me.  These workers like any others are doing their best.  They may not have been right for the job, grant you.  They may not have been trained properly.  They may not understand the systems they work in.  But ultimately the system they work in determines the level of my service.

As people that have become more disenchanted with "the service" in these less than stellar economic times.  Customers are looking for more from those that they transact business with.  Each point of transaction rather call center is turning into a mini-battle to win the hearts and minds of customers.  Our service systems are losing this battle in a time where customers are looking for more in making their buying decisions, they are getting less.

At one point of transaction that we are all familiar with we face unprecedented hurdles to service.  When we want to talk to a person we can trust from an organization, we are greeted with a voice recording that prompts us to press "2" or attempts to discern our individual speech impediments to move on to the next prompt or gives us options that don’t match our problem.  We are left feeling like maybe we should be doing business somewhere else or just skip any of the service in general.  If we navigate the rough seas of the IVR and talk to someone, we rarely feel like they are in it for the duration or that they care about anything other than selling the next service.

So what makes good people untrustworthy?  Bad genes? Bad hair day? No, its the system they work in.  The structure, work design, technology, measures, procedures, and management roles all play the most significant part of what happens when the customer meets the service portion of any organization.  The old will take Harry out back for a little attitude adjustment (known as coaching) has us looking in the wrong place unless of course Harry happens to be wearing a mirror.  The current thinking about the design and management of work is what is the issue here that leads to a damaging performance with the customer.  For me, it reminds me of the movie "Gettysburg" where General Longstreet predicts what is about to happen to his scout (Harrison) before Picketts Charge.  The same it is for systems thinking folks that know the outcome of the service to be provisioned before the customer calls or reaches a point of transaction in an organization based on a non-systems thinking approach.  They witness traditional responses to poor service like pay for performance, appraisals of performance, inspection, standardization, targets, incentives, technology, coaching and other worn-out tools that make things worse for the customer and in a management paradox increase costs.

The point is that the customers interaction with a service organization is tied to the organization end-to-end.  Trust is won or lost based on that interaction with the system.  Good service at any point of transaction is systemic regardless of which worker provisions the service.  The call center worker and any other front-line worker is only as good as the system they are put in.

A call for a different approach.
John Gerzema (Young and Rubicam) recently outlined several items that the importance of trust will play out in the form of cultural ethics and fair play and that the management of these organizations must have a sense of value and values while the consumer adjusts to a less material world where they look for products and services that deliver value (quality, warranty and the like).  So how can an organization achieve this new reality where trust needs to be high?  An organization has to deliver it at each and every point of transaction and the system they interact with has to be able to absorb the variety of demand the customer is asking for and deliver the service end-to-end from the customer perspective.  Then and only then can we establish a relationship based on trust.

Call center and other front-line workers need to engage to build this value and trust building system.  Instead of engaging the front-line worker with targets that suck out all the ingenuity of the worker, we need to engage them in helping us discern customer demand and "what matters" to customers so an organization can act on the system.  The front-line workers are in the best position to understand these demands and quick action needs to be taken on what they learn.  This means that trust between service worker and customer can be established as the decision-making is put back with the work.

Managements job changes from managing people to managing the system.  This means improving the workflows end-to-end as they work to understand and deliver on customer demands.  This requires a change from focusing on the worker to collaborating with them to work on the same problem.  This is a huge conceptual leap to understand that performance is governed by the system and not the people.

If we are to put trust back into the points of transaction, it will require this form of new thinking in our customer management process and in our future leadership development programs.  Only then can we establish the core value of trust needed to conduct business with our customers.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt. 

 


A Call for Small Ball?

Friday, July 3, 2009 by Tripp Babbitt
Too big to fail?  The political pundits at work trying to answer this one . . . conservative, liberal and everyone in between.  I’ll attempt to stay away from a political answer although I am sure that all things will get politicized no matter what I say.  So here we go.

For years now we have been taught and utilized the thinking around "economies of scale."  "Bigger is better", "grow or die", "the more we make, the cheaper they are" have become cliche . . . or have they?  Locked in a battle over minds is the accounting and finance mentality around "fixed costs" diminish as we produce more.  All well and good until Taiichi Ohno came along and showed us that cost was not in scale, but in the flow.  John Seddon coined the phrase "economies of flow" to replace the prevailing thinking around "economies of scale."  What this tells me is that bigger is NOT necessarily better and after the round of spanking we just out of our economy you wonder if maybe smaller is better.  Would multiple banks have made the same mistake if there wasn’t a Merrill Lynch, Citi, Bank of America and the like?  Some maybe . . . but would we have had the same crisis?

Taiichi Ohno showed us in the Toyota Production System that batching of products was ineffective and inefficient . . . counter to economies of scale.  He was able to see that costs were in the flow.  This leveled the playing field for Toyota to compete against the Big 3 automakers that had all the advantage.  He found a better way because they had to find one.  One would suggest if a country as resource poor as Japan can compete against the resource rich US then a small bank (or organization) could compete against a large bank (or organization).  Even in sports other countries are finding that "team play" in basketball is superior to "individual play" that the US team aspires to as they have been able to compete as a team vs. a team of stars.  They certainly have made up a lot of ground and leveled the playing field.

So, necessity makes us look at a problem differently.  You would think that maybe we ought to be looking at things differently.  This may require "economies of thinking" where organizations need to find new ways to compete, because just as large organizations may not have the advantage they once had . . .  being small does not guarantee the ability to compete.  New thinking is in order, and for service, systems thinking gives the advantage to service organizations no matter what the size.  The important part is that the small can compete with the large in service with better thinking and methods.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.


The End of Trust?

Friday, July 3, 2009 by Tripp Babbitt
We have seen an amazing transformation occur over the past 18 months.  This has been initiated by the banking industry by Ponzi schemes and mortgage fraud in the banking industry.  Life savings have been sacrificed, homes taken, taxpayer money spent, and jobs lost.  This is well-documented.  This doesn’t mean that all banks are bad and in fact . . . a large majority of banks steered clear of the need to make "easy money."  The problem is that this industry has been tainted by the "best and the brightest" in large banks.  Probably another post on my speculation of why "the best and the brightest" do stupid things, for a preview I suspect selfishness nurtured by reward systems that made these pursuits acceptable.  Regardless of the reason, we now face a crisis of trust.

I was listening to John Gerzema (Young and Rubicam) at The Marketing Forum in San Francisco Avoiding the Looming Crisis in Brand Value (Listen here).  He mentioned several items that the consumer is dealing with right now and include:
  • Selfishness and Collusion
  • Egregious and Criminal Behavior
  • Decaying Infrastructure
  • Failure of Regulatory Oversight
  • Taxpayers as Shareholders
  • Lack of Permanence
Mr. Gerzema in stating the obvious talks about how trust is important to the consumer, but has not been high in importance to corporations.  Ah Duhhh!  Seems like we have played this song before, remember Sears and the mystery car repairs where targets and incentives drove stores to "find" repairs?  The same trust issue exists today as the targets and incentives drove our banking system further and further from what mattered to customers.  Let’s face it, we all were a little greedy and now we are paying the piper.

Many have talked about the transparency needed in organizations or more regulation by government.  Transparency is difficult to achieve as unscrupulous organizations can always hide things or misrepresent them and more regulation will add costs plus there is no guarantee that regulation will keep us from the next crisis.  Regulation may help to prevent a crisis like the one we just had, but not the next crisis as it will be different in some form.  Instead of transparency and regulation, maybe we need to review the target and reward systems that help drive the wrong behavior in the first place.  Targets and incentives have become the defacto purposes in many organizations, hiding the real purpose of serving the customer.

Social media is bringing a different game to the field where now a person can call out an organization.  You get more than one person experiencing the same problem your organization may have a crisis on its hand.  Companies are running out of places to hide their poor product or service.  So, wouldn’t it just be easier to fix the problem?  I would submit to you . . . the answer is yes.  The answer that will possibly save the future.

My hope is that corporations will see the value of systems thinking which focuses attention on the customer, not because we just had a crisis . . . but because when we focus on the customer provisioning services costs less.  This is not the command and control thinking we are used to having in the US where we believe there is a trade-off between costs and good service . . . it is a management paradox. 

We can actually lower costs and better service by providing good products and services.  We don’t need to hide problems, we need to address them.  The customer has a voice louder than ever.  Corporations are in need of building systems that understand customer demand and purpose associated with these demands.  If we begin to rebuild our organizations to acquiesce to customer demands we have a better chance of re-building the trust lost between customer and company.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

Zappos’ Achilles Heel

Wednesday, July 1, 2009 by Tripp Babbitt
First of all, let’s not look at the cup as half empty for Zappos, because I believe it is two-thirds full.  At the Economist Marketing Forum held in San Francisco this year Tony Hsieh (pronounced Shay) and two CMO’s from Del Monte and Frito Lay discussed the role of marketing in their organizations amongst other things (watch: Ties That Must Bind: Why CEOs Rely on CMOs More Than Ever).  The poor guys in the traditional roles of CMOs (by function) had to listen to Tony say that they really didn’t have a marketing function at Zappos.  They reinvested into customer service and the better service was the marketing for Zappos.  I thought the others would spontaneously combust.

So yes, there is much to like about Zappos.  Let me highlight a few other comments Tony Hsieh made that got my attention:
  • Our culture (of customer service) is our brand
  • Investment of surprise upgrades to customers
  • Repeat customers from word-of-mouth (pull, not push)
  • Investment in culture is not an immediate benefit like cutting costs, long-term thinking is necessary
  • The use of the telephone as a branding device
  • Allowing new hires to weed themselves out by offering significant money ($2,000) if they quit
  • A lot of emphasis in getting the right people in the organization
  • Leadership development and training
So why the heading about the "Achilles Heel"?  What could possibly better than this.  I got concerned when Tony started to talk about:
  • Low Performers (and how they weeded out "Jack Welch" style the low 8%).  I don’t know the nature of the 8% and it could be they hired the wrong people before they "improved" the hiring process.  But it brings up questions about having already invested in training and Tony said they were profitable when they did it and didn’t have to do fire the 8%.  Who says that if they dip back into the pool of people available that they will find better employees than the ones they just let go and now they have to be trained.  This "renewal" process is expensive.
  • Call Monitoring.  Call monitoring has a useful purpose if the agent is new or if the monitoring is for improvement efforts.  Regulatory compliance is waste, but required and doesn’t always require monitoring that’s just they way people interpret it.  Otherwise, call monitoring used as inspection comes too late and is costly.  if the other elements like culture, hiring the right people, management thinking, etc. are correct do I really need to inspect?
  • Performance Appraisal.  I was disappointed to hear that performance appraisal was being used.  My fear is that the worker is being managed command and control style. If I understand purpose "to serve the customer" what possible good can come from an appraisal of performance.  It distracts the worker from "serving the customer" to "serving my supervisor or manager" or could over time . . . this is a type of waste.
  • Financial Goals.  If this means targets for profits  that lead to scorecards, MBO or the like trouble is not far away.  The targets (financial or performance) will ultimately become the defacto purpose of the organization and customer service will become secondary to the target.
  • Failure Demand.  How many phone calls are they getting that are follow-ups, wrong shipments, wrong billing, problems with the product, etc?  This is failure demand and even if you have nice people and good service if failure demand runs high customers will eventually erode their advantage and go elsewhere.  So, what percentage of calls are failure demand?
  • Do they understand variation?  Do they understand when a worker is statistically different from other workers?  Do they understand how to use data for prediction?  Do they understand the difference between "special" and "common" causes of variation that will help them continually improve their organization.
  • How will they achieve continual or continuous improvement?  "By what method" will they improve.  Will command and control or will systems thinking prevail in their business improvement efforts?
I know he didn’t talk about the last three, but these are things that will play themselves out over time.  There is much for Zappos to be proud of in its inception-to-date achievements and I can only hope that continue to maintain that innovation leadership that they have on their side now.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

What Does the Future Hold?

Monday, June 29, 2009 by Tripp Babbitt
A crystal ball would be nice to be able to see the future.  I don’t have one.  Not sure that I would want one anyway, seems kind of boring.  There is excitement in not knowing. 

John Chambers from Cisco said command and control management will be dead in 5 -10 years. I have to agree with him.  The command and control world has dominated thinking for 100 years.  Scientific management theory was proved outdated by the likes of Deming and John Seddon. Systems thinking will prevail.  So what are the characteristics of a systems thinking organization?
  • Organizations will learn to optimize their systems or fail against those that do. The functional separation of work has created sub-optimization and waste beyond tolerance levels of customers.

  • Decision making will be put back with the work instead of separated from it as AP Sloan did at GM in the 1930s. The worker will become important again because they have the best knowledge to innovate and improve the work.

  • Organizations will serve the greater good rather than maximizing profits for themselves. Customers, vendors and even competitors will work to make the customer experience better. Contracts will take a back seat to doing what matters for customers. Cooperative attitudes will prevail as competition takes a back seat to making the pie bigger by expanding opportunities.

  • Intrinsic motivation will rule over extrinsic motivation. Targets and incentives will become extinct as organizations understand they bring waste. Without the functional separation of work there becomes only one objective . . . to serve the customer.  Organizations lose the need to optimize each function as it sub-optimizes the whole increasing costs and degrading service. 


  • Technology will be pulled to enhance the work and not pushed as a solution as organizations find the return on technology is only as great as its need for it. Technology companies will understand that just selling technology is only good if it helps the customer and keeps them in business, not if they hit their monthly target or quarterly dividend and kill the patient.
Most of these items have been described and played out by the likes of Deming, Ohno, Seddon, Herzburg and McGregor.  My interpretation of them and what the future may hold.  The organizations that don’t understand these at a minimum risk losing business or their organization.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com "Understanding Your Organization as a System" and gain knowledge of systems thinking or contact us about our intervention services at [email protected].  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.