Bryce Harrison

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.

 

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. 

 

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.

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.
 

• 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.

 

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.

 

• 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."

• 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

• 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.

• 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.

• Automate a manual system
• Replace "old" technology or an antiquated system
• Reduce costs

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.

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.

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).

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.

• 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 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.

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. 

 

• Selfishness and Collusion
• Egregious and Criminal Behavior
• Decaying Infrastructure
• Failure of Regulatory Oversight
• Taxpayers as Shareholders
• Lack of Permanence

• 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

• 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?