Organizational Change Management

Indiana Welfare Eligibility Modernization, Costs and Cynicism

Saturday, December 12, 2009 by Tripp Babbitt

I ran across a couple of documents I had not seen about what was going on before the failed Indiana Welfare Eligibility Modernization was into full swing. A couple of documents are very telling about the mindset of the administration. The first is from FSSA called Eligibility Modernization: The Need for Change and the second is an article that appeared in reason.org called Steering Not Rowing.

The FSSA document cited six reasons on why the welfare eligibility system needed to be changed. They were:

Worst record of welfare reform in the country
High error rates
Slow processes that fall short of federal guidelines and provide poor customer service
Inconvenient access
Lack of consistency
Lack of tracking capabilities and proper accounting programs

In the article Steering Not Rowing former FSSA Secretary E. Mitchell Roob outlined the problems in light of forthcoming solutions:

Lack of a central accounting system
A paper-based system
A general rule based on theory that if you can find someone in the private sector doing a service that mirrors what the government is doing, chances are the private company is doing at much higher quality and a much lower cost.
Efficiency leads to costs savings.

The State of Indiana (in general) has spent a lot of time putting in systems to track costs. They spent millions implementing a Peoplesoft system to do just this. The problem is they have spent so little time looking at the causes of costs. Tracking costs does nothing to improve them. In fact, spending money on ways to identify costs adds to costs and that is waste.

FSSA would be better off spending time finding the causes of costs associated with the design and management of work. They are in the system (structure, work design, measures, technology, management thinking, etc.) and end-to-end flow from a customer perspective. Something that typical government management can’t or won’t see.

The assumptions around technology, automation and "paper-less" systems is one I see killing government on a routine basis. Technology companies are making lots of money and nothing is getting better.

The problem is the work design and not the need for more technology. We perpetuate poor work designs by adding technology or automating them. For government management it is to lock in the costs of a bad design.

Front office/back office and functional designs aren’t questioned they are automated. For example, worker A passes documents to worker B and the decision is made to automate the process. Do we need the hand-off or the document? This goes unquestioned and if you think about it IT companies don’t want to get rid of a poor design. A poor design means lots of front office/back office and functional designs and the more of these we have the more revenue IT companies get to automate them or make them paperless.

The premise that efficiency leads to cost savings is unfounded. Government management needs to learn to be effective. A focus on costs and efficiency usually drives sub-optimization. This means that we drive costs down in one area, but total costs are driven up.

The public sector would be wise to see John Seddon’s "Law of Costs." This is where government costs increase in proportion to the variety of demand. The traditional design of government work is such that freedom must give way to efficiency . . . meaning the worker must be controlled. The management paradox is that freedom by the worker is what gains efficiencies as the worker is best able to absorb the variety of demand that comes to government work.

The ability to absorb variety by the worker requires less technology as only people can abosrb variety effectively. Something that technology companies don’t want governments to understand.

Public sector innovation is possible, but it requires a new line of thinking about the design and management of work. The State of Indiana and FSSA continues to miss opportunity as they are blinded by oversight thinking, an obsession with technology and cynical view of the role of the worker.

We help government entities innovate through our unique approach to the design and management of work. We can help you "see" the waste and sub-optimization of your systems and work with you to change management thinking and redesign. To learn more go to www.thesystemsthinkingreview.com or contact the North American office at info.newsystemsthinking.com or (317)849-8670.

Driving Change in Government: Get Knowledge or Go Home

Monday, December 7, 2009 by Tripp Babbitt

Seems like each time I read something coming from the Ash Institute from Harvard, I am left shaking my head in disbelief. It has now advanced to the point where I just accept that they will say things that defy all reality. They can spin a web faster then any spider I know.
In the latest travesty John O’Leary in Driving Change: Go Big or Go Home likens government to driving a bus where everyone has access to a brake. Meaning anyone can kill any change program in government. He uses this as an impetus to basically run over people to achieve change.

With apologies to one of our fine educational institutions this is ridiculous. What got us in the mess we are in today is our inability to seek knowledge before seeking change. Government management can only make assumptions about one thing . . . that they need to get knowledge before introducing change.

The cost of not getting knowledge is to guarantee failure in any organizational change management program. The result is higher costs, worse service and a poor culture. The political spin of this has to be exposed as they administrations point to those costs that go down and not to the ones that increase due to this flawed approach.

Any new administration at any level of government management would be well-served to start by performing "check." This means understanding the what and why of current performance. Not to come in with pre-conceived notions, agendas, mandates, milestones, schedules and project plans.

Further, Mr. Leary promotes the favorite of the Ash Institute which is cost cutting. Even worse he promotes it as a top-down exercise. Both of these again are command and control moves that increase government spending . . . let me explain.

Costs are often seen from activity and productivity numbers that are leading government management to take a shared services strategy or outsourcing. What the fail to see is that cost are in the flow not the scale of activity (economies of flow). To focus on costs increases them and instead we need government to focus on the causes of costs that are in the flow.

With respect to top-down implementation of a political agenda, we would be much better served to design our government systems from the outside-in. This requires understanding demand while getting knowledge in "check." When we don’t understand demand we stand to outsource failure demand (demand caused by a failure to do something or do something right for a customer) or share services that shouldn’t be shared.

I have found a better way (as opposed to top-down) is to get knowledge of the work and engaging government workers. Rather than a small group by engaging employees we get far more ideas for innovation. And larger changes are accepted because when we make decisions with the knowledge of the work we don’t alienate those that do the work.

Think about it . . . would you rather have a small group innovating or the assistance of thousands to help facilitate change? When you don’t make decisions with the work we wind up with SNAFU and FUBAR types of results and activities.

Workers engaged and understanding purpose and customer measures should be allowed to experiment with method. This experimentation can lead to new methods and innovation. New administrations would be wise to tap into this valuable resource pool.

Indiana has had a massive failure in the Welfare Modernization project they just cancelled with IBM. Let’s not spin this any other way than a disaster that cost taxpayers money by not doing the things I have outlined above. More approaches like this and we will continue to have to sell the public’s assets to meet the fiscal responsibilities of the state.

Join us for a new and better way to improve government at www.thesystemsthinkingreview.com

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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 Role of a Manager in Service Organizations and Government

Monday, November 30, 2009 by Tripp Babbitt

As I was working with a client last week, I reflected on the role of a manager in a systems thinking environment. If we are to improve the design and management of work . . . the way we manage must change. This should be seen as an opportunity to a more efficient and compassionate leadership strategy.

Taking an outside-in approach we squarely place ourselves in alignment with the customer. There is no need to manage the financials as this will take care of itself when the customer is the center of our thoughts. Taking our minds away from cost control to focus on the causes of costs.

Organizational change management with all the restructuring that leads to new programs and no improvement, gives way to focus management attention on the work. A far cry from the report-driven and anecdotal method embraced by today’s command and control style of management. Silos become non-existent as doing what is right for the customer delivers value rather than turf battles.

Measurement derived from customer purpose replaces the functional targets set from the quarterly dividend, financial forecast or budget. Managers are instead looking at how capable they are at meeting customer demand and the measures that matter to customers.

Meetings related to making sure the customer or supplier are adhering to contracts written, instead look at a systemic review of "what matters" to customers and create a cooperative environment. Working together with suppliers and other managers to act on the system to improve flow rather than manage people and budgets.

Managers and workers learning together how to (first) understand current performance and learn what matters to customers. We move from a reactive environment to an adaptive one. Change is emergent as workers and managers try new methods to improve the work and innovation through better design. Rewarded with the desire to learn more and continue the cycle.

Our need to redesign the way manager’s manage should be at the top of our 2010 to-do list. Is your service organization or government ready for real change?

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The Great Service Epiphany

Tuesday, October 27, 2009 by Tripp Babbitt

When I first read Freedom from Command and Control (by John Seddon) I hit one of those moments that give one pause. It’s like a kick to the head . . . a jolt. Some react differently than me when confronted with a counter intuitive truth or a management paradox and immediately reject it. Not me . . . I have gone to such depth in learning and improving service organizations that you can feel it when you have heard something significant that will change your course.

Here it is . . . standardization is the enemy of service organizations.

Sounds harmless enough, but it changes everything. The way you think about tools-based improvement programs, documentation, scripts, information technology, and much more.   It all changes.

Lean manufacturing tells you to standardize as I have seen so many lean tool-based programs advocate. Folks running around for the one best way or doing 5S . . . all non-sense.

I have consulted with Fortune 500 technology companies standardizing processes so business analysts could write requirements, system engineers and programmers code and schedules can be met.  But the problem was the back and forth between the technology company and the customer. The customer rarely got what would work on the front-line and the technology company would blame the dumb or rigid user.

Contact centers with IVR systems that require a standard message. Or the script for the customer service representative (CSR) that has to be complied to when the customer calls. For the most part . . . all waste.

Why?

Standardization does not allow for the absorption of the variety of demand offered by service customers.

The waste is in costs and customer service. If a customer can’t understand the tree of options offered an IVR they are forced to call back to "get it right."  Or if the script a CSR is forced to comply with doesn’t fit a customer demand . . . the customer has to call back or try to negotiate a response with the CSR. Additional handling of a customer either loses them or they are forced to call again (failure demand).

Variety of demand is best absorbed by humans and NOT technology. To introduce technology in places where humans are needed is to increase costs for buying the technology and increasing the costs to serve a customer. Technology change management tends to miss this as they gather requirements without knowledge and a rush to meet deadlines.

Call center and government management miss it because the prevailing thinking is that standardization is always good because they can control things. The truth is that they are making themselves less competitive with increased costs and worse service.

I have learned many other counter-intuitive truths and management paradoxes working with systems thinking, but this opened my eyes.  I hope it does for you too.

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Call Centers: Where Outside-In Performance Improvement Begins

Tuesday, September 1, 2009 by Tripp Babbitt

One often hears that quality begins in the boardroom. This implies that (1) the boardroom

and the people in it actually understand the work being done between the customer and their organization and (2) that the boardroom actually understands how to run the organization as a system. Those are two items that would be a stretch for any service organization, but are needed to achieve business improvement.

So, here is a suggestion. Those looking for a better leadership strategy may want to consider designing against customer demand. An approach that requires the organization to look and understand current performance from the outside-in and not top-down. This would require executive and front-line worker understanding current performance by performing a "check" of the system. What are the types of demand received? Are these demands of value (things customers want to give and get from your organization)? Or are they failure demands (demand caused by a failure to do something or do something correctly)? We can refer to this as getting knowledge about the organization and more specifically customer demand. My company has found that you will find somewhere between 25 – 75% failure demand in service organizations. Most organizations can not tell me this number and yet project plans, technology buys, organizational changes, etc. are done without knowledge.

This leads us to Willy Sutton (the original Slick Willy) the depression era bank robber when asked "Why do you rob banks?" His response, "because that is where the money is" . . . and no this is not an advertisement for Activity-Based Costing. An organization needs to go to where the knowledge can be gained . . . no, not a report or an anecdotal witness to activities . . . but where the customers are. Where are they? At the transaction points of your business, for service organizations that is (but not limited to) the call center. Customers calling in every day with their demands, some value and some failure.

Getting knowledge leads to an understanding of purpose and better measures that constitute the customer perspective and not the department or function perspective. Customers don’t care that the other department was responsible for their problem, they see things differently than the function-by-function separation of work that we have built into our service systems. We have become functional specialists by design and unable to serve the end-to-end demands of customers.

Better designs for customer demands almost become self-evident once we gain knowledge about the nature of demand. This allows a better customer management process to be achieved. Because designing the organization from knowledge of customer demand helps us make the right choices regarding what will create value for the customer with regards to technology, policies, work design, structure, procedures, etc. Otherwise, it is just a shot in the dark hoping to hit something.

Call centers can aid in this process by getting knowledge about customers by understanding the type and frequency of demand and whether it is – value or failure. It’s taking leadership in understanding customer demand by performing "check" (or getting knowledge). This is a value add to customers, executives and your organization.

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.

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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.

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Systems Thinking: A Personal Affront?

Friday, June 26, 2009 by Tripp Babbitt

Some of my posts have caught the eye of several folks who have decided that my blogs are a personal affront. Most of these people, I don’t even know . . . but they write like they do. They are offended or even irked by my posts. I don’t believe I have attacked any one person ( I have mentioned a few) or any one company (ditto), but most of my writing has been about the thinking of those people or companies. I don’t blame them for thinking in a command and control manner, what I aim to do is point out that there are better ways of thinking . . . for me that is systems thinking as defined by the likes of W. Edwards Deming, Taiichi Ohno and John Seddon. An American, a Japanese and a Brit, I’m sure there is a joke in there somewhere.

There is a history here that tells me that we are not evolving and learning in the US. Sub-optimization and waste is rampant. This waste is as disgusting as any of the nastiest scum at the bottom of the barrel, sewage treatment plant or the the flatulence of Uncle Bill at Thanksgiving. We all seem to react the same way by ignoring the unsightly scum, smell or Uncle Bill. Organizations come up with new change management programs that amount to no more than rearranging the deck chairs on the Titanic . . . might feel like you are doing something important, but in the end the ship sinks.

As a self-declared "reformed" Lean Six Sigma Master Black Belt I have witnessed many "real" improvements, "show" improvements, "no" improvements and way too many "we thought we were improving, but we were really only making things worse" improvements. The problem I witnessed was that the "real" improvements were compromised by later executive thinking that undid what was just improved (no sustainability) because of command and control thinking. "Show" and "no" improvements were made to be sure that a project showed savings even if they weren’t real. But my favorite was always the category of "we thought we were improving, but we were really only making things worse" improvements where we would sub-optimize one part of the system for "savings" only to make things worse somewhere else in the system, making one/function/team/company hit their target and one (or more) others miss theirs. This can not be helpful.

So, the options were to stand idly by and continue to know the truth and not act or do something about it. I chose to act, communicate, blog post, tweet, and speak to find other voices that have found the same thing. Along the way, someone will be offended as belief systems are being challenged. Writing and speaking against the assumptions around outsourcing, shared services, IVRs, technology, targets, incentives, scientific management theory and other damaging beliefs are bound to grab the ire of many (if not most) people. Some because their livelihoods depend on it, some because they can’t imagine a better way or that they have been doing something wrong for all these years. The reality is to me it is not so much that they were doing it wrong, just that is the way they knew, now there is better thinking and there will be something beyond this thinking.

The great part about systems thinking is that I can show you in your system why command and control thinking doesn’t work as well. As this requires an unlearning and re-education where the work happens not just in a classroom. The risk of being caustic far outweighs the benefit an organization can capture from new thinking.

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.

How Do We Become a Systems Thinking Organization?

Monday, June 22, 2009 by Tripp Babbitt

A natural question for the curious is "how to do something." What are the steps to becoming a systems thinking organization? The answer I will leave you in this blog will be somewhat of a paradox consistent with the discipline itself. First of all, you can’t copy another organization, each organization is unique and part of systems thinking is understanding that copying can lead to more problems. And it was Dr. W. Edwards Deming that said that it is difficult for an organization to see itself. So combining theory and knowledge the Vanguard Method takes organizations through a learning model that requires an unlearning and relearning method to change thinking. We believe that this is best done with the work so one can see the waste and inefficiency in your organization.

Someone might say that this is awfully convenient to have to hire a consultant to do it right. So, we offer much in the way of self-guided learning, as we also believe that an organization must change willingly. We do not use coercive or rational methods to learn. This is long-term counterproductive. Here are some recommendations to becoming a systems thinking organization.

You must be curious. If you are trying to rationalize systems thinking against other disciplines like lean six sigma you are off on the wrong foot. As a "reformed" lean six sigma master black belt, I can tell you this journey will be like nothing you have gone through before.
Read the books. Systems Thinking in the Public Sector for government and Freedom from Command and Control for the public sector. These will help in understanding what is involved with practical examples.
Read the Fit for the Future series. This is a series of six management articles to help an individual understand systems thinking and takes you through (step-by-step) some of the general elements.
Download and read Understanding Your Organization as a System. This is for the diehard lots of information on how to look at an organization and more importantly it is a free resource.
Other downloads. There are other downloads currently available from Rain University. Using Measures for Performance Improvement, Transforming Call Center Operations, Process Mapping and Analysis, and Managing by Walking Around are all available for purchase.

So no matter what, there are plenty of resources to help you improve your change management 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.

2 Steps to Reduce Profits: Targets and Incentives

Wednesday, June 10, 2009 by Tripp Babbitt

When I first was introduced to the theory of variation (by W. Edwards Deming) back in the 1980s. I was taken aback by what this all meant. The realization of the differences between common and special causes of variation are simple yet profound (please read: Service Metrics: What You Need to Understand). This theory helps us understand that performance is 95% attributable to the system (work design, measures, management thinking, constraints, policies, regulations, etc.) and 5% is attributable to the individual. Theory of variation also taught me that setting a target will not change the system, only a change in method (e.g., a change in the system itself) could facilitate improvement of performance. A target or goal without a method is useless.

When an organization adds in incentives (financial rewards, pay for performance, etc.) it ignores the fundamental premise learned from the theory of variation that the individual is inextricably tied to the system in which they work. In essence, this means all this attention to the individual is working on the small problem while ignoring the big problem (the system). I am both thankful and cursed that Dr. Deming presented this thinking to me.

Some 5 years ago I was presented something that further explained the problem of targets. John Seddon (my Vanguard partner) had studied failed organizational change management programs. Taking Deming’s theory he expanded upon it. He discovered when organizations set targets that this became the de facto purpose. Instead of working to improve service or product we work to achieve a target set by (in some order) Wall Street (dividend), executives, managers, supervisors and front-line workers. The problem with these financial and performance targets is that they do not create the value for the customer which drives the profit and not vice versa. He further discovered that as command and control managers used these arbitrary measures with targets, method was constrained because the work winds up getting designed around reporting requirements and not the customer.

A better method is to define purpose from a customer perspective, derive measures related to this purpose which in turn liberates method and innovation. a simple but profound systemic relationship. One that John Seddon references as systems thinking.

We have seen too many times where an individual hits their targets, achieves their incentive and the company goes out of business (AIG comes to mind). This is a failure to understand the theory of variation (Deming) and the relationship between purpose, measures and method (Seddon). Until we begin to understand this theory and relationship we will continue to send our companies down the path to reduced profits.

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.

Semmelweiss Syndrome: A Barrier to Business Improvement

Tuesday, June 2, 2009 by Tripp Babbitt

Assuming most readers of this blog have some familiarity with systems thinking from my previous 100+ blogs may be a stretch, but the question came up a few times last week as to what is preventing companies from achieving business improvement by adoption of new thinking?

Let’s start with one Ignaz Philipp Semmelweis a mid-1800s physician that worked in a Vienna hospital where almost 1 in 3 women would die after childbirth of "childbed fever." The reasons for the deaths were things such as "wounded modesty", "guilt and fear complexes", "cosmic influences" and "sudden changes in weather and temperature." Dr. Semmelweiss wouldn’t buy any of it and set out for a cure. Through a freak occurrence a

physician friend died after accidentally cutting himself dissecting a corpse. the symptoms were strangely similar to that of childbed fever. With no knowledge of infection at the time, Dr. Semmelweiss was able to conclude that physicians were commingling infection one patient to another through the physicians themselves. His discovery was nothing short of brilliant, he found that by having physicians and other care givers wash their hands the death rate spiraled down to almost zero. But Semmelweiss ran into a problem (even with data) he was labeled a "nut case" because of his insistence on hand-washing. The physicians of the day just couldn’t accept that they had been killing their patients because of their lack of hand washing. Political pressure dumped the hand washing, the death rate went back up and Semmelweiss went crazy. Having a better way and knowing that changing thinking is hard for people to believe . . . if it was that easy they would have discovered it by now. Thus, the "Semmelweiss Syndrome" that I am coining right here in this blog.

Individuals and organizations have invested heavily into training for Six Sigma, Lean, TQM, ISO and other organization change management programs. I can’t say they haven’t improved things, but as a "reformed" Lean Six Sigma Master Black Belt I can only say that we are doing the wrong thing righter. Until we begin to address the fundamental thinking problem of command and control thinking, we stand little chance of sustainability or large leaps in improvement.

The organizations that deliver the training are also a barrier, they are doing quite well thank you. The last thing they want to hear is that their training is outdated and there are better ways to achieve improvement.

I don’t know what the future holds, I am hopeful that I don’t wind up like Semmelweiss. Despondent (and (somewhat mad) he wound up cutting his hand and thrusting it into a corpse, within three weeks he had died of the same disease he had tried so hard to defeat.

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.

Changing Culture in Hard Times . . . the Easy Way

Monday, June 1, 2009 by Tripp Babbitt

I have heard over and over again HR professionals fretting over the culture of their organizations. To me it is puzzling, why is there low morale? You mean the secret formula hasn’t made it to your ears or eyes?

OK, I’ll let you in on the secret. The problem is that our thinking is old, not Civil War old mind you, but I consider anything pre-Titanic old. We have based our thinking on that of Frederick Winslow Taylor and AP Sloan. So what does that mean? It means that we have functional separation of work and separated the decision-making from the work and the worker. It means we have introduced entrapping technology to dumb down the worker so that they check their brains at the door. It means we have built systems with scripts, policies and procedures that that allow little opportunity to innovate or serve the customer. It means hitting financial and performance targets that we know degrade service to the customer, but allow the worker to achieve an award for poor service and increased costs. All of this is command and control thinking at work.

So what if we thought differently about the work? You know, made it more interesting. Put the decision-making back with the work instead of some management report that can’t tell you what is really going on. Gave the worker new measures that weren’t top-down, but outside-in allowing the worker to figure out the best way to serve the customer and liberating method. Allow the worker to pull technology that enables their work vs. the push method that entraps them. Now that would be cool for any organizational change management program to do all that! There is a method for doing all this called systems thinking.

However moving from command and control thinking to systems thinking requires us to take a different approach then what ISO, Lean, Six Sigma, TQM or other change management programs have to offer. Culture really isn’t that hard to change, are you ready to think differently?

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." Reach him on Twitter at www.twitter.com/TriBabbitt.

Lesson: Technology Couldn’t Save GM and Won’t Save Service

Monday, June 1, 2009 by Tripp Babbitt

With all the advancements in US technology shouldn’t GM, Ford and Chrysler just been kicking the daylights out of all the competition? What lessons can we glean from GM, that at one point owned EDS. GM had all the latest in software and hardware. I am not here to dispute there were or weren’t other factors at work that caused GM to fail. But let’s own the fact that the US technology advantage didn’t make a difference here and won’t for service either.

With regards to GM, I have read on more than one occasion how Toyota (the nemesis of the Big 3) actually saw more failures in technology and pulled them out in favor of manual processes (from The Toyota Way by Jeffrery K. Liker). WOW . . . that’s an eye-opener try selling technology around that philosophy. Toyota was always behind the Big 3 in technology, because they understood that it wasn’t an advantage and in most cases a waste in resources.

It’s been a long-time since I have worked in manufacturing, which seems to be dying in the US like a dinosaur. I have learned over the years that in working with service organizations they are in a frenzy to find the latest technology to give them (gulp) . . . a competitive advantage. It’s like the "fountain of youth" do you really want to spend millions on something that can’t deliver?

Let’s face it . . . IBM, HP and a host of other companies are making tons of money showing lots to their bottom line. The promise of technology just doesn’t live up to the hype. They certainly have lots of money for advertising and boondoggles (conventions, advisory board meetings, etc.). They make you feel good, but fall short of making your service organization better.

A better technology change management program is at hand, a systems thinking approach. Let’s take a page from Toyota and first improve processes without technology or consider technology as a constraint. Then pull technology if it will enable the work to be performed better. Service organizations will achieve corporate cost reductions on from not trying to automate work that is better off being done manually. Something you will not hear from your technology vendor.

Service organizations have an opportunity to learn from both GM and Toyota. Which would you rather be right now, GM or Toyota?

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.

Toxic Systems

Wednesday, May 6, 2009 by Tripp Babbitt

I read a lot about toxic workers in service organizations. How to manage them, analyze them fire them, etc., but I don’t read much about the toxic systems that they have to work in. These are the organizations full of command and control thinkers. The ones that believe in:

separate decision making from the work
scientific management theory
performance appraisals
targets, rewards and incentives
productivity goals

These are all things I have talked about before and the damage they can do. The 95/5 Rule is a good catch-up blog.

What astonishes me is how few (if any) address the fundamental issues that create the toxic culture. Most people that join an organization have a positive outlook hoping that this organization will be better than the last organization they just left. Within a few weeks or months they are beaten down like the rest of them. They can’t make decisions about their own work, they can’t help the customer if it gets in the way of targets, incentives, goals, etc. and if they disagree with the boss or the way something is done they can’t speak out or it will come up at their next performance appraisal. I get fired up just thinking about it. The sad part is that command and control thinking creates the toxic culture.

There is a better way and it does not involve coaching or psychoanalysis of the individual. Here we go:

Put decision-making back with the work. People will come to work with their brains and engage, instead of checking them at the door. Innovation and collaboration will result.
Use measures that matter to the customer. Not the internal measures that the customer doesn’t care about, the ones that really matter to the customer and purpose. Workers can use these brains you just released to innovate and provide better service . . . at a lower cost.
Get rid of all that other productivity and performance appraisal crap that focuses on the individual. How much time is eaten away from your managers to evaluate "performance" when they could be working to improve the system that decides 95% of the performance of the organization anyway. This alone will save you money and in some cases a lot of it, it’s all waste.

Systems thinking comes with a price . . . you have to change your thinking. The command and control way of thinking has run its course. Change management leadership means changing the way you think. You will liberate your culture and your system.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public). He is focused on exposing the problems of command and control thinking and the termination of bad service through application of new thinking . . . systems thinking. Download free 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.

Service Metrics: Changing the Operational Definition Changes the Measure

Wednesday, May 6, 2009 by Tripp Babbitt

In an earlier article, I wrote about SPC and its importance to making good decisions when using data. There is much more to the story (even beyond this blog). One item to write about involves the use of operational definitions and how data is manipulated.

During a bank management consulting contract (technology) I was tasked with coming up with SLAs (see SLA=Stupid Limiting Agreements). I was asked to come up with operational definitions that would allow the vendor to "meet the SLA." That means we wouldn’t count certain types of downtime when we were considering uptime of a system. Some were reasonable from the vendor perspective, but we really didn’t know the impact on the end banking customer risking sub-optimization or worse service to the bank.

I see intended and unintended types of manipulation with data all the time. People cheating or changing the operational definition to hit their financial or performance goal, not realizing the impact or realizing the impact on the system that is trying to be optimized. I’ve pointed out the root cause of this manipulation coming from these types of financial and performance targets. I also see where people using data change operational definitions (unwittingly) and then draw poor conclusions from two different sets of data. If you change the operational defintion you change the measure.

This doesn’t mean that operational definitions won’t change over time, we just need to be able to know that comparisons can not be made between data with different definitions. In the Vanguard method (my preferred method), customer metrics are defined in customer terms, but require some consistency in the measure. This does not mean perfect as all data are flawed to some degree, but consistent measures worthy of comparison.

Coming up with worthy data requires meticulous study of customer demand and what is important to the customer. The operational definitions help ensure the SPC data and decisions based on these data are valid. Be sure that your quality change management program accounts for the practical use of data for the front-line, managers and executives, it will allow your service organization to ask better questions and make better decisions.

Service Metrics: What You Need to Understand

Monday, May 4, 2009 by Tripp Babbitt

I overheard a fellow say "I’ve got Deming’s principles down pat, now all I have to do is understand this variation thing." Hmmm, Dr. Deming was a statistician and his philosophy did come from his understanding of variation as taught to him at the Western Electric plant (Chicago, IL) in the late 1920s from Dr. Walter Shewhart. What W. Edwards Deming learned was how to evaluate data using a statistical process control (SPC) chart. To me, the difference between knowledge and tampering or guessing.

Early in my career I was a corporate director of operations where I learned to evaluate income statements and compare last months revenue, expenses, etc. to this months and all types of dictates and commands came from this naive view of data.

After attending Dr. Deming’s 4-day seminar and learning from the likes of Dr. Don Wheeler and Dr. "Frony" Ward, I learned a better way to manage with data. In statistical terms understanding the differences between common and special causes of variation. Let’s pretend we have sales of 15, 19, 14, 16, 12, 17, 15, 17 and 11 (in thousands). A manager might conclude that the month with 19,000 in sales is a celebratory moment best month on record and the last month with 11,000 is reason to "bark" at the salespeople for poor sales.

By plotting data using the SPC chart (below), we can tell that we can expect anywhere from 5.1 (LCL-Lower Control Limit) to 25.1 (UPL-Upper Control Limit) with an average of 15.1. A manager celebrating 19,000 or getting upset over 11,000 is foolishness. In a matter of fact, we can expect between 5,100 and 25,100 (the control limits) in sales and it wouldn’t be unusual. This is called common cause variation.

Conversely, if the next month showed 28,000 in sales (see chart below) this would be outside the UCL (Upper Control Limit). The $28,000 month is unusual (outside the limits) meaning we have a special cause. Something unusual has happened. Now is the time to investigate the reason there is overwhelming evidence that we should investigate the "special cause." There are other indicators of special causes (run of 8 and others) that need to be accounted for, but this is a blog.

Not understanding the differences between common and special causes leads a manager to tamper with the system. Dr. Deming outlined two types of mistakes:

Reacting to an outcome as if it came from a special cause, when it came from common causes of variation.
To treat an outcome as if it came from common causes of variation, when it was from a special cause.

A systems thinking organization (or any other organization) must understand the differences between special and common causes of variation in order to manage effectively. Leadership development, organization change management programs and even technology implemented devoid of these basics are keeping service organizations from making better decisions. This isn’t just for Lean Six Sigma Black Belts and Master Black Belts, we all use data. We must know how to use this data to make better decisions and avoiding the mistakes Dr. Deming warned us about.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public). He is focused on exposing the problems of command and control management and the termination of bad service through application of new thinking . . . systems thinking. Download free "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.

Donald Trump Against Rewards and Incentives?

Wednesday, April 29, 2009 by Tripp Babbitt

Are you kidding me? Donald Trump one of the icons of American Capitalism was speaking against bonuses and incentives (listen – for the impatient folks go to about the 3:00 minute mark). Bankers making $40 million plus while not even being very good bankers. These are sales people manipulating the system for the rewards and incentives and who put these systems in place? Command and control thinking is responsible for this. Bad loans to achieve the reward or incentive. Makes you kind of miss the old "boring" bank.

While doing bank management consulting I worked with a regional bank that was moving from the old "boring" bank to become a "bigger" bank and needed to act like a big bank. They got rid of the old bankers because they weren’t being aggressive enough in their selling. They needed rewards, incentives and salespeople not bankers. Oops! they were caught up in the mortgage crisis with this knew aggressive approach. They are still trying to dig themselves out, the problem is the management doesn’t see what is wrong with their "new" thinking (which is really old).

Most banks stayed clear of the bad loans that started this crisis and have stayed the course. I would like to see these banks reap the benefits of "boring" banking. Give them the TARP funds and let the knuckleheads fail.

Rewards and incentives had no small role in the current crisis. They always get you less. The sub-optimize the system and get people focused on defacto purposes not related to the real purpose . . . to serve their customers. This sub-optimization is costing them in higher costs and worse service.

The leadership development of banks need to include systems thinking as part of their organizational change management programs. Only then, can they begin to eliminate waste and improve service. I have several management articles associated with this and banking worth a gander, see this link.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public). He is focused on exposing the problems of command and control management and the termination of bad service through application of new thinking . . . systems thinking. Download free 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.

Time for a Different Approach for Service Improvement

Tuesday, April 28, 2009 by Tripp Babbitt

I have talking to several service organizations that want to know more about systems thinking. Some have Lean Six Sigma, Lean, Six Sigma, TQM, technology, customer service training, etc. or some combination of these. Most of the Lean Six Sigma folks I have spoken with are already coming to the conclusion that LSS does not work the same for service organizations as it does for manufacturing. I command for recognizing this. Others are disappointed in their inability to sustain the improvements. One executive described their efforts as "we fix one problem only to create 2 – 3 more and the ones we fix are broken within a few months."

As a "reformed" Master Black Belt in Lean Six Sigma I can tell you that LSS has many shortcomings and have blogged about many of them. Other efforts in customer service training fail in other aspects as they assume the problem is with the worker only. The reality is the problem lies in the system . . . the people, the technology, the work design, motivation, decision-making process, etc. I have seen people attempt to make things better, but not change their thinking about the causes of waste. Their organizational change management programs focus on the symptoms and not the causes of these wastes.

To have sustainable improvement organizations must choose a path. One leads to more tools and treating of symptoms . . . or for those that believe they are improving . . . "doing the wrong thing, righter." The other path is a systems thinking approach that leads to better thinking and treating the organization as a system. You have a choice. You may want to know your options.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public). He is focused on exposing the problems of command and control management and the termination of bad service through application of new thinking . . . systems thinking. Download free 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.

The Core Management Paradigm that is a Paradox

Monday, April 27, 2009 by Tripp Babbitt

What elements do every command and control manager believe are core to their management paradigm?

The amount of work to be done.
The number of people to do the work.

The amount of time it takes to do the work.

The command and control manager sees their problem as a resource issue. They are focused on SLAs . . . # of things done over time, talk time, volumes of incoming work, etc. This is a manufacturing view of service work, complete with inspection. This thought process brings forward the need for scripts, procedures, targets, standards, compliance, etc. to "manage" the organization.

In manufacturing, we used to reference the hidden factory. The visual factory was the one that built the good stuff (value) and the "hidden" factory was all the scrap and waste. Well, in service there is a hidden management factory that is separate from the work where managers gather to make decisions about the work that they don’t understand. This factory is supported by technology to help "dumb down" front-line workers.

Command and control thinkers are focused on cost reduction. Scientific management theory promises economies of scale, but in a management paradox this thinking drives costs up and service down.

There are five fundamental thinking problems that John Seddon outlines for us in Systems Thinking in the Public Sector.

Treating all demand as though it is work.
No accounting for failure demand.
The foolishness of managing activity.
A service systems that prevents absorbing variety.
Negative Assumptions about people.

For more on these see my blog 5 Fundamental Thinking Problems in Service Businesses (link).

Systems thinking is about changing from command and control to systems thinking. This shift in thinking can achieve corporate cost reductions and business improvement beyond traditional organizational change management programs.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public). He is focused on exposing the problems of command and control management and the termination of bad service through application of new thinking . . . systems thinking. Download free 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.

One Secret Weapon to Service Improvement

Wednesday, April 22, 2009 by Tripp Babbitt

I have not been subtle in past blogs about the need for change of thinking. One thing I see in command and control organizations that is a staple is fear. More specifically, the fear of failure. Fear drives thinking in command and control organizations.

Front-line workers know it and W. Edwards Deming recognized it . . . Drive out fear was the 8th of his 14 points for transformation of US industry. Service industry in particular is enthralled with the performance appraisal, merit rating and annual reviews to determine the performance of the individual. All waste . . . as Dr. Deming pointed out that 95% of the performance of any organization is attributable to the system and ONLY 5% is attributable to the individual. All this attention to the individual worker drives conformance and not innovation, because of fear.

The command and control manager and executive are not exempt from this fear. Missing targets both financial and performance can spell doom for this group. Fear? Yes, of course. I read an article recently by Russell Ackoff called Why Few Organizations Adopt Systems Thinking. In this article, Dr. Ackoff talks about errors of commission and errors of omission. "Errors of commission occur when an organization or individual does something they shouldn’t have done and errors of omission occur when an organization or individual fails to do something it should have done." He argues that the deterioration or failure of organizations are almost always due to something they did not do. Fear drives errors of omission. What will be the consequences of failure?

So this is the one secret weapon of improving service organizations. How does your organization handle failure? Do they hide it, persecute it, or encourage it? When I talk to service organizations about failure demand, several executives have stopped me and said that their organization does not use that word (failure). Too bad because failure typically leads to success.

Systems thinking organizations run towards failures and not away from them. A leadership development or organizational change management program devoid of the topic of failure is missing the opportunity to change thinking.

Bryce Harrison