Having witnessed the demise of the Indiana Welfare Modernization project and other Modernization projects in the US, we have a learning opportunity applicable to any level of government (federal, state, city or local). With former Indianapolis Mayor Stephen Goldsmith (a long-time proponent of privatization) admitting in Governing magazine that his drive for privatization early in the Bush administration was ill-advised we all need to take a step back. Here are some things I believe we can or should learn.
- A Focus on Costs Increases Costs. The flawed belief that economies of scale reduce costs prevails in government management thinking. We have found that costs are in the flow (economies of flow). There is a dire need to end the fallacy that reducing costs as an objective works, governments need to find the causes of costs and they are in the flow.
- Standardization Can Make Things Worse. A difference between manufacturing and service is variety of demand. Standardization can (and usually does) lead to the inability to absorb variety of customer demand. This leads to increased costs and worse service in the form of failure demand (demand caused by a failure to do something or do something right for a customer) which increases when services can’t absorb variety.
- Technology can lock in Waste. Too many modernizations get kicked-off with faulty assumptions that technology and automation will improve things. There are some things that technology is good at and some things that humans are good at . . . and in service humans are better able to absorb variety. Further, standardization locked-in by technology is to institutionalize waste in government.
- Perform "Check." Before making changes of any type government management must get knowledge about the service they want to change. This means understanding the "what and why" of current performance. No plans, schedules, milestones, projects, cost-benefit analysis, etc. can precede getting knowledge.
- A Big Lever for Improvement in Government is the Design of the Work. The reality is that the design of the work to be done is flawed and needs to be redesigned against customer demand eliminating hand-offs, redundancy and other wastes.
- Sharing Services and Outsourcing without Knowledge is to Invite Trouble. In desperate attempts to cut costs quickly these two methods are deployed as "no-brainers." Without knowledge gained from "check" these methods are typically disasters. They ignore the causes of costs and focus on visible costs.
There are many more of these management paradoxes and counter-intuitive truths that have been learned that should be communicated. Many before us like W. Edwards Deming, Taiichi Ohno and others laid the foundation for learning. This is not best practice or tools as these stagnate learning, but theories of management that have universal application.
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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.
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