My Brand of Insanity . . . What is Yours?

 

When you look at service organizations (private and public sector) you will find precious few that have ever tried such "innovative" thinking.  The list is long as to why . . . competition (no one else pressuring service organizations), "we've always done it this way" thinking, lack of understanding, unwillingness to give up control, technology, etc., etc.  For what ever the reason, not much has changed in management since Frederick Winslow Taylor.  Improvement programs (Lean, Six Sigma, TQM and many others) have become more of the same.  However, "new" thinking challenges this stale sameness.

 

The economy has changed now.  Maybe we need to be looking for better ways.  My continual search for better methods has led me back to Deming and Ohno. Instead of tools, we need new methods and to change thinking.  

 
To help promote and implement this "new" thinking I have partnered with Vanguard Consulting Ltd. from the UK because (quite frankly) they have had better success at changing thinking.  They have taken the "new" thinking of Deming and Ohno added intervention theory and have had success throughout Europe.  John Seddon (Managing Director) is an occupational psychologist which was a red flag for me because I thought he would be getting people in a room kicking balloons (or something like that).  I was pleasantly surprised that John had spent his time studying "change programmes" and what worked and didn't work.  From Deming, we (John and myself) both learned that to improve performance in an organization we had to improve the system. What John further discovered was that you have to change the thinking, and that intervention theory can aid in this process.  His method - the Vanguard Method- has been tested and refined over the years to help service organizations benefit from the "new" thinking or more appropriately move from Command and Control thinking to Systems Thinking.
 
The Bryce Harrison website (www.newsystemsthinking.com) was designed to whet your appetite around the "new" thinking and contains many articles. I highly recommend the Fit for the Future series of articles (6 in all) that contains a detailed explanation of Command and Control Thinking vs. Systems Thinking and exercises to help you gain personal understanding.
 
From this newsletter, you can purchase the sector appropriate book (public or private), get the free download Understanding Your Organization as a System or link to the Bryce Harrison site.
 
So, our hope is that you bring the curiosity, and we will supply you with a better way to make the work work.

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There are many assumptions that command and control organizations believe are "truths."  American businesses love these "truths" and manage by them, but they almost always make service worse and increase costs.  Let's look at my favorite 11:

 

Assumption #1:  There is a trade-off between costs and good service.  I can have one or the other, but not both.
Reality #1:  Good service always results in lower costs.

 

Assumption #2:  Managing costs and making budgets is the way to manage an organization.
Reality #2:  Managing costs and budgets is purely "keeping score" and managing with these lagging measures is like driving a car looking out the rear view mirror.  Creating value for customers is the purpose of the business.  By managing costs and budgets we will always increase costs and decrease service.

Assumption #3:  Using targets and incentives helps improve profits.
Reality #3:  This is the evil twin of assumption #2.  In the 1930s at GM, it was Alfred Sloan who created "management by the numbers" as he saw it as inappropriate that executives should be involved in operations.  The defacto purpose becomes making the numbers . . . and not creating value for customers or  improving the flow of work. Targets are usually tied to incentives and at best sub-optimize the system (one area is rewarded at the expense of another).  An example is the sales department with its quotas and commission schemes that create an "all about me" attitude where the commission is achieved at the expense of the organization with price-cutting and being unable to deliver what is sold.
 
Assumption #4:  Outsourcing will decrease my costs.
Reality #4:  The most likely department to be outsourced is the call center.  The benefit is that transaction costs are lowered based on a production mentality (scientific management).  One assumes all demand is something to be worked, when in reality the failure demand (calls we don't want) are outsourced as waste.  With failure demand running anywhere from 25 - 75% of phone calls (depending on industry), doesn't it make sense to work on failure demand and its elimination?  What about outsourcing what your customers perceive of your company?  Seems like a lot to give up.
 
Assumption #5:  The first thing to do is standardize a service process to improve it.
Reality #5:  Without a full accounting of customer demand it is impossible to know if a process should be standardized.  Service has greater variety in demand than manufacturing (one reason why lean manufacturing doesn't work for service).  I have seen many organizations merge companies to a standard product without first understanding such variety, and this always leads to worse service and increased costs.
 
Assumption #6:  "Economies of scale" will make my service less expensive.
Reality #6:  That is why companies merge so this must be true.  I have listened to banking pundits talk about the impending merger of banks for "economies of scale."  If that is the reason, I hope that banks never merge.  "Economies of flow" will trump "economies of scale" every time and if that wasn't true Toyota would never have been able to compete against the US car companies because the US had all the volume after WWII.  Prepare for worse service from the Delta/Northwest merger as the "bean counters" try to lower costs . . . hard to imagine it can get worse.
 
Assumption #7:  Splitting tasks between front and back offices is a good design of work.
Reality #7:  The design of work between front office and back office (and possibly several middle offices ) rings of the functional specialization of work. This is an inefficient design of work that almost all US service organizations have.  Understanding the customer demand, value and the flow of work will lead you to a better design, lower costs and better service.
 
Assumption #8:  Shared services results in lower costs.
Reality #8:  Without IT we could not share services.  The fact we have IT does not mean that we should share services.  In many cases we are sharing call centers or back office functions which may institutionalize waste (and usually does).
 
Assumption #9:  There is one "best practice."
Reality #9:  No, there isn't . . . there is always a better way to do things.  A best practice assumes one best way for all to copy.  An organization should never copy as each system has a unique set of customer demands and culture. 
 
Assumption #10:  If I spend more on IT, my costs will go down.
Reality #10:  Unfortunately, I typically see costs go up where IT becomes entrapping rather than enabling.  Seems like all the big IT organizations are driven by making sales rather than adding value.  Better approach: We must first understand our system (perform "check"), improve and then pull technology.  See the article Is IT Bugging You? 
 
Assumption #11: Improvement of service takes a long time.
Reality #11: No, any change or improvement program taking years to show results should be discarded.  It usually means that rationalization and coercion are in place. An executive once informed me that "the improvement program had finally started to take hold after 3 years and the people that were left (after many rounds of purging) were finally starting to get it" . . . this is coercion.  Too many careers lost and brains tortured for something that can be easily gained with better thinking.


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At a large call center for a tier one bank I spent time listening to some phone calls and understanding what customers hear when they reach the bank's IVR (Interactive Voice Response) system.  I started with the IVR system and listened to all 8 options and none of the options allowed the customer to talk to a service representative. The exception was the customer who wanted to open a new account or loan.  The amount of button pushing required to get to a person by listening to their "tree of options" was mind boggling.  A person calling in with a problem had to follow a path that had no end.  I was assured by the call center manager that this was saving them money . . . huh?

 

Next, I started to listen to value calls (open account and loans), but those lines were being clogged by the customers who had problems as the customer had figured out from the IVR that the only way to talk to a person was to hit the option for opening a loan or an account.  Customers have a way of figuring things out to get what they need.  The really interesting part is that the executives were tracking the new account and loan calls and wondered why they were getting so many calls to open accounts and loans but not very many accounts or loans were being made in proportion to the calls.  The data from their reports didn't tell them what was really happening (calls were problems not sales).
 
The executives could only look in the mirror as the source of the problem.  They put in the IVR system to "save money."  I suspect it cost them money not only for the IT but for the customers they lost.

The IVR systems have created a whole sub-culture culminating in a website to tell you how to speak to a person at major service organizations.  Check out the website www.gethuman.com.  Customers can be very creative, but why make it so hard to get value?
 
Bryce Harrison offers multiple articles to delve deeper into better methods for call centers.  They include: Transforming Call Center Operations, Design Against Demand, A Better Way of Motivating People, A Better Way of Thinking about Technology, Better Thinking about Demand, and Better Thinking about Managing People. For those wanting a more in-depth analysis ask about a health check for you call center.

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