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New Systems Thinking
Featured Article
Tripp Babbitt
 My Brand of Insanity . . . What is Yours?
In This Issue
My Brand of Insanity
5 Fundamental Problems in Service Businesses
The Cost of Everything and the Value of Nothing
Fiasco
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System Thinking in the Public Sector Freedom from Command & Control
 
 
 
 
 
 

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Dear Systems Thinker,

Greetings!  Much has happened in my "eWorld" since the inaugural newsletter, we started a blog -blog.newsystemsthinking.com, doubled the number of recipients for the newsletter, had over 500 downloads of "Understanding Your Organization as a System" pdf and our website has been visited by 38 different countries on all 7 continents . . . who was that guy in Antarctica?  Not bad for 28 days!  Thanks for the inquiries and passing the word on!
My Brand of Insanity 

Each newsletter, I will share some random thoughts on current events, service (good and bad) and other sometimes closely attached and sometimes detached thoughts.  Having been a proponent of W. Edwards Deming's thinking for more than two decades it is not hard to imagine why the title for this section.  Here are a few announcements, thoughts and observations:
 
  • I have written over 25 blogs on command and control vs. systems thinking.  Connect to blog.newsystemsthinking.com.
  • I would also like public sector readers to take time to read Government Shared Services - A Recipe for Disaster.  I received many emails on this controversial piece that I submitted to Govtech.com as a commentary.  We can't allow our government to waste our tax dollars on shared services and outsourcing with the methods they currently use.  Government workers read the article and find at why!
  • I can't help but cringe every time I watch CNBC and the short-term thinking that stocks have promoted.  Command and control thinkers at the helm of major corporations as stock prices fall, they only know how to cut costs, not create value.  The stock markets were designed to reward value that leads to profit and not vice versa.  Command and control thinkers need a better way . . . might I suggest systems thinking?  
  • I had a few inquiries this week on whether we work with manufacturers.  The answer is yes . . . but just with the service side of manufacturing.  One gentleman told me that service is where all the waste is located at his manufacturing firm.  I commend him for recognizing it.
  • Beware the "techheads" as they have an expensive technology solution for all your problems.  Contact us for practical advice on how to improve your service organization.

For comments or to share your experiences contact me at tripp@newsystemsthinking.com.

5 Fundamental Thinking Problems in Service Businesses 
 
Like most service organizations, command and control thinking is the dominate paradigm in which we build and manage organizations in the public and private sectors.  We really have not been taught a better way of thinking for over 100 years (scientific management theory).  Our technology world has grown while our thinking has remained stagnant. In Systems Thinking in the Public Sector, John Seddon (Managing Director of Vanguard Consulting Ltd. - my partners in the UK) points to 5 important fundamental flaws in command and control thinking.  Let's look at them:
   

 
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The Cost of Everything and the Value of Nothing
 
My wife recently read The Last Lecture by Randy Pausch and read me Chapter 50.  Dr. Pausch writes about an experience he had at Walt Disney World when he was twelve and his sister was 14.  His parents had allowed the two to go off on their own and explore.  While they were exploring they got the idea to pool their allowances and purchase a salt and pepper shaker as a thank you for recognizing their maturity.  While walking through the park with their purchase, the bag carrying the gift dropped and broke.  The two were devastated by the turn of events.  A stranger noticed their despair and suggested they take the package back to the  shop where they purchased the gift.  They followed this suggestion and took the gift back explaining what had happened and admitting their carelessness.  The cast member (Disney employee) replaced the shakers and told the two that the store should have packaged it better.  Dr. Pausch explains that this small act of kindness was repaid Disney with $100,000 in subsequent visits to Disney World.  Decades later in speaking with Disney executives he asked them if workers still would be able to replace the item?  He says the executives would squirm and the answer would be . . . probably not.

Command and control thinkers don't understand value and where it is derived from . . . the customer.  Instead they fill the organization with mandates from financial budgets that are penny-wise and dollar foolish.  Playing the zero-sum game where there are winners and losers, fighting over the piece of the pie instead of finding innovative ways to make the pie bigger.  The customer management process becomes just that a way to manage customers.  The story above creates a management paradox to their way of thinking.

 The "unknown and unknowable measures" as Dr. Deming would refer to those things that can not be measured, but were important.  No one knows the cost of a dissatisfied customer, but command and control thinkers can only understand what comes out on the income statement or balance sheet in the short-term.  Business improvement comes from their ability to manage these financials in everyday work by making front-line employees adhere to scripts, mandates, policies, standards, etc. so they can make sure $50 doesn't go out the door without their knowing.  Meanwhile all the complexity and waste they build into the system winds up costing them more and they wind up being the ones that make the big mistakes for their short-sightedness.

Command and control thinkers can be seen by the fruit they don't bear . . . They know the cost of everything, but the value of nothing.
 
 
Fiasco

I recently signed an agreement with a company called Compendium that supplies software for blogging.  I really like the concept of blogging especially for what I do.  I am not a technical person and I have not really worked with web development.  However, like most service organizations I ran into issues when I tried to "pull" value from them.
 
 
 
5 Fundamental Thinking Problems in Service Businesses
 
Like most service organizations, command and control thinking is the dominate paradigm in which we build and manage organizations in the public and private sectors.  We really have not been taught a better way of thinking for over 100 years (scientific management theory).  Our technology world has grown while our thinking has remained stagnant. In Systems Thinking in the Public Sector, John Seddon (Managing Director of Vanguard Consulting Ltd. - my partners in the UK) points to 5 important fundamental flaws in command and control thinking.  Let's look at them:

(1)  Treating all demand as though it is work.

We are constantly trying to reduce talk time in call centers, process an item faster, etc. and this thinking has the fundamental flaw of treating work  as units of production.  We fail to separate the value work from the failure work (value work gone wrong) and therefore happily process the failure with the value demands.  The reality is that this failure demand makes up 25 to 75% of all demand from customers, in the public sector I have seen unspeakable levels approaching 90%.  Mr. Seddon's fear is that people will understand failure demand and set new targets for its elimination, instead of changing the way work is designed and managed to eliminate it.


(2)  Failure Demand - leverage for improvement

Our response to failure demand is even more alarming instead of its elimination we wind up adding (at great cost) call centers to handle it, IT systems to manage it, share services and outsource to cut unit costs thus institutionalizing the waste. 


(3)  The foolishness of managing activity

I am yet to walk into a call center without seeing individual and department statistics kept for number of calls, talk time, AHT, etc.  For individuals, managers spend their time paying attention to these activity statistics, monitoring workers and doing "coaching sessions" with those that miss their targets.  W. Edwards Deming taught us that 95% of the problems are systemic and the responsibility of management to fix and only 5% are attributable to the individual.  The performance of the individual is the center of ire and performance to the command and control thinker.  Their "proof" is when they see cheating that more controls are needed creating more waste.  The focus on people's activity is not the source of errors, it is the way work is designed and managed.


(4)  Preventing the system from absorbing variety

One must credit John Seddon for this discovery.  Modern day "lean" practitioners advocate standard work like "lean" manufacturing, this is a bad application for service industry.  There are differences between service and manufacturing, a primary one being the variety of demand service industry receives.  Most business improvement efforts focus on too narrow a focus (department) when the customers expectations are end-to-end.  Government is overwhelmed with waste because of the inability to absorb this variety of demand. Government management has institutionalized this waste with information technology, best practices, work design, poor measures and the use of targets.


(5)  Negative assumptions about people

How many times have I heard service executives say "we can't let the patients run the asylum" or "workers would just give away our service."  I'm sorry, but you built the asylum based on command and control principles that allow the workers to check their brain at the door.  Morale is sapped in these cultures and "fun" day at work is like being treated like a 3rd grader.  A little MacGregor Theory Y (trust of workers) intrinsic motivation would go a long way in improving service. These same front-line workers are the perception customers have of your organization and represent your only chance to absorb the variety of demand customers present.  Managing with more controls will only add more costs and institutionalize waste.

These are good management problems for any service industry to work on in improving their system.  If you want leadership change management or organizational change management this is a great place to start.  Systems thinking truly begins with changing thinking.



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Fiasco 
 
I recently signed an agreement with a company called Compendium that supplies software for blogging.  I really like the concept of blogging especially for what I do.  I am not a technical person and I have not really worked with web development.  However, like most service organizations I ran into issues when I tried to "pull" value from them.
 
In order to set-up my blog, I had to have a C-name for my blog.  I was told by Compendium that I would have to call where I had registered my domain name . . .  this was with GoDaddy.com.  I called GoDaddy and after an 8-minute hold I was told that because I had gotten my website hosted with Network Solutions (a decision made by my web developer) that the C-name would have to be set up through Network Solutions.  I called Network Solutions, who then pointed the finger back to GoDaddy.  On the second call to GoDaddy, they helped me set up the C-name, except Compendium told me that I had set up an A-record and not a C-name and would have to call GoDaddy back.  I called GoDaddy and got a different service rep and was informed that I would have to call Network Solutions for the C-name change.  Frustrated I called Compendium back and was told they would help me if I gave them my user ID and password.  I did this and 45 minutes later got a call from Compendium and told that they couldn't do this for me because of the exposure to liability.  I would call GoDaddy and Network Solutions back 7 times each to try to find someone to help me or figure out who really was responsible for the C-name.  I was able to surmise from my conversations that both GoDaddy and Network Solutions were worried about liability, just like Compendium.  Finally, a supervisor at GoDaddy helped set-up my C-name.
 
The next morning my email didn't work.  We had the C-name, but had not put all the pieces back together.  I called Network Solutions 3 times before I got to someone that had mercy on me and fixed both my email and C-name on GoDaddy.  I am sure he was at personal risk.  The funny part was that the gentleman from Network Solutions told me they should have done the c-name in the first place (something I didn't want to hear at this point).  He then tried to sell me some SEO product, which I thought was hilarious . . . it must have been one of the scripts he was required to read.
 
In all, over three days I spent 6 hours and 24 minutes on the phone with this issue . . . more than half that time on hold.  I begged service reps to have the three parties talk to each other to resolve and none could make this happen because of liability issues or weren't allowed to speak with a competitor.  Network Solutions and GoDaddy both talk about their "world class service" . . . it mustn't have anything to do with customer perceptions (all internal awards). 
 
I don't blame one service representative that I spoke with during this fiasco.  The system with its IVR system, policies and work standards prevented me from getting the service I wanted.  Look at all the failure demand (multiple call backs and unresolved issues) . . . were they "saving" money by not dealing with me?  I don't think so.  Take some time to see what is really happening with your customers in your call center . . . you will find failure demand between 25% and 75% as I have found in almost all I have visited.
 
That's it for this newsletter.  Best wishes with improving your system.
 
Sincerely,
 

Tripp Babbitt
Bryce Harrison, Inc.
© 2009. Bryce Harrison, Inc. All Rights Reserved.
Phone: (317) 849-8670 Email: info@newsystemsthinking.com

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