The No Tool Zone

At this point everyone understand the debacle of the Indiana Welfare Eligibility program run by IBM and its partners.  Currently as it stands there are no winners in this situation.  All the stakeholders IBM (and its partners), applicants/recipients, FSSA, executive/legislative branches of Indiana government and most of all taxpayers.  The damage has been done and each of the above stakeholders stand to lose something of value.  So . . . as much as we may dislike our situation, we need IBM to succeed.  After all, they are now in the best position to improve things and save taxpayers from more wasted money.  Here is a suggested formula for turning lemons into lemonade and what each stakeholder should be asking for:

The Taxpayer.  There is one thing the taxpayer needs . . . transparency.  If things are going well we don’t need transparency, but when things are going badly we need to be both educated and informed on what is happening.  So here is what the taxpayer should be asking for:

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.

The Governor and Legislators.  Other than making sure the taxpayers get the above four items . . . nothing.  They don’t understand the system enough to legislate improvements and audits at this point will just add costs and more confusion.  One thing that might be helpful is to have a small group of legislators that would take some phone calls and walk the process end-to-end so they can speak intelligently about what is actually happening instead of hearing anecdotal testimony alone.  Note: I did this as CIO for FSSA and it was eye-opening. 

FSSA.  Three things:

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).

IBM and partners.  I have spent some time gathering information from reporters, legislators, caseworkers and recipients/applicants acquired from many different mediums from many different states.  It will not do us any good to pick through all the detail, but I have some basic elements that should be addressed.  Learned from my Vanguard partners in the UK, here is how to turn lemons into lemonade:

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.

Lemons to get rid of:

• 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 one lesson I hope any state will learn is that technology should not be pushed, it needs to be pulled.  Just because the system is manual doesn’t mean that an automated system is better.  We need to improve the systems (structure, work design, measures, management thinking, constraints, etc.) and then pull in technology as needed. 

One former case worker pointed out to me that although the previous system was labor intensive working with the applicant/recipient allowed a relationship to develop.  This was important in helping to head off fraud or gaming the system something that a report or data can’t do.  The new system (not just the technology) separated the work with more hand-offs, quotas and focus on efficiency that was misguided.  I recognized this as scientific management theory and the functional separation of work that leads to sub-optimization and waste.  Every piece optimized does not make a good end-to-end system.

My wish for all stakeholders is that the Indiana Welfare Eligibility system works well moving forward and whatever system that comes out of this will serve the State well and be more than just doing the wrong thing, righter.

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 info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

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 info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

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.

New measures and new thinking would not only raise the stature of call centers as part of the system, but can provide tremendous opportunity to an organization that recognizes the possibilities when we look at our organizations as systems rather than functions.

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 info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

In Freedom from Command and Control, John Seddon (of Vanguard Consulting, my UK partners) outlined two types of demand that can occur at the point of transaction.  Value demand and failure demand.  They are distinguished by the nature of customer demand and simply are those demands we want (value) and demands we don’t want (failure).  So what exactly is failure demand? John Seddon wrote that “failure demand is demand caused by a failure to do something or do something right for the customer.”  If you miss or show up late for an appointment, the follow-up with one or more calls, poor service, forms or websites poorly designed or other activities that could be prevented we have failure demand. 

Failure demand is often overlooked because command and control thinking has most service organizations focusing on productivity which relates to how fast we can process something.  We take the phone call or other encounter as something to do an activity if you will and not necessarily something that can be prevented.  Failure demand changes this thinking, so I encourage organizations to know this percentage with the numerator being the number of failure demand contacts and the denominator being the total number of contacts. 

Probably the best place to conduct this exercise is with the call center where metrics are easily gathered, just don’t use your existing call data or your number will be tainted.  You must work with the front-line and listen to the calls with them to discern failure demand.

Here is what I can tell you about what you may find.  Our consultants have found that failure demand runs between 25 – 75% in private industry and in the public sector it can be as high as 90%.  So, any number you get in that range is typical, but it presents a tremendous opportunity to improve.

There is more to improving your organization with systems thinking than just knowing the failure demand percentage.  However, this will arm you with a new metric to help size up the possibilities for business improvement. 

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 info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

Too big to fail?  The political pundits at work trying to answer this one . . . conservative, liberal and everyone in between.  I’ll attempt to stay away from a political answer although I am sure that all things will get politicized no matter what I say.  So here we go.

For years now we have been taught and utilized the thinking around “economies of scale.”  “Bigger is better”, “grow or die”, “the more we make, the cheaper they are” have become cliche . . . or have they?  Locked in a battle over minds is the accounting and finance mentality around “fixed costs” that diminish as we produce more.  All well and good until Taiichi Ohno came along and showed us that cost was not in scale, but in the flow.  John Seddon coined the phrase “economies of flow” to replace the prevailing thinking around “economies of scale.”  What this tells me is that bigger is NOT necessarily better and after the round of spanking we just out of our economy you wonder if maybe smaller is better.  Would multiple banks have made the same mistake if there wasn’t a Merrill Lynch, Citi, Bank of America and the like?  Some maybe . . . but would we have had the same crisis?

Taiichi Ohno showed us in the Toyota Production System that batching of products was ineffective and inefficient . . . counter to economies of scale.  He was able to see that costs were in the flow.  This leveled the playing field for Toyota to compete against the Big 3 automakers that had all the advantage.  He found a better way because they had to find one.  One would suggest if a country as resource poor as Japan can compete against the resource rich US then a small bank (or organization) could compete against a large bank (or organization).  Even in sports other countries are finding that “team play” in basketball is superior to “individual play” that the US team aspires to as they have been able to compete as a team vs. a team of stars.  They certainly have made up a lot of ground and leveled the playing field.

So, necessity makes us look at a problem differently.  You would think that maybe we ought to be looking at things differently.  This may require “economies of thinking” where organizations need to find new ways to compete, because just as large organizations may not have the advantage they once had . . .  being small does not guarantee the ability to compete.  New thinking is in order, and for service, systems thinking gives the advantage to service organizations no matter what the size.  The important part is that the small can compete with the large in service with better thinking and 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 info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

First of all, let’s not look at the cup as half empty for Zappos, because I believe it is two-thirds full.  At the Economist Marketing Forum held in San Francisco this year Tony Hsieh (pronounced Shay) and two CMO’s from Del Monte and Frito Lay discussed the role of marketing in their organizations amongst other things (watch: Ties That Must Bind: Why CEOs Rely on CMOs More Than Ever).  The poor guys in the traditional roles of CMOs (by function) had to listen to Tony say that they really didn’t have a marketing function at Zappos.  They reinvested into customer service and the better service was the marketing for Zappos.  I thought the others would spontaneously combust.

So yes, there is much to like about Zappos.  Let me highlight a few other comments Tony Hsieh made that got my attention:

• 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

So why the heading about the “Achilles Heel”?  What could possibly better than this.  I got concerned when Tony started to talk about:

• 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?

I know he didn’t talk about the last three, but these are things that will play themselves out over time.  There is much for Zappos to be proud of in its inception-to-date achievements and I can only hope that continue to maintain that innovation leadership that they have on their side now.

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 info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.