The No Tool Zone

Contact centers notoriously take a manufacturing approach to how they are managed.  The contact center formula has long been set and looks like this:

# Calls  x  AHT (Average Handle Time)  x  Service Level

Contact center management and cost accountants use this number so they can determine how many people they need to staff phones.  The service level piece is constantly being benchmarked to see what an acceptable amount of phone calls would be not to get answered.

I’m OK with the first two factors to determine staffing levels, but the whole acceptable level of service piece is to plan to upset customers.  From a customer perspective having all phone calls answered when they call is what is desired.  The customer expectation is in direct conflict with the the formula above.

Some will say, “Everyone uses this formula .”  Yes, they do . . . and at great expense. 

Starting with the customer, they call in when it is convenient for them to call.  With service levels your company calls back when it is convenient for you.  Customers have a choice either find someone else to call (competitor) or have to call back or wait for a call back – both are arrogant approaches to customer service.

On the cost side we may be able to staff at lower levels with less than 100% service level.  But try putting a figure on how many don’t call back and do business elsewhere or swear never to do business with you again.  These figures are unknown and unknowable (W. Edwards Deming).

On the AHT factor, I have had many conversations (some heated) about if they just drop AHT by 15 seconds they save (in some cases) 100s of thousands of dollars.  I can only say this may be true, but they are looking at the wrong part of the formula.  They completely ignore their biggest opportunity to improve.

What is this opportunity?  Reducing failure demand.  First discovered by John Seddon, this is a failure to do something or do something right for a customer.  This number ranges from 25 – 75% of all calls a contact center receives.  Eliminate or reduce failure demand, you reduce phone calls.  This represents a far larger savings than reducing AHT because you never have to take the call in the first place.

The added benefit is greater customer satisfaction when you reduce or eliminate calls that customers don’t want to make and you don’t want to get.  This also frees up resources  to answer 100% of calls.  Customers love good service and rarely get it, so this becomes a differentiator from the masses and your competition.

Failure demand is only the beginning.  We have learned many other counter-intuitive truths about contact centers through interventions with the public and private sector.  But taking this first step to different thinking can help your organization dramatically.

Leave me a comment. . . share your opinion!  Click on comments below.

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.  Read his articles at Quality Digest and his column for CustomermanagementIQ.com  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/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

Government management and elected officials in federal, state, and local government have but one method to reduce costs . . . look at the budget and make cuts.  This myopic approach to “right-sizing” government makes so little sense.  What makes it worse is the fact cuts are usually made to the people that actually provide services and not to those in supporting and management roles.

One thing I have learned from working with my UK partners is that focusing on costs . . . increases them.  Reducing services brings out complaints and lawsuits, but worst of all poor services to constituents.  Calls for cutting spending is the mantra of the day.  It’s time to take a step back and look at the real causes of costs.

Government provides a wide array of services and who is providing those services in how they are being provisioned.  A poorly designed system of  provisioning those services leads to increases in costs whether done in the public or private sector (outsourced). 

US government is full of rules and dictates and large sums of the money spent in government are to inspect or seek compliance for them (rules and dictates).  When not pre-occupied with the rules and dictates government management is usually trying to find money for their programs.  No one is asking about how to provision the services better.

In fact, many government executives have no idea what it takes to deliver the services or see them delivered.  This means they have no context to the decisions they make about the work.  Decision-making separated from the work makes for poor decisions. 

I was recently asked in a seminar how a government executive of a large agency could possibly have time to understand what happens on the front-line.  My response is they have a choice either go to the work and understand or quit making decisions about work they don’t understand.  Decisions made with the work with knowledge of customer purpose and demand will emit new customer measures that drive costs

I have talked about the causes of costs before and they are in the flow (economies of flow) end-to-end from a customer perspective.  New customer measures help reveal what really matters in the work to be done.  These measures should be known by all throughout the system, it gives people perspective about the people they serve.

When government workers and management have perspective on customer purpose and measures good things happen.  They may be restrained by legislative laws, but they soon realize that more rules and dictates only make things worse.  So few people in government have seek this perspective and instead enter with political agendas. 

Government can be fixed but we need to understand the customer purpose of providing the service and stop trying to legislate, edict, rule, inspect and monitor ourselves to death.  Understanding customer purpose and designing systems against customer demands will lead to more effective and efficient services at reduced costs.

Government management would do well to get knowledge before embarking on a mandate path.  Government workers will need to be involved in improvements if sustainability is to take hold.  To ignore this is to disrespect the worker and the customer . . . something government has gotten good at with great cost.

Leave me a comment. . . share your opinion!  Click on comments below.

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.  For government please link to www.thesystemsthinkingreview.com.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

Benchmarking is a command and control managers dream.  You can compare your organization to others in the industry and barely have to get up from your desk to do it.  The problem is it adds no value and costs a lot in resources and time to conduct the activities.

Why No Value?

Why no value?  A number of reasons, but let’s start with benchmarking being used as gauge against others.  This leads to copying for best practices.  This action is especially promoted by technology companies selling software.

You will hear software companies talk about “not reinventing the wheel” or “the one best way” . . . this is nonsense.  Every system (organization)  is different in structure, work design, technology, management, measures, culture, customers, etc.  What works for another organization’s customers and system doesn’t mean it will work for yours (bad assumption).

Copying will always leave you behind the competition.  You will always be catching up.  Worse, many times what I see organizations copy didn’t ever really work for the originator, copiers buy the marketing hype that their competitors put out.

Benchmarking is Expensive

Companies and government entities spend from thousands to millions of dollars on benchmarking services.  Many times benchmarking studies lead to gap analysis which just perpetuates the poor thinking outlined above.  Plans are launched to fill the perceived gap and the waste continues.

A Better Way

Every organization has inside its four walls what they need to improve.  You don’t need to benchmark to become world class, but you do need to think differently.  In fact, by taking the following action competitors will spend money to benchmark against your company.

Lock the executives out of their offices and go to the points where customers transact business and study what goes on there.  Understand customer purpose of what they want at these points of transaction.  What types of demand are they and are they predictable.  After you have spent time studying demand and know about every type, separate the demands to value and failure (failure defined as the failure to do something or do something right for a customer).

You will find great opportunity and profit in reducing failure demand from customers and they will love you for it . . . but don’t start there.  Customer demands have customer measures associated with them these can be end-to-end times to receive a service and how well you meet the customers nominal value.

Understanding customer purpose and deriving measures will begin to put you on a path to world class without benchmarking.  You’ll save a lot of money in planning, gap analyses, and benchmarking studies.  This will put you in a position to be the standard . . . whatever that means.

Leave me a comment. . . share your opinion!  Click on comments below.

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.  Read his articles at Quality Digest and his column for CustomermanagementIQ.com  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.

OK, here we go . . .  the pay-for-performance thing keeps coming up in conversations.  I’ve talked about this subject in many posts.  This will be  a long, but high-level post.  The curious will seek more information from the sources I cite.

The dichotomy exists because the most prescribed solution to government, education, and business performance improvement is a problem of motivation.  I have long shared W. Edwards Deming (from a statistical viewpoint) found that to 95% of  performance is attributable to the system (work design, structure, management, technology, measures, customers, etc.) and only 5% is attributable to an individual (The 95/5 Rule).  The overwhelming evidence is that we need to improve the system to get large improvements, focusing on the individual doesn’t give us large returns.

But let’s look at some of the other people talked about and have researched this subject.  Alfie Kohn and Frederick Herzburg are two people among many that spoke and researched this area.

Frederick Herzburg who wrote an article titled One More Time, How do You Motivate Employees? has been published in the Harvard Business Review many times.  In this article he found many other stronger motivators than pay for performance by virtue of studying worker attitudes.  The greatest satisfiers were found to be:

1. Achievement
2. Recognition
3. Work Itself
4. Responsibility
5. Advancement
6. Growth

Additionally,  job dissatisfiers were items that would not positively affect their attitude, but more likely negatively affect it (in order of dissatisfaction):

1. Company Policy and Administration
2. Supervision
3. Relationship with Supervision
4. Work Conditions
5. Salary
6. Work Conditions
7. Salary
8. Relationship with Peers
9. Personal Life
10. Relationships with Subordinates
11. Status
12. Security

Herzburg also referenced physical and psychological KITA (i.e., Kick in the Arse).  The problem with physical means is that it may get a person to move, but like a dog, anytime you want them to do something it requires kicking them again.  There are hazards to this method including retaliation and lawsuits.

So this leads us to to psychological KITA, this is mental warfare.  I see many organizations deploying this approach these days.  It is more of a game of one-upmanship where things like comments, moving employees to smaller offices or worse working conditions.  Negative KITA of any sort leads to compliance not motivation.

Positive KITA has the same affect.  You give a reward and you get the result but no long-lasting motivation until you offer the next reward.  This is short-term thinking and certainly not systemic to the individual or the system.

Herzburg advocates an approach that can be summarized by his quote “If you want people to do a good job, give them a good job to do.”  He suggested certain steps for job enrichment that he outlines in his article that I linked to above (this will take curiosity on the reader’s part).

Alfie Kohn was referenced in The New Economics by W. Edwards Deming.  His two books (more research papers) No Contest and Punished by Rewards are attacks on the management assumption that competition and rewards are good.  Too few seem to either grasp the concepts while most ignore the evidence.

He believes that incentives fail for these reasons (from Punished by Rewards with my comments):

1. Lack of necessity.  Managers introduce incentives even when the system is performing well.
2.  Secrecy.  No one is supposed to know how much money is paid, but this creates organizational havoc and reduces morale.
3. Pay doesn’t match performance.  Recent CEO bonuses show this to be true.  Company loses money, but bonuses are paid out.
4. Expense.  These incentive programs are expensive to administer.
5. Too big vs. too small.  Too small and it does nothing.  Too big a few can get them.
6. Short-term vs. Long-term.  Most have been designed with short-term thinking, can anybody say banking crisis?
7. Objective vs. subjective.  There is no objective appraisal of performance to a systems thinker.  All individual assessments are subjective (a popularity contest).
8. “Performance evaluation is an exercise in futility.”  From Peter Scholtes (above quote), it is impossible to separate individual performance from the system performance.  Too many companies try and spend much in the effort.
9. “Pay is not a motivator.”  This doesn’t mean we don’t want to be paid, but that money doesn’t produce sustainable motivation.  Low pay can be dissatisfying.  Greed tends to take over when it is a prime motivator for the few that this attracts.
10. Rewards punish.  Coercive tactics are used to get people to do things they don’t want to do.  I find it better and easier to improve the work.  Deming’s Point #8 – Drive out Fear is not mainstream American Business as many executives believe fear is a good motivator.  GE believed that making the bottom 10% uncomfortable is good business, this is non-sense.
11. Rewards rupture relationships.  If you are rewarded for better method, will you share with others?  Or is the system being manipulated to achieve the reward?
12. Rewards ignore reasons.  Working in a poorly designed system with rewards is not motivating.  The reward solution ignores real causes of problems.
13. Rewards discourage risk-taking.  I have to add that we seem to have two paths here.  The front-line forced into compliance with rules, scripts, policies, written procedures, monitoring and inspection that doesn’t allow experimentation with method where we need it.  Executives however are free to make huge mistakes in pursuit of rewards that are huge – like bringing world economies down (banking).
14. Rewards undermine interest.  Intinsic motivation is pushed out by extrinsic motivation.  We need people to enjoy work and so few do.

Herzberg and Kohn have given us plenty to think about with regards to pay-for-performance.  But there are other reasons that I see also.  When working with service organizations pay-for-performance becomes what I call a “faux target.”

Sure pay-for-performance will get people’s attention (if only for awhile).  In service organizations who will employees serve the customer or the “faux target?”  I see these things at odds with each other.  The customer more often loses the attention battle.

The bad news for service organizations is that many people plan to leave their jobs when the economy recovers.  The good news is that organizations have time to redesign the work and their thinking about work to keep employees.  Let’s start by losing the false dichotomy.

Leave me a comment. . . share your opinion!  Click on comments below.

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/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

If you haven’t seen Apollo 13 the movie . . . you should.  The famous line as the title of this post is still used often today.  After all, we had to find something to replace FUBAR and SNAFU from WWII.

Many of today’s problems in the business world can be attributed to management thinking.  Unions were started because management took advantage of the worker.  If greed didn’t prevail there never would have been a need to unionize.

As I read the Indianapolis Star today about the massive exporting of jobs in Indiana to Mexico, India and many other destinations.  We have outsourced ourselves in search of profit.  The government response  is worker retraining . . . nothing about management retraining that is really needed.

Along the path to prosperity we found the road to greed.  -Tripp Babbitt

The Star article cites even military products being made in foreign countries as profit-motivated and expense-driven companies seek to increase the former and decrease the latter.  Motivated by rewards and incentives we continue a massive spiral to less profit and more expenses.  It is a management paradox that the very thing pursued has the opposite outcome.

The blame game is something that executives have mastered . . . where what we need are leaders that can build value (too few of these types).  Why would the road to success be associated with the pursuit of self and not for the greater good?  Are we all really OK, if the American worker suffers?

We are embarking at another critical point in US history, this one is commerce related and military.  The fall of one will be the demise of the other.  Old Tayloristic management methods, technology, outsourcing and other ill-conceived thinking will surely seal our fate.

As displaced workers get retrained they are finding (and many cases not finding) jobs paying half the wage they had before.  This makes them eligible for entitlement programs that businesses abhor. 

If or when we discover that the management thinking being perpetuated is not profitable and indeed damaging . . . we may have a chance to be curious about better ways.  A better way of thinking exists and has been proven over the past 60 years.

Leave me a comment. . . share your opinion!  Click on comments below.

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.

No shock when I read in the Star this morning that State Superintendent Tony Bennett had capitulated in the race to receive education reform money.  The inability to cooperate with the Indiana State Teacher’s Association and other school superintendents around the state is part of the problem, but the worst part is what is being proposed.

My daughter will be taking the ISTEP test for the third time this year.  All this testing is no more than a form of inspection.  Just as in manufacturing and service industry we know that inspection is costly and more inspection has nothing to do with improving .  We may be improving against a test, but this has no correlation to our ability to compete in an international marketplace.

The proposal is similar in nature to a plan presented back in 1990 titled America 2000.  The US has been on course to use elements of America 2000 for years and education continues to decline.  Programs started from this thinking like No Child left Behind and Deliverology which are target-laden and based on mass inspection of children using tests.  Merit pay and results focus were the purpose, not finding better ways to educate children.

The whole approach is based on results and not method.  We have ruined students based on grades and competition in schools (why do we need competition where cooperation should be desirable?).  When we have targets this becomes the defacto purpose of students, teachers and administrators . . . our real purpose should be to learn and be able to help improve government, service and manufacturing.

“Race to the Top” as outlined by the Star and produced by Tony Bennett is a potential disaster that needs to be stopped.  Let’s take a look at some of the misguided elements:

Four Tiers for Teachers.  From highly effective to ineffective, teachers in higher categories get bonuses and those targeted as ineffective get dismissed.  We stand to have a whole bureaucracy of people inspecting teachers to determine their tier.  Reviews, appeals and competition will be the result accompanied by great waste in money.  If we have winners and losers in teaching, than what will be the reason any teacher with better method to share what they are doing?  Creating tiers creates artifical scarcity where there should be none.  More cooperation is needed not less.

Evaluations.  Teachers would be evaluated with 51% of the evaluation given to test scores (I assume ISTEP).  So what this means is that 49% will be subjective as their is no objective performance appraisal.  Whether an administrator likes you or not will play a key role, this is a play to educational politics and compliance.  Further 51% of the evaluation being based on test scores would predictably mean that teachers would be teaching to the test . . . how is this learning?  There will be appeals to get low scoring students into special programs so teachers don’t get their test scores pulled down (happened in California).  The Star’s opinion is that pay for performance is a good assumption as many in industry use it in the US, and the US has been in a decline since 1968 with this thinking.

School Takeovers.  Low-performing schools would be taken over by a private management company.  Indiana FSSA has already shown that assuming the private sector has better method needs to be questioned.  If taking over the school means someone else has a better method to improving the school, why do we have to wreck people’s lives to make it happen?

Grades for Schools.  Schools would be given grades A-F based on student performance.  We already have grades for our children that sorts winners and losers, so why not schools?  Performance on some arbitrary scale for students or schools based on test scores that can not help us determine future success in the world.

Our problem is not related to more ways to test (inspect) or grade.  We need method . . . a method to create better education for students.  If we want to do better and be better than we must begin by studying the education system in a cooperative manner with all parties going to where the real work is done.  In case you don’t know, Dr. Bennett, it is in the classroom where teachers and students meet  for that mandatory 180 days (even though you still haven’t explained why 180 is better than 179 or why 181 wouldn’t be better).

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.

For some time I have asking customers and customers of customers what industries are ranked on a trust scale.  At the bottom are staples like lawyers, auto dealerships, insurance and break-fix organizations (plumbing, HVAC, home repair, etc.).  Even people in one of these industries say the perception is poor.

Banking (regular, not investment) has for the most part been held in high esteem until the great fall from grace here recently.  This was a huge fall and has effected every American where banking has slid to almost unrecoverable levels.  If there is one industry we needed trust it was banking . . . their fall has made other industries look “good.”

The perception problem has many roots.  When customers get different answers, service, product, advice, etc. the perception is that something is fishy.  Some people are better at “explaining things” in a trusting manner and can be perceived as manipulative especially when intent is to take advantage.

Another is when the customer has no idea whether what is being told to them is the truth.  The dilemma is that customers have to have blind faith in areas where they lack knowledge.  When customers find out later (and they do find out) that what service or product you sold them was exorbitantly priced or bad advice perception takes a hit.

The most egregious is where money is involved and where service or product is perceived to be unfairly priced.  Sometimes this is because customers smell greed and complicating this is when service providers or product sales people have commissions, rewards or incentives.  A question I have asked for years of service providers is “How are you paid?”

Commissions, rewards and incentives certainly drive behavior, but the wrong behavior.  They are a “faux target” meaning they become the defacto purpose of the organization and/or individual in the company.  The management paradox is that rewards drive costs up as any activity not focused on customer value is waste.

Think about it . . . many of these low trust industries or companies have to spend more money in marketing to convince you they are trustworthy ($450 billion in the US annually).  If instead organizations focused on the customer their marketing expenses would go down (happy customers), they would spend less time monitoring workers that might manipulate the system and end the perception problem of their industry or company in the eyes of the customer.

As I told a regional bank, ” You are selling the public . . . trust” and this is true for any organization not just banks.  So, what we need to do is design out the things that build perception problems with customers.  Incentives, rewards, and commissions all are faux targets that need to go.

No industry is immune from the trust scale and the customers perception of your company and industry.  Making a change based on customer purpose (outside-in) and not indivdual or organizational purpose (inside-out) are the first steps to improving the perception.

Leave me a comment. . . share your opinion!  Click on comments below.

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/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

The most asked question at my first US seminar and workshop is how do I get employees engaged in change (or in this case systems thinking - Vanguard style).  The question is revealing on its own. 

The problem with the question is that change shouldn’t be about doing something to a group of employees using coercion.   Change should be emergent.  Employees should be willing to change.

The problem is perspective.  When change is made top-down and decisions separated from the work change is hard.  This is because the change is forced upon employees or rationalized in “all-hands” meetings.

In systems thinking this is never the case.  Workers are engaged from the beginning and involved in decision-making about their work.  Results are better because of this engagement and because better decisions are made from knowledge (as opposed to anecdotal evidence, reports and plans).

Employees only resist change when they don’t understand or know the change will make serving the customer more difficult.  Management and employee relationships become adversarial.  Frustration leads to low morale.

The way to correct this is to work together to understand customer demand and purpose.  Once understood, new customer measures can be in place.  These types are better than the old financial, productivity and internal measures with targets tied to someones whim.

The beauty of all this is that focusing on customer purpose and demands drives costs out . . .and not just a little, but a lot.  Give it a shot and let me know how it goes.

Leave me a comment. . . share your opinion!  Click on comments below.

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/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

A staple of systems thinking is the management paradox that “focusing on costs increases them.”  Yet when we take a collective look at most business and government activities we see that costs and budgets are the focus.  The mantra of cutting costs and balancing budgets is deafening.

I have written before about the zero-sum game where the prevailing theory is that good service costs more.  The problem is most organizations don’t know any other theory or how to look at their systems to consider different method.  Organizations are managed by cost accountants.

Predictably . . . the customer pays for this mentality.  Bad service and increased costs to the company and customer result.  The cycle continues as each subsequent iteration of cost cutting begins to cut to the bone marrow of the business.

By taking a different look at service we have an opportunity to change the mindset.  US business spends $450 billon annually on marketing programs to convince customers that they provide good service.  They spend $50 billion dollars in improving their service. 

Increasing a customer retention rate of 5% results in increases profits 25 – 100%.  The problem is 90% of customers that are dissatisfied with you service will never purchase from you again.  Try putting these figures into cost accounting . . . how would an organization be able to account for what they have lost?

Government management is not off the hook because they have demand and customers have no choice.  We keep having this government deficit problem in the US and an inability to provision services cost effectively is the problem. 

Government entities are not provding services effectively.  Poor thinking and theory is more to blame than big government.  The design and management of the work is to blame, but these same problems exist in the public AND private sector.

Big government is big because of its inability to serve a customer effectively.  When customers don’t get served well complaints follow in the form of failure demand – demand caused by a failure to something or do something right for a customer (Seddon).  Customers calling back creates waste and I have seen failure demand in the public and private sector as high as 90%.

Different measures derived from a customer perspective rather than the typical SLAs by function, productivity and financial measures set a different tone.    A pleased customer (or constituent) results.  This is to reduce failure demand and design the system against demand and customer purpose.

To begin we need to change our thinking about the causes of cost.  They are in the flow, not the scale (economies of flow).  The ability to provide good service throough better thinking can do much to improve our world.

Leave me a comment. . . share your opinion!  Click on comments below.

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.

My counterparts in the UK have run into the same American problem.  Short-sighted thinkers that blindly go for extremes.  Be they Democrats that believe that all work should be done by the government or Republicans that believe everything should be outsourced . . .  no one is asking the right questions.

John Seddon outlines the problems with government outsourcing of services that a Conservative (Sir Peter Gershon) advocates in an article titled, Economy is in flow, not scale.  Gershon’s suggestion is that all the public sector back offices should be outsourced within 18 months. 

As Mr. Seddon smartly points out, the focus starts with two failing premises reduce costs (this focus always increases them) and a central plan is more communist than capitalist.  The very thing hell-bent Republicans are trying not to be . . . they are becoming.  More centralization to save money (reduce costs)  is blazing a path to ruin.

So what are the right questions?  Well in Gershon’s case maybe we don’t even need a back office.  Just to outsource or privatize the back office to reduce costs does not guarantee that the design of front office-back office is even needed.  Much of the waste is in the design of the work, so why perpetuate a bad design by outsourcing a function?

Then where do we begin?  Quite simply with understanding constituent demand and purpose.  Designing public and private sector systems based on demand means that the work gets redesigned to allow the flow to run smoothly.  In turn, well designed work  and smooth flow reduces costs.

Unfortunately, this is not what I see from Republicans that are doing more Soviet-style central planning.  They focus on scale and not flow.  More is not better, did the fall of the Soviet Union not convince them of this?

The scary part is that the cost reduction thinking I have seen in states like Indiana has done nothing but increase costs.  Poor theory leads to higher costs.  Indiana’s answer has been to sell State assets to make more revenue (which is really taxes) to over come expensive provisioning of services.

A colossal waste of money in moves to consolidate (or share) government services.  They fail to see the real costs of provisioning services.  Unfortunately, until thinking changes we have little chance of reducing government deficits.

Leave me a comment. . . share your opinion!  Click on comments below.

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.  For government please link to www.thesystemsthinkingreview.com.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.