Category Archives: Systems Thinking and Contact Centers

EA Sports – Worst Company in America?

What makes a company the worst in America?  The Consumerist website has determined EA Sports is this years winner of the Golden Poo award – for the second year in a row.  EA Sports soundly defeated perennial powerhouse Bank of America.

I like to read the Consumerist as you get some really good info on what problems organizations have in delivering product and/or service.  I see many of these problems with organization obsessed with revenue and costs – where they should be focused on the customer and let revenue and costs take care of themselves.  Unfortunately, too many executives only get targets for revenue and expenses that lead to bonuses.  This leads to a short-term focus and an internal view.  Consumers feel the pain.

There are few companies (and I haven’t found one) that deliver really good service and mostly for the reasons I have noted above.  All organizations in the US are struggling with an environment that has been shrinking.  The shrinking has to do with our collective approach to management and a scarcity mentality.  Budgets are part of this thinking.  Growth and innovation takes a back seat to budgets and shrinkage.  Businesses fight over market share rather than ways to grow.

This is a disease that began here in America.  EA Sports in the eyes of consumers that frequent the Consumerist have spoken.  However, so are your customers – are you listening?  Do you know how?

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 column at Quality Digest and his articles for CustomermanagementIQ.com. Reach him on Twitter atwww.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.Enhanced by Zemanta
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Complaint Line Con

You can find almost anything on the internet these days.  I found a piece by A Current Affair on Australian TV that talks about how hard it is to voice a complaint in today’s IVR infected and functionally separated  organizations.  The piece highlights how fast sales lines are picked up and how slowly complaint lines are handled . . . if at all.

You have to love an voice recognition system that does not recognize “complaint” as something that should be routed.  Of course, I believe that the world would be a better place without IVRs in general.  Its not old-fashioned to have a human answer the phone, it’s just good business.

It doesn’t surprise me that sales lines are answered so quickly and most other inquiries are slow to be answered or even resolved.  With many organizations – private or public – running failure demand upwards of 4 – 9 out of 10 calls means that these organizations are frustrating or even chasing away customers.

Imagine what it would be like in reduced costs to organizations if it could be designed out with different and better thinking . . .

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.  Learn more about the The 95 Method for service organizations.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

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The 67 Year Thinking Problem

If it wasn’t bad enough that SPC charts disappeared from the Hawthorne Plant after WWII as management adopted a mass-production mindset, 67 years after Japan kicked our collective behinds we still think the same about management.  Worse, we have even fallen deeper into insignificance in the US.  Short-term thinking driven by the financial markets and management with an attention span of the TV generation struggle to compete and innovate.

Buying and selling companies for profit and mergers for economy of scale.  Except profit comes from satisfying customers in new and different ways  . . . and mergers have not achieved the scale needed to increase profit as this comes from economies of flow.  The scale fantasy continues to drive the wrong behavior.

With great embarrassment, the US still tries to copy Japan.  How do you catch a competitor by copying?  It always keeps you behind.  Finding out what matters to customers leads to innovation that is emergent from what you learn.

Instead of thinking for ourselves, we embrace “gurus” that study Japan and have never actually applied the hypothesis.  Because if they had they would discover the truth through application.

The clock is still ticking . . .

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.  Learn more about the The 95 Method for service organizations.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

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The Secret to Great a Customer Experience

I have been reading a lot of customer experience articles and posts.  Most of it is softball stuff, lots of syrupy language and like love your customers and think about the customer experience in all you do.  Unfortunately, as I dig deeper the traditional design and management approaches make all this stuff a real yawner.  Yet, people make a ton of money telling you obvious things with speeches and writing.

Traditional approaches still are based on incentives and having the “right” data.  One is based on the flawed thinking that performance is down to the individual.  And then – of course – data is needed to figure out ways to improve the customer experience . . . bring in the IT!

Sorry folks, dead end.

Getting a great customer experience requires a better system for front-line employees to work in.  The 25 – 75% failure demand that customers experience is pathetic.  Designing the work to customer purpose and demands.  Management learning counter-intuitive truths about how system perform and that it is not down to the individual.

The fluffy and feel good customer experience gurus need more depth to what needs to happen to change the poorly designed systems.  Just using words like “seamless” and “customer friendly” advances nothing.  Some depth . . . please!

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Technology – A History of Increasing Costs

The problem isn’t technology alone when it comes to costs, but more the thinking behind it that increases costs.  The transaction costs are very visible and for the gullible represent quick savings for companies.  And companies laden with rewards and pressure to reduce costs “quick” is an embraceable proposition – it becomes a way to achieve instant gratification and survival in organizations.

I recently had a phone call with a technology company that assured me that IVR systems – that I loathe – were saving companies millions.  No evidence but the reduction in visible transaction costs – this means each transaction cost is lower.  Systemic or total costs are completely ignored.

No one asks about how many transactions that come in the form of customer demands are actually value or failure they just look at the transaction alone . . . not whether the transaction should have occurred in the first place or not.

Reducing failure demand (demand caused by a failure to do something or do something right for  a customer) becomes a huge area to make improvement and does not involve any IT.  As part of reducing failure demand, we are improving the flow . . . as economies come from flow and not scale.

Looking at the history of reducing transaction costs with a flawed mindset, we see that in the good old days we would get service face-to-face.  Telephony advances in technology allowed for a cost reduction in centralizing customer demands through contact centers.  Now, we have websites to reduce transaction costs and avoid the contact center.

The result has been worse service and more costs.  A natural extension of when the focus is on reducing costs . . . costs increase.

Outsourcing and shared services have been enabled by technology – couldn’t have either without technology.  However, both perpetuate the reduction of transaction costs as a form of improvement and ignore the systemic customer demand and flow that really are behind reducing costs.  The management paradox is that the transactional mindset is increasing costs in the form of lost customers and acceptance of a poor service design.

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.  Learn more about the 95 Method for service organizations.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

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Pay and Performance – Two Separate Things

As the political season heats up, so does the call for “pay for performance.”  The assumption here is that it works . . . and yes, to some degree it does.  Unfortunately, it works in a manner that actually diminishes and destroys service.

Performance is dictated by the system in which you work.  This is true for front-line workers and executives.

I have often quoted W. Edwards Deming and written about the 95/5 Rule.  95% of the performance of any organization is dependent upon how well your system is set-up, and only 5% is down to the individual/  The system is comprised of processes, work design, management thinking, measures, roles and any other element that exists.

It is true that pay drives individual performance.  However, this takes away from the focus on the customer.  Organizations that are functionally separated try to give managers individual pieces of the organization to optimize which results in sub-optimization.  Sub-optimization is the enemy of synthesizing the whole – creating waste and inefficiency.

Individual pay for performance creates competition between workers where cooperation needs to exist to improve any system.  Further, individuals learn to manipulate the system to survive or gain reward.  What this boils down to is that the system loses when pay is tied to performance.

I have seen organizations go out of business while everyone is still getting bonuses for performance.  How can this be?  Some claim it is just the wrong measures and miss the point.  The problem is that pay is tied to performance in the first place.

Improving performance requires redesigning our organizations be they governments or private companies.  Working on the 5% is just dumb and wastes what little time we have already.  This requires a shift in Western mindsets about how we think about work.  It wouldn’t hurt to have governments start to learn this with teachers, police officers and other government jobs.

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.  Learn more about the 95 Method for service organizations.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

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Management Infatuation . . . The Large Project

What is it about large projects that is so attractive?

Is it the ability to put a large project on a resume?  Or the feeling of power to have introduced massive change?  It is hard to figure out the answer to this management paradox.  Maybe there isn’t one.

Service organizations and governments love the large project.  A lot of them involve information technology, but these projects certainly aren’t just IT.  IT just seems a good way to fund it.  No one will argue with large projects that are the future.

However, large projects seem to fail at unbelievable rates.  In fact, I am yet to see a successful one.  All have begun with great pomp and circumstance.  Executive speeches given, resources allocate, Gantt charts populated on hundreds of pages and the master plan is unveiled.

Two months later and the ADD management has usually already lost interest.  Funding for other things is poured into the financials of the projects.  Large projects do represent a great way to hide costs.  Our software developers put in 500 hours last month into your project . . . and you got one line of code – if you are lucky.

These days I remain amused by those that promote their company or themselves as large-scale project managers with years of working on large projects.  All that experience that has delivered so very little in tangible improvement.

The problem is really quite simple, the need was never really there to do a large project.  Egos and assumptions play a larger role in these decisions than need.  The truth is that most of the time value can be created by small changes on the front-line.  It just isn’t as glamorous.

Before the next big project kicks off, take a couple of deep breadths and do the following:

  1. Get knowledge – leave the egos and assumptions behind
  2. Improve the work and pull IT

There are more to these steps, but if you are reflective on this you will discover a much better way than big projects.

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.  Learn more about the 95 Method for service organizations.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

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IT Workers – Let’s Get the Outsourcing Argument Right

Former IT workers at Molina healthcare have started a firestorm with a lawsuit (see Outsourced and Fired, IT Workers Fight Back).  The article is an interesting read and I side with the former IT workers . . . but not for the reasons that keep being used.  They claim discrimination and they may be right, I don’t know.  The court will have to sort this one out.

Regardless, discrimination or even the patriotic message of protecting American jobs will not resonate with corporate America.  Heartless . . . maybe.  But workers – and not just IT workers – need a new tactic.

Plainly said, almost all outsourcing I have seen in contact centers and IT is not profitable.  Yep, that is correct . . . it is NOT profitable.  This is a message that corporate America will understand.

Yes, I know the wages paid to foreigners is much lower.  However, reducing wages 30 – 50% or more isn’t enough to make up for the poorly designed IT when you separate developer and the work that IT is supposed to enable.

IT executives have made IT in the form of production plants in manufacturing.  I even hear words like “software factory” when I speak to executives.  Software is not manufacturing and to treat it as such is foolhardy.  This is economy of scale thinking and is used in an IT outsourcing strategy.

So what is wrong with the design?  The flow of the work – economies of flow.  Traditional software process: project planning, feasibility studies, systems analysis, requirements definition, implementation, integration, testing, installation, deployment and then maintenance.  There may be derivations of this, but who came up with this crap?  Why has this become best practice or the “one best way.”  IT projects have stunk up the place for a long time.  New thinking is needed to save jobs, profit and improve IT in general.

The traditional approach allows for the functional separation of work.  Project managers, business analysts, testers and other roles for the most part are non-value adding.  Most outsourcing seems to go after the developers, because they are expensive in an executive’s mind.  But developers are the only ones that do the work that adds value.  They have been hidden away as too expensive to interact with those workers that add value in the eyes of customers.

Developers are the only workers that can add value.  Having them away from the front-line employees that interact with customers is expensive.  Instead they have phone calls, meetings, requirements documents to facilitate their work.  Flow is disrupted and costs are increased . . . a lot!

Functional separation of work and economies of scale thinking leads to higher costs.  Outsourcing the pieces makes sense with this line of thinking.  This is why executives embrace it.  It is wrong thinking familiarize yourself with the arguments I have linked to in this article.  If you are in the midst of having outsourcing companies learn your system to get rid of your job, give me a call.  New thinking that is more profitable may be your only chance.

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.  Learn more about the 95 Method for service organizations.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

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Asking the Wrong Questions to Improve Service

A client recently forwarded me an invitation from a company promoting a seminar titled “How to make off-shoring work?”  He rightly pointed out that if your asking the wrong question, you will get the wrong answer.  After all, it isn’t about getting off-shoring (or outsourcing, shared services, etc.) to work, it is about getting the work to work better.

The problem is (as with most fads) they are based in assumptions.  Here is the one that caught my attention in the promotion:

“Most major corporations have embraced offshore delivery of IT and are moving to the next stage of a global delivery model, in which the location of both supplier and internal resources are decided from a business perspective, with very few duplicate roles across the world. With major economic benefits, this transition has been accelerated by the economic developments of 2009. What are the challenges? What are the opportunities? And how can you make it work for you?”

Obviously someone with a vested interest in convincing an audience that off-shoring is the right thing to do and you would be ignorant or stupid to have not embraced it as this point.  No evidence, just a lot of hype from a major consulting firm that is trying to sell the mirage.

Too many companies will fall into the cost trap of such claims.  They will do this because they see a reduction in activity costs . . . a very short-term thinking proposition.  But with executives salivating over bonus potential in the next quarter, reducing activity costs sounds appealing.  They miss huge improvement opportunities with this thinking by not addressing the design of the work BEFORE considering off-shoring, outsourcing or shared services.  This is the fundamental thinking problem that management must overcome to improve service.

Off-shoring, outsourcing and even a shared services strategy have gone from a snowball to an avalanche without proof of total cost reduction.  If companies would see that they are off-shoring the waste that is in the design of the work, I believe a different approach would be in order to achieve 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.  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.


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Service Targets, Technology and other Non-sense

It was W. Edwards Deming that first spoke of “arbitrary numerical goals” and the damage they can do to organizations.  His famous question was, “By what method?”

Anyone that understands Walter Shewhart’s control charts understands that a system operating predictably between the upper and lower control limits cannot be improved without a statistically significant change of method.

They can, however, be changed by manipulation of the system or the numbers.   This is the bad news of targets, especially when rewards or penalties are tied to achieving them.  Managers and workers are caught attempting to reach targets in bad systems . . . manipulation is often the only alternative.  It is sometimes referred to as a “defacto purpose.”

Over and over organizations that set targets get a false sense of security.  SLAs (Service Level Agreements), KPIs, budgets are set with targets and seemingly achieved, but customers don’t feel the 95% target in the service provisioned to them.  There is good reason for this, the truth is hidden in the details.  Projects and cases are closed and reopened, customers get hung up on, operational definitions are changed, money shifted and the list goes on in the creativeness to hit the numbers.

None of this is real improvement.

The design of our service systems gets to the heart of Dr. Deming’s method question.  When the design of the work is consistently poor (and it is), the result is predictable . . . bad service hidden by faux measures.

It doesn’t end there.

Unfortunately, service organizations turn to information technology to automate the poor design.  Here, we enter the realm of scripts, IVRs, best practices, analytics and standardization – a short list.  Management has a love for technology that is assumptive in nature and puzzling to customers.  Management and technology are like moths to light.  Why have paper when we can have technology?  For that matter, why have people?

A fool’s gold.

Service organizations have spent billions on technology and the outcome has been project delays, cost overruns, and entrapped workers have contributed to the great money pit called information technology.

But it doesn’t have to be this way.  Our greatest opportunity for improvement lies in the design and management of work.  This involves not just redesign, but also how our thinking got us to the poor design in the first place.

Much of this thinking problem is rooted in costs and budgets with the corresponding targets associated with these.  Others are rooted in the problem of the functional separation of work, how we think about workers (see the Quality Digest article The Droids We Build), assumptions about motivation.

Coming to grips with the thinking that prevents good service is an important part of developing good service.  Addressing the system conditions (targets, technology, standardization, etc.) that constrain our service systems can only be done with knowledge.  And knowledge is gained by studying our service systems outside-in from a customer’s perspective.

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.

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