The No Tool Zone

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One out of every Six IT projects is identified as a “black swan” project.   A “black swan” project was coined by Nassim Nicholas Taleb and desribes “high impact events that are rare and unpredictable but in retrospect seem not so improbable.”

Large IT projects are staples in companies and government.  John Seddon (Managing Director at Vanguard Consulting) predicted the demise of the NHS computer system in 2004.  He describes (IT) projects as “the sale of the plausible to the gullible.”

Is John Seddon the Nostradamus of IT projects?

I don’t believe so, but he understand that most IT projects fail because they lack the fundamentals to succeed. Copying and lack of knowledge and chief among them.

W. Edwards Deming taught us long ago that copying is never a good idea.  The problem with copying is that you never know if you have the same problems as the person you are copying.  All systems have different problems and issues assuming that your organization has the same problem can be costly.  Also, many times there is no evidence to support the copying just made up numbers or broad statements.

Closely related to copying is lack of knowledge.  IF management understood their organizations as systems, they would not need to copy.  Further, they often discover that they don’t require large IT projects.

Getting knowledge and addressing the flow of work before purchasing IT seems back wards to some.  They instead start with a plan or strategy or perceived problem that doesn’t address the real systemic problems in the design and management of work.  The bottom-line is large IT projects with this approach don’t require large IT projects – never mind Black swans.

The best way to get knowledge is to study your organization as a system.  Understanding customer purpose and demands placed on our systems gives great clarity to what matters.  Designing systems to support customers by improving flow without IT helps us determine what if any IT is needed.  IF IT can help you may find that it is not a large project with risks – a white swan instead.

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 Vanguard Method for service organizations.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

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 Vanguard Method for service organizations.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

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 Vanguard Method for service organizations.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

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 Vanguard Method for service organizations.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

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.

An excellent post by Simon Caulkin called Not Customers but Commodities got my attention.  It illustrates how customers are being treated like commodities.  Technology, standardization or a combination of the two have left us feeling . . . shorted in the service we receive.

Efficiency has replaced sanity and customers feel it.  Service organizations (public and private) have looked to their own bottom-line to “hit the numbers.”  Meanwhile service to customers has deteriorated either rapidly or slowly, but does entropy.

Managers without fortitude or knowledge claim they are trying to balance profit and good service.  The result is disastrous and preposterous.  The false assumption is that there is a trade-off between good service and costs.  The “zero-sum game” as I call it.

The truth is there isn’t a trade-off.

Good service delivered the way a customer wants it always costs less.  Less handling and more revenue.  Oh, and less marketing to service customers that don’t need to be convinced of your good service – because you are delivering it.

Absorbing variety in a technology, best practice, rules, scripted and standardized world is very difficult and the customers are left out of the equation.  Like a product that is cheap but only lasts a few days, service is done in the cheapest manner at the expense of the customer.

The examples are many, like a contact center geared to answer calls that add revenue but put customers through the gauntlet when they have a problem.  In an attempt to avoid costs, service organizations add costs.  IVRs to navigate and back offices to negotiate . . . in a word it sucks.

The good news – for now- is that all your competition stinks too.  Customers are mired in mediocrity or less and yearn for someone to actually stand out.

However, given the service systems companies have designed business improvement seems so far away. Managing costs over rules good service.  If only service companies and governments understood that serving customers ineffectively is at the root of the causes of costs.

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.

I read an article today in Quality Digest about Dr. Don Wheeler (An Interview with Donald J. Wheeler).  I had the pleasure of getting a solid back ground in SPC from Dr. Wheeler and from a local (Indianapolis) statistician named Tim Baer.  I won’t pretend to have their knowledge, but through application of statistical theory I have learned that there is no other way to know whether improvement efforts or experimentation are making things better.

W. Edwards Deming challenged us in many ways.  He warned us not to copy the Japanese (because we could never catch up).  The perpetuation of Dr. Deming’s ideas requires a solid understanding of statistical methods.  Rarely, do I walk into a service organization and see the use of control charts (or process behavior charts as Dr. Wheeler references them).

The truth is there is no way to know whether things are getting better without the use of SPC.

That is correct – there is no other way!  So this begs the question of why their use is so uncommon amongst those that mine, analyze and use data.  If they did they would understand why targets are so damaging.  Or why the system governs performance and not the individual.  These are things you come to understand when you understand variation through the use of SPC.  My Myth Buster series at IQPC explains why – click here.

To me, operating without solid knowledge of SPC is a mistake that is very costly.  An organization trying to achieve business improvement must know when things are betting better or falling apart.  Sometimes you find out that things are worse when it is too late.  This requires an early warning system for a business tsunami that can wipe you out.

Using data in appropriate manner is hard to find these days in service organizations.  SPC is the only tool worth learning.

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.

I recently read an article by one of the management fad proponents that even though they used tools they were a systemic thinker.  Further review and reading determined they provided no evidence of systemic thinking in the work they had done.  Where is the evidence?  None existed.

The use of tools offers problems I have written about before.  I wrote about it in my recent Quality Digest column – Are You a Sheet or Shelf Thinker? Tools limit thinking and create a barrier to systemic and breakthrough thinking.

Systems thinking (and more specifically, the Vanguard Method) is about method and innovation.  It addresses the management thinking that has to be challenged because of the assumptions that lead service organizations in the wrong direction.  The functional separation of work, targets, financials, hierarchy, technology, information are but a small sample of items that need to be challenged.

So, part of systems thinking is about addressing not just the design, but the management of the work.  Management thinking drives the design.  The management fads claim to do this too, but look for the evidence . . . lots of hat, but no cattle.  Pathetic and misleading.

Managers have a choice too, they can pick assumptions or knowledge.  Knowledge requires context to all those management reports with meaningless data.  One can only get that in the work.

Toolhead activities support status quo in management.  Most don’t know better, but many believe that someday if they see the benefit of tools management will buy-in over time.  The benefit never comes in sufficient quantity to convince management and management relegates the improvement fads to lower and middle management or the front-line.  A dead-end for sure.

Unless efforts to optimize systems include management . . . it is better not to start.  Systems thinking includes everyone and everything, not just the elitist or toolheads wreaking havoc on the systems.  This is not business improvement, it is more waste and sub-optimization in the system.

Good video of former toolheads that have found a better way:

I used to be a toolhead but I am alright now (short video 4 mins) from The Systems Thinking Review on Vimeo.

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.

Over the weekend, I was preparing my paper for the International Deming Conference in March.  I decided to look at some videos of W. Edwards Deming on YouTube and other assorted mediums. Having attended Dr. Deming’s 4-day seminar I felt the familiar pull of a lost message about American management and that the Western style of management needs to change.  That was in 1984 . . . and not much has changed.

Dr. Deming in one video outlined the 5 Deadly Diseases of Management.  They are:

1. Constancy of Purpose
2. Emphasis on Short-Term Profits and Thinking
3. Annual Rating of Performance/ Merit Pay
4. Mobility of Management
5. Use of Visible Figures Alone

All of these things Dr. Deming warned us about in 1984 are present in almost all American businesses and government today.  The banking crisis we are finally emerging from in the emphasis of banks to seek larger and larger profits to achieve targets.  Short-term thinking isn’t just accepted, it is encouraged.

The problems with mobility of management are rooted in the lack of knowledge that management has about the systems in which they manage.  Many lack the basic knowledge of their systems and manage based on common sense.  But common sense can only be achieved by having knowledge from being in the work understanding it – outside-in as a system from a customers point of view.  Anything less is leads to waste and sub-optimization.

The financial targets in American business are highly visible to anyone who manages and in government the focus on visible costs.  A shame that very few can answer a simple question like, “what measures matter to customers?”  Most will say, “oh yeah, that too”, but have no idea from their functional perch.

And so we live with high unemployment that is firmly rooted in bad management.  Education is a top priority in the US and many states to help America become more competitive.  A noble aim, but our problem is not just education . . . it is the wrong management theories being taught that deepen our plight.

Join me for the International Deming Conference in New York City on March 21 – 22.

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.

To take a look at business we have to go back in time to a Post WW II world.  Manufacturing was decimated by the war, except in one country . . . the United States. The world turned to the US for products.

Because of world demand, the US focused its manufacturing on mass production and the thinking from Frederick Taylor and Henry Ford.  How many can we produce and how fast?   . . . Were the questions that US manufacturing was trying to solve.  No competition and no focus on quality.

This worked well until a meeting in Japan on July 13^th, 1950.  Where W. Edwards Deming met with 21 presidents of industry that represented about 80% of the capital of Japan.  Dr. Deming promised that if they followed better thinking that the US would be screaming for protection from Japanese goods in 5 years, they did it in 3.

In the greatest upset in economic history, US manufacturing faltered . . . culminating in the 1970’s with the bankruptcy of auto industry giants – Chrysler and Ford.  This lead to some self-reflection in the US about how a small country like Japan with few natural resources could put the US on its heels.

In 2011, the design of American manufacturing and service still has that mass-production flavor.  Some have managed to change to just survive (always good motivation to do so), but service still lags in thinking.  Many technology organizations think of their software development process as a production line.  A wholly wrong approach if you hope to make good software.

I have talked about economies of flow before, but it is scale thinking that still wins the day.  Reducing costs through outsourcing, shared services leads to service designs that have the opposite outcome of what is desired . . . or unintended consequences.  In this case, the unintended consequences are increased costs, worse service and reduced morale.

Economies of flow thinking helps lead us to better design as what is good for the customer always is good for the bottom-line.  To many, this is counter-intuitive.  The prevailing thinking is that better service costs money and it is with the industrialized thinking of yesteryear.

And so as we enter 2011, we still have the fundamental thinking problems about the design and management of work.  Will this be the year that you do something about it?

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.