The No Tool Zone

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Reading Governor Mitch Daniel’s book, Keeping the Republic, he mentions the Indiana Welfare Eligibility modernization.  This modernization was a ten-year deal worth $1.3 billion to IBM and its partners.  It is an important story for all of government because everyone has the same mindset.

This mindset is characterized by anecdotal evidence to support an ideology.  In this case, privatization.  The old welfare system was labeled as the nation’s worst according to the US Department of Health and Human Services back in 2005 – these are the same bureaucrats that Governor Daniels laments about earlier in the book.  The system was rife with error, delays, fraud and unhappy people with the status quo.

Further, the welfare offices were described in the book as “a chaotic mess.  Antique, green-screen computers from the 1970s sat amid the floor-to-ceiling stacks of boxes stuffed with paper.  I asked our researchers to take pictures.  Otherwise, I knew no one would believe later how bad the system was.”

This is the death sentence for governments assuming old manual systems with old technology is always bad.  Government management has embraced modernization because it doesn’t feel “modern.”  However, the old systems are never evaluated for flow or knowledge, just that things looked old.  This is the mentality that wastes taxpayers billions of dollars.  IBM and others wait like wolves ready to pounce on the gullible and naive.

Governor Daniel’s calls the attempt an “oops.”   The re-engineering to modernize and privatize the welfare system wasn’t begun with knowledge but ideology and assumption.  When ideology and assumption are in the decision-making costs increase and service worsens.  Politics has a hard time separating reality from fantasy.  Evidence without preconceived notions is always best.

Modernization and privatization – which I am not against – really need to begin with knowledge of the systems we are trying to improve.  Governor Daniels does not challenge the back office design when describing the improvement effort, yet, here is a huge opportunity for improvement.  Most believe in the front-back office design that handicaps the design of work.  Different thinking and better method are required to improve work.

Governor Daniels has brought fiscal discipline to Indiana, but fiscal discipline by itself is doing the wrong thing, righter.  Indiana and other government entities can find dramatic improvement (another 30-70%)  from changing the thinking about the design and management of work.

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.

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“. . . an astonishing amount of the laws created today are not made by elected, and therefore recallable, representatives, but by unelected bureaucrats and judges.”

- Governor Mitch Daniels

In Keeping the Republic, Governor Mitch Daniels laments how unelected officials (bureaucrats) make policy and law.  I was once a bureaucrat and so was Governor Daniels – lest he forget his time at the OMB.  However, Governor Daniels has a view of a right way and a wrong way to be a bureaucrat . . . and so do I.

Much of Governor Daniel’s view has to do with having a favorable cost-benefit ratio and making sure a law didn’t already exist.  This seems reasonable, especially considering Governor Daniels staunch fiscal discipline that he has embraced as Governor of Indiana.

For me, the issue is the same I have written about in posts many times before.  The question becomes, “by what method?”  Setting our cites on costs alone – always increases costs.  The method to improve government requires method.

I have long been an advocate of the virtues of the Vanguard Method.  Getting knowledge is always the best first step to improving service organizations.  The problem is that it is a rarity to find executives or elected officials willing to get in the work to get knowledge.  Instead, they rely on reports, anecdotes and others to do this for them.  Bureaucrats are in a position to be in the work and make decisions based on knowledge.

This doesn’t mean elected officials should abdicate the responsibility, but the reality is they do.  Elected officials are too busy embracing political ideology, and creating new laws to be bothered with facts.  As a bureaucrat, I remember being more hand-cuffed by dumb laws than wanting to create new ones.  Plenty of opportunities to do what makes sense than to pass a law.

Bureaucrats need good systems to work in too.  What I have seen in government is the influence of ideology over evidence that dictates the design.  Each new government has a different ideology and the learning is skipped in favor of ideology.  Misguided laws and ideology make government systems run poorly.  Blindly running down the privatization path is as faulty as embracing government to do things.  Better design of government is in order, but that is not what we get.

Bureaucrats are stuck in systems that are poorly design.  Not by choice, but by laws and ideology that rule thinking.  Government management and workers have been marginalized.  If we are to fix government, we need everybody engaged and the bureaucrats are in the best position to see the problems and identify ways to fix them and help fix the systems they work in.

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.

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There was an election recently in Indianapolis between incumbent Mayor Greg Ballard (R) and challenger Melina Kennedy.  A reporter for the Indianapolis Star (and the Star) put their endorsement behind the challenger because she had better vision . . . and we aren’t talking about eyesight.

I consider myself an independent, so there things I like and don’t like about Republicans and Democrats.  However, I found the whole “vision thing” to be pathetic.  I’ve seen it in business too.

Too many executives with “vision” running companies into the ground.  They need to understand the business first and not just bullet points and anecdotes.  They need to understand what it takes to do the job and interact with constituents or customers that use the service.  Visionaries often gloss over the “understand the business first” piece.

Mayor Ballard won despite the endorsement of the Star falling to his challenger.  Why? Because he and his staff did the things that matter to the voters.  Do the fundamentals well and reelection will follow.  The “vision thing” can wait for the basics to be mastered and knowledge to be gained.  If you aren’t doing the things that matter to customers and constituents than you aren’t going to win an election or make profit.

Vision and political ideology in government seemingly go hand-in-hand.  More government, less government, privatization . . . how about “what works”  for a change.  This requires knowledge, not plans or policy.  This is completely counter to the “big picture” people we too often see in government.

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.

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I am reading two books right now.  One by Governor Daniels of Indiana and another by former Governor Jennifer Granholm of Michigan.  Governor Granholm talks quite a bit about the loss of jobs in manufacturing in her State to outsourcing.  In fact, her last election against Dick DeVos – the former Amway CEO – she let him have it during her campaign for outsourcing jobs to China.  Certainly, the subject for a future blog post.

However, something else caught my eye . . . Governor Granholm’s love for MBO.

“As a big believer in management by objectives, I loved using  the State of the State speech as a blueprint for the year.”

- from A Governor’s Story – Governor Granholm

There is a correlation between the loss of jobs to outsourcing and MBO, but I won’t make it in this post.  They are both wrong behaviors and outsourcing you can find plenty of posts why it isn’t typically saving money.

Organizations and governments are still using MBO – shocking?  Not really.  I still see it in many organizations, once a bad idea . . . always a bad idea.

Peter Drucker invented this thinking in 1954, W. Edwards Deming rocked the world when he spoke about MBO as one of the evils of management (as practiced).  Closely related to MBO is SMART (Specific, Measurable, Agreed, Realistic and Time-related) and a Balanced Scorecard.  Targets come along with these thinking methods.

First of all, Dr. Deming understood that when you provide objectives and targets by function you get sub-optimization.  Meaning if you optimize each functional piece you miss the inter-dependencies and create a system works against itself.  This creates waste.  For example, you often see departments vying for resources focused on what they can get in resources for themselves. Artificial competition is produced and the loss to the system is great because we do what is right for the department, but not right for the system.

Information technology seems to get much of the money in organizations.  Yet IT cannot create value, it can only add value to the relationship between customer demands and work.  Unfortunately, too many organizations don’t get that IT, HR, Finance and other supporting areas aren’t meant to create a profit for their department – they are there to enable the value creating relationships.

With MBO, we get management and worker focused on the wrong things.  Hitting the target laid out in the objective (remember SMART).  The flow is interrupted by the functional separation of work as each piece tries to optimize itself.

“(MBO) nourishes short-term performance, annihilates long-term planning, builds fear, demolishes teamwork, nourishes rivalry and politics.”

- W. Edwards Deming (from Out of the Crisis)

“Management by Fear” was the Deming phrase that replaced MBO.

Governor Granholm is a Harvard graduate.  Peter Drucker taught there.  Harvard, with all its money has become the poster child for bad theory.  Smart people, wrong method.

As voters, we need to ask candidate, “By what method?”  As managers, we need better thinking about the design and management of work – devoid of MBO and targets.

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.

I recently read an article from Governing, Human Services by the Batch.  I felt a familiar pain associated with the “answer” for social services – process management, modernization, automation – the Greek trilogy and tragedy.

I posted a comment at Governing that explains why process or task management is NOT the way of the future.  I had to go back and adjust my answer (over the character limit) so the comment below is longer:

I am a former CIO of FSSA in Indiana. The “process management” system that is proposed here is similar to the IBM (and partners)-led modernization failure in Indiana.  This was a billion dollar contract that the Governor was forced to cancel.  In essence, “process management” is doing the wrong thing, righter – or possibly wronger.

Here is why – we have a fundamental thinking problem in government about the design and management of work.  The design of “process management” deals with three traditional questions, How much work do I have? How much time will it take?  How many people do I need?  These are the WRONG questions to start with to improve services.

All demand is not work to be done – some of the demand we receive is in the form of failure demand (demand caused by a failure to do something or do something right for a constituent).  Eliminating the amount of failure demand which I have seen as high as 90% in social services offers us a huge opportunity to reduce the demand coming in.  A leverage point for better designed social services.

Secondly, the flow of the work is interrupted by designing the work into teams and things wind up taking longer when functionally separated – a counter-intuitive truth.  Separated work even with a team will create more failure demand and less flow.  Better ?s are how many demands are done one-stop?  What matters to the constituent?  How long does it take end-to-end from application to benefit sought?

Improving the design of the work requires different thinking about how we manage work.  Unfortunately, I didn’t discover this thinking until after the IBM fiasco in Indiana.  However, you can learn from mistakes others have made.

A better method is to first understand the “what and why” of current performance.  When variety of demands is high – like in social services – IT systems and standardized process can’t absorb the variety resulting in failure demand (or more work to be done).  Redesign the flow of the work by eliminating failure demand and making the work one-stop.  Then automate with IT when a design that works (good flow) is found.

The problem we had in Indiana was that political ideology ruled the day – this at the expense of evidence and knowledge.  Case workers replaced by process and task management.  The system that the case workers worked in was flawed, but the flaw was from poor thinking from management . . . not bad workers.

With 49.1 million Americans living in poverty, we need better services that reach those in need.  Better social services needs to be a government management issue regarding how we think about the design and management of work.

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.

I follow a l0t of the conversations going around on the web comments pages.  An article about contract labor and outsourcing for government showed up on CNBC’s site.  The high wages of government workers are cited as a reason for our deficits . . . can’t be the politicians.

These governments workers are making the budget busting amount of $15 – 20 per hour plus benefits.  Bastards!  Greedy, aren’t they?  This bothers me in light of the government bailout poster children – Fannie and Freddie – whose top execs got over $2 million in bonuses (each).  This for such well run organizations that just borrowed $169 billion more.  When do we get the well run organization first, before we pay the big bonuses?  I am still waiting for the previous execs for Fannie and Freddie to go to jail.

Back to the task at hand – cheap labor in government.

I worked as a CIO for a year in government, government is full of waste.  It is everywhere you look.  However, the workers in government are not to blame for the poor design of the work.  Political ideology vacillating back and forth over the years is what created our current problem with government design.  No one in government knows how to design good work.

Politicians go immediately to the “technology well” to modernize and automate.  No evidence or knowledge this is the right or wrong thing to do.  The design requires many times the number of workers that are needed for a well-designed system.    But between the functional separation of work and keeping labor costs down, government management instead “dumb’s down” the design to keep costs down.  Ridiculous? Yep and it is costing us in the way of huge deficits for government.

What this means that if design work that adds value to constituents that maybe workers are paid a wage of $30 – 40 per hour or more.  As a taxpayer, I would gladly pay these wages for a system that isn’t full of waste.

We are missing a great opportunity to change the system that is more full of blind political ideology and misguided legislation.  Making the government workers a part of the solution rather than pointing a finger at them as the problem would be useful . . . that would mean that politicians would have to point the finger at themselves (sigh).

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.

Probably better to say curiosity starts us down a different path and innovation follows, but assumptions block the path to curiosity.  Grabbing or copying the first best practice or tool to make improvements ends any chance at innovation.  We want to check a problem off the to-do list not have to think about what options we have to solve a problem.

I was reading Alfie Kohn’s website and remembered my Deming days.  He was the first person I had met that challenged my thinking on competition and reward systems.  He reinforced and furthered Dr. Deming’s argument that cooperation and not competition was that better way to go.

Deming and Kohn also made me rethink reward systems and how they drive the wrong behavior.  John Seddon talks about how rewards and targets become the defacto purpose of an organization – meaning that management and worker pursuits of targets and rewards take our eyes off creating value for customers.  Further, the system we work in and how well it is designed is by far the biggest influence on organizational performance.

The best way to ask people to begin is to set aside the old assumption that we have learned in childhood, experience, schools and what others have told us are true.  This is why going to the work is so important rather than relying on IT-generated reports or the biggest mouth in a meeting.  You can learn new truths when you do and banish myths at the same time.

This brings new and better thinking to problems.  This is called innovation.

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.

There is  a growing trend of backlash in America and around the world.  The Tea Party wants a balanced budget and less government, Occupy Wall Street wants equality in business and government and now the consumer is taking action against $5 debit card fees.  We are in a new age.

Caveat Venditor!!!

“Let the seller beware” is upon us.  Social media has allowed people to organize causes quickly.  Be it the Arab Spring or London Summer or the recent events we have witnessed the times they are a-changing.

Organizations, governments and management need to get serious about the poor service they are providing customers because they aren’t just one-off or individual complaints anymore they are movements.  This can be good news or bad news for companies.

If you are trying to maximize profit and putting it to customers – bad news.  If you have horrendous service through poor customer service, IVRs, websites, etc. – bad news.

Blaming it on Washington just won’t fly anymore.

On the other hand, if you are designing good services – good news!

Here is the management paradox that organizations and governments need to get a grip on . . . good service costs less!  So, quit lamenting on lost revenue and build services that meet customer purpose and satisfy demands.  There will be less failure demand to deal with (lower costs), happier customers (more revenue) and discovery of new and innovative methods for new products and services.

That short-term focus on profit-thingy your reward systems will not survive this onslaught.  People are perceiving it as greedy and sometimes it is.  Long-term thinking with a consumer focus will win the day.

Are you ready?

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.

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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.