The No Tool Zone

In Indiana, if the 180-day mandatory school year wasn’t bad enough, now we have these “standards” (targets) for the federal No Child Left Behind Program.  Last year 65.7% had to pass the test and the new target for this year is 72.6%.  This increase in the target has made in the best schools in Indiana “fail” in the eyes of this federal program.  All this foolishness achieves nothing.

The school systems are performing the best their systems are capable of achieving.  Let me give you an example.  I shoot around 80 when I play golf.  My system allows me to shoot in a range between 75 and 85 with an average of 80.  This is what I am capable of achieving without changes to the system.  To have someone tell me to shoot 72 (on average) requires a change to my system (swing, short game, etc.).  Just setting the target does not change method.  Our school systems need to change method to achieve new heights . . . a new target without method achieves nothing. 

Worse these targets become the defacto purpose of the school systems when the real purpose should be to find new methods to educate our children.  Instead, this defacto purpose urges schools to meet the target.  The targets will (and have) promote cheating and manipulation in the school system that distracts them from changing method and blurring the schools purpose.  These are old methods born from scientific management theory from the late 1800s.

Let’s look at the waste already being created.  My son goes to Hamilton Southeastern and we have already received a letter from the principal explaining why they didn’t pass the new standard target.  I don’t care the reason and what a waste of time and resources for the principal to have to take to to explain.  He needs to be finding better methods.  Targets are creating waste in letters of explanations (time to write), and mailings (money).

Our school systems are badly in need of better methods, not targets.  Our country and state need to focus developing these new methods and gaining knowledge.  I urge Dr. Bennett to find new thinking as targets and standards are ancient ways and cause intolerable waste.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  He is focused on exposing the problems of command and control management and the termination of bad service through application of new thinking . . . systems thinking.  Download free 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.

My counterparts in the UK (Vanguard Consulting Ltd.) identified five types of waste in the public sector.  After review, I had a V-8 moment and said these are the same problems we have here with the US government.

Here are the 5 types:

1. The costs of people spending time writing specifications.  The massive amount of growth in employment in government has nothing to do with public sector innovation or improvement.  It is all of those people being hired to develop specifications, standards, performance targets, contracts, reporting schedules and other non-value activities that command and control thinkers love.  This stuff is based on opinion and bi-partisan ideology not knowledge.  This is a tremendous source of waste as their is no value in this stuff.
2. The costs of inspection.  Next comes the inspection for all these specifications.  Checklists and training for inspectors.  This inhibits public sector innovation in favor of compliance.  More and more auditors are hired and now we have auditors to audit the auditors that creates waste and huge costs.  Worse we have auditors dictating methods to workers even though they do not understand the work.
3. The costs for preparing for inspection.  Schools, agencies, state governments, etc. spend lots of time with copying and preparing reports for the auditors.  More documentation is sought to keep the auditors away.  Consulting on how to pass inspections.  All preparation for inspection is waste.
4. The costs of the specifications being wrong.  The worse cost is the cost of compliance to specifications which actually results in worse performance.  We get the double whammy . . . bad service and high cost.  The nature of arbitrary and opinion-based requirements and specifications without knowledge increases waste.
5. The cost of demoralization.  The pass/fail, good/bad nature of inspection in accordance with compliance to specifications can demoralize the worker and the public.  Especially, when they can tell the mandate is making things worse which happens more often that not.

Systems thinking offers a better way.  Instead of compliance, we need public sector innovation.  People doing the work need to be able to be able to act in the best interest of their shareholders.  Government management needs to be responsible, they need to chose what to do free from compliance.

Performance inspection in systems thinking is concerned only with the measures that government management uses to understand and improve the work.  Managers should be free to use new methods to achieve these measures.  Public sector innovation would explode and eliminate the 100s of billions of dollars spent in the specification, compliance, inspection, and preparation for inspection.  As a bonus we get government management and workers wanting to help rather than comply.

My counterparts in the UK are implementing as much of this thinking with local authorities as possible.  Their central government stands in the way of removing more waste.  Find out more at www.thesystemsthinkingreview.co.uk.

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  He is focused on exposing the problems of command and control management and the termination of bad service through application of new thinking . . . systems thinking.  Download free 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.

I rarely try to look at local issues as my blog has international readers, but this has to be addressed.  In my home state of Indiana, Dr. Tony Bennett Superintendent of Public Instruction has issues a mandatory 180-day school year.  On the surface this seems plausible assuring kids are in school 180 days, the more time in school the better . . . right?  Well the 180-day school year is now a target that must be hit by schools without any waivers for weather, and can’t take credit for parent-teacher conferences, and in-service teacher days.  The Indy Star (Indianapolis newspaper) and Indiana Chamber have come out in support of this plan.

This is not a Republican or Democrat issue.  This is an issue of command and control thinking where a random target is set in stone without regard for the system that it effects.  Targets always get you less.  As if there weren’t enough defacto purposes in our school system we now have a new one which has little to do with educating children.  Superintendents and principals are going to be trying to figure out how to get to 180 days instead of finding better ways to educate our children.  What might they do?  Well, we might put our children at risk by going ahead and having school on days that have treacherous driving . . . we have to hit that 180 days right?  No waiver.  Those pesky non-value-added parent/teacher conferences will have to go away.  Class preparation for teachers is obviously them just being lazy.  There are myriad other sub-optimal things that can happen from a random target set like this. 

For those concerned with more school days I have no argument, except why is 180 days the magical number over 179, or would 185 be better?  No one really knows the answer.  I support Dr. Bennett in having better education, but targets are not the way in the public or private sectors.  This is not a method for new public sector innovation this is old school command and control thinking bound to get us away from our purpose . . . to educate children.

A better way is systems thinking.  Start by studying the system and the interaction of student, teacher and parent.  Learn to leave the decision-making with the work and work on the system of better education as State Superintendent.

Dr. Bennett admits that he once had to used waivers because of snow days as a school superintendent.  He claims to wear a different hat now.  The hat he needs to wear is a systems thinking hat that understands the damage of targets and their corresponding carrots and sticks.  Senseless targets and government management mandates put better education at risk.

There are quite a few articles on shared services strategy and most of them are positive.  There is a better way to achieve business cost reduction and business improvement than cited in most of the articles. As an example, AT Kearney put out an report/white paper called Success through Shared Services.  The first pages of this, report that getting the advantages of shared services is like spinning “straw in to gold.”  They would have been better off stopping there. 

In a survey by Harris Interactive, the report goes on to say that on average up to 6 departments are typically consolidated and these companies are “highly sophisticated” and have Service Level Agreements and charge-back systems and are also exploring outsourcing strategies.  The report sites that “70% of executives rank their shared services efforts as successful . . . and the benefits range from reduced costs and  improved productivity to superior employees.”  A command and control thinkers dream!

The purpose of the paper is to “highlight why shared services is a proven method to deliver value.”  Doesn’t sound like people are beating the door down to share services and need convincing.

AT Kearney discusses the “Fundamental Truths of Shared Services” in this article and cite the need for a standardized model.  All command and control thinking.  My favorite in this section “many executives cling to the misconception that shared services will result in increased costs.  Examples of companies that tried shared services and abandoned them because of higher expenditures and increased operational complexity are easy to come by.”  Yes, because shared services increase costs and complexity, I’d like to talk to these executives because they get are correct.  AT Kearney goes on that costs are only increased because of a “flawed implementation.”  Of course that’s the problem it just wasn’t implemented correctly . . . it REALLY works after all it is one of the “truths.”

AT Kearney then goes on to talk about “The Three Pillars” of shared services.  All three are directly targeted at the command and control thinker . . . consolidation, standardization and automation.  All three items I find to lead to worse service for the customer and increased costs.

AT Kearney has a nine step process that is used to avoid the dreaded “flawed implementation.” In summary, it includes “setting targets, appropriate operating model, effective governance, take your time (2 years), managing rising technology costs, integrate outsourcing strategies, management tools (charge backs and SLAs), measure performance, and focus on internal customers.”  Targets and performance will always become the de facto purposes of the organization so a better way is to focus on customer purpose and measures that matter.  I find it strange that one of the nine steps is internal customer focus, without any mention of the actual external customer.  SLAs are another form of targets and charge backs add no value to the system . . . it is a form of waste.  Outsourcing strategies lock in waste without accounting for failure demand.  And technology costs rise because you have to have all types of technology software, hardware and of course consulting to make all this stuff happen, that must be the reason to allow time and two years probably isn’t enough with implementation issues.  Other than that it is a command and control thinkers dream.

What should be done?
Do we need a front and back office? Or is a front office design a better way to handle demand.  Only by studying customer demand can we be sure.

Before any shared services strategy takes place we need to understand current service performance.  This can be accomplished by studying customer demand (what customers want), capability (how well it is delivered), the value work (the service customers want efficiently), waste and its causes.  We can then improve service where it is currently delivered and then have a knowledge-based discussion on shared services opportunities.

 just read an article from Govtech.com displaying the “efficiencies” gained from a shared services strategy in the states of California (CIO – Teri Takai) and Michigan (CIO – Ken Theis).  Maybe this is the reason that these two state deficits are so large.

Shared services usually means either we are consolidating front office activities or back office activities to gain economies of scale.  The problem is that we have created front and back offices that are not designed very well to handle customer demand.  Front and back offices are designed with the assumption that all the work received is value work and thus treated as something to be processed.  The reality is much of the work is failure work, work that is rework, “status inquiries or progress chasing.

Information Technology in these situations leads to locking in costs rather becoming an enabler.  Work is broken down into tasks that can be electronically sent to the “right” people.  Managers then monitor the activity and performance to pre-determined targets.  End game:  Targets are hit, but poor service generates increasing failure demand.  The activity and performance measures take the attention away from the purpose of the activity and reality of the work.  Ultimately, leading to the need for additional staff to accommodate the increase in failure demand.

Economies of scale is a driver of the shared services strategy, but it is the economies of flow (Taiichi Ohno) not scale that will drive costs down and improve service.   Understanding the predictability of failure demand will help identify and stop the causes by redesign of services that can then provide value.  Understanding value demands will help managers design services that allow citizens to get what they demand from the service.

Some services may not require a front and back office split and by having tasks split create more waste and worsen service.  Some services are provisioned better with just a front office (especially those that have high complexity).

My fear is Ms. Takai and Mr. Theis believe that front and back office designs should be driven by IT.  IT analysts and consultants that identify the tasks to be done and the processes these tasks belong to, creating standardized work.  But the standard work is not able to absorb the variety of demand and by placing these demands ensures that information technology will lock in costs.  The costs of a shared service design is in the flow not transactions.  It is the total volume of transactions and its accompanying costs of delivering the service that are important, not the cost per transaction.  Assumptions that costs are in transactions leads to building shared services departments that deliver high cost and poor quality services.  IT guarantees locking in this waste.

What should be done?
Do we need a front and back office? Or is a front office design a better way to handle demand.  Only by studying customer demand can we be sure.

Before any shared services strategy takes place we need to understand current service performance.  This can be accomplished by studying customer demand (what customers want), capability (how well it is delivered), the value work (the service customers want efficiently), waste and its causes.  We can then improve service where it is currently delivered and then have a knowledge-based discussion on shared services opportunities.

These same arguments exist for the private sector and not just government management.  As a former CIO in state government, I am thankful that my partners (Vanguard Consulting) and especially John Seddon pointed the difference out to me.  Systems thinking is a better way.

This blog title is truly bi-partisan.  I am not posting for or against any political view, but to agree that services could actually be distributed for the greater cause.  I have worked in state and federal governments as a contractor and an employee.  There is no shortage of waste in the provisioning and outsourcing of government services.

Government management in agencies that I have worked with were consumed with the following types of issues:

• How much money could the agency get.
• How much did it spend.
• How the agency could get more funding.
• How does the agency avoid (unwanted) attention.

Unfortunately, at the government management level there was limited discussion of how well the services were being provisioned, unless the agency received “unwanted” attention (bullet #4).  When there was unwanted attention there was usually some knee-jerk reaction to fix the issue, or a previous administration, vendor or person to blame.  Sometimes the media or interest group with an issue got the facts wrong and those were easy to defend.  Rarely was the conversation about how well a service was executed.

The four bullet points above became the de facto purpose of the agency.  To be good stewards of the taxpayers money the purpose should have been related to how well the services were provided.  As in the private sector, the public sector believes that the provisioning of services is a zero-sum game, where costs increase as service improves.  The management paradox here is that costs actually go down as service improves.

I have seen a movement in recent years to manage the costs like a business.  The focus on the management of costs will always increase them.  I am not saying we shouldn’t know the financial score . . . we should.  What I am saying is that the total costs go down as service improves.  A systems thinking service organization (private or public sector)understands these differences.

To find out more on systems thinking go www.newsystemsthinking.com.