The No Tool Zone

John Seddon and my Vanguard partners have written a very important white paper on economies of scale titled Why do we believe in economy of scale?    If management is to change thinking, here is a great place to start.  The mass-production, economy of scale thinking has outlived its usefulness.

This paper challenges the assumptions around our management thinking from costs to the causes of costs.  The leap from economies of scale and the design of work that is resultant from it is destroying value and creating waste.  Economies of flow are driving both work design and management thinking.

I am commited to finding ways for service organizations and government to understand the impact of this thinking in improving profits and reducing costs.  This paper is lengthy, but should be reviewed and digested several times as its significance is unequivocal. 

I am writing in both columns (Quality Digest and IQPC) about the importance of economies of flow.  Additonally, I am working on a speech to present to associations, government entities and service companies on this topic.

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Make the new decade a profitable and rewarding one, start a new path here.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about how to get started at tripp@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

Tripp Babbitt is a columist (Quality Digest and IQPC), speaker, and consultant to private and public service industry.

Expect more than just nurse strikes in the upcoming days.  Command and control thinking with its cost-cutting mentality is sure to get worse.  Let’s not limit this to just hospitals, but I expect to see strikes in many other industries as workers of all sorts say enough is enough.

It is never good when workers strike . . . especially in hospitals where life and death are decided daily.  The question becomes what are the root causes? They are usually same things with cost cutting being a focal point.  We know that cutting costs always increase costs . . . always.

Unfortunately, command and control managers know little more than how to manage budgets and productivity.  Few hospital administrators spend time in the work understanding their systems.  Time instead is spent over the deteriorating income statements and reports that give them little context of the causes of costs.

A heart-wrenching story about a nurse suicide can be found on YouTube (Melissa’s Story) paints a sad picture.  We have plenty of disciplinary procedures and protocol but few efforts to advance learning and improvement of services.  There is much waste in hospitals and there is a need for administrators, nurses and others to work on the system (structure, technology, work design, technology, policies, etc.).

Why work on the system?  Because 95% of the performance of any organiztion is attributable to the system and only 5% the individual.  Working on the system gives us a huge opportunity to improve.  Working on the individual results in poor outcomes.

The current structure of most hospitals with poor work design and management focused on costs leads to a predictable conflict.  This is neither good management or good patient care. 

Redsigning hospital work requires both management and worker looking together at customer demand and not each other.  Better thinking will prevail as management and worker understand customer purpose and derive new and better customer measures that drive costs down and relationships together.  The old command and control style of worker’s work and manager’s manage with cost cutting does nothing good for management, worker or patient.

We face an era of more strikes or more cooperation, I would suggest that it is more profitable to seek cooperation.  Proper focus on the system and the causes of costs is a great place to begin.

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Make the new decade a profitable and rewarding one, start a new path here.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about how to get started at tripp@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

Recently, in talking with some hospitals I have discovered that many have taken what they call a “lean path” to improvement.  A short surf to some of the forums that support conversations about this path has people sending pictures of cleaned up areas using 5S (discussed in my post: 5S in Hospitals and Service).  No wonder hospitals need to have Employee Assistance Program representatives on standby to help employees cope with the stress caused by change.

The movement of hospitals running around finding a best method for everything seems plausible, but they miss bigger opportunities to change their systems so nurses and other workers don’t have to go to the psychiatric couch.  Worse, many of the lean implementations are sub-optimizing their systems by improvement department by department.  This means one piece or finction is optimized but the overall system pays the price.

Why does this happen?  The problem is the inside-out approach that is too often taken.  I have found the better approach is to start with demand from the outside-in.  After all, why spend time on improving a hospital based off another hospital’s demand . . . which is what copying gives you.

Every hospital system is different by demand, structure, work design, technology, policies, people, etc.  Making assumptions to achieve a best practice can be costly.

Studying the type and frequency of demand and whether the demand is of value or failure (demand caused a failure to do something or do something right for a customer) can give us a better starting point.  All this can be learned at the points of transactions that customers communicate demands to your hospital.  Hospitals can be better informed about their system because looking at things from a customer’s point of view gives us new perspective.

The important thing about this customer perspective is that customers don’t see functions they see a hospital system.  Understanding customer purpose (what matters to them) leads to better systemic measures.  This helps shift the focus from internal to external . . . it is one system after all.

5S and other tools distract from the system and management focuses on the wrong or “functional” measures.  This creates a missed opportunity to redesign the work to accommodate customer demand through systemic changes.  

 This has led to arguments that may not benefit anyone between systems thinking and lean crowds, but I believe these are important arguments as the tool-based approach is missing huge opportunity to change thinking and get far more comprehensive systemic changes.  I doubt there will be lean people converted.  However, it is important to know there is a different and from what I have seen better approach.

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Make the new decade a profitable and rewarding one, start a new path here.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about how to get started at tripp@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

I have posted many times before about the importance of demand for service.  It is something that practitioners of manufacturing-based improvement methodologies like lean six sigma seem to miss.  As manufacturing facilities have closed in the US, the movement of people from manufacturing to service has brought this thinking with them.

What have they brought?

Standardization as the place to begin improvement activities.  Something that I have learned is not a good place to start.  Yet, most service books I read that have applied these manufacturing techniques to service industries like hospitals, contact centers, break-fix organizations and many more.

Service may improve as order is made out of chaos with this thinking, but I often find that demand has a way of changing over time and that the service variety is much greater than manufacturing.  I would also include that most of these manufacturing techniques were deployed on the front-line and the important changes to management thinking never took hold or place in manufacturing.  This hits at the heart of sustainability as in order to improve management thinking has to change too.

With service having greater variety, standardization doesn’t make much sense until we understand demand.  In fact, standardization inhibits absorption of the variety found in service without the insightful study of demand.  It is (in essence) putting the cart before the horse when we start with standardization in service.

A study of demand allows us to discern customer wants and needs to truly design the system to give exceptional service.  The absorption of variety allows costs to be reduced.  When variety isn’t abosrbed like say in an IVR (Interactive Voice Response), customers have to call back with great frustration or they don’t call back which results in loss of business.

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Want to learn more about designing against demand?  Check out Finding out “What matters” to your customers under the down loads tab or click here. 

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.

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

Why No Value?

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

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

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

Benchmarking is Expensive

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

A Better Way

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

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

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

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

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

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Read his articles at Quality Digest and his column for CustomermanagementIQ.com  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

Doing my weekly review of articles at Governing.com, I came across an article written by Jonathon Walters.  Titled “The Right Way to Fight Fraud” Mr. Walters does a pretty good assessment of the problems and perks of fighting fraud.  The perks he describes under the heading of “the three horsemen of the public-sector apocalypse ‘waste, fraud and abuse’” that leaves us short a horseman (there are four), but we are talking about government where perfect is the enemy of good enough.  My personal four horsemen of the apocalypse are benchmarking, outsourcing, shared services and command and control thinking.

I certainly agree with Mr. Walters that the amounts of fraud are great in Medicaid, Medicare, TANF, and SCHIP and the amounts of $27 billion in “leakage” is staggering.  But to me this is a political red herring as politicians build programs to avoid waste . . . only to add more cost and waste to the system.  The State of Indiana and FSSA can serve as an example.

Indiana set out to modernize Indiana Welfare Eligibility where the Secretary of FSSA was out to eliminate abuse through technology.  What we got instead was a lesson that I am not sure anybody has learned (after all, Indiana is the not invented here state).  The modernization took functions of the work and separated them believing that more separation of function would reduce fraud and with technology all the pieces would work together with checks and balances at each step.

The result was recipients, legislators, providers and special interest groups coming together to complain about processing times in one of the most bi-partisan efforts I have ever seen in government that . . . this modernization wasn’t working.   Billions of dollars wasted on bad theory that will take years to recover from the mess.  Politically the heat is off as Governor Daniels killed the contract with IBM, but the waste continues.

The current secretary is stuck with a 30% increase in personnel from this debacle.  But no lessons have been learned I fear as the pilot program running today includes even more people.  The reason is more checking because the secretary says that $1 million of fraud has been committed over four years in the old system and so we spend millions more to prevent this in eligibility (read Indiana Welfare Modernization, Costs and Cynicism).  Politically correct . . . maybe, hugely wasteful . . . definitely.

Part of the problem is the belief that any system with paper is antiquated and needs technology to automate.  But this is to ignore our biggest opportunity to improve . . . the design and management of work.  Poor work design is at fault for fraud, not people.

In fact, technology only makes things worse.  Technology locks in the waste of a poor work design and management thinking that technology is the answer continues the downward spiral.  Just because we can automate something doesn’t mean we should.

Further, with all the checks and balances and separation of the work into functional specialties, we lose who is responsible and accountable for the work.  More hand-offs through technology or paper always increases waste in a system.  The work loses context as it moves from person to person and the queues it creates increases service time on a large scale.

There is one other thing that functional separation of work and technology creates and it is called fraud.  People bent on committing fraud learn that when no one is responsible that it is easier to game the system.  I see algorithms in technology to catch people committing fraud, edits, audits, etc. where the answer is really much simpler.

The answer is to design the work by getting knowledge about the what and why of current performance.  Understanding customer demands, deriving measures from these demands and experimentation with method.  This means government management must first understand the actual work without technology (either ignore it or turn it off). 

Additionally, this means decisions about the work have to be made with the work and not top-down.  Workers can only be made accountable when decisions are made with them, not to them.  For the political hacks out there with their preconceived notions about fraud prevention, my suggestion is to get knowledge for your ignorance.

The answer is in the work with the people that perform the work and not in the inspection, monitoring, technology, etc that sounds promising but continues to add fraud and waste.

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

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  For government please link to www.thesystemsthinkingreview.com.  Reach him on Twitter at www.twitter.com/TriBabbittor LinkedIn at www.linkedin.com/in/trippbabbitt.

Mystery shopping originally began in the 1940s as a way to assess the integrity of employes of banks and retail stores.  In recent years, the industry has morphed into other areas like customer satisfaction, compliance and improvement for many different service industries including hospitals, car dealerships, restaurants, theaters, gyms and the list goes on.

I first encountered mystery shopping while working with bank call centers and for the most part it was used as a compliance tool to be sure that agents were being friendly, answering the phone correctly and offering other products during the call.  Most call center agents would tell me that they usually could tell when a mystery shopper called because “they just don’t sound or act the same as a real customer.”

In hopspitals, mystery shoppers are used as “fake” patients or a friend going through the process with a patient.  The customer experience is noted by what they see in the process of checking in a patient, delivery of services and/or the payment process.  The idea is completely plausible but the premise is faulty.

Whether mystery shopping is used  for compliance, market research and/or improvement it is the wrong approach.  Compliance typically means that we have some standard process, script or procedure that we are trying to catch someone doing something right or wrong.  It is a sneaky way of doing monitoring or inspection on employees of service organizations.

Forced compliance is not a good idea, in most industries I have found that agents are up against compliance to things that really don’t matter to the customer or patient.  Most standards used for compliance come top-down in command and control fashion and not from an understanding of customer demands or the work.  This leads to mystery shopping that looks for the wrong things as service organizations force compliance inside-out rather than outside-in.

Market research to me is just another way of finding out what matters to customers.  This is best done as an internal exercise as surveys and observation by outside agents winds up as a report that no one takes action on.  Further, the knowledge of market research is best gained by those interacting customers (front-line employees) as they have knowledge of both the work and the customer or patient.  I have seen many good ideas from employees never get tapped into or worse ignored.

In the improvement arena, I don’t need a mystery shopper to pretend to be a patient or customer.  Service organizations have plenty of these every day that we can learn from.  And for hospitals who has time to deal with artificial demand (patients)?

If improvement is to happen in service organizations mystery shopping is not the way to go.  Service organizations need to understand that the biggest opportunity for improvement is the design and management of the work.  This is best improved by understanding customer purpose and demand, deriving customer measures from this understanding and experimenting with with method that leads to improved work design and innovation.

So save your mystery shopping money and invest in performing check on your organization to understand the what and why of current performance.  By understanding how you perform today your service organization will be on the way to improving service.

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

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.

I made the mistake of going to the LEI website today.  They have chosen not to post some of my comments, but I saw a conversation in the Lean Forum about 5S in hospitals.  I had to read on.

The participants were all looking for case studies and pictures of using 5S in a hospital setting.  I couldn’t believe the amount of copying being promoted. “Send me pictures of what you did.”

All these approaches are inside-out and not outside-in.  There is no discussion of customer demand, purpose or measures.  Is this a really effective approach?

Will improvement result from these activities?  Possibly, but the tool-laden approach without the insightful study of demand means we have little chance of finding a more purposeful design. What if demand changes (which happens  in service environments), will hospitals be able to absorb the variety of demands?

More importantly, I can predict that everyone will be forced to comply.  The compliance police will be right around the corner to make sure that you do.  After all, these are the folks that love tools, rules and order especially while wielding misguided authority.

So, when hospitals begin copying 5S activities from one to another, do they have the same demands?  Did anybody ask? No, because the functional thinking that we didn’t change before embarking on 5S allows people to make assumptions that one function is like another.

The reality is that you can 5S until the cows come home and still have lots of waste.  Maybe better with 5S that I dance with the cows until you come home (thank you, Groucho Marx).

5S had a purpose in manufacturing and a different problem to solve.  The codification of 5S for hospitals or any other service is erroneous until we ask the three questions:

• Who invented the tool?
• What problem were they trying to solve?
• Do I have that problem?

And please stop the incessant copying and work on the thinking first.  A good place to start is understanding the type and variety of demand before tools.  When you start this way, you may discover that you never really needed the tools.  Better yet, you may discover a new tool that solves your problem even better . . . innovation is OK.

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

Tripp Babbitt is a speaker, blogger and consultant to service industry (private and public).  His organization helps executives find a better way to make the work work.  Download free from www.newsystemsthinking.com “Understanding Your Organization as a System” and gain knowledge of systems thinking or contact us about our intervention services at info@newsystemsthinking.com.  Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt.