The No Tool Zone

The advent of technology has enabled work to be spread around the world.  Try finding who actually does the work once it reaches an electronic mailbox and you are sure to need to hire a detective.

Service organizations have designed front offices that actually can’t do anything but pass the work to the back office.  And some times either the front office and/or back office are outsourced to a country with cheaper labor.  This is allowed only because we have technology to pass things around the world.

As a customer, I get frustrated with talking to contact centers that have been outsourced and off-shored.  Yes, sometimes I can’t understand the agent, but that isn’t the reason for my ire.  The problem is they can’t help me when I get to them.  They read scripts and are polite, but they can’t help me.

The sad thing is I run into the problem when the agent hasn’t been off-shored.  This has long led me to believe that the design is the problem whether outsourced or not.  Consumers are frustrated with IVRs to navigate, scripts to overcome, and back offices hidden away with the people that can actually help me buy or solve my problem.

Many companies have programs for off-shored companies to teach language skills to their employees.  But no one is addressing the real problem of the design of the work.  The result is predictable demand from customers that are caused by a failure to do something or do something right for a customer (failure demand).  Or worse, the customer never calls back . . . and you can’t measure loss of business.  The reality is that if you have large amounts of failure demand, you have a large loss of potential and existing business – word gets around.

Too many service organizations take the attitude that it is costly to actually answer a phone call with a human that can absorb the variety service customers bring.  And to design work that actually allows a customer to get an answer one-stop would have the organization drowning in red ink.

The management paradox is that nothing could be further from the truth.  Good service always costs less than bad service . . . by a lot!  Designing out failure demand and creating value for customers is what creates profit.  There is no profit without customers.

Service organizations have created a maze for customers to navigate thinking that this is good business.  For customers, it is a shell game from an unscrupulous street vendor determined on hiding the pea.  This is a lose-lose for both service provider and customer.

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.

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The variety of demand in service is one reason it differs from manufacturing. This is a subject I have talked about before.  In service, the customer brings variety and the aim of a service organization is to understand what matters to customers (their nominal value).  A manager for a client of mine came up with the analogy of Goldilocks and the Three Bears to describe the relationship.

You know  the story of Goldilocks.  She finds a house that is empty and different types of porridge, chairs and beds until she finds one that is “just right.”  So it is with customers that are provisioned service they want service to respond to what matters to them, not the standardized process that they get when they interact with an industrialized, mass-production service provider.

Customers want it “their way” and not providing it in the manner they want it stands to increase costs through waste like failure demand (demand caused by a failure to do something or do something right for a customer – Seddon).  When customers don’t get what they want . . . they either don’t do business with you or complain.  In Taguchi terms, when service organizations don’t  provide for a customer’s nominal value there is economic loss.

Key to understanding a customers nominal value is first understanding your service organization outside-in (customer’s perspective) as a system.  Understanding customer demands that are placed on the organization helps us define and refine customer purpose.  Measures emerge that are significant to the customer.

Measures like end-to-end time for certain types of services are important to customers.  But each customer or group of customers sets their own nominal.  Only by going to the points of transaction can we listen to the demands placed on service organizations by customers and learn what their nominal value is.  Just like Goldilocks wants things “just right” so do your customers.

Before your service organization heads down the industrialized approach promoted by today’s management fads, consider designing or redesigning your service system to one that truly differentiates you from the pack . . . or would that be a sleuth?

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.

“All of our problems arise from doing the wrong thing, righter”

-Russell Ackoff

Service organizations have long embraced process improvement to fix their problems.  The most popular fads have been lean and/or six sigma to enable process improvement.  Large organizations have whole elitist groups to facilitate such efforts.

Charged to improve  processes with limited scope and thinking by management, these teams kick off projects that must bear a return.  So, they go out find some low-hanging fruit and check the box of improvement.  This allows the team to celebrate and claim victory.  Pizza party for those involved.

Been there . . . done that.  Process improvement is not system improvement, not that some don’t try to be.  But when teams:

• get no or little executive involvement (beyond sponsorship),
• don’t focus on changing management thinking,
• and don’t redesign the work end-to-end,

we wind up with process improvement that has little real improvement or damaging effects on the entire system.  This comes in the form of waste and sub-optimization.  It’s like wetting your pants, you get that warm feeling at first, but really are only left with a mess.

Systemic improvement begins with getting knowledge outside-in as a system.  This means understanding the customer purpose of the work we do and adopting measures from this purpose and redesigning the work to achieve this purpose.  Anything else is really just top-down, inside-out command and control thinking and efforts.

Management has to have skin in the game to get a normative experience to see the damage of their thinking on work design.  Without a change to thinking systems will revert back to the original state or, more likely, entropy.

Unfortunately, most improvements are of the process kind.  Management has little desire or motive to change and so process improvement becomes acceptable and comfortable.  So those that need to change most . . . management are left out and business improvement becomes marginalized.

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.

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.

Best example of lunacy in a hospital or any service organization is the constant and predictable spend to renew their image.  I woke up this morning reading an article about Clarian Health (a hospital) change its name to Indiana University Health.  I have seen such ” interesting” marketing ploys before and all manifest themselves in poor thinking.

The first time was land ago with EDS when they changed geometric shapes and later the position of the letters.  This during a time when layoffs were occurring and pay reduced.  Untold millions to change coffee mugs, T-Shirts, Banners and building signs in the name of a better image.

Try this one on for size . . . how about actually IMPROVING the service you provide instead of mesmerizing the naive with pretty colors and flashy lights.  That would be amazing.

There is a history that this works better.  Remember Tylenol and the public relations nightmare that followed some tampering that led to deaths?  They fixed the problem instead of changing the name like ValuJet did.

For service organizations, there is a mind-boggling amount of improvement that can be made by redesigning the work to actually provide customers with service.  Just more companies chose the marketing route (what ever that means) instead of what can provide them free advertising . . . unparalleled and unrivaled service that customers want, but instead get rebranding.

So, next time save me the fresh starts and doesn’t baffle me with BS and instead dazzles me with brilliance . . . better service.  Money wisely and well spent.

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

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.

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

As always, the lean crowd is predictably unpredictable.  Everyone has a different view and I love perspective, but defining lean and every one’s different interpretations of it is virtually impossible . . . like chasing Jell-O across the table.

A recent comment caught my attention. The claim that Lean is more than tools is predictable even though they all run around with 5S, kaizens,  poka yoke, standardization and other Japanese terms that long lost context of the thinking that created the tools.  But this comment claims that if we honor three principles we change thinking.  Well why didn’t I think of that?  Here they are:

1. Honor Standards
2. Honor People’s Good Ideas
3. Honor Customers

Well . . . there you have it.  Go improve your service organization now, but don’t forget the tools.  Even though they don’t transfer very well from manufacturing to service.  This thinking is why according to Nohia and Berkley in Harvard Business Review claim 75% of executives are unhappy with change initiatives in their organizations.

Now why?

American Management thinks they can just copy from Japan, but they don’t know what to copy! – W. Edwards Deming

And so here we are with failing projects to improve organizations, because copying Japan is not enough.  Dr. Deming challenged us to think for ourselves not learn the Japanese language.  His concern, we will never catch up . . . Japan isn’t standing still.  Copying always leaves you behind the one that is advancing thinking.

Just saying buy into these principles will not get you where you want to be.  The human change methods I reference, change behavior in a normative fashion.

How is this different?

I’ve ranted many times about how standards create failure demand in service organizations (read this post).  I would recommend anyone read The Case Against ISO 9000 by John Seddon.  The often quoted “Where there is no standard, there is no kaizen” is mostly true . . . in manufacturing, but the variety problems of service are completely ignored.  It is blind copying.  But don’t believe me, look for yourself.

The human change methods I am talking about have to change thinking (management thinking) and behavior changes will follow.  This is Dr. Deming’s 4th area in his System of Profound Knowledge – psychology.  There is no tool in the lean toolbox.

The audits for compliance lock in the waste created.  The inspection police come to check their boxes, this isn’t improvement this is coercion.  You may get compliance, but you haven’t changed thinking.  Worse, you add to costs.  The best inspection you can have is never done (not needed) or done by the worker alone.

While service companies are out building misguided standards and entrapping with technology, we miss the 95% problem that Dr. Deming talked about . . . management thinking.

From “If Japan can . . . Why can’t we?

“I ask people in management what proportion of this problem arises from your production worker. And the answer is always: All of it! That’s absolutely wrong. There’s nobody that comes out of a School of Business that knows what management is, or what its deficiencies are. There’s no one coming out of a School of Business that ever heard of the answers that I’m giving your questions—or probably even thought of the questions.” – W. Edwards Deming

So, if we want to improve our systems.  We need normative methods to change thinking and behavior.  The coercive and rational approaches just don’t work.

And no, Lean has nothing in their toolbox.

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

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.

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

The answer many organizations have come up with for problems of efficiency is to seek standardization in their processes.  But they don’t understand the problem and the potential damage of not understanding the problem ends in increased costs and worse performance.

Manufacturing has taught us that a standardized process is helpful in making products.  We get predictable outputs and quality in making products.  Much that has happened in service industry in recent years has been an attempt to copy this thinking.

People wrongly think that the ability to standardize work in service will help improvement like in manufacturing.  Here, we get a starting point to reduce the variation and get better quality.  The result is the search for “one best way,” scripts for contact centers, written procedures in operational areas, etc.  in service.  All of these efforts to standardize work are locked-in with entrapping technology.

These efforts seem practical until we look at the evidence.

The missing element that creates a management paradox is the variety of demand that customers place on service systems.  And the evidence that this exists comes in the form of failure demand (demand caused by a failure to do something or do something right for a customer).

When our service systems are full of standardization they lack the ability to absorb the variety customers bring to service.  A direct measure of this comes in the form of failure demand which we find runs between 25-75% of all demands customer.  This is some of the evidence that a service organization needs to know how well or poorly a system performs in absorbing variety from customers.

This does not mean that all standardization is bad.  What it does mean that it dispels the notion that all standardization is good.  More importantly, it means to make an assumption that to standardize and reduce variation is good for service is a wholly wrong place to begin.

Our first task needs to be to get knowledge by understanding the what and why of current performance.  Purpose of the service system, type and frequencies of demand (plus value and failure demand), how the system responds to demand, studying flow, system conditions and management thinking are part of this process.

From understanding purpose, new measures and methods present new perspective and insight.  Whole new and different problems emerge when we study our organizations as systems.  The result is improve service, reduced costs and better performance.

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

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.

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

I read the lean stuff with amazement.  A recent article on sixsigmaIQ is titled, How to lose friends and alienate staff – a lean sponsor’s guide.  This “lean engagement” highlights many of the problems with lean in services.

As most lean efforts go, the focus is on getting “top-down” management support.  I have long noted that to improve the system that management has to change too.  There is nothing in the lean management engagement that addresses the hierarchy problem that must be tended to improve services.  The top-down, command and control, functional separated hierarchy is a huge barrier to improvement.

The lean folks have no human change methodologies in their tool boxes.

The next problem is where they start . . . with the work, inside-out as a process to improve – “The team began work as per the pre-defined schedule, going through the typical due-diligence of comprising value stream walk, detailed process dissection, takt time calculation,  etc.”  In services, this is wholly the wrong place to begin as systems thinking advocates understanding your organization as a system from the outside-in.  In fact, until we understand the system purpose and demands by studying the system, we risk a flawed design of services that creates more waste and sub-optimization.

Further, the use of takt time in service is not applicable.  The concept originated in manufacturing where services have a different problem.  (see – John Seddon:  Why Management Tools Don’t Work).  The tools approach is a form of copying from manufacturing, but service has different problems.

Tools like the seven wastes that came from manufacturing are applied to service settings.  If we are looking for the seven wastes and not looking for waste in general we stand to miss a lot in service.  I compare it to taking inventory sheet-to-shelf rather than shelf-to-sheet . . . if you are only looking for on what is on the sheet you may miss what is on the shelf.

Services have different problems than manufacturing:

• Greater variety in demands from customers
• Nothing is stored like products and raw materials
• Service happens between the front-line and the customer
• The front-line and the customer are involved in service delivery

With more manufacturing people moving into service we have a forced fit of manufacturing thinking and tools represented by Lean and Six Sigma in to service.  The problems are different and so should your approach be different.

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

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.

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

The difference between lean and systems thinking from the Vanguard Newsletter by John Seddon

I was asked by someone from a local authority: what is the difference between ‘lean’ and ‘systems thinking?  Having been on about it for years I was a bit surprised, but then I thought why should I be? Why should everyone know? So here, for others who have not read all the stuff on lean versus systems thinking, is what I wrote, maybe the simplest explanation:

“‘Lean’ was the word coined by Womack, Roos and Jones (in The Machine that Changed the World, 1990) to describe the Toyota Production System (TPS). The book brought the extraordinary achievements of the TPS to prominence. This led to the general assumption that if we apply the tools created in the TPS we will improve as it did. So the market for ‘lean’ grew.

But are you in the business of making cars at the rate of customer demand? Why should these tools be universal?

The TPS tools were developed to solve the problems they faced in developing a system to produce cars at the rate of demand. Do you have the same problems?

How did Taiichi Ohno (the man who created the TPS) teach people? Did he give them tools to solve problems they thought they had (as the lean tool-heads do?). No, he taught managers to study their work as a system, his favourite work was ‘understanding’. That’s what Systems Thinking does, it starts with studying. It leads to astonishing improvement. My current favourite: Portsmouth and their suppliers deliver repairs on the day and the time tenants want them, and they do so at half the repair cost. Just like the TPS, an economic benchmark.

Now for the tricky bit. ‘Lean as tools and projects’ appeals to managers. Managers think they know what their problems are and they think tools training and projects will be useful. Managers like the idea (promoted by the lean tool-heads) that services should be standardised (big mistake). If they do get improvement it is marginal, often they end up worse but they don’t know because they are still measuring the wrong things (lean tool-heads don’t question targets or activity measures for example, indeed they don’t question management philosophy).

My work has been the development of the Vanguard Method. It is a method that helps managers study service organisations as systems. On the basis of the knowledge gained, the system is re-designed; changing everything, roles, measures, procedures etc. The first step is leaders becoming curious about changing the way they think about the design and management of their services, for applying the method will change their thinking and hence the way everything is done.”

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The tool-head collection

I have written a number of articles on the lean tool-head problem. Last month we put them all in one place, so if you want longer explanations you can find them in the articles section of the web site

Lean Articles