The No Tool Zone

There are been fewer mergers and acquisitions in recent months . . . and that is a good thing.  Too many organizations and government entities have swallowed whole the economies of scale thinking that in a management paradox has led to higher costs.

The culprit behind is a shared services strategy that is fundamentally rooted in economies of scale thinking.  Government entities and for-profit companies desperate for cost savings look to combine services to achieve them.  The problem is not the scale, it is the flow.

Blindly combining IT, HR or contact centers seems to be where organizations have been duped in to thinking that this is a good idea.  The problem with this approach is rooted in the design.

Most organizations destroy flow by their design through the functional separation of work.  Phone calls have been centralized into contact centers to achieve such scale economies and back offices built to do processing.  Technology entraps the worker through such poor design thinking and locks in the waste.

For any organization (public or private) a better way is to study demand before taking on scale thinking.  This can’t be done at the 50,000 foot level, but by studying demand where transactions occur between the worker and customer.  Too many assumptions are made based on “you have a contact center and so do I, let’s save money by combining the two” thinking. 

If the demands are the same (rarely the case) their may be opportunity, but contact centers, IT, back offices and HR are typically fraught with waste.  This waste comes in the form of failure demand (demand caused by a failure to do something or do something right for a customer – Seddon).  As much failure demand as organizations have in it, we miss the opportunity to redesign the system to design out the failure demand.  Do we even need that back office?

The functional design is an inhibitor to flow.  Poor flow leads to higher costs as hand-offs and queues lead to poor service.  The insightful study of demand can aid in a better design as we can design failure demand out and design in services that accommodate “what matters” to customers and constituents.

Better design for increased economies of flow will decrease costs, not economies of scale thinking.

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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.

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