The No Tool Zone

An interesting week in Indiana.  Governor Daniels canceled the Indiana Welfare Eligibility contract with IBM.  I have to say it took guts to do that as the political fallout already has his enemies seeking his political head.  This is unfortunate as I would much rather have a leader that admits when there is a problem than one that keeps their head buried in the ground.

The problem now is that the eligibility system is still a mess.  It was before and still is.  A group comprised of Representatives of United Senior Action, Hoosiers First, The Generations Project, Indiana Alliance for Retired Americans and other groups is calling to restore a “personal touch” and legislation to rebuild the eligibility system.

Further, FSSA is putting together a detailed plan for a hybrid system that includes:

• Client Choice of access into the system
• Face-to-face contact in county offices
• Case management in county offices
• Paperless case files
• Fraud prevention
• Consistent determination of benefits

All of these ideas (personal touch, legislation, and the items listed above) seem plausible, the problem is so did modernization.  We are left with a fundamental thinking problem that is not unique to Indiana.  The focus to reduce costs and improve productivity is the problem.

This “economies of scale” thinking has been perpetuated over time into our belief systems.  The problem is that it is a fallacy.  Costs are in the flow, end-to-end from a customer perspective (economies of flow).  A counter-intuitive truth that if followed will give Indiana cost savings beyond what IBM had hoped for using technology (as proven in the UK and other countries).

The management paradox is that when we focus on reducing costs, we increase costs.

Why?

All of these good folks, the Governor, Indiana legislature, special interest groups and FSSA have lots of information about the program from reports and anecdotal evidence.  But they lack knowledge of the system as a system.  Government management requires knowledge.

In order to determine what the next steps should be there should be an effort to get knowledge.  This means performing “check” in my world or understanding the “what and why” of current performance.  Additionally, the decision makers need to go to the work and this must precede any projects, deliverables, timescales and milestones.

Performing “check” means getting knowledge so that they don’t make assumptions other than knowing that they don’t know what the performance is.  A pre-determined outcome with corresponding plan spells trouble as prescribing improvement this way will drive up costs . . . guaranteed.

Here are somethings they should do from the Vanguard Method©:

1. What is the purpose?  What is the purpose of the service from the welfare recipient’s perspective.
2. What are the type and frequencies of demand?  This requires decision-makers to go to the work where the agency transactions occur.  Here they can understand: why they call, what they want, what would create value for them, what matters to them?  They must understand the major types of value and failure demand and their predictability.  To design for the unpredictable is costly.  You stand to entrap the workers delivering the service with technology if this is not understood (raising costs).  Understanding demand will also shorten the training cycle for workers as you train for only predictable (high frequency) demands.
3. How well does the system respond to demand?  You will discover the measures that matter are end-to-end from the customer perspective and NOT the ones currently used.
4. Study the flow.  Demand will tell you what to flow and measures related to purpose will tell you what the priorities are to flow activities.
5. Understand the systems conditions.  All the waste and sub-optimization is man-made.  The result of poor work design, structure, contracts, roles, technology, measures, etc.  Failure to remove the system conditions will lead to improvements that are unsustainable.
6. Management thinking.  Understanding the “what and why” of current performance draws the decision-makers in as this means that they must change too.  The actions they take can create more or less waste depending on their degree of knowledge.

Warnings:
Legislation can lead to entrapping the system worse than technology and should be avoided.  Systems change over time and to undo legislation is virtually impossible.  Variety of demand can not be absorbed by either technology or legislation.

Going back to the old way or planning without knowledge (as outlined here) can lead to missed opportunities or additional waste.

I am hopeful that other government agencies trying to improve their services will see the value in the approach.  This thinking transcends all partisan approaches.

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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.