Tag Archives: innovation leadership

Beware of Common Sense

I have often been accused of my lack of “common sense.”  Which makes me proud of my “uncommon sense.”  So let’s take a look at what types of things are “common sense” in the world of the command and control thinking service organization:

  • Ranking workers, units, teams and departments
  • “Carrots and Sticks” for workers
  • Quotas, targets and arbitrary numerical goals
  • Performance appraisal of the worker,manager and executive
  • When service fails . . . take action
  • Rewards, incentives and bonuses for salespeople, workers and managers
  • Using lean manufacturing tools to improve service
  • Standardization is the place to begin service improvement efforts
  • Outsourcing, technology and/or shared services reduce costs
  • Economies of Scale
  • Separation of the decision making from the work
  • Divide the work into functions
  • Use an IVR for customers to save costs
  • Use reports to make decisions about the work
  • Do lots of inspection to improve quality of service
  • Hire the cheapest workers for the front-line
  • Keep the skilled workers away from service customers
  • Make decisions based on last month’s financials
  • Create competition between workers, teams and departments to increase production
  • Use scripts, policies, procedures, mandates to manage the workers
  • Motivation of employees
  • There is a trade-off between good service and costs (zero-sum game)

All of these make “common sense” to every service organization.  The problem is they all lead to higher costs and worse service.  The management articles/blogs that I have written to date have talked about the problems of each one these.  As a whole they create a management paradox to achieve “uncommon sense” (counter-intuitive ideas).  Innovation leadership means applying new “systems thinking” in our leadership strategy to accomplish new heights.  A service organization can not learn by reading alone, it requires understanding by doing.

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. Let us show you what you cannot see.

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Keep Decision-Making with the Work

Command and control management thinking is flawed in many ways.  The separation of decision-making from the work is one of these flaws and because of this separation decision-making defines management’s role.  Scientific management theory influences this separation because work is defined in “functional specialisms” and control (decision-making) is maintained by financial budgets, targets and standards.  The focus of management becomes output with the assumption that improving the numbers is equivalent to improving performance . . . it is not.  This way of thinking only assures sub-optimization, causes waste and prevents managers from understanding an organization’s performance.  In a management paradox, command and control thinkers act in ways that only make things worse.

A better “systems thinking” way is to work on how well systems and processes delivered what matters to customers and engaged capability data (measures on how well an organization serves what matters to customers).  This would give an organization the ability to learn how to improve and make better decisions.  Putting these same measures in the hands of the workers would allow them to make decisions . . . learning and continually improving the service offered to customers.

Command and control thinking will meet its demise as systems thinking is far more efficient and economical.  If it isn’t abandoned by the U.S. soon, I have no doubt that service industry will fall like manufacturing has . . . a sub-optimized organization can not compete with a systems thinking one.  Leadership innovation can only be achieved by making this transformation.

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Collections: Better Thinking

My partners in the UK recently had a bank management consulting engagement in the UK. It was in their collections department. Just as with another UK bank, as soon as the customer misses a payment, the IT system starts a predefined lettering campaign. If this does not prompt the customer to pay then the computer pops the account onto an agent’s screen and the agent’s job is to get money right then and there over the phone. Details of the payment taken are fed into the computer and it decides when to make the next call with the same (‘collections’) purpose. What was most frustrating for customers was that if they called to say they had a problem paying before they had missed any payments there was nothing agents could do to help because the customers weren’t in the correct IT system.

You only had to listen to calls to learn how awful this was from the customers’
point of view. It wasn’t unusual for customers to avoid the call, knowing it
meant grief and in their words ‘to be treated like a criminal’. Agents were
measured on calls made, money collected and were incentivized to collect the
most money. No surprise there.

What had been completely forgotten was why customers were in arrears. The
reality was most of these people had experienced either a minor cash flow
problem or had a major life changing event (divorce, serious
illness, etc). Yet the system was designed to treat them all the same.

We helped them redesign the service, to make it work from the customers’ point
of view. The first contact was a problem-solving contact: Hi, you missed a
payment, is there a problem, can we help? Instead of following rules, agents
were to help the customer solve the problem, and there were no constraints;
they could re-structure debt, repossess the item bought (for example the car)
and so on.

The results were astonishing. The agents collected more money and the customers were happier – without prompting, many told the agents how impressed they were with the service. What’s more we showed this design could be delivered with only 30% of the agents. Delivering the service against customer demand meant the removal of massive volumes of failure demand and other types of waste. So, a major change: massive improvements in collections, vast improvements in
efficiency and huge improvement in customer service. Furthermore agents were
happier, for now they were doing a much more interesting and worthwhile job.

The only down side was the solution meant the computer system would be redundant, it meant managers would have to confess to their board that last year’s
multi-million pound investment in technology was a waste. What did they do?
Nothing. The redesign was dropped.

Deming used to say doesn’t anybody give a hoot about profit? All the customers
wanted was a conversation that would help them solve their problem. But banks seem to be designed on the assumption customers are delinquent.

The customer management process was improved without changing technology.  The move from a command and control environment to systems thinking can bear fruit and save on technology that is not needed.  However, this will require new thinking and innovative leadership.

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