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Problem Solving – Am I allergic to Dolphins?

March 18th, 2010

The family and I were on holiday in Gran Canaria last week. I got sick, I’m a man so trust me I was very sick.

As I lay in my bed trying to figure out how I’d got sick I remembered that the last time I was on holiday and got ill just as I was going on a trip to swim with some Dolphins (I never made it, I was sick). And on the morning that I took ill in Gran Canaria we were also off to see some Dolphins.

Well, you can imagine my immediate conclusion, ‘it must be the Dolphins that are making me sick’ I thought.

Let’s be honest, that’s a pretty stupid conclusion but when you think about it no less silly than some of the conclusions that managers in organisations reach when trying to solve their problems.

At the weekend I got a call from an old client, she’d resigned from her job because she’d got fed up with the crazy approach her Managing Director took to running the business. For example the error rate was high so he set everyone an objective that they must not make any errors.

Think about the logic.

  1. Errors are made by people

  2. So it must be their fault

  3. Therefore if I shout at them or set them a target the problem will go away

It didn’t! To get to the root of the problem would have required just a wee bit more thought.

Here’s the process:

  1. Get clarity on the problem

    2. a. There are too many errors, but how many?

  2. Can the problem be contained?

    3. a. Is there a short term fix that we can use to stop the problem getting worse?

  3. Analyse the problem

    4. a. How many errors, what type, when and where do they occur? What is the cause?

  4. Using the data from above try something

    5. a. Run an experiment and see if the error rate changes, then try one thing at time and see what is most effective

  5. Keep going until the problem is solved, then start again on the next one

We use this method when working with managers to help them start the process of never ending improvement of the business. It works. I’ve included a sheet you can use, just click here to download it. If you want more info drop a note to admin@vanguardscotland.co.uk with ‘more problem solving info’ in the subject line. I will make a short video and get it to you next week.

On a final note I’ve still never had that dolphin trip so feel free to send photos! And yes (before you say it) there is something very weird about having your head down the toilet and your only thought being ‘this would make a great blog!’

Many Thanks

Stuart Corrigan

PS If you think a friend or colleague may like this blog please pass it on.

www.vanguardscotland.co.uk/blog-welcome

Posted in problem solving | No Comments »

Housing is failing, but we don’t learn

March 10th, 2010

The housing regulator is not happy; the service being provided by local authorities and social landlords is not good! For example in 2009 the Scottish Housing Regulator said that just under half of the landlords they had inspected were poor or only just adequate. I’m also fairly certain these problems are not unique to the Scottish property sector.

In my experience it’s not unusual for a repair to take up to 200 days, voids to lie empty for months, hundreds of names to be on the allocations lists, and rent arrears to be in the millions.

What’s being done to tackle these issues and solve the problems? A number of things actually, but they’re the same things that were done last year and the year before that; you know the old cliché we keep on doing the same things but expect a different result.

What about you, are you ready for a change?

If you are then over the next few weeks I’m going to let you have a series of reports on the problems in housing and how to fix it.

The first in the series has been written by Caroline Rodgers. Caroline has worked with me for the past nine years and knows housing as well as any hotshot guru. You can download the PDF from here.

We don’t want to spam you, so you’ll only get the reports if you ask for them, they won’t replace the usual blog. To get the rest of the free reports as they are issued sign up here.

The first report hits back at those suggesting that I.T. and outsourcing will solve the problem.

So if you’re ready to buck the trend, think differently and blaze a trail, I look forward to helping you get on the right track.

Many Thanks

Stuart Corrigan

PS If you think a friend or colleague may like this blog please pass it on.

www.vanguardscotland.co.uk/blog-welcome

Posted in Public Sector, Service Failure | No Comments »

The Google Slap and what you can learn from it

February 24th, 2010

Google has a clear purpose: To ensure that when folks like us are searching, we have a great (and relevant experience).

What’s interesting is that they don’t make money from the searchers, well not directly. They make money from the advertisers (the little ad’s down the side of the Google page). But if there’s ever a conflict between the two it’s the end user who wins.

Here’s how it works. Let’s say that you are running an ad for your latest book. Your research has shown that 5,000 people per month type in the name of your book searching Google and there are no advertisers; result: you can run an ad for 1p per click.

However you get a bit lazy and greedy, rather than creating a site that gives the searchers lots of useful information about your book with different pages and lots of content you just throw up a single page site to sell your book, and worse you try to sell other books on your site. Google won’t be happy, they will deem that the visitor experience is poor and they’ll Google slap you.

What this means is that they’ll impose a minimum bid on your ad for anything between £5 and £10 per click, thus making your advertising pointlessly expensive.

The point is this: when Google have to choose between their intermediary advertisers and their end users the real customers will win every time, they know that if the customer has a poor experience then they’ll use another search engine. So they choose to take a hit on short term advertising money for the sake of long term visitor value; as a result they are the world’s largest and most popular search engine and make billions of pounds annually.

What can we learn from this? Two points:

  1. Make sure that you are clear on who your real customer is and decide how you are going to serve them.
  2. When there is a conflict between an intermediary and the real customer always take the side of the end user.

Google have a clear single purpose built around creating value for the end customer, as a result it allows them to stay focused and make good decisions in their business, how about you..?

Many Thanks

Stuart Corrigan

Posted in Quality, Creating Value | No Comments »

Improving throughput in public sector planning and casework environments -special report and video

February 17th, 2010

A few weeks ago I wrote about how the Scottish Government had (in my opinion) got the solution to public sector planning badly wrong. (Local Authority Planning - How the government and the lean gurus got it wrong.) They had thought that the matter was merely about getting cases in clean. Whilst this is an issue (for most organisations) it’s really only the tip of the planning iceberg when it comes to making a change.

You see simply putting in a pre-application process actually means that for some, they are now looking at the application twice and therefore have more (not less) work to do.

The pre-app is important but so is the method by which it’s carried out. I believe the that government’s intent was to simply have a quick meeting or phone call prior to application being sent in, to make sure everything was fit for purpose. But that doesn’t seem to be the way it’s working. I’d be keen to hear from you if you either support or have an alternative view of our findings.

However the pre-app isn’t really the big problem. As I’ve blogged about before, the issue is the performance indicators combined with the volume of work pushed to the planners. As they (the planning officers) are trying their best to do a bit of work on all the cases in their queue, what actually happens is that everything takes longer. Some planners have openly told me that if an application goes over the statutory indicator they leave it, it’s already late so they’re better concentrating on the ones that they can get through in time.

The result of this is that two people suffer: the customer, who may have to wait an inordinate amount of time to get a decision and the planner, who is under a great deal of stress to do a ‘bit of everything’.

The fault lies not with the planners but with the government and management who refuse to see that setting an arbitrary target, pushing work to the planners and focusing on utilising and activity rather than throughput has actually made the system worse.

So what’s the answer? Dougal Mather one of our project experts in Vanguard (Scotland) has written a comprehensive report and made a video that lays out exactly what you need to do to fix the problem.

Visit the download page for the video and report

Also bear in mind that the solution here is not just for planning departments but any environment which has casework as the work method. You can get the video and report here.

Many Thanks

Stuart Corrigan

Posted in Change Management, Public Sector, Project Management | No Comments »

My best kept secret around sustainable change

January 28th, 2010

I hope that this is one of those blogs that you print off, pass around and mark as important because what I’m about to tell you really is the difference between whether your change programme will flourish and grow or wither away with the passing of time.

There are certain rules when you’re trying to improve your business.

1. How the leaders think about the design and management of the work determines how the work is done and it’s that relationship that predicts the success or failure of the business.

2. Before you make change you have to get knowledge how the business works today.

3. The direction of the change should be driven around a new way of thinking about work, policy and measurement design.

4. Whether the change sticks depends on whether the leaders change their thinking and their behaviour.

I’m going to make an assumption. You’ve heard me rant on about points 1-3 for the past eighteen months so I’ll concentrate on why number four is so important and (what you want to know) how to actually get leaders to change.

Let’s take a typical failing leader. Their head is full is unit costs, setting targets, service standards, productivity, customer care and functional work design. This has an influence on how they spend their time.

For example if they receive complaints, which they will (in spades), their first reaction is that the poor attitude people are at fault and they need fixed. Fixing means customer care! That won’t work because the problem is likely down to the design of the system.

Or…they have a backlog, the assumption here is that the people are lazy. So a team of managers go and study how long it takes to do a piece of work and then set targets around how fast the work should be done. Anyone who fails will be punished! So people cheat and waste their ingenuity on cheating the system.

Do you get it? We change the processes, the policies and measures but unless the leaders actually: a.) understand why this was done and b.) how they need to behave differently, your firecracker change programme had just become a damp squib.

With me so far? Let’s look at what the new behaviour looks like.

1. Understand the work from the customer’s perspective. The leader must know how it feels to be a customer and how the work design influences that experience. For example the targets in public sector planning departments (actually all departments) cause good people to ignore cases that go outside of statutory indicators. Hence if you are a customer who has a difficult one you might wait hundreds of days for your answer. The leader must be able to look at the work and make the connection between the policy (do work within 57 days) and the behaviour they see.

2. Create new policies designed from the customer’s perspective. It stands to reason that what matters to the customer is to be dealt with first in first out. So the new policy becomes, do work in the order that it comes in the door and work on one thing at a time. And to make it work the leader must remove the 57 day service standard.

3. Armed with this policy the leader creates a new purpose and has measures related to that purpose.

4. And now for the secret. The leader must reinforce and problem solve around the policy. First they observe and make sure that everyone is using the new policy. If not the job is to find out why. If some people simply didn’t understand then the job is to reinforce the policy, explain why it was put in place and get people back on track. If people can’t use the policy because of a problem in the work then the leaders job is to problem solve.

Which leaves a final question, what’s the role of the consultant in all of this? To coach the leader. Which means the following: 1. Make sure the leader knows the core polices around how work should be done.

2. Go and study someone doing some work.

3. If the policy is not being used, coach the leader to ask why.

4. If it’s simply human error coach the leader on how to reinforce the new policy.

5. If it’s because the work design prevents the use of the policy coach the leader on how to problem solve.

For sustainable change repeat two to three times per week for 3-6 months. Sounds tough, and it is. But no-one says change is easy.
Many Thanks

Stuart Corrigan

PS If you think a friend or colleague may like this blog please pass it on.

www.vanguardscotland.co.uk/blog-welcome

Posted in Change Management, leadership | No Comments »

Benchmarking Examples - Are there any good ones?

January 18th, 2010

I’m going against the current here by telling you that you’d be hard pushed to find any good benchmarking examples. Sure you can always find evidence of how fat cat directors can justify their trip to Jamaica with a couple of business cards from folks they met at the bar, but this does not cut it as a good benchmarking example.

Here’s the problem: benchmarking is in most cases a complete waste of time and money. Let me explain with a short story.

Denise, Matt and I were up at Aviemore for a few days over the holidays (Daniel decided he’s just too cool now and stayed at home). A friend, Mike, and his family joined us.

Though there was no snow (yes the irony is not lost on me) but on the first night the temperature went down to minus 12 degrees and Mike’s car wouldn’t start in the morning.

Guess what he did to fix it? He called out a mechanic. Guess what the mechanic did, looked under the bonnet, identified the problem and fixed it. But the question is “what would the mechanic have done if he was doing a bench marking study?”

First he would have guessed at the problem, then he would have opened the bonnet of my car had a look, chatted to me about why the car was working well and what I did when it didn’t start in the morning, then he would have written a report handed it to Mike and left. A great example of benchmarking don’t you think?

When your service is failing, isn’t that what you’re told to do by those in the know? Spend our time looking at others, who according to their KPIs, are better than you and then hope for divine inspiration.

Not convinced I’m right? Here’s an example. Imagine you are a director of a utility company and you have a division of your business that makes money from the installation of pay as you go meters. But the division is failing and as a result losing money.

You get permission to have a look at other businesses that use the pay as you go model. What might you find?

You might get told by one company you benchmark that success in the pay as you go market lies in choosing the right demographics of the client group, another might show you their technology, and yet another might explain how card distribution is the key.

You head back to office with your PowerPoint presentation to make three recommendations: better demographics, better technology, better distribution.

Sorry wrong answer, do not pass go and do not collect a promotion and a new car. Here’s why, because if you’d spent the time studying your system you’d have seen that the pay as you go meters have a standing charge of 99p per week. This generates an income of around six million per annum.

But when a home is unoccupied the standing charge continues to accrue, when the new tenant takes up residence and puts their card in the meter the card is immediately debited by the accumulated charge.

The disgruntled customer then calls in (failure demand) and requests a call out to have the meter re-set. The cost for this is sixteen million pounds per year.

You see by spending time studying your own system, not only have you saved the cost of flight to the Caribbean you have just found a way of eliminating £9,000,000 in annual operating expense.

Call me hasty if you like but I think the girl that solved this problem deserves a bit of a bonus and heck, why don’t we throw in a new car just for good measure. I still reckon we’re up by quite a few million. And easy money at that, it only took three days to identify the solution.

I had the privilege of working with this amazing leader, she knows who she is (don’t you Rachel?).

So here’s the lesson, whether you’re going to visit other companies in New York or New Cummnock, don’t, it’s a waste of your time and your money.

As an old friend of mine always says, “If your car breaks down, you won’t learn anything by looking under my bonnet.”

If you beg to differ in your opinion and have any good benchmarking examples please feel free to post a comment and let me know.

Many thanks,
Stuart Corrigan

PS: You can download the MP3 version of this blog entry>> HERE. (Right click on the link, click on ’save target as’ and click ’save’)

PSS: Our Process Mapping & Analysis workshop is now available for 2010 >> Find out more HERE

PSSS: If you’ve missed listening to the great interview on Radio 4 with the late Russell Ackoff - ‘In Business - Doing it wrong’, you can still listen to it HERE

Posted in Measures | 2 Comments »

Quality guru W.Edwards Deming would turn in his grave

January 6th, 2010

First I trust you all had fantastic Christmas and New Year. This post is on the subject of how to start the process of taking your business to the next level in 2010; as usual it involves getting data and also has some advice from a quality guru.

I’ve ranted about this in 2009 so no reason to stop in 2010 (I’m reaching my mid 40’s so I’m now officially allowed to be cranky).

Just before Christmas I was studying a system within social services. As a result of unclear rules, occupational therapists in the service weren’t sure how they should order a stair lift.

So different therapists applied their definition of the process in different ways and it meant that the budget was being used faster than necessary. Now I’m no quality guru but I’d have thought that ensuring that everyone was clear on how to do their work was always a good place to start when running any business.

But to do this you have to know how people work. And you can’t do that from behind a 17 inch screen.


In-fact point 6 of Deming’s famous 14 points states that we should ‘Institute training on the job.’

I wouldn’t have thought you needed to be one of the quality management guru’s to understand that rule, or would you? Look at the language, “institute training on the job”, in practice this means you have to be there and listen and learn so you understand what to train. An interesting quality philosophy don’t you think?

Naively I decided I wanted to get the answer to the question, ‘what is the correct budget for a stair lift?” And I even went right to the top to get the sacred knowledge.

I doffed my cap and asked the question “what budget should I apply to a stair lift?” I waited with baited breath and got the following answer:

“It’s not that simple, let me ask you, how many angels can dance on a pinhead?”

Seriously that’s the answer I was given! Is it any wonder that people in this business haven’t got a clue what they are doing? Seriously I’m sure I felt the spirit of quality guru W. Edwards Deming enter the room and breathe a deep sigh before having a wee cry in the corner.

A better quality philosophy

So if you want to take your business to the next level you could do worse than making sure that everyone was actually clear on what they should be doing every day. And I bet that if you go and have a look at what people are doing you will see lots of stuff that you could fix, thus getting a double bang for your buck.

And on the subject of Deming’s 14 points you can get a free download in the form of a PDF that covers each one or scroll to the end this post to hear them in our presentation. And for those of you who want to take your learning to the next level you could do worse than get Deming’s book Out of the Crisis. I assure you it’s the best book you’ll read this year.

Oh and one final point does anyone know exactly how many angels you can get on a pinhead? I’d really like to see the chap’s face when I give him the answer.

Many Thanks

Stuart Corrigan

Posted in Quality, Change Management | No Comments »

Local Authority Planning - How the government and the lean gurus got it wrong

December 16th, 2009

If you are in local authority planning, grants distribution, information technology, pharmaceutical, roads resurfacing or any other project environment, stop what you are doing and put the kettle on because the information contained in this blog could be the most important you will ever get your hands on.

At the latter part of last year I was asked to speak to the great and the good in Scottish local authority planning.  The purpose was to give my thoughts on how to change planning for the better.  The advice was simple and unequivocal ‘get knowledge about how the system works before you make a change.’

I guess I must have been having an off-day because for whatever reason many went off and ignored this advice and missed a big trick in planning.  I’ve studied planning departments at the tail end of the lean gurus as well; they also failed to see the answer. 

So stay tuned as I’m about to reveal all.  And if you are one of the few that will actually go away and do something as a result of reading this blog you will see results very fast. 

Here’s what happened in planning.  The boffins decided that the problem was a lack of clean information coming into planning departments.  This resulted in plans being sent back to the client or agent for rework.  Fair enough, if you studied planning as a system you would indeed find that around 20% of applications have missing information. 

The result of this revelation was two actions, the first was to create a detailed specification of how the plans should be drawn up with a list of required information and the second was for all proposals to be subject to a pre-application meeting between the client and/or agent and the planner.    Both of these rules have now been embedded in the system. 

But nothing much seems to have changed.  The authorities I’ve seen are still struggling to meet their performance indicators and the planners are drowning in a sea of work, even more so now that they have to have pre-application meetings.  So why didn’t the solution work?

The answer was simply incomplete, in-fact it only dealt with one small aspect of the overall problem, akin to trying to lose a ton of weight by replacing your mid morning bacon butties with an apple, sure it will help a little, but you’re not going to see a significant change. 

Let me lay out the real problem (actually there are two).  The first is that in the planning departments I’ve seen there are simply too many open cases; the planners are flooded with work.  This happens as a result of wanting to tell a client that their case has been seen.   But it causes a big problem, multi-tasking. 

What happens is that in an effort to get more done everything takes longer and the lack of focus causes errors.  Think of it like this, imagine you have 10 tasks to do and you try to do a little of everything.  The result is that you are constantly picking up and putting down the tasks. Every time you pick something up you have to take a moment just to remember where you were before you can start again.  Consequently everything takes longer and is more likely to include mistakes.   

The second issue exacerbates the first.  Misguided ministers and managers believe that we need service standards to improve our performance.  But if they knew how to look they would see that it’s making us worse not better. 

In planning there is a 56 day service standard to give a decision on an application.  And the clock doesn’t start ticking until the application is error free.  Some planners have told me that, because they have so much work to do and there is pressure to hit the arbitrary 56 day standard, applications ping-pong back and forth until they are fit to enter the process. 

And when the application is in the process the 56 day service standard causes student syndrome.  Cases get opened and then put down again until nearer the deadline, just like a difficult essay.  Planners flip-flop between handling easy cases to hit that standard and trying to break the backlog of the more complex ones.  Sometimes an application goes over the 56 days and it gets left, the rationale being that service standard is breached anyway so it doesn’t matter if the case takes 56 days or 256 days, either way it’s late.

So what can be done to fix the problems?

  • Create a list of all planning applications in date order, oldest to earliest.
  • Create two schedules, the first for pre-applications and the second for determinations.
  • Schedule the work for the technical clerks and the planners.
  • Limit the release of work into the flow. Only allow planners and tech clerks to work on only a few cases at a time. 
  • Keep the service standard away from the planner; better still remove it all together. 
  • Create a new rule, work on the case until it’s finished, do it as fast as you can but do it right.
  • Have a system so that the manager’s job is to help the planner if they get blocked.
  • If a case is not in the flow then it’s not open.  This will give you visibility over the exact size of your backlog (which will soon disappear). 

But before I’ve even posted this blog, I can hear the objections. 

  • ‘Our customers will be furious that we haven’t looked at their case’- not as angry as when you tell them that you’ve looked at it umpteen times and it’s still not complete. 
  • ‘I can handle lots of cases at one time’- not if you’re a human you can’t.
  • ‘Our planners need the service standard to motivate them’- get real!

The problems I’ve discussed here are not restricted to planning.  They happen in the distribution of grants, information technology, pharmaceutical, roads resurfacing or any other project environment. 

To gauge if you are in a project environment have a look at the touch time of the work, if it is high in relation to the throughput time then it’s likely the above rules will apply to you. 

For more information on this subject, check out our free videocast made by Daniel Rodgers and Dougal Mather of Vanguard Scotland.

And finally I think there is a bigger lesson here than just planning, it’s the one I urged the government to take. “Before you make a change get knowledge”.  If you do you will see the whole problem and create a complete solution.

Many Thanks

Stuart Corrigan

Posted in Change Management, Public Sector, Measures, Project Management | No Comments »

Top 5 Questions & Answers of 2009

December 16th, 2009

The final installment: Question 5

Q: In Scotland in the addictions field we are all facing a huge shift in emphasis from a treatment modality (i.e. Methadone prescriptions) to Recovery (i.e. focussing on the holistic person - improving quality of life).  This is significant in terms of service redesign and a system overhaul.

I just wondered what kind of support you could offer - we want to change how we deliver services and the biggest problem we have is that our current system is under so much pressure we have no room to make that turning space.  How do you create turning space when the front end of your system is under so much pressure - the mid end is at capacity and there is little throughput at the backend.  Existing systems are convoluted and confusing for clients to negotiate and we are facing targets from the Scottish Government that have no bearing on whether or not the service we provide is of quality and what people want.

Stuart’s A: The question needs to be answered in two parts.  The first is how to create capacity and the second is how do you start to improve the wider system around addiction?  Let me try to deal with each separately.

  1. Creating capacity in the current system
    1. Without being glib, to create capacity requires knowledge of how the current system works today.  And in your system you have to know two things.  The first is the type and frequency of demand into the system, i.e. who wants help, how often and what help do they want. When you get this data you might find that there are some people who would be better served elsewhere, or some who are having to make multiple demands on the system to get what they need, hence destroying capacity.
    2. The second piece of information you need to get is your capability to serve those that need your help.  I.e. how often do they get what they want and how easy does the system make it for you to deliver what they need?

Let me give you an example.  A few years ago we did some work in cancer care.  They had similar problems to the ones you describe.  As you can imagine it was tough but very satisfying work.  We worked with the medical staff and hospital administrators to teach them how to study their system. They soon found that the nature of demand was predictable in terms of frequency.

But what they also found was that there were a percentage of the clients referred from doctors that should not have been referred and they made plans to work with doctors who needed additional help in the pre-diagnosis stage.  Additionally there were some patients that had been given the all the clear many years before and therefore had no higher likely hood of contracting cancer than someone who had no history of cancer. There were obvious opportunities to reduce the demand into the system.

Whilst I can’t and wouldn’t say that the same would be true of your system, gathering data on the type and frequency of demand would be my first port of call, it’s likely to provide useful data if not about how to reduce demand, then to prove the true levels of funding and staff you might need in your system.

Additionally when we studied the flow of a patient through the cancer diagnosis system, it was obvious that the process was cumbersome, slow and filled with red tape. And when systems are slow to respond to what matters to customers, they (the customer) tend to place more demand on the system to find out what’s happening.

Hence it’s likely that you would get some benefit studying what’s involved in your service provision. You may find that there is unnecessary bureaucracy and policies that would be better removed for those afflicted with the addiction and would reduce the cost of running the service.

Having created capacity by doing this I would suggest that it’s incumbent on you to make the wider system better and actually do things to help remove the addiction (yes a statement of the obvious I know).  But the question is by what method. I will deal with this in the second part of my answer.

  1. Optimising the larger system and improving care throughout the system
    1. As in my first response the answer to actually improving the whole system lies in understanding the points of failure in the system.  It may be that those points give the clues to what happens when a methadone dependant citizen reaches out for help and is let down, thus further exacerbating their addiction.
    2. To provide insight would require, in my opinion, a slightly different approach.  Rather than working forward, you work back.  Take 20-30 people who are in the system currently and work back though their typical journeys.  You may have to involve many different agencies: benefits, housing, the criminal justice system, accident and emergency, the local GP practice, and of course your own system.  As you study a typical journey you will no-doubt find predictable points at which help might have been effective and welcomed, or points at which help was wanted but there was no method for its provision.

Though this might prove a difficult task I’m sure it would be a worthy one.  My experience in multi-agency work with the criminal justice system and local authorities is that with the right leadership much can be changed.

Posted in Change Management, Public Sector, Measures | No Comments »

Top 5 Questions & Answers of 2009

December 15th, 2009

Continuing our daily series, here’s Question 4:

Q: We all agree that a poorly designed and managed system/process is counterproductive to satisfy customer’s needs effectively and efficiently.  However, the process of changing the system for the better via a change in thinking, eventually comes down to delivering a process in a particular way (the need to accommodate variation not withstanding). The improved way of handling certain types of customer demand would therefore need to be specified and adhered to ensure predictable outcomes - is this not standardisation? What other name would you label the practices and behaviour of the redesigned system/process?

Stuart’s A: Standardisation can be put in place when the nature of demand has been established. Standard processes can be designed against standard demands.  For example let’s say that you knew that 65% of you customers called in to ask for the balance of their business account, a standard process can be established to provide the answer to that question.  However the problem occurs when standard processes policies and procedures are put in place with when no account has been taken of the nature of demand.

For example in the UK my bank (The Bank of Scotland) decided to standardise how they managed personal and business accounts.  If you were an operator in the call centre you would now not be allowed to deal with both.  So as a customer I used to be able to have a single operator transfer money from my business account and then pay bills with it from my personal account. The bank’s new standardised approach to dealing with business and personal customers differently means I now have to call twice.

Had the bank studied the nature of demand they would have made the system able to absorb demand, and would have had a process for handing a customer who had a business and personal account (assuming I was not the only one).

Hence the way to standardise is first to understand the nature of customer demand and make sure that the system can handle all the demands placed on it.  The most important issue is not what standard processes are required but what is the nature of customer demand and how can we make sure that our operators are enabled to handle everything.

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Top 5 Questions & Answers of 2009

December 14th, 2009

Question 3:

Q: I’d be interested in your thoughts on the current trend emerging from the Agile community on Kanban, or push versus pull systems? The latter deals with variability by not defining end dates and controlling queues and WIP limits (over-simplifying I know.)

Critical chain, as far as I can see, assumes that schedules are a good thing to manage. Pull systems tell you to manage the workflow (aka TPS).

Stuart’s A: Agile and Kanban are techniques applied to operations environments. The basis of Kanban, as you say, is that it manages flow and inventory by using buffers in a pull system. It allows operators to see defects and stops overproduction. Agile is typically used to manage variety and works best (as I understand it) in T-shaped plants where variety can be added at the end. For example in a car plant where lots of Land Rovers were being built the extras could be added at the end.

The problems occur when you try to apply the same techniques to a service system. What’s different is that that customer is involved at the point of transaction and decides what matters to them there and then. Hence the system has to have the ability to absorb the demand at the front of the system. Think of member packs in marketing communications. Though each pack starts as a white shell, the customer decides at the front of the system what they want in their pack. If the variety is added too late in the system then all that happens is waste is introduced as a result of going back and forward between the client.

In terms of Kanban it can be thought of like this: it’s helpful in processing and production environments to make sure that you understand where the capacity is constrained in the system i.e. who is most likely to be overloaded. The capacity constrained resource must be kept busy, must never do re-work and must get work clean. So because Kanban works in conjunction with a physical or time buffer a good place to start is to make sure that the capacity constrained resource is given clean work and never runs out of work as a result of poor flow. That said, in my opinion in most service organisations there is no real capacity constraint, the degree of waste (unclean info, functional design, rework, behaviour caused by targets and incentives) is such that if the system was changed you’d probably see 50%-60% capacity improvement.

The key in service organisation is to focus on flow.

In projects, Agile doesn’t apply because the network determines where the variety is added, there is no choice. However Kanban is used in critical chain. At the end of the network a time buffer is applied to provide an early warning of late running projects. Also the convergence point (the point at which all work comes together) is usually the constraint hence the resource around that point is managed to make sure that no time is lost here. In that way it’s not the schedule that’s being managed but the consumption of the buffer.

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Top 5 Questions & Answers of 2009

December 11th, 2009

Here’s Question 2 in our series:

Q: I work in a large and complex life insurance and investment business and we have been changing huge areas of our business using the Systems Thinking method for over 18 months now.

My question is really about how a Systems Thinking approach fits with other perceived business drivers; particularly our declared objective to cross sell more of our products to existing customers, up sell more of the same and crucially retain more of our existing customers for longer.

I hope it is not an over simplification but the Systems Thinking argument I think goes something like this - Our purpose is to design our work to fulfil the “nominal” demand of our customers (eg provide a retirement income). If we do this well we will deliver a level of service that our customers expect, we won’t make mistakes, we will keep our promises and waste and failure will have as little impact as possible on both us (in terms of costs) and our customers (in terms of frustration and disappointment).

Customer satisfaction is a by-product of the way the work works. Like staff engagement it comes for free as we redesign our system against the value demands of our customers.

Because we are delivering what we promise (within our control) it is a natural consequence that customers stay with us and buy more from us. Our brand promise and the actual real experiences of our customers are aligned. There is no need to “Push” additional products or up sell at every contact opportunity - fundamentally this is not responding to customer demand (e.g. please change my address) but is part of our own agenda and will cost us money, might not work and could undermine our newly designed business.

If this argument is correct we would be far better redesigning our service and getting the basics right before embarking on a major up-sell / retention / cross-sell programme across our operational business. Especially when over 1/2 the work we do is waste / failure.

As you might guess the logic above does not resonate with some key players in our business. In fact I’m not even sure that I have captured what an experienced “Systems Thinker” would propose.

What do you think - does pro active multi-channel CRM type retention and cross-selling have a place in a Systems Thinking service organisation?

Stuart’s A: Many thanks for your question.  This is a really important subject because I don’t think that there’s an obvious enough link between Systems Thinking and growing your business.  But I will do my best to give you my philosophy on the subject.

As you say it’s a given that in order to enable people to buy from you, they have to have a good experience and it has to be easy to buy.  Additionally when they make a service request it should be fulfilled quickly, with high quality and in such a way that it’s efficient for the organisation.  So the customer has a great experience, they tell others and you most likely get some organic growth. 

Additionally because the customer has had a good experience I think it’s logical to suggest that they are more open to hearing from you, but that doesn’t necessarily mean that they will buy more.  This is when you have to think about Systems Thinking from a slightly different perspective.  Let me try to lay it out as a series of principles.

  1. Pull not push
    1. Having done what matters to the customer (or met their nominal value), you have won their trust.  Now you have to ask permission to talk them on a regular basis.  So once you have done what they asked, you ask a question “Can we talk to you once per week/month/year with highly relevant information to your circumstances.  Also you need to make sure that the offer is designed from the customer’s point of view.  It talks in terms of what they want to hear, not what you want to tell them.
    2. But you must make sure they have a good experience first!  I tried to get a quote during a famous insurance company’s ‘quote me happy campaign’, it was a terrible experience.
  2. Create even more value for the customer
    1. Assuming that you know what matters to the group of customers with which you want to converse, you have to now add value.  You do this by providing content that is associated with your product, even though it will not necessarily lead to a short term sale for you.  For example let’s say you provide annuities for retirement.  And you know what matters to your customers is income maximisation, tax avoidance and providing for a spouse after death.  You put together information booklets/CDs/DVDs etc that are easy to understand and have useful content that can help customers meet their goals. In other words you become a reliable source of expert information, a trusted adviser.
    2. Then every so often you put an offer in communication that a client may want to buy.
    3. But there’s no point doing this if when they’ve asked you for something and you messed up.
    4. You also need to plan the whole process so that it’s slick and easy for the customer to get something if you offer it.
  3. Reduce waste to free up capacity
    1. It need not be the case that designing and administering the whole sales funnel should cost money, because if you have freed up staff from the improvement of flow then you can use them in the new marketing processes.
    2. Also you should gather data on the lifetime value of a client so that you know how much you can afford to spend on each client.
    3. But yes before you go working on outbound processes make sure that you’re making the most of the inbound stuff.
  4. Gather capability data, then test rigorously and maximise
    1. Before you go designing new outbound processes first gather data on what works now, then start to tweak these to optimise their performance.  For example change headlines, pictures, copy, offers, testimonials, check the frequency of mailings, check your database and see how much failure demand a campaign attracts.
    2. Make sure that everyone who wants to spend money with you actually does spend money with you.  Last week I saw a car I liked on a website, I filled in the details and then waited, I thought my phone would ring within minutes.  Four days later they called and it was too late.
    3. Dump the processes that perform poorly and put more money behind those that perform well.
    4. Make sure you know exactly how each process drives traffic and converts.
  5. Keep learning
    1. Once maximised, look at others to see how they have leveraged their operational capability. The most obvious thing to do (but UK businesses don’t) is to use your improved capability to make a guarantee.  Can you think of how you can leverage your new and improved service to give clients more confidence so that they try you out?

I think that a company that has previously worked on push CAN move to a different model, especially as it’s cheaper and much more aligned to growth and profitability.  The challenge is that it takes time and patience to improve the operational capability such that you win over the confidence of a client. And that depends on whether management are willing to do the work to build relationships with clients before they ask them to buy more.

Finally, I’m thankful that you took the time to write, as using Systems Thinking as a means to an end is a subject close to my heart.  Too often I’ve looked at how well I’ve done Systems Thinking rather than asking how I can leverage the operational and measurement capability to create more demand in the market.

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