Memo to ‘Top Management’ – Subject: Engine Technology

I’ve just been searching for a post that is hugely relevant to a recent conversation, and have found that it was an old piece that didn’t get published onto this blog…so here it is:

Jet engine“Management thinking affects business performance just as an engine affects the performance of an aircraft. Internal combustion and jet propulsion are two technologies for converting fuel into power to drive an aircraft.

New recipes for internal combustion can improve the performance of a propeller-driven airplane, but jet propulsion technology raises total performance to levels that internal combustion cannot achieve. So it is with management thinking.

Competitive businesses require jet (even rocket!) management principles. Unfortunately, internal combustion principles still power almost all management thinking.” (H. Thomas Johnson)

And so Johnson nicely compares and contrasts the decades old ‘command and control’ management system with a new ‘systems thinking’ way.

Let’s take incentives as an important example:

You report to a manager, who reports to a manager, who…etc. You have ‘negotiated’ some cascaded objectives and you will be rated and then rewarded on your ‘performance’ in meeting them. Sound familiar?

Here are the fundamental problems with this arrangement:

  • Obey and justifyYou will tell your manager what you think he/she wants to hear, and provide tailored evidence that supports this, whilst suppressing that which does not;

  • If you are ‘brave’ and tell your manager something that they might not like, you will do so very very carefully, like ‘walking on eggshells’…and, in so doing, likely de-power (i.e. remove the necessary clout from) the message;

  • You realise that it’s virtually suicidal to ‘go above them’ and tell your manager’s manager the ‘brave’ thing that they should hear…because you fear (with good reason) that this will most likely ‘come back to bite you’ at your judgement time (when the carrots are being handed out);

  • You are locked into a hierarchy that is reliant on a game of ‘Chinese whispers’ up the chain of command, with each whisperer finessing (or blocking) the message to assist in the rating of their own individual performance;

  • Each layer of management is shielded (by their own mechanism) from hearing the raw truth and, as such, they engineer that they ‘hear what they like, and like what they hear’.

…and therefore this system, whilst fully functioning, is perpetually impotent! It has disabled itself from finding out what it really needs to know.

“Hierarchies don’t like bad news…. bad news does not travel easily up organisations” (John Seddon)

If you’ve been in such a system and HAVE broken one of the rules above through your passion to make a real difference for the good of the organisation you work for (or perhaps worked!), then you’ve probably got some scars to show for it.

If you’ve always played it safe, then this is probably because you’ve seen what happens to the others!

The ‘Bottom line’ for ‘Top Management’:

If you want to transform your organisation, change ‘engine technology’! Tinkering with your existing one is simply not going to work.

  • Managers should not be rating the performance of individuals. Rather, they should understand what the system is preventing the individual from achieving…and then work with them to change that system to release their untapped potential;

  • Managers should not be incentivising individuals to comply. Rather, they should be sharing the success of the organisation with them. (These are very different things!)

Neither of these fundamental changes is in the gift of ‘middle management’ – they belong to those that determine the management system.

… and so, if (and this is a big ‘if’) ‘top management’ want to know the raw truth (‘warts and all’) they must constantly remove, and guard against, system conditions (e.g. incentives, performance ratings) that would prevent the truth from easily and quickly becoming lucid and transparent.

Afterthought, to counter a likely retort from ‘Top management’:

I have often (professionally) provided well intended feedback to ‘management’ as to what’s actually ‘happening out there’, particularly when I believe that they may not be aware of this. Many an Executive has derived great worth from this feedback (and thanked me accordingly).

This isn’t saying that I’m always right, or that I know everything. Obviously I’m not, and I don’t. But I do know what I see and hear.

However, there has been a subset of deeply command-and-control executives that confidently respond with “no Steve, you are wrong – that’s not the case at all. My people tell me exactly what’s happening…and there’s no problem here”.

I find this interesting (sometimes amusing, but mostly disappointing).

A manager can never be sure that people are being totally open and honest with them…but they can constantly look for, and understand, what mechanisms and practices would put this desired feedback in doubt or at risk….and then tirelessly work to remove these system conditions, for the good of all.

Footnote: I wrote this post before I wrote ‘Your Money or your Life!’…which considers the question as to whether ‘Top management’ in large corporates CAN change.

“Citizens face many front doors…”

Doors-Doors-DoorsGovernments all over the world want to get the most out of the money they spend on public services – for the benefit of the citizens requiring the services, and the taxpayers footing the bill.

Government officials regularly devise initiatives, and even new departments, aimed at getting their myriad of agencies to work better together.

However, looking at this from the outside, the media regularly uncover seemingly daft (and sometimes tragic) instances where government agencies have failed to effectively act, connect and co-operate with each other. In such instances, each agency appears to ‘the person on the street’ to have been wearing blinkers with their ‘common sense’ radars turned to ‘exceedingly low’.

But is it right to lay blame on the agencies or, worse, the people acting within them? In the majority of cases, I’d suggest that the answer would clearly be ‘no’. We should be looking at the bigger ‘whole of public service’ system that they are designed to operate within.

A new phrase was termed some years back called ‘Joined up government’. The Oxford dictionary defines it as:

“A method of government characterized by effective communication between different departments and co-ordination of policies.”

When a dictionary defines a word, it usually provides the reader with an example sentence showing its proper usage. In this instance, the first example sentence given is a negative one, as in:

“There is an obvious lack of joined-up government here” (Oxford Dictionary)

i.e. Governments openly recognise that there is a big problem (a lack of togetherness)…and that they would love to ‘solve’ it…but it’s regularly in the ‘too hard basket’!

The purpose of this post is to share (what is to me) an important (and very well presented) 30 min. video by Jeremy Cox1: Budget Management and People Centred Services that nicely explains, by way of reference to a real case study, the ‘multi agency’ problem and how to go about changing it.

If you are interested (particularly if you work within the public sector) then I’d expect that watching it should be a worthwhile (and thought provoking) use of your time.


Right…if you’ve got to here then I’ll assume that you’ve watched the video…the rest of this post pulls out (what I believe to be) key things said by Jeremy Cox in his presentation (blue italics below) and my ‘wrap-around’ narrative.

Note: What follows is incomplete and not a substitute for watching the video. It’s just an aide-memoire so that I (and you) don’t have to watch the video every time to pull out the key points or discuss it with our colleagues.


Jeremy Cox starts at a summary level by walking us through “four critical steps”:

1. The first thing to do is to study your system…and, just to be crystal clear, YOU (those responsible for the system) have to study it, and do so WITH those who operate it. A consultant cannot do this for (i.e. to) you2.

“You have to go and study because if you see it with your own eyes, you can’t deny it. If someone ‘tells you’, then you can ‘rationalise’ it away quite easily.”

2. From studying your system, you can then see and understand the effects of (supposed) ‘controls’ on its performance.

3. Only when we understand (at a root cause) WHY the system operates as it does, should we redesign…because then, and only then, is such a redesign based on meaningful evidence…as opposed to the usual ‘conventional wisdom’ or ‘current in-vogue ideology’;

and finally:

4. Devise new measures, and move to a new model of leadership.

Cox then goes into each step in some detail.

Going back to Step 1: Cox talks about studying demand.

HelpHe takes us through a case study of a real person in need, and their interactions with multiple organisations (many ‘front doors’) and how the traditional way of thinking seriously fails them and, as an aside, costs the full system a fortune.

Understand demand in context….don’t understand people from the point of view of your organisation, understand the person and what matters to them about living a better life.”

The case study is sad…and yet not really a surprise – we all kind of know that it’s true. It shows the huge power of following some cases around the full system.

In explaining Step 2, Cox opens up the madness within silo’d (i.e. single department) thinking, which is driven by their ‘budgetary controls’.

Rules of playHe identifies three survival principles in play, and the resulting anti-systemic controls that result:

a) “We must prioritise [our] services for the most in need” which leads to attempts to stop entry into the service, and then the requirement to break through escalating thresholds of eligibility.

Such ‘screening out’ logic creates the following madness: “Your case isn’t serious enough yet…go away until things get worse!”

b) “We must stick to what we do” which leads to “I can see that you need A and B for you to get better…but, here, we only do A.”

Cox gives a real example of an alcoholic with depression being turned away by mental health practitioners because “we don’t work on alcoholism – you need to solve that first and then come back with your depression”. We can predict that such unhelpfulness will lead the needy citizen towards a rather large drink!

c) “We must limit service delivery” which leads to attempts at closing cases, doing things on the cheap, and setting time limits…all of which are about pushing things through at the expense of the needy citizen…which will lead to failure demand (probably popping up unexpectedly in another department…and therefore not seen as linked).

The redesign at Step 3 requires different principles.

IntegratedCox makes the obvious point that the actual redesign can’t be explained up-front because, well…how can it be -you haven’t studied your system yet!

…but, generally, it is likely that “genuinely integrated, local-by-default problem solving teams will emerge from [following the steps]”.

A clarification: ‘Genuinely integrated’ doesn’t mean a multi-disciplined shared building where people regularly come together for, say, case review meetings…and then go back to their ‘corners’ and work to their existing (i.e. competing) policies and procedures.

A nice test from Cox:

“How do you know a team is genuinely integrated rather than co-located?…All you have to do is look in the fridge – nobody’s written their department’s name on the milk!”

And so to Step 4: New measures and new leadership

shovelling sand with a pitchfork[Once you’ve successfully redesigned the system] “The primary focus is on having really good citizen-focused measure: ’are you improving’, ‘are you getting better’, ‘is the demand that you’re placing reducing over time’.”

Notice that these measures are about the purpose of the system (i.e. for the citizen), and NOT about the activities performed within the system. It’s not about the volumes of calls taken or visits performed or payments made or cases closed or…[carry on naming activities].

“You have to shift leaders from managing the budget top-down to adding value to the process of studying, and improving outcomes for individuals.”

The point here is that you are never done. The outcomes from a redesign can radically shift performance, but you’ll quickly be ‘back at square one’ if you haven’t grasped the WHY and don’t ‘kick on’ to yet more learning, and yet more improvement – becoming better every day – for the good of citizens, and (importantly) for the pride of your employees.

To close

What’s most interesting to me from the video is the graphic explanation of one unit of demand, a needy citizen in a really shitty situation, being bounced around – presenting at public service ‘front doors’ in multiple and seemingly unrelated ‘cases’, with each agency doing what they can but not what is required….and the needy slip ever further into their personal quagmire.

“We limit what we do to ‘what we do’, not to what the person needs.”

Cox makes the hugely important point that, once you open your mind, then the study and redesign of the work is relatively easy. The hard bit is re-conceiving the ‘system of management’. This takes real leadership and (perhaps most importantly) self-development.

Cox closes with the following comment:

“Some of the most rewarding work that I have ever done is just working with these integrated teams who are out…on the ground, with good leadership, learning how to solve problems for citizens. You actually see people’s lives turned around and people who otherwise would have been dead who are now still alive.”

This is powerful stuff! There can’t be much more meaning to anyone’s working life than that.

Footnotes:

1. The video covers one session within a ‘Beyond Budgeting’ event run by Vanguard Consulting over in the UK. The first 3 mins. is an introduction from John Seddon, and then Jeremy Cox (a Vanguard consultant) presents the rest.

Note: Cox refers to names of UK government departments (e.g. The DWP). If you live elsewhere in the world then you are likely to have similar agencies, just with different names.

2. A consultant cannot do it for you: I should clarify that an experienced ‘systems thinking’ coach CAN facilitate you through studying your system and its redesign….BUT they aren’t ‘doing it’ – you are!

I have a post with the ink half dry that explains and expands this point called ‘Smoke and Mirrors’. I guess I should get on and finish it now.

3. The NZ government is setting up a Social Investment Agency. Its focus is fundamentally about changing the lives of the most vulnerable New Zealanders by focusing on individuals and families, understanding their needs better, and doing more of what is most likely to give the best results”. I like the intent.  I hope that those involved watch (or have already watched) the Jeremy Cox video, and consider the messages within.

Roar!

Lions badgeFor those rugby fans among you – and virtually every New Zealander – the British and Irish Lions touched down in Auckland this afternoon.

They are here to play ten (daunting) games, including against all five NZ Super Rugby franchises and three All Black tests. I can hardly wait!

A Lions tour to NZ is special. It now only happens every twelve years….and the Lions have only ever won one series, way back in 1971. It’s going to be a tough gig.

I’ve recently been getting into the mood by listening to interviews with various Lions from past tours. Much of the material on offer understandably focuses on the last NZ tour, back in 2005 (when the Lions got well and truly thumped) and what went wrong….and how on earth can they win this time round.

One interview stood out to me – Matt Dawson with Sir Ian McGeechan1.

(I should explain, for those that don’t know, that ‘Geech’ is perhaps the most successful Lions Head Coach there has ever been).

Dawson was asking Geech about an incredibly tricky task – the process of selection (i.e. which players from the ‘squad of four nations’2 would get to play in a test).

GeechSir Ian explained that he would sit down with his team of coaches (perhaps five people) and work through all the analysis and then discuss, often for hours deep into the night. He provided this wonderful insight:

I’ve never voted in picking a test team, [I’ve] always talked it through until we get to what we want to see and are comfortable with.”

He doesn’t even mention that, as Head Coach, he had the power to force his views through (i.e. not even go to a vote)…because that’s not how he thinks.

I love the fact that (when he was the Head Coach) they never voted!

This fits really well with a few of my earlier posts:

Talk-back radio which has a dig at people using their opinions;

“What I think is…” which talks about moving from opinions to knowledge; and

Catch-ball which talks about moving from the (predictably) divisive process of ‘consultation’, to the inclusive process of ‘catch-ball’.

If you’re reading the above and you are a ‘tough’, ‘command and control’, ‘conventional wisdom’ type of person, then:

  • you may judge me (and Geech) to be weak; and
  • you may argue that talking it through would take forever to make any decisions.

Yes, it takes a great deal of effort to reach a consensus…but that’s the point – it requires you to actually invest in those around you, to listen to them, to test your own thinking, to draw out theirs, to connect, to understand, to appreciate, to grow…and to make monumentally better decisions, for the longer term, together, towards your shared purpose.

Footnotes

1. Sir Ian McGeechan (‘Geech’) is perhaps the most respected/revered/ loved Lion ever. He played for the Lions in 1974 and 1977 and then coached them in 1989, 1993, 1997 and then again in 2009.

He also coached the ‘mid-week massive’ during the 2005 tour of New Zealand whilst Sir Clive Woodward was Head Coach. Woodward (in my view) is a very different man to Geech.  Sir Clive ‘decided’ things, and often wouldn’t budge in spite of the advice being offered to him….which didn’t turn out too well.

2. The Lions are made up of the very best players from each of England, Scotland, Wales and Ireland.

3. For long-term blog readers, you may recall from an earlier post that I would be torn as to which team I will be supporting. I have the good fortune to be going to the 3rd test in Auckland on 8th July with my oldest son, and with some great mates (thanks Jonesy!)

Let’s just say that I will be wearing red, and my son will be wearing black – which I think fits rather nicely with our past and our future.

4. As a bonus for reading this far 🙂 , here’s another nice ‘Geech’ quote to ponder regarding selecting the right people:

“It’s what’s happening off the ball that you watch….I spent as much time watching players off the ball as I did on the ball…Who’s putting themselves into the game? What’s happening off the ball? Who’s stepping up trying to make a difference when the team are under the cosh?”

Polishing a Turd

turd polishWhen I was growing up, I remember my dad (a Physicist) telling me that it was pointless, and in fact meaningless, to be accurate with an estimate: if you’ve worked out a calculation using a number of assumptions, there’s no point in writing the answer to 3 decimal places! He would say that my ‘accurate’ answer would be wrong because it is misleading. The reader needs to know about the possible range of answers – i.e. about the uncertainty – so that they don’t run off thinking that it is exact.

And so, with that introduction (and flashback to my school days) this post is about the regular comedy surrounding business cases, and detailed up-front planning…and what to do instead.

A seriously important concept to start with:

The Planning fallacy

Human beings who desire something to be ‘a success’ (e.g. many an Executive/ Senior Manager) tend to:

“make decisions based on delusional optimism rather than on a rational weighting of gains, losses, and probabilities. They overestimate benefits and underestimate costs. They spin scenarios of success while overlooking the potential for mistakes and miscalculations. As a result, they pursue initiatives that are unlikely to come in on budget or on time or deliver the expected returns – or even to be completed.” (Daniel Kahneman)

This isn’t calling such individuals ‘bad people’, or even to suggest that their actions are in some way deliberate – it is simply to call out a well-known human irrationality: the planning fallacy.

We all ‘suffer from’, and would be wise to understand and guard against, it.

I’ve worked (or is that wasted time) on many a ‘detailed business case’ over the years. There is an all-too-common pattern….

“Can you just tweak that figure till it looks good…”

models are wrongLet’s say that someone in senior management (we’ll call her Theresa) wants to carry out a major organisational change that (the salesman said) will change the world as we know it!

Theresa needs permission (e.g. from the board) to make a rather large investment decision. The board want certainty as to what will happen if they sign the cheque – there’s the first problem1.

Theresa looks around for someone who can write a great story, including convincing calculations…and finds YOU.

Yep, you are now the lucky ‘spreadsheet jockey’ on this proposed (ahem) ‘transformation programme’.

You gather all sorts of data, but mainly around the following:

  • a ‘base case’ (i.e. where we are now, and what might happen if we took the ‘do nothing’ option);
  • a list of ‘improvements’ that will (supposedly) occur if the board says ‘Yes’;
  • assumptions relating to the potential costs and benefits (including their size and how/when the cash will flow); and
  • some ‘financial extras’ used to wrap up the above (interest rates, currency rates, taxes, the cost of capital…and so on)

You create an initial broad-brush model and then, after gaining feedback from ‘key’ people, you work through a number of drafts – adding in new features and much detail that they insist as being essential.

And voila! We have a beautifully crafted financial model that has a box at the end with ‘the answer’ in it2.

You show the model to Theresa.

Wow, she’s impressed with the work you’ve put in (over many weeks) and how sophisticated the model is…but she doesn’t like this initial answer. She’s disappointed – it’s not what she was looking for.

You go through all of the assumptions together. Theresa has some suggestions:

  • “I reckon the ‘base case’ comparison will be worse than that…let’s tweak it a bit”
  • “Our turnover should go up by more than that…let’s tweak it a bit”
  • “Nah, there won’t be such a negative productivity hit during implementation – the ‘learning curve’ will be much steeper!…let’s tweak it a bit”
  • “We’ll save more money than that…and avoid paying that…let’s tweak it a bit”
  • “Those savings should kick in much earlier than that…let’s tweak it a bit”
  • “We’ll be able to delay those costs a bit more than that…let’s tweak it a bit”

…and, one of my favourites:

“Mmm, the ‘time value of money’3 makes those upfront costs large compared to the benefits coming later…why don’t we extend the model out for another 5 years?”

And, because you designed a nice flexible model, all of the above ‘suggestions’ are relatively easily tweaked to flow through to the magic ‘answer’ cell

“now THAT looks more healthy! The board is going to LOVE this. Gosh, this is going to be such a success”.

Some reflections

John Dewey quote on learningSome (and perhaps all) of the tweaks might have logic to them…but for every assumption being made (supposedly) tighter:

  • one, or many, of the basic assumptions might be spectacularly wrong;
  • plenty of the assumptions are being (conveniently4) ignored for tweaking…and could equally be ‘tightened’ in the other direction (i.e. making the business case look far worse); and
  • there are many assumptions that are completely missing…because you simply don’t know about them….yet…or don’t want to know about them.

With any and every tweak made, nothing has actually changed: Nothing has been learned about what can and will actually occur. You have been ‘polishing a turd’…but, sadly, that’s not how those around you see it. Your model presents a highly convincing and desirable story.

Going back, your first high-level draft model was probably more useful! It left many ‘as-yet-unknowns’, it contained ranges of outcomes, it provided food-for-thought rather than delusional certainty.

We should reflect that “adding more upfront planning…tends to make the eventual outcome worse, not better” (Lean Enterprise). The more detailed you get then the more reliant you become on those assumptions.

The repercussions

Theresa gains approval from the board for her grand plan and now cascades the (ahem) ‘realisation of benefits’ down to her direct reports…who protest that the desired outcomes are optimistic at best, and sheer madness at worst (though they hold their tongues on this last bit).

Some of the assumptions have already proven to be incorrect – as should be expected – but it’s too late: the board approved it.

The plan is baked into cascaded KPIs…and everyone retreats into their silos, to force their part through regardless of the harm being caused.

But here’s the thing:

“Whether the project ‘succeeds’ according to [the original plan] is irrelevant and insignificant when compared to whether we actually created value for customers and for our organisations.” (Lean Enterprise)

The wider point…and what to do instead

validated learningIt’s not just financial models within business cases – it is ‘detailed up-front’ planning in general: the idea that we should create a highly detailed plan before making a decision (usually by hierarchical committee) as to whether to proceed on a major investment.

The Lean Start-up movement, led by Eric Ries, makes a great case for a totally different way of thinking:

  • assumptions aren’t true! (it seems daft to be writing that…but the existence of the planning fallacy requires me to do so);
  • we should test big assumptions as quickly as possible;
  • such testing can be done through small scale experimentation (which doesn’t require huge investment) and subsequent (open-minded) reflection;
  • we will learn important things…which we did not (and probably could not) predict through detailed up-front planning. This is a seriously good thing – we can save much time, money and pain, and create real customer value;
  • we may (and often will) find a huge flaw in our original thinking…which will enable us to ‘pivot’5 to some new hypothesis, and re-orientate us towards our customer purpose.

The big idea to get across is what has been termed ‘validated learning’.

Learning comes from actually trying things out on, and gaining direct feedback from, the end customers (or patients, citizens, employees etc.), rather than relying on our opinions about them.

Validated is about demonstrating what the customer (or patient, citizen, employee etc.) actually does (or doesn’t do), not what they say they would do when asked (i.e. from external market research or internal survey). It is to observe and measure real behaviours, rather than analyse responses to hypothetical questions.

…and to do the above rapidly by experimenting with ‘minimum viable products’ (MVPs).

Delay (whilst writing a beautiful document, getting it approved, and then building a seemingly golden ‘solution’) prevents the necessary feedback from getting through.

Caveat: Many an organisation has read ‘The Lean Startup’ book (or employed a consultant who has) and is using the above logic merely at the start of their legacy ‘investment decision’ process…but, through grafting new labels (such as Lean) onto old methods and retaining central hierarchical approval committees, their process remains ostensibly the same.

You don’t do validated learning merely at the start of an investment process – you re-imagine what ‘making investments’ means!

“It’s moving leaders from playing Caesar with their thumbs up and down on every idea to – instead – putting in the culture and the systems so that teams can move and innovate at the speed of the experimentation system.”

“The focus of each team is iterating with customers as rapidly as possible, running experiments, and then using validated learning to make real-time investment decisions about what to work on.” (Eric Ries)

 Notice that it is the team that is making the investment decisions as they go along. They are not deferring to some higher body for ‘permission’. This is made possible when:

  • the purpose of the team is clear and meaningful (i.e. based around a service or value stream);
  • they have meaningful capability measures to work with (i.e. truly knowing how they are doing against their purpose); and
  • all extrinsic motivators have been removed…so that they can focus, collaborate and gain a real sense of worth in their collective work.

Nothing new here

You might read the above and shout out:

  • “but this is just the scientific method”; or
  • “it’s yet another re-writing of the ‘Plan – Do – Study – Act’6 way of working”

…and you’d be right.

Eric Ries’ thinking came about directly from his studying of Deming, Toyota etc. and then applying the learning to his world of entrepreneurship – to become effective when investing time and money.

His book, ‘The Lean Startup’, and the ‘validated learning’ concept are an excellent addition to the existing body of work on experimentation towards purpose.

Footnotes

1. We should never present a seemingly certain picture to a board (or merely hide the caveats in footnotes)…and we should coach them to be suspicious if they see one.

2. For the financially aware: this will likely be a net present value (NPV) figure using a cost of capital (WACC) provided by the finance department, or some financial governance body.

3. The ‘time value of money’ reflects the fact that $1 now is worth more to you than $1 in a year’s time.

4. Conveniently doesn’t mean intentionally or maliciously – it can just be that lovely planning fallacy at work.

5. Pivot: This word has become trendy in many a management conversation but I think that its original (i.e.intended) meaning is excellent (as used by Eric Ries, and his mentor Steve Blank).

Eric Ries defines a pivot as “a structured course correction designed to test a new fundamental hypothesis….”

6. PDSA: Popularised by Deming, who learned it from his mentor, Walter Shewhart. A method of iterative experimentation towards your purpose, where the path is discovered as you go, rather than attempted to be planned at the start. Note that, whilst the first step is ‘Plan’, this DOESN’T mean detailed up-front planning of an answer – it simply means properly planning the next experiment (e.g. what you are going to do, how you are going to conduct it, and how you are going to meaningfully measure it).

 

A kerfuffle over Coffee

Coffee beansI was having a chat with someone about ‘batching’ the other day, and wanted to point them to a short and simple post I wrote a few years ago that I thought would assist…so I looked for it…and couldn’t find it…and then realised that I’d never published it on this blog…so here it is:


I wrote a post a bit back entitled One at a time please. In it, I attempted to explain (using my washing up at home1) about the problems caused by doing things in batches, and that we should strive to shift our processes towards ‘single piece flow’.

This is such an important point that I thought that I would put forward another, hopefully more obvious, example.

Right, here goes:

What do you see here…

Coffee - both doors closed

…yep, we had two fancy coffee machines in our last works kitchen.

If you were to watch people using them you would note that it is rare that they are both being used…but it does happen…so having 2 machines helps cope with the variation in our demand for a coffee (with spikes in demand unsurprisingly occurring Monday – Friday at around 10:30 and 15:00)

These machines need regular cleaning. I think, from my observations that this is performed weekly.

Cleaning

How about this picture?

Coffee - both doors open

Yep, this is what happened when they were both being cleaned.

We used to have a cleaner that liked to come in at around 10:30 (not such a good time really…but that’s a different story), open up both machines and then proceed to perform his cleaning steps one-by one for both machines. Something like this:

  • Take out both sets of waste drawers, empty them and put them by the sink
  • Take out both drip trays, empty and put them by the sink
  • Open up both coffee hoppers and fill them
  • Open up both creamer hoppers and fill them
  • Open up both sugar hoppers and fill them
  • Clean the pipes and connectors of both machines
  • Wash and dry the waste drawers and drip trays for both machines
  • Put everything back together for both machines
  • Close the front drawers of both machines
  • Wipe the outsides of both machines
  • …and done. Nice job.

This takes some time…and what can’t happen whilst this is being done?

No one can make a coffee! (or hot chocolate or mocha or …..name some other weird drink made from permutations of powder)

What’s the purpose of the machine? To reliably make (good) coffee as and when someone wants one.

A change in cleaner

I noticed one day that we had changed our cleaner. I also noticed this:

Coffee - one open, one closed

Oh yes! She does exactly the same steps as the earlier cleaner…but she does it one machine at a time.

Now, for those die-hard ‘economies of scale’ fans out there:

  1. There is hardly any time difference between the two cleaning approaches; BUT
  1. We can all still make coffee whilst it’s being done!!!

Even better, she concentrates on one machine at a time (in a state of flow), likely making sure that all is okay with it, potentially causing her to think far wider than just repeating a set of standard steps.

So there you go: a short and simple example of the sense in reducing batch sizes as and when we can 🙂

Anyone for a coffee?

Footnotes

1: My earlier post: If this is the first time you’ve read about batches then please do read my earlier post  – it goes into more detail.

There was one among you who, in response to this earlier washing up ‘batch to flow’ post, spent quite some time explaining to me exactly how they emptied their dishwasher, specifying how they had experimented with which items of cutlery were best held between each digits. Nice! You know who you are…Tom 🙂

2: On cleaners: I don’t know why the cleaner changed or why they adopted their different approaches and I make no judgement on either of them. I just really like being able to get a coffee whilst the machines are being cleaned!

3. Simple, and complicated: I know that there are all sorts of batches ‘out there’ (whether temporal or quantity based)…and I know that there are constraints that need to be understood and worked with (you can’t usually just remove, or even reduce, batch sizes – you have to look at the ‘why’)….but the desired target condition of ‘single piece flow’ can be used as a vision to experiment towards, whatever the nature of your batch.

Toilet Humour

UrinalSo, I’m in the process of moving office and I’m clearing out paperwork around my desk. I came across something which made me reflect, and have a giggle…and I thought I’d share:

We moved into our current building about four years ago – approximately 100 people, with only one urinal in the men’s toilet.

It all started with an email which read something like this…

“Would the men please stand over the urinal before doing their business.”

The motivation for this email? Well, let’s just say that there was a fair bit of ‘dribbling’ going on, creating ‘puddling’ on the floor…and (unsurprisingly) some of the male toilet goers weren’t particularly enamoured with their colleagues’ failure to aim…and neither was the cleaner!

So that email should have sorted it all out, yes?

No.

The next email was more direct, dropping any attempt at politeness.

Then, a hand-written sign was put above the urinal. The author’s aim was clearly to insult the culprit(s) – the phantom dribblers.

Finally, the cleaner refused to mop the male toilets.

Action was required…and this came in the form of a mop and bucket of chemical solution, bought for us men, and installed next to the urinal.

Another ‘direct and to the point’ email was sent around informing us of the ‘mop and bucket’ purchase, and what to do with it!

Things quietened down for a while. I definitely detected that a little mopping was happening. A change, but nowhere near perfection.

We then got an email about the mop. Apparently, mops left in chemical solution ‘all day, every day’ quickly dissolve – we were going through a mop head every week! We were now instructed to take the mop out of the bucket once we had cleaned up.

I observed (through my natural toilet visits each day) that the mop was being balanced in all sorts of weird positions – often not making it out of, or falling back into the bucket (splashing chemicals over the floor).

Taking a different approach

It was at this point that I saw an opportunity to experiment.

Emails operate at a point in time, far from the gemba – the urinal in this case! And those emails were clearly proving to be ineffective.

Question: When does someone most need instructions, and/or prompts?

Answer (Hypothesis): At the time and place that the ‘action’ occurs (!), in a format that they can understand and (importantly) accept1 and relate to.

Proposed Countermeasure: Create a clear (and non-judgemental) poster and put it up on the wall, by the urinal.

…and so I did:

Musings of a mop

…and every time I went to the toilet I observed the condition of the urinal2.

So how did that go?

Miraculous! The toilet floor was virtually always mopped clean (it was still shiny from the last fella passing through)…and the mop was always balanced nicely on the bucket.

Hilariously, I found myself regularly reading my own poster and checking the floor and mop3 – I was altering my own behaviours.

The floor stayed nice and clean for many months and I became bored of reading the poster (my words were annoying me)…and so I wanted to perform another experiment – what would happen if I took the poster down? And so I did.

Did the wheels fall off?

Well, no, not really.

I’d say that the floor doesn’t stay quite as clean as it used to…but, in general, people will mop up, and best of all for Mopsy, he remains nicely balanced on the side of the bucket, away from those harsh chemicals.

Learnings

In summary:

  • clear, practical and non-judgemental visual controls at the gemba really work;
  • emails telling you off, and/or telling you what to do, don’t!
  • new behaviours can become habitual (hence why the poster could be taken down4).

I know that there are loads and loads of far more meaningful examples of the enormous power of visual management…but I thought that I’d introduce a little bit of ‘toilet humour’ into our office move process…and now my fellow male office dwellers5 know who wrote the poster 🙂 .

A serious point to end

My editor for this post (thanks Paul) made the most excellent comment:

“It’s interesting that when something is not good then we behave with ‘blaming’…

Asking ‘why’ over ‘who’ is better. [Whether we do this] must be something to do with the environment!”

Paul is calling out that:

  • we so easily jump to blame, looking for the WHO…and think that by naming and shaming, we will force things to improve;
  • we can achieve so much if we look for the WHY, and then do something meaningful about this.

The emails and rude notes were aimed at people.

The mop and bucket, and visual control, were focused on the activity.

Footnotes

1. Acceptance: All those emails (and rude signs) were deficient because, just like cars, no-one believes that they are a bad driver. Unless you are presented with direct evidence of your deficient behaviour, it’s always somebody else!

2. Analysis: Don’t worry, I didn’t set up a formal measuring regime and/or start making deliberate trips to the toilet. For the benefit of any hard core researchers reading this post – my observations can only be described as anecdotal.

3. I’m not saying that I was ‘the phantom dribbler’! I just felt compelled to share the burden and have a little mop up 🙂

4. Taking down the poster: I’m not suggesting that visual controls should be taken down after a period of time. I am suggesting though, that they should be regularly revisited to be refreshed – to keep people’s attention, and improved – to make things even better.

5. …and the females around the office are either disgusted (not having known that some of the males were ‘dribblers’) or pleasantly surprised (that males can change their habits!)

’80 in 20’…erm, can we change that?!

80 in 20This is a bit of a ‘back to basics’ post, inspired by refreshing my memory from reading a superb book. It’s long…but hopefully interesting 🙂

Some years back I was working with a most excellent colleague, who managed a busy contact centre operation. Let’s call her Bob. She was absolutely committed to doing the best she could, for her staff and her customers.

Bob came to me one day for some help: Things weren’t going well, she had a meeting with senior management coming up and she was going to ask them to approve a radical thing – to change, by which I mean relax, their current call handling target.

I didn’t know too much about contact centres back then…so I started by asking some dumb questions. And it went something like this:

Me: “What’s this ‘80 in 20’ measure about?”

Bob: “It’s our main ‘Key Performance Indicator’ (KPI), called ‘Grade of Service’ (or GOS for short) and it means that we aim to pick up 80% of all incoming calls within 20 seconds of the customer calling.”

Me: “Oh…and where do these figures comes from?”

Bob: “It’s an industry recognised KPI. All ‘up to date’ contact centres use it to measure how they are doing and ‘80 in 20’ is Best Practise.”

Me: “…what ‘industry body’ and where did they get these figures?”

Bob: “The [insert name of a] ‘Contact Centre Association’…and I’ve got no idea where the figures come from.”

Me: “So, we have a target of picking up a customer’s call within an arbitrary 20 seconds…and we have an arbitrary target on meeting this target 80% of the time? …so it’s a target on a target?”

Bob: “Yes…I suppose it is…but we are having a real tough time at the moment and we hardly ever achieve it.”

Me: “Okay…but why do you want to ask senior management to ‘relax’ this target-on-a-target? What will this achieve?”

Bob: “Because we publish our GOS results against target for all our contact centre team leaders to see…and frankly there’s not much they can do about it…and this is really demoralising. If I could just get senior management to relax it to, say, 70% in 30 seconds then my staff could see that they at least achieve it sometimes.”

…and that’s how my discussion with Bob started.


I have just finished reading Donald Wheeler’s superb book ‘Understanding Variation – the key to managing chaos’ and my work with Bob1 all those years ago came flooding back to me…and so I thought I’d revisit it, and jot down the key points within. Here goes…

Confusing ‘Voice of the Customer’ and ‘Voice of the Process’

VoPI’ll start with clarifying the difference between the customer and the process. In the words of Donald Wheeler:

“The ‘voice of the customer’ defines what you want from a system.

The ‘voice of the process’ defines what you will get from a system.”

The difference in words is subtle, but in meaning is profound.

In Bob’s case, she has determined that customers want the phone to be picked up within 20 seconds2. However, this wishful thinking (a target) is completely outside the system. Bob could set the customer specification (target) at anything, but this has got nothing to do with what the process can, and will predictably3, achieve.

What we really want to see is what the system (‘handling4 customer calls’) is achieving over time.

A target is digital (on/off) – either ‘a pat on the back’ or ‘not good enough!’

On off switch “A natural consequence of this specification [target] approach…is the suddenness with which you can change from a state of bliss to a state of torment. As long as you are ‘doing okay’ there is no reason to worry, so sit back, relax, and let things take care of themselves. However, when you are in trouble, ‘don’t just stand there – do something!’ …This ‘on-again, off again’ approach is completely antithetical to continual improvement.” (Wheeler)

Unfortunately, Bob is constantly the wrong side of the (current) specification and therefore has the unwavering torment of ‘don’t just stand there – do something!’

But do what? And how would Bob know if whatever they try is actually an improvement or not? Using a target is such a blunt (and inappropriate) tool. Future results:

  • might ‘beat target’ (gaining a ‘pat on the back’) and yet simply be noise5; or
  • might still be lower than target (receiving another ‘kick’) and yet contain an important signal.

Bob cannot see the true effects of any experimentation on her system whilst relying on her current Industry best practise ‘Grade of Service’ KPI. She does not have a method to separate out potential signals from probable noise.

Thinking that a target can change things for the better

pressure“When people are pressured to meet a target value, there are three ways they can proceed:

  1. They can work to improve the system;
  2. They can distort the system; or
  3. They can distort the data.               

(Wheeler, referencing Brian Joiner)

What can a call agent do to ‘hit’ that target? Well, not much really. They can’t influence the number of calls coming in or what those customers want or need. They CAN, however, try to ‘get off the phone’ so as to get to the next call. Mmm, that’s not going to help the (customer-defined) purpose…and is probably likely to create failure demand, complaints and re-work…and make things worse.

What can the contact centre management (from team leaders and upwards to Bob) do to ‘hit’ that target? They could try to improve the system* (which, whilst being the right thing to do, is also the hardest) OR they could simply ask for the target to be relaxed. If they aren’t allowed to do either, then they might begin to ‘play games’ with the data…and hide what is actually happening.

* To improve the system, Bob needs contextual data presented such that it uncovers what is happening in the system…which will enable her to listen to the process, see signals, ask relevant questions, understand root cause, experiment and improve. She, and her team, cannot do this at present using her hugely limiting KPI.

In short, the target is doing no good…and probably some (and perhaps a lot of) harm.

It’s perhaps worth reflecting that “Bad measures = bad behaviours = bad service” (Vanguard)

What’s dafter than a target? A target on a target!

stop that its very sillyWhy? Well, because it removes us from the contextual data, stripping out the necessary understanding of variation within and thus further hiding the ‘voice of the process’.

It’s worth noting that, in Bob’s ‘20 seconds to answer’ target world:

  • A call answered in 3 seconds is worth the same as one answered in 19 seconds; and, worse
  • A call answered in 21 seconds is treated the same as one answered in, say, 480 seconds….and beyond…perhaps even an hour!

Note: I’ve added an addendum at the end of this post with a specific ‘target on a target’ example (hospital wait times). I hope that it is of use to demonstrate that using a ‘target on a target’ is to hide the important data underneath it.

“Setting goals [targets] on meeting goals is an act of desperation.” (Wheeler)

Worse still, a ‘target on a target’ can fool us into thinking that we are looking at something useful. After all, I can still graph it…so it must be good…mustn’t it?

Here’s a control chart of Bob’s ‘Grade of Service’ (GOS) KPI:

I-MR

 You might look at it and think “Wow, that looks professional with all that I-MR control charty stuff! I thought you said that we’d be foolish to use this ’80 in 20’ target on a target?”

You can see that Bob’s contact centre never met the ’80 in 20’ target-on-a-target6 (and, with the current system, isn’t likely to)…and you can perhaps see why she wants to ‘relax’ it to ’70 in 30’….but we can’t see what really happens.

What’s the variation in wait times? (times of day, days of week etc.)

Do some people get answered in 5 seconds? Is it common for some people to wait for 200 seconds? (basically, what’s actually gong on?!)

Is the variation predictable? Are there any patterns within?

Are those months really so comparable?…are any games being played?!

Okay, so I’ve shot at what Bob has before her…but what advice can I offer to help?

Does Bob need to change her ’80 in 20’ KPI?  Yes, she does….but not by relaxing the target.

‘The right data, measured right’ (‘what’, and ‘how’)

what how whyAt its very simplest, Bob’s measures need to help her (and her people) understand and improve the system.

To do this, they need to see:

WHAT matters to the customer? …which could be uncovered by:
“Don’t make me queue” Volume of calls, time taken to answer, abandonment rate.
“I want you to deal with me at my first point of contact” % of calls resolved at first point of contact (i.e. didn’t need to be passed on).
“Don’t put me on hold unnecessarily” % of calls put on hold (including reason types and frequencies).
“I want to deal with the right person (i.e. with the necessary knowledge, expertise, and authority)” % of calls passed on (including reason types and frequencies).
“I want you to action what you have promised, when I need it…and to do so first time.” Failure demand, either chasing up or complaining (including reason types and frequencies).

Now, Bob (and most contact centres) might reply “We already measure some of that stuff!”

Yes, I expect you do.

What also matters is HOW you measure it.  Measures should be:

  • shown over time, in chronological order (i.e. in control charts, to show variation), with control limits (to separate out signals from noise);

  • updated regularly (i.e. at meaningful intervals) and shown visually (on the floor, at the gemba), providing feedback to those working in the system;

  • presented/ displayed together, as a set of measures, to show the system and its interactions, rather than a ‘Grade of Service’ KPI on a dashboard;

  • monitored and analysed to identify signals, and consider the effect of each experimental change towards the customer purpose;

  • devoid of a target! The right measures, measured right will do just fine.

Why are control charts so important? Wheeler writes that:

“Instead of attempting to attach a meaning to each and every specific value of the time series, the process behaviour [i.e. control] chart concentrates on the behaviour of the underlying process.”

aeroplane dashboardWhy do we need to see a set of measures together? Simon Guilfoyle uses the excellent analogy of an aeroplane cockpit – you need to see the full set of relevant system measures to understand what is happening (speed, altitude, direction, fuel level…). There isn’t ‘One metric that matters’ and it is madness to attempt to find one.

Looking at Bob’s proposed set of capability measures (the table above), you can probably imagine why you’d want to see them all together, so as to spot any unintended consequences to changes you are experimenting with.

I.e. if one measure appears to be improving, is another one apparently worsening? Remember – it’s a system with components!

To summarise:

In a nutshellIf I am responsible for a process (a system) then I want to:

  • see the actual voice of the process;
  • get behind (and then drop) any numerical target;
  • split the noise from any signals within;
  • understand if the system is ‘in control’ (i.e. stable, predictable) or not; and
  • spot, and investigate any special causes7

and, perhaps more important, I want to:

  • understand what is causing the demand coming into the system (rather than simply treating all demand as work to be done);
  • involve all of the people in their process, through the use of visual management (done in the right way); and then
  • experiment towards improving it…safe in the knowledge that our measures will tell us whether we should adopt, adapt or abandon each proposed change.

Bob and I continued to have some great conversations 🙂


I said that I would add an addendum on the subject of ‘a target on a target’…and here it is:

Addendum: An example to illustrate the point

I’ll borrow two diagrams8 from a really interesting piece of analysis on NHS hospitals (i.e. in the UK) and their Accident and Emergency (A&E) wait times.

The first chart is of Alder Hey Children’s hospital. It shows a nice curve of the time it takes for patients to be discharged:

Alder Hey

The second chart is of Croydon University Hospital. Same type of chart, but their data tells a vastly different story!

Croydon

Q1: Do you think that an activity target has been set on the A&E system and, if so, where do you think it has been set?

I’d bet (heavily) that there is an A&E ‘time to discharge’ target, set from management above, of 4 hours (i.e. 240 minutes). It’s sort of evident from the first graph…but ‘smacks you between the eyes’ in the second.

Two further questions for you to ponder9: Looking at the charts for these two hospitals…


Q2: Which one has a smooth, relatively under control A&E system, and which do you think might be engaged in ‘playing (survival) games’ to meet the target?

I’d say that Alder Hey is doing rather well, whilst Croydon is (likely) engaged in all sorts of tricks to ship patients somewhere (anywhere!) ‘before the 4 hour buzzer’ – with a likely knock-on effect to patient experiences and outcomes;


Q3: Which one looks better on a ‘% of patients that met the 4 hour target’ league table? (i.e. a target on a target)

It is typical for health services to set an A&E ‘target on a target’ of, say, ‘95% discharged from A&E within 4 hours’10. This is just like Bob’s ‘80% in 20 seconds’.

Sadly, Croydon will sit higher up this league table (i.e. appear better) than Alder Hey!

If you don’t understand why, have a closer look at the two charts. Look specifically at the volume of patients being discharged after the 240 min. mark. Alder Hey has some, but Croydon has virtually none.

Foot notes

1. Just in case you hadn’t worked it out, she (or he) wasn’t called Bob!

2. Customer Target: Setting aside that the customer target shouldn’t (and indeed can’t) be used to improve the ‘handling calls’ system, I have two problems with the 20 second ‘customer specification’.

a. An industry figure vs. reality: rather than assuming that a generic industry figure of 20 seconds is what Bob’s customers want, I asked Bob to provide me with her call abandonment data.

I then graphed a histogram of the time (in seconds) that each customer abandoned their call and the corresponding volume of such calls. This provided us with evidence as to what exactly was happening within Bob’s system…which leads me on to:

b. An average customer vs. variety: There’s no such thing as ‘an average customer’ and we should resist thinking in this way. Some people were abandoning after a couple of seconds, others did so after waiting for two minutes. We can see that there is plenty of customer variety within – we should be thinking about how we can absorb that variety rather than meet some non-existent average.

3. Predictably, assuming that it is stable and there is no change made to the process.

4. Handling: I specifically wrote ‘handling’ and not ‘answering’. Customers don’t just want their call answered – they want their need to be met. To properly understand a system we must first set out its purpose from the customer’s perspective, and then use an appropriate set of measures that reveal the capability of the system against this customer purpose. ‘Answering calls’ may be necessary, but it’s not sufficient.

5. Noise vs. Signal: I’m assuming in this post that you understand the difference between noise and signals. If you don’t (or would like a refresh) then an earlier (foundational) posts on variation might assist: The Spice of Life

6. A clarification in respect of the example ‘I’ control chart: The Upper Control Limit (UCL) red line (at 80.55%) does not represent/ is not the 80% target. It just happens to be the case that the calculated UCL for Bob’s data works out to be nearly the same as the arbitrary target – this is an (unfortunate) fluke. A target line does not belong on a control chart!

7. Special Cause tests: The most obvious signal on a control chart can been seen when a point appears outside the upper or lower control limits. There are, however, other types of signals indicating that something special has occurred. These include ‘trends’, ‘shifts’, and ‘hugging’. Here’s a useful diagram (sourced from here):

special causes

8. Hospital charts: The full set of charts (covering 144 NHS hospitals for the period 2012-13) is here. I’ve obviously chosen hospitals at both extremes to best illustrate the point.

I can’t remember where I first came across these hospital charts – which annoys me!…so if it was via a post on your blog – I’m sorry for my crap referencing/ recognition of your efforts 🙂 

9. Here’s a 4th and final question to ponder: If, after pondering those two questions, you still think that a ‘target on a target’ makes sense then how do you cope with someone not always meeting it? Do you set them a target…to motivate them?

How about a target for the ‘target on a target’???

  • A 95% target of achieving an ‘80% of calls answered in 20 seconds’ target
  • A 90% target of achieving an ’95% of patents discharged within 4 hours’ target
  • ….

…and, if you are okay with this…but they don’t always meet it then how about setting them a target…where does the madness end?!

We are simply ‘playing with numbers’, moving ever further from reality and usefulness.

10. Hospital ‘Emergency department’ League tables:

Emergency tableHere’s a New Zealand ‘Emergency departments’ league table, ranking district health boards against each other (Source).

Notice that it shows:

  • A ‘target on a target’ (95% within 6 hrs)
  • A single quarter’s outcome
  • A binary comparison ‘with last quarter’
  • A (competitive) ranking

All of which are, ahem, ‘problematic’ (that’s me being polite 🙂

You can’t actually see how each district is performing (whether stable, getting better…or worse)

…and you certainly can’t see whether games are being played.