Lights, camera…and ACTION!

Clapper boardMy last post explained the thinking behind the softening of systems thinking – to include the reality of human beings into the mix.

I ended by noting that this naturally leads on to the hugely important question of how interventions into social systems (i.e. attempts at improving them) should be approached

What’s the difference between…?

The word ‘Science’ is a big one! It breaks down into several major branches, which are often set out as the:

  • Natural sciences – the study of natural phenomena;
  • Formal sciences – the study of Mathematics and Logic; and
  • Social sciences – the study of human behaviour, and social patterns.

Natural science can be further broken down into the familiar fields of the Physical sciences (Physics, Chemistry, Earth Science and Astronomy) and the Life sciences (a.k.a Biology).

The aim of scientists working in the natural science domain is to uncover and explain the rules that govern the Universe, and this is done by applying the scientific method (using experimentation1) to their research.

The key to any and every advancement in the Natural sciences is that an experiment that has supposedly added to our ‘body of knowledge’ (i.e. found out something new) must be:

  • Repeatable – you could do it again (and again and again) and get the same result; and
  • Reproduceable – someone else could carry out your method and arrive at the same findings.

This explains why all ‘good science’ must have been subjected to peer review – i.e. robust review by several independent and objective experts in the field in question.

“Erm, okay…thanks for the ‘lecture’…but so what?!”

Well, Social science is different. It involves humans and, as such, is complex.

The Natural science approach to learning (e.g. to set up a hypothesis and then test it experimentally) doesn’t transfer well to the immensely rich and varied reality of humanity.

“In [social science] research you accept the great difficulty of ‘scientific’ experimental work in human situations, since each human situation is not only unique, but changes through time and exhibits multiple conflicting worldviews.” (Checkland)

I’ll try to explain the enormity of this distinction between natural and social scientific learning with some examples, and these will necessarily return to those repeatability and reproducibility tests:


sodium into waterUnique: I’ll start with Chemistry. If you were to line up two beakers of water and (carefully) drop a small piece of sodium into each then you would observe the same explosive reaction…and, even though you could predict what would happen if you did it a third time, you’d still like to do it again 🙂

I was looking for a ‘social’ comparison and, following a comedy coffee conversation with a fellow Dad, the following observation arose: If you are a parent of two or more children, then you’ll know that consistency along the lines of ‘sodium into water’ is a pipe dream. I’ve got two teenage sons (currently 17 and 15 years old) and whenever I think I’ve learned something from bringing up the first one, it usually (and rather quickly) turns out to be mostly the opposite for the second! They are certainly unique.

The same goes for group dynamics – two different groups of people will act and react in different ways…which you won’t be able to fully determine up-front – it will emerge.


Electric circuitChanging over time: Now, over to Physics. If you were to select a  battery, light bulb and resistor combination and then connect them together with cables in a defined pattern (e.g. in series) then you could work out (using good old Ohm’s law) what will happen within the circuit that you’ve just created. Then, you could take it all apart and put it away, safe in the knowledge that it would work in the same predictable way when you got it all out the next time.

However, in our ‘social’ comparison, you can’t expect to do the same with people…because each time you (attempt to) do something to/with them, they change. They attain new interactions, experiences, knowledge and opinions. This means that it is far too simplistic to suggest that “we can always just undo it if we want to” when we are referring to social situations.

Just about every sci-fi movie recognises this fact and comes up with some ingenious device to ‘wipe people’s minds’ such that they conveniently forget what just happened to them – their memories are rewound to a defined point earlier in time. The ‘Men in Black’ use a wand with a bright red light on the end (hence their protective sunglasses…or is that also fashion?).

In reality, because such devices don’t exist (that I’m aware of), people in most organisations suffer from (what I refer to as) ‘Change fatigue’ – they’ve become wary of (what they’ve come to think of as) the current corporate ‘silver bullet’, and act accordingly. This understandably frustrates ‘management’ who often don’t want to see/ understand the fatigue2 and respond with speeches along the lines of “Now, just wipe the past from your mind – pretend none of it happened – and this time around, I want you to act like it’s really worth throwing yourself into 110%!”.

Mmmm, if only they could!


scalpelsConflicting worldviews: Finally, a Biology example. Let’s suppose that you’ve done a couple of lung dissections – one’s pink and spongy, the other is a black oogy mess3. Everyone agrees which one belonged to the 40-a-day-for-life smoker.

However, for our ‘social’ comparison, get a bunch of people into a room and ask them for their opinions on other people and their actions, and you will get wildly differing points of view – just ask a split jury!

The social phenomena of the ‘facts’ are subject to multiple, and changing, interpretations.

After reading the above you might be thinking…

“….so how on earth can we learn when people are involved?”

Kurt LewinThis is where I bring in the foundational work of the psychologist Kurt Lewin (1890 – 1947).

Lewin realised the important difference between natural and social science and came up with a prototype for social research, which he labelled as ‘Action research’.

“The method that [Lewin] evolved was of involving his subjects as active, inquiring participants in the conduct of social experiments about themselves.” (Argyris & Schon)

His reasoning was that:

“People are more likely to accept and act on research findings if they helped to design the research and participate in the gathering and analysis of data.” (Lewin & Grabbe)

Yep, as a fellow human being, I’d wholeheartedly agree with that!

Who’s doing the research?

I hope that you can see that the (potentially grand) title of ‘social research’ doesn’t presume a group of people in white lab coats attached to a University or such like. Rather, applied social research can (and should) be happening every minute of every day within your organisation – it does at Toyota!

Argyris and Schon wrote about two (divergent) methods of attempting to intervene in an organisation. They labelled these as:

  • ‘Spectator – Manipulator’: a distant observer who keeps themselves at arms lengths from the worker, yet frequently disturbs the work with ‘experiments’ to manipulate the environment and observe the response;

and

  • ‘Agent – Experient’: an actor who locates themselves within the problematic situation (with the people), to appreciate and be guided by it, to facilitate change (in actions and thinking) by better understanding of the situation.

You can see that the first fits well with natural science whilst the second fits with social.

‘The ‘spectator – manipulator’ method also describes rather well the reality of commanding and controlling, through attempting to implement (supposed) ‘best practise’ on people, and then rolling out ever wider.

The nice thing about action research is that the researcher (the agent) and the practitioner (the people doing the work) participate together, meaning that:

“The divide between practitioner and researcher is thus closed down. The two roles become one. All involved are co-workers, co-researchers and co-authors…of the output.” (Flood)

Proper4 action research dissolves the barrier between researcher and participant.

And, as such, ‘Action research’ is now often relabelled as ‘Action learning’…. because that is exactly what the participants are doing.

A note on intervention

InterventionAny intervention into a social system causes change5. Further, the interventionist cannot be ‘separated from the system’ – they will change too!

Argyris and Schon wrote that:

“An inquiry into an actor’s reasons for acting in a certain way is itself an intervention…[which] can and do have powerful effects on the ways in which both inquirer and informant construe the meaning of their interaction, interpret each other’s messages, act towards each other, and perceive each other’s actions. These effects can complicate and often subvert the inquirer’s quest for valid information.

Organisational inquiry is almost inevitably a political process…the attempt to uncover the causes of a systems failure is inevitably a perceived test of loyalty to one’s subgroup and an opportunity to allocate blame or credit…

[We thus focus on] the problem of creating conditions for collaborative inquiry in which people in organisations function as co-researchers rather than as merely subjects.”

You might think that taking a ‘spectator – manipulator’ approach (i.e. remaining distant) removes the problem of unintended consequences from intervening…but this would be the opposite. The more remote you keep yourself then the more concerned the workers will likely be about your motives and intentions….and the less open and expansive their assistance is likely to be.

So, as Argyris and Schon wrote, the best thing for meaningful learning to occur would be to create an appropriate environment – and that would mean gaining people’s trust….and we are back at action learning.

The stages of action research within an organisation

Action research might be described as having three stages6, which are repeated indefinitely. These are:

  1. Discovery;
  2. Measurable action; and
  3. Reflection

Discovery means to study your system, to find out what is really happening, and to drive down to root cause – from events, through patterns of behaviour, to the actual structure of the system (i.e. what fundamentally makes it operate as it does) …and at this point you are likely to be dealing with people’s beliefs.

…and to be crystal clear: the people doing the discovery are not some central corporate function or consultants ‘coming in’ – it’s the people (and perhaps a skilled facilitator) who are working in the system.


Measurable action means to use what you have discovered and, together, take some deliberate experimental action that you (through consensus) believe will move you towards your purpose.

But we aren’t talking about conventional measurement. We’re referring to ‘the right measures, measured right’!


Reflection means to consider what happened, looking from all points of view, and consider the learning within…. leading on to the next loop – starting again with discovery.

This requires an environment that ensures that open and honest reflection will occur. That’s an easy sentence to write, but a much harder thing to achieve – it requires the dismantling of many conventional management instruments. I’m not going to list them – you would need to find them for yourselves…which will only happen once you start your discovery journey.

What it isn’t

Action research isn’t ‘a project’; something to be implemented; best practise; something to be ‘standardised’…(carry on with a list of conventional thinking).

If you want individuals, and the organisation itself, to meaningfully learn then ‘commanding and controlling’ won’t deliver what you desire.

…and finally: A big caveat

warning trianglePeter Checkland adopted action research as the method within his Soft Systems Methodology (SSM) and yet he was highly critical of “the now extensive and rapidly growing literature” on the approach, calling it “poverty stricken”. Here’s why:

“The great issue with action research is obvious: what is its truth criterion? It cannot be the repeatability of natural science, for no human (social) situation ever exactly duplicates another such situation.” (Checkland)

The risk of simply saying “we’re doing action research” is that any account of what you achieved becomes nothing more than plausible story telling. Whilst social research can never be as solid as the repeatable and reproduceable natural science equivalent, there must be an ‘is it reasonable?’ test on the outcomes for it to be meaningful.

There’s already plenty of ‘narrative fallacy’ story telling done within organisations – where virtually every outcome is explained away in a “didn’t we do well” style.

To be able to judge outcomes from action research, Checkland argues that an advanced declaration is required of “what constitutes knowledge about the situation. This helps to draw the distinction between research and novel writing.”

This makes the action research recoverable by anyone interested in subjecting the work to critical scrutiny.

So what does that mean? Well, taking John Seddon’s Vanguard Method7 as an example, the Check stage specifically starts up front with:

  1. Defining the purpose of the system (from the customer’s perspective – ‘outside in’);
  2. Understanding the demands being placed on the system (and so appreciating value from a wide variety of customer points of view); and
  3. Setting out a set of capability measures that would objectively determine whether any subsequent interventions have moved the system towards its purpose.

…and (in meeting Checkland’s point) this is done BEFORE anyone runs off to map any processes etc.

In summary:

We need to appreciate “the role of surprise as a stimulus to new ways of thinking and acting.” (Argyris & Schon).

People should be discovering, doing and seeing for themselves, which will create a learning system.

Footnotes:

1. Experiments: If you’d like a clearer understanding of experiments, and some comment on their validity then I wrote about this in a very early post called Shonky Experiments

2. Not wanting to see the change fatigue: This would happen if a manager is feverishly working towards a ‘SMART’ KPI, where this would be exacerbated if there is a bonus attached.

3. Lung dissection: I was searching around for an image of a healthy and then a smoker’s lungs…but thought that not everyone would like to see it for real…so I’ve put up an image with a collection of surgical scalpels – you can imagine for yourself 🙂

4. Proper: see the ‘big caveat’ at the end of the post.

5. Such changes may or may not be intended, and may be considered as positive, negative or benign.

6. Three stages of action research: If I look at the likes of Toyota’s Improvement/Coaching Katas or John Seddon’s Vanguard Method then these three stages can be seen as existing within.

7. The Vanguard Method is based on the foundation of action learning.

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Not Particularly Surprising

pH scaleHave you heard people telling you their NPS number? (perhaps with their chests puffed out…or maybe somewhat quietly – depending on the score). Further, have they been telling you that they must do all they can to retain or increase it?1

NPS – what’s one of those?

‘Net Promoter Score’, or NPS, is a customer loyalty metric that has become much loved by the management of many (most?) large corporations. It was introduced to the management world by Fred Reichheld2 in his 2003 HBR article titled ‘One number you need to grow’.

So far, so what.

But as most things in ‘modern management‘ medicine, once introduced, NPS took on a life of its own.

Reichheld designed NPS to be rather simple. You just ask a sample of subjects (usually customers3) one question and give them an 11-point scale of 0 to 10 to answer it. And that question?

‘How likely is it that you would recommend our company/product/ service to a friend or a colleague?’

You then take all your responses (which, incidentally, may be rather low) and boil them down into one number. Marvellous…that will be easy to (ab)use!

But, before you grab your calculators, this number isn’t just an arithmetic average of the responses. Oh no, there’s some magic to take you from your survey results to your rather exciting score…and here’s how:

  • A respondent scoring a 9 or 10 is labelled as a ‘Promoter’;
  • A scorer of 0 to 6 is labelled as a ‘Detractor’; and
  • A 7 or 8 is labelled as being ‘Passive’4.

where the sum of all Promoters, Detractors and Passives = the total number of respondents.

NPS calculation.jpgYou then work out the % of your total respondents that are Promoters and Detractors, and subtract one from the other.

You’ll get a number between -100 (they are all Detractors) and +100 (all Promoters), with a zero meaning Detractors and Promoters exactly balance each other out.

And, guess what…a positive score is desirable…and, over the long term, a likely necessity if you want to stay in business.

Okay, so I’ve done the up-front explanatory bit and regular readers of this blog are probably now ready for me to go on and attempt to tear ‘NPS’ apart.

I’m not particularly bothered by the score – it might be of some interest…though exceedingly limited in its usefulness.

Rather, I’m bothered by:

  1. what use it is said to be; and
  2. what use it is put to.

I’ve split my thoughts into two posts. This post deals with the second ‘bother’, and my next one will go back to consider the first.

Qualitative from Quantitative – trying to ‘make a wrong thing righter’

The sane manager, when faced with an NPS score and a ‘strategic objective’ to improve it, wants to move on from the purely quantitative score and ‘get behind it’ – they want to know why a score of x was given.

Reichheld’s NPS method covers this obvious craving by encouraging a second open-ended question requesting the respondent’s reasoning behind the rating just given – a ‘please explain’ comments box of sorts. The logic being that this additional qualitative data can then be provided to operational management for analysis and follow up action(s).

Reichheld’s research might suggest that NPS provides an indicator of ‘customer loyalty’, but…and here’s the key bit…don’t believe it to be a particularly good tool to help you improve your system’s performance.

There are many limitations with attempting to study the reasons for your system’s performance through such a delayed, incomplete and second-hand ‘the horse has bolted’ method such as NPS.

  • Which subjects (e.g. customers) were surveyed?
  • What caused you to survey them?
  • Which subjects chose to respond…and which didn’t?
  • What effort from the respondent is likely to go into explaining their scoring?
  • Does the respondent even know their ‘why’?
  • Can they put their (potentially hidden) feelings into words?…and do they even want to?

If you truly want to understand how your system works and why, so that you can meaningfully and sustainably improve it, wouldn’t it just be soooo much better (and simpler) to jump straight to (properly5) studying the system in operation?!

A lagging indicator vs. Operational measures

One of my very early posts on this blog covered the mad, yet conventional, idea of ‘management by results’ and subsequent posts have delved into ‘cause and effect’ in more detail (e.g. ‘Chain beats Triangle’).

My ‘cause and effect’ post ends with the key point that:

“Customer Purpose (which, by definition, means quality) comes first…which then delivers growth and profitability, and NOT the other way around!”

Now, if you read up on what Reichheld has to say about NPS, he will tell you that it is a leading measure, whereas I argue that it is a lagging one. The difference is because we are coming from opposite ends of the chain:

  • Reichheld appears to be concerned with growth and profitability, and argues that NPS predicts what is going to happen to these two financial measures (I would say in the short term);

  • I am concerned with customer purpose, and an organisation’s capability at delivering against its customers’ needs. This means that I want to know what IS happening, here and now so that I can understand and improve it …which will deliver (for our customers, for the organisation, for its stakeholders) now, and over the long term.

You might read the above and think I am playing with semantics. I think not.

I want operational measures on the actual demands coming in the door, and how my processes are actually working. I want first hand operational knowledge, rather than attempting to reverse engineer this from partial and likely misleading secondary NPS survey evidence.

“Managers learn to examine results, outcomes. This is wrong. The manager’s concern should be with processes….the concentration of a manager should be to make his processes better and better. To do so, he needs information about the performance of the process – the ‘voice of the process’. “ [‘Four Days with Dr Deming’]

Deming’s clear message was ‘focus on the process and the result will come’ and, conversely, you can look at results all you like but you’d be looking in the wrong place!

NPS thinking fits into the ‘remote control’ school of management. Don’t survey and interrogate. ‘Go to the gemba’ (the place where the work occurs).

 “But what about the Lean Start-up Steve?”

Some readers familiar with Eric Ries’ Lean Start-up movement might respond “but Eric advocates the use of customer data!” and yes, he does.

But he isn’t trying to get a score from them, he is trying to deeply engage with a small number of them, understand how they think and behave when experiencing a product or service, and learn from this…and repeat this loop again and again.

This fits with studying demand, where it comes in, and as it flows.

The Lean Startup movement is about observing and reflecting upon what is actually happening at the point of customer interaction, and not about surveying them afterwards.

To close – some wise words

After writing this post I remembered that John Seddon had written something about NPS…so I searched through my book collection to recover what he had to say…and he didn’t disappoint:

“Even though NPS is completely useless in helping service organisations improve, on our first assignment [e.g. as system improvement interventionists] we say nothing about it, because we know the result of redesigning the system will be an immediate jump in the NPS score…and because when this is reported to the board our work gets the directors’ attention.

It makes it easy to see why NPS is a waste of time and money. First, it is what we call a ‘lagging measure’ – as with all customer satisfaction measures, it assesses the result of something done in the past. Since it doesn’t help anyone understand or improve performance in the present, it fails the test of a good measure5 – it can’t help to understand or improve performance.” [Seddon, ‘The Whitehall Effect’]

Seddon goes on to illuminate a clear and pernicious ‘red herring’ triggered by the use of NPS:  the simple question of ‘would you recommend this service to a friend’ mutates to a hunt for the person who delivered the particular instance of service currently under the microscope. Management become “concerned with the behaviour of people delivering the service” as opposed to the system that makes such behaviour highly likely to occur!

I have experience of this exact management behaviour in full flow, with senior management contacting specified members of staff directly (i.e. those who handled the random transaction in question) to congratulate or interrogate/berate them, following the receipt of particularly outstanding6 NPS responses.

This is to focus on the 5% (the people) and ignore the 95% (the system that they are required to operate within). NPS “becomes an attractive device for controlling them”.

Indeed.

The title of this post follows from Seddon’s point that if you focus on studying, understanding and improving the system then, guess what, the NPS will improve – usually markedly. Not Particularly Surprising.

My next post called ‘How good is that one number’ contains the second part of my NPS critique.

Footnotes

1. This post, as usual, comes from having a most excellent conversation with a friend (and ex-colleague) …and she bought me lunch!

I should add that the title image (the pH scale) is a light-hearted satire of the various NPS images I found i.e. smiley, neutral and angry faces arranged on a coloured and numbered scale.

2. Reichheld has written a number of books on customer loyalty, with one of his more recent ones trying to relabel ‘NPS’ from Net Promoter Score to Net Promoter System (of management) …which, to put it mildly, I am not a fan of.

It reminds me of the earlier ‘Balanced Scorecard’ attempting to morph into a system of management. See ‘Slaughtering the Sacred Cow’.

Yet another ‘management idea’ expanding beyond its initial semblance of relevance, in the hands of book sellers and consultants.

Sorry, but that’s how I feel about it.

NPS is linked to the ‘Balanced Scorecard’ in that it provides a metric for the customer ‘quadrant’ of the scorecard …but, as with financial measures, it is still an ‘outcome’ (lagging) measure of an organisation’s people and processes.

3. The original NPS focused on customers, but this has subsequently been expanded to consider other subjects, particularly employees.

4. Being British (i.e. somewhat subdued), I find the labelling of a 7 or 8 score as ‘Passive’ to be hilarious. A score of 7 from me would be positively gushing in praise! What a great example of the variety inherent within customers…and which NPS cannot reveal.

5. For the ‘tests of a good measure, please see an earlier post titled ‘Capability what?’

6. Where ‘outstanding’ means particularly low, as well as high.

“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.

Inspector Clouseau

inspector-clouseauSo, a bloody good mate of mine manages a team that delivers an important public service – let’s call him Charlie. We have a weekly coffee after a challenging MAMIL 1 bike ride….and we thoroughly explore our (comedic) working lives.

And so to our most recent conversation – Charlie told me that his department is due an inspection (a public sector reality)…and how much he, ahem, ‘loves’ such things! 🙂

“Oh, and why’s that?” I say.

His response2 went something like this: “Well, they come in with a standardised checklist of stuff, perform interviews and site visits to tick off against a set of targets, and then issue a report with our score, and recommendations as to what we should be doing….it’s not exactly motivational!”

“Mmm” I say…”but presumably their intent – to understand how well things are going – is good?”

Here’s the essence of Charlie’s reply: “Yep, I ‘get’ the intent behind many of the items on their checklist, and I accept that knowing how we are doing is really important…but, rather than act like robotic examiners, I want them to:

  • understand us, and our reality (what we are having to deal with3)…and I want them to focus on what really matters in respect of our service, not hide behind narrow ‘currently trendy’ targets and initiatives set from above;

  • give us the chance to demonstrate:
    • how we are doing;
    • where we know we have room for improvement; and
    • what we are doing to get better; and finally 

  • assist us, by adding value (perhaps with useful references to what they’ve seen working elsewhere) rather than be seen as ‘taking up our time’. “

“Righto”, I said ”…that sounds excellent! I’ll write a post on that lot”…so here goes:

A ‘short but sharp’ generic critique of inspections:

inspectionInspection requires someone looking for something (whether positive or negative)…and this comes from a specification as to what they believe you should be doing and/or how you should be doing it.

The ‘compliance’ word fits here.

…and, as such, the inputs, behaviours and outcomes from inspections are rather predictable. You can expect some or all of the following:

  • people, often (usually?) from outside your service, spend time writing (often inflexible) specifications as to what you should (and should not) be doing;
  • people are employed, and trained, as inspectors of those specifications;
  • you and your team spend precious time preparing before each imminent inspection:
    • running preparatory meetings to guess what might happen;
    • window-dressing solely for the benefit of ‘the inspector’ e.g. making your work space look temporarily good, filling in (and perhaps even back dating) ‘paperwork’;
    • even performing ‘dummy runs’ (rehearsals!);
  • you and your team serenade the inspector around during their visit, with everyone on their best behaviour;
  • questions are asked, careful (guarded) answers are given, and an inspection report is issued;
  • your post-inspection time is then consumed rebutting (what you consider to be) poorly drawn recommendations and/or drafting action plans, stating what is going to be implemented to comply.

…and after it’s all over, a big sigh is let out, and you go back to how you were.

Wouldn’t it be great if, rather than playing the ‘inspection game show’, you truly welcomed someone (anyone) coming in to see what you actually do and, when they arrive, you carried on as normal because you are confident that:

  • you are operating in the way that you currently believe to be the best; and
  • you want them to see and understand this, and yet provide you with feedback that you can ponder, experiment with, and get even better at delivering against your purpose4.

…so how might you get to this wonderland?

A better way:

just-one-questionI’m a huge fan of a (deceptively) simple yet (potentially) revolutionary idea put forward by John Seddon:

“Instead of being measured on compliance, people should be assessed on whether they are able to show that they are working to understand and improve the work they do.

It is to shift from ‘extrinsic’ motivation (carrot and stick) to intrinsic motivation (pride), which is a far more powerful source of motivation.”

…and to the crux of what Seddon is suggesting:

“Inspection of performance should be concerned with asking only one question of managers:

‘What measures are you using to help you understand and improve the work?’ “

This, to me, is superb – the inspector doesn’t arrive with a detailed checklist and ‘cookie cutter’ answers to be complied with; and the manager (and his/her team) has to really think about that question!

To answer it, the team must become clear on:

  • the (true) purpose of the service that they provide;
  • what measures5 would tell them how they are doing against this purpose (i.e. their capability);
  • how they are doing against purpose (i.e. as well as knowing what to measure, they must be actively, and appropriately, measuring it for themselves);
  • what they are working on to improve, and how these are affecting the performance of their system; and
  • what fresh ideas have arisen to experiment with.

You can see that this isn’t something that is simply ‘prepared in advance’ for a point-in-time inspection. It is an ongoing, and ever maturing, endeavour – a way of working.

It means that any inspector (or interested party) can arrive at any time and explore the above in use (as opposed to it being beautifully presented in ‘this years’ audit file ring-binder)

 “Are you saying that ‘specifications’ are wrong then?”

i-love-to-clarifyBefore ending this post, I’d like to clarify that:

  • No, I’m not saying that specifications are (necessarily) wrong; and
  • I’m also not saying that scientific know-how, generated from a great deal of experience over time should be ridiculed or ignored ‘just because it comes from somewhere else’.

Taking each in turn,

  • Specifications (e.g. the current best known way to perform a task) should be owned by the team that have to perform them…and these should be:
    • of adequate depth and breadth to enable anyone and everyone to professionally perform their roles;
    • suitably flexible to cater for the variety of demands placed upon them (requiring principled guidelines rather than concrete rules); and
    • ‘living’ i.e. continuously improved as new learning occurs6

  • If there is a central function, then their role should be to:

    • understand what is working ‘out there’; and
    • effectively share that information with everyone else (thus being of great value to managers)

without dictating that a specific method should be ‘complied with’.

The point being that we should not think in terms of ‘best practise’…we should be continuously looking for, and experimenting with, better practise, suited to each scenario. This is to remove the (attempted) authority from the centre, and place it as the (necessary) responsibility where the actual work is performed, by the service (manager, and team) on the front line.

In this way, ‘the centre’ can shift itself from being seen as an interfering, bureaucratic and distant police force, to a much valued support service.

To Ponder:

If you are ‘being inspected’ then, yes, I ‘get’ that you currently need to ‘tick those boxes’…but how about thinking a little bit differently:

…how would you show those ‘inspecting you’ that you truly understand, and are improving, your system against its purpose?

You could seriously surprise them!

If you can really answer that one question, then you are likely to be operating a stable, yet continually improving service within a healthy environment, both for your team and those they serve.

Who knows – ‘the inspector’ might want to share what you are doing with everyone else 🙂

And, going back to the top – i.e. Charlie’s reply as to what he really wanted out of an inspection – I reckon he was ‘right on the money’!

A final comment…for all you private sector organisations out there:

Don’t think that this post doesn’t apply to you!

If you have centralised ‘Audit’, ‘Quality Assurance’ and/or ‘Business Performance’ teams (i.e. that are separate from the actual work), then virtually everything written above applies to your organisation.

Footnotes:

1. MAMIL: Middle aged men in lycra

2. To ‘Charlie’ – Please excuse the poetic licence that I have taken in writing the above…and I hope it may be of some use (woof woof 🙂 ).

3. What we are really dealing with: I picked the ‘Inspector Clouseau’ picture to allude to the possibility (probability?) that many an inspector, stuck with their heads in their audit checklist, hasn’t a clue about what is really going on within, and/or what really matters for, the service before them….and for some, this is still true AFTER the inspection has been completed 😦

I’m not trying to ‘shoot at’ inspectors – this is a role that you have (currently) been given. You might also like to ponder the above and thereby look to re-imagine your purpose. Doing so could dramatically improve your work satisfaction…and help improve the services that you support.

4. Purpose: not to be confused with the lottery of attempting to meet a numeric target.

5. A set of Measures that uncover how the system is performing, NOT one supposedly ‘all seeing’ KPI and an associated target.

6. Living: Years of (regularly futile) experience have proven to me that ‘learning aids’ (whether they be documents, diagrams, charts, pictures….) will only ‘live’ (i.e. improve) if they are regularly (i.e. necessarily) used by the workers to do the work. An earlier post (Déjà vu) fits here.

7. I think that a couple of previous posts are foundational and/or complimentary to this one:

The Principle of Mission: That clarification of intent, and allowing flexibility in how it is achieved, is far more important than waiting for, and slavishly carrying out ‘instructions’ from above.

Rolling, rolling, rolling: The huge, and game-changing difference between rolling out and rolling in change. One is static, the other is dynamic and purpose-seeking.

“You keep saying that…but what does it mean?!”

what-does-it-meanSo I recently had a most excellent conversation with a comrade.

I’d written some guff in the usual way and he wanted to push back on it…great! I need to be challenged on my thinking, particularly the more I verbalise (and therefore risk believing) it.

His push back:

I’d used the ‘absorb variety’ [in customer demand] phrase yet again…and he (quite rightly) said “but what does it mean?”

He went on to say that, whilst he understands and agrees with a great deal of what I write about, he doesn’t fully agree with this bit. He has reservations.

So we got into a discussion about his critique, which goes something like this:

“I agree that we should be customer focused, but…‘absorb their variety’???

You can’t do anything for everybody….they’d start asking for the world…you’d go out of business! There have to be rules as to what we will or won’t do.”

He gave an example:

“If a customer asked you to fax them their documents [e.g. invoice, contract, policy…], surely you’d say no because this is such old technology and it doesn’t make sense for people to use it anymore.”

Yep, a very fair view point to hold…and an example to play with.

So, in discussing his critique, I expanded on what I mean when using the ‘absorb variety’ phrase. Here’s the gist of that conversation:

First, be clear as to what business you are in

Taking the “you can’t do anything for everybody” concern: I agree…which is why any business (and value stream within) should be clear up-front on its (true) purpose.

However, such a purpose should be written in terms of the customer and their need. This is important – it liberates the system from the ‘how’, rather than dictating method. It allows flexibility and experimentation.

Clarification: ‘liberating’ doesn’t mean allowing anything – it means a clear and unconstrained focus on the purpose (the ‘why’ for the system in question). If you don’t have a clear aim then you don’t have a system!

Understanding the customer: who they are, what they need.

fredOkay, so the purpose is set, but each customer that comes before us is different (whether we like this or not). The generic purpose may be the same, but what works best for each unique customer and their specific situation will have nuances.

On ‘unique’: A service organisation (or value stream within) may serve many customers, but a customer only buys one service – their need. We need to see the world through their eyes.

“The customer comes in customer-shaped” (John Seddon)

Let’s take the scenario of an insurer handling a house burglary, with some contents stolen and property damage from the break-in.

The customer purpose of ‘help me recover from my loss’ is generic yet focused…it clearly narrows down what the value stream is about.

But, at the risk of stereotyping, here’s some potential customer nuances:

  • Fred1 is an old person that lives at home alone. He’s very upset and concerned about his security going forward;
  • Hilary is a really busy person and just wants the repair work done to a high quality, with little involvement required from her;
  • Manuel2 doesn’t speak English very well;
  • Theresa is currently away from the country (a neighbour notified the police);
  • ….and the variety goes on and on and on3

Each of these customers needs to recover from their loss…but the specifics of what matters differ and these can be VERY important to them.

If we (are ‘allowed’ by our management system4 to) make the effort up-front to (genuinely) understand the customer and their specific unit of demand, and then work out how best to meet their needs then they are going to be very happy…and so are we…AND we will handle their need efficiently.

If we don’t understand them and, instead, try to force them into a transaction orientated strait-jacket, we can expect:

…adding significant and un-necessary costs and damaging our reputation.  Not a great place to work either!

Do what is ‘reasonable’ for them

Right, so you may agree that we should understand a customer and their reality…but I still hear the critique that we can’t do anything and everything for them, even if it could be argued as fitting within the purpose of the value stream in question.

So let’s consider the ‘what’s reasonable?’ question. ‘Reasonable’ is judged by society, NOT by your current constraints. Just because your current system conditions5 mean that you can’t do it doesn’t make it unreasonable!

computer-says-noA test: if you (were allowed to actually) listen to the customer, understand the sense in their situation and the reasonableness of their need…but respond with “computer says no” (or such like) then your value stream isn’t designed to absorb variety.

And so we get to what it means to design a system that can absorb variety.

It doesn’t mean that we design a hugely complicated system that tries to predict every eventuality and respond to it. This would be impossible and a huge waste.

It means to design a system that is flexible and focuses on flow, not scale. This will be achieved by putting the power in the hands of the front-line worker, whilst providing them with, and allowing them to pull, what they need to satisfy each customer and their nominal value. This is the opposite of front-line ‘order takers’ coupled to back-office specialised transaction-oriented sweat shops.

How does that ‘fax request’ example sit with the above? Well, on its own, I don’t know…and that’s the point! I’d like to know why the customer wants it by fax.

  • perhaps they aren’t in their normal environment (e.g. they are on holiday in the middle of nowhere) and the only thing available to them is some old fax machine;
  • perhaps they didn’t know that we can now email them something;
  • perhaps they don’t (currently) trust other forms of communication…and we’d do well to understand why this is so;
  • perhaps, perhaps perhaps…

Each scenario is worthy of us understanding them, and trying to be reasonably flexible.

Forget all that!

take-a-lookOf course the above means virtually nothing.

You’d need to see the variety in your system for yourself to believe, and understand, it…and the way to do that would be to listen and see how your current system DOESN’T absorb variety.

How would you do that? Well, from listening to the customer:

  • in every unit of failure demand;
  • within each formal complaint made to you;
  • …and from every informal criticism made ‘about you’ (such as on social media)

I’ve got absolutely no idea what you would find! But do you?

 The funny thing is…

…if we allow front-line/ value-creating workers to truly care about, and serve each customer – as individuals – in the absence of ‘management controls’ that constrain this intent (e.g. activity targets) then:

  • the ‘work’ becomes truly inspiring for the workers, ‘we’ (the workers) gain a clear purpose with which we can personally agree with and passionately get behind;
  • we become engaged in wanting to work together to improve how we satisfy demand, for the good of current and future customers; and
  • the ‘management controls’ aren’t needed!

If I asked you, as a human being:

  • do you primarily care about, say, a ‘7 day turn-around target’? (other than to please management/ get a bonus)

vs.

  • do you really want to help Fred (or Hilary, Manuel, Theresa…) resolve their specific needs and get back on with their lives?

…how would you answer?

We need to move away from what makes sense to the attempted industrial production of service delivery to what makes sense in the real worlds of the likes of Fred.

Footnotes

1. Fred: The picture of Fred comes from a most excellent blog post written by Think Purpose some time ago. This post really nicely explains about the importance of understanding customer variety in a health care setting.

2. Manuel: A tribute to the late Andrew Sach (a.k.a Manuel from Fawlty Towers) who died recently. He wasn’t very good at English…

que

3. Variety in service demand: I’ve previously written about Professor Frances Frei’s classification of five types of variety in service demand and, taken together, they highlight the lottery within the units of demand that a service agent is asked to handle.

4. Allowed to: This is not a criticism of front-line workers. Most (if not all) start by wanting to truly help their customers. It is the design of the system that they work within that frustrates (and even prevents) them from doing so.

You show me a bunch of employees and I’ll show you the same bunch that could do awesome things. Whether they do so depends!

5. System Conditions may include structures, policies, procedures, measures, technology, competencies…

6. Bespoke vs. Commoditisation: It has been put to me that there are two types of service offerings. Implied within this is that there are two distinct customer segments: One that wants little or no involvement for a low cost and another that wants, and is willing and able to pay for, a bespoke service.

This is, for me, far too simplistic and misunderstands customer variety. Staying with the world of insurance…

A single customer might want low involvement when managing their risk (taking out a policy and paying for it, say, ‘online’) but to deal with a human if they need help recovering from a loss (i.e. at claim time).

That same customer may switch between wanting low involvement and the human touch even within a value stream – e.g. happy with low involvement car insurance but wants a human when it comes to their house insurance.

…and even within a given unit of demand, a customer may be happy with low involvement (say registering a claim)…but want the option of a human conversation if certain (unpredictable) scenarios develop.

The point is that we shouldn’t attempt to pigeon-hole customers. We should aim to provide what they need, when they need it…and they will love us for it!

7. Automation: On reading the above, some of you may retort with “Nice ideas…but you’re behind the times ‘Granddad’ – the world has moved to Artificial Intelligence and Robotics”. I wrote about that a bit back: Dilbert says… lets automate everything!

Chapter 4: What possible ‘defences’ exist against the harm of ‘Money Power’?

So I’ve:

  • set out Ford’s explanation of Dead vs. Live money (Chapter 1);
  • ‘shot at’ organisations that claim they get this –as in “see, here’s my purpose!” (Chapter 2);
  • explained why shareholders are probably the last people you’d want as guardians for an organisation’s successful longevity; and
  • put forward a logic as to why executives behave as they do (including the recent Mylan example to consider) (Chapter 3).

light-bulb…and at this point you may reasonably ask “so what can be done about this situation?”

Thankfully not everywhere is the same…and we can look around for ideas.

Ha-Joon Chang writes that “most rich countries outside the Anglo-American world have tried to reduce the influence of free-floating shareholders and maintain (or even create) a group of long-term stakeholders (including some shareholders) through various formal or informal means.”

These include:

  • government ownership (either direct or indirect) of a sizeable share to act as stable shareholders (examples in France, Germany, Korea);
  • differential voting rights for different classes of shares e.g. for founders and their families to retain significant control (Sweden);
  • formal representation by the workers on the company supervisory board (Germany);
  • minimising influence of floating shareholders through cross-shareholdings amongst friendly companies (Japan)

“Being heavily influenced, if not totally controlled, by longer-term stakeholders, companies in these countries do not as easily sack workers, squeeze suppliers, neglect investment and use profits for dividends and share buybacks…all this means that in the long run they may be more viable…

Running companies in the interests of floating shareholders is not only inequitable but also inefficient, not just for the national economy but also for the company itself.”

(Of course, I should reflect that there are lots of other ownership models ‘out there’, such as State Owned Enterprises, Mutuals and Co-operatives…and I have read many a good-news story about what can be achieved with the latter.

If you already have one of these ownership models, please stay as you are! What follows is aimed squarely at the Dead Money corporations).

Exploring the employee option:

proft-sharing-quoteI’m a big fan of the ‘employees as long-term owners’ method.

Now, many a ‘large corporate’ would respond that their people can buy shares in their company and, further, that they encourage this by administering some form of ‘employee share buying scheme’.

So how’s this different to share ownership through profit sharing (as in the Oktogonen Foundation)?

Well, if we consider a typical ‘employee share buying scheme’:

  • You are asking employees to put up their own money as risk, rather than rewarding them for their ‘blood, sweat and tears’;
  • Only a limited number of employees will buy shares (for a variety of reasons – the most obvious being their level of affluence and their attitude to risk);
  • The minority that do buy a small ‘side salad’ of shares have simply been added to the vast pool of floating shareholders…worried about short-term profits and dividends.

In contrast:

The power in ‘share ownership through profit sharing’ is that EVERYBODY in the organisation becomes an owner, and thereby connected with the same aim.

The power in setting up a foundation specifically for this purpose is that the employees as a GROUP obtain a significant voice, creating representation on the board.

The power in defining a long-term method of payment (say, at pensionable age) is that employees (past and present) care deeply about the LONG TERM success of the organisation…which will produce a genuine focus on the CUSTOMER (and society).

Now these words might cause the following reaction from existing shareholders and executives: “Whoa…I don’t like the sound of ‘worker power’ – this is Trade Unionism by the back door…and look at where that always ends up!”

Here’s why it is the exact opposite:

The birth, and historic basis, of the Trade Union movement was to protect the workers from the power of the owners. In response to Trade Union power, the owners would regularly claim that the employees were ‘biting the hand that feeds them’…and thus a hugely adversarial battle became the norm1 (usually with the customer, and consequently the organisation, suffering in the cross fire).

But, rather than employee ownership through profit sharing stoking the ‘worker – owner’ flames, it actually dissolves the problem! Everyone is pointing in the same direction.

Even better, a foundational base is set to enable the business to become so much more efficient and effective because all those commanding and controlling ‘management instruments of torture’ can be torn down – that would be incentives and Performance Management2 for a start!

….just think how easy it would become to engage with the workers – or should we call them ‘long term guardians’ now?

“Just close your eyes and imagine…”

imagineI have often found myself in company presentations with management eulogising about the next ‘cost cutting’ initiative. A usual candidate is the travel and expenses budget (and the associated rules to be complied with)…and they always use the same logic:

“Imagine it as your own money!”

Ponder upon this for a minute: management ‘get’ that it isn’t our money, and that this will alter how we think about it…but they want us to play a game of ‘pretend’. Hmmm – they’re missing something there.

But what if THEY (management) altered their thinking such that it IS the employees’ money. They can dispense with those silly games, and potentially all those wasteful cost cutting initiatives. Imagine that!

“But it’s not their money!!”

Now, there may be a backlash of comments from shareholders with a view that the company would be giving away their money.

Some thoughts on this:

  • The organisation doesn’t need to raise capital to do this! It just needs to STOP the offering, and paying, of contingent rewards. There’s plenty of money right there;
  • For those shareholders that don’t realise this…there is loads of cost spent in administering the performance management/ incentives lark…and a great deal of harm caused that is unmeasurable! This is no longer required;
  • But, fundamentally, a long term ownership interest (Live Money) will change the way that employees think…for the good of the customer and therefore the organisation…and, as a result, to the benefit of those that invest.

A start to the journey

silver-bullet‘Necessary but not sufficient’: I’d like to be clear that, whilst profit sharing could be game changing, it’s not a silver bullet….but it is a hugely sound foundation from which the right type of business can be successfully built and sustained.

It can act as a catalyst for all those things that you’ve been saying, but not been able to do. Why? Well, because it fundamentally changes the employee – company relationship.

It brings Live Money onto the scene and, if done well, brings Service Power back to the fore.

(Note: I’ve written this whole serialised post because – after many years of pondering – I came to the conclusion that you can understand and passionately want to change your ‘culture’ BUT you won’t (meaningfully or sustainable) achieve this if you don’t address your ownership structure…and this relates to Money Power).

To close: A comment on the current ‘side show’

The current ‘large corporates’ hymn is all about diversity….and that this will ensure the future of an organisation – all those different people, with all those different perspectives and ideas! What’s not to like?!

Now, I’m all for diversity. I believe in respect, equality and fairness for all.

However, you can be as diverse as you like, but if you don’t change the system (of management and ownership) then you’ll simply get more of the same.

To repeat my regular John Seddon quote (I have it ringing in my head most days!):

“People’s behaviour is a product of their system. It is only by changing [the system] that we can expect a change in behaviour.”

Or, to a Deming pearl of wisdom: “A bad system will beat a good person every time”

Stop trying to change people and, instead, perform a paradigm3 shift so that they change for themselves.

I should add that the diversity thing will be so much easier to achieve when all employees want to collaborate together (profit sharing) rather than competing with each other for ratings, rankings and contingent rewards. i.e. If you really want diversity, and what it can offer, then change the system first.


Okay, so I’ve argued that employee ownership through long-term profit sharing is a bloody good way to go…but there’s a few people that I really need to convince first. That would be a) the existing shareholders and b) the CEO. And that is the subject of my next, and final, chapter 🙂

Update: Link forwards to Chapter 5

Footnotes:

1. Owners vs. Unions: As usual, Henry had something useful to say on the matter:

“Business does not exist to earn money for the capitalist or for the wage-earner. The narrow capitalist and the narrow trades unionist have exactly the same view of business – they differ only on who is to have the loot.” (Ford)

2. On the merit system (i.e the rating and rewarding of people’s performance): Here’s a nice Deming exchange in a Q & A part of one of his famous lectures:

Question from the audience: “What do you propose to replace the merit system with?”

Deming: “Replace it? What, you want something to destroy people better than that does?!

Replacement means another method to do the same thing. [Do] you know of anything more effective in the destruction of people?

Question rephrased: “But is there any way to change the merit system?”

Deming: “Change it? Abolish it! Look at what it’s done to us.”

3. Paradigm: I usually hate using the ‘p’ word – it seems so ‘management consultancy’ to me…but in this case it is spot on!

4. So…what if you don’t (yet) want Live Money: If you don’t want to do the profit sharing thing (even though you’ll be seriously missing out) then STILL GET RID OF THE INCENTIVES!

Depths of ‘Transformation’

butterflyI’ve been meaning to write this post for 2 years! It feels good to finally ‘get it out of my head’ and onto the page.

It’s about that lovely ‘Transformation’ word.

Before I go on, I’ll repeat a definition from an earlier post:

Transformation: In an organisational context, a process of profound and radical change that orients an organisation in a new direction and takes it to an entirely different level of effectiveness….transformation implies a basic change of character and little or no resemblance with the past configuration or structure.” (businessdictionary.com)

To repeat the key phrase: An entirely different level of effectiveness! …and, just in case you missed it, the word is effectiveness, not efficiency.

I’m going to outline 3 levels of (supposed) transformation and I’ll do this by borrowing the bones of an idea from Mike Rother’s excellent ‘Toyota Kata’ book and extend it with a large dose of my own ‘poetic license’.

Level 1 Transformation: ‘On the surface’

iceburgSo, picture the scene: It’s the late 1970s. Your organisation desperately wants to improve and, on looking around for someone achieving brilliant results, you spot the awesome Toyota (or such like1).

You go on a Toyota factory visit. You are amazed at what you see and excitedly ask them how they do it.

You easily observe (‘on the surface’) lots of obvious methods and tools…and so you grab evidence of how these are carried out – e.g. some template forms, and the instructions that go with them. You also take lots of pictures of their (visual management) walls to show all this working in situ.

You run back home, hand out the methods and tools and mandate that, from now on, this is what we are doing.

toolboxYou helpfully provide training and (so called) ‘coaching’…and you put in place ‘governance’ to ensure it’s working. You roll it all up together and you give it a funky title…like your Quality Toolbox. Nice.

So what happens?

Well, yep, those tools and methods sure are ‘shiny new’ and easily applied. There’s an initial buzz, probably because of senior management focus…and pressure to prove the comedy ‘Return on Investment’ (ROI) calculation that had to be set out in the short-term thinking ‘will you pay for our factory trip?’ business case.

But the initial effects fall away. Anything achieved was a one-off, or of limited and low level benefit. The changes aren’t sustained – with a slide back to the old state. People start to misuse the tools and methods, and do much damage rather than good. There is a brief and ugly fight with the ‘methods and tools’ compliance police but disillusionment sets in and the early good work becomes discredited and abandoned (just like the last silver bullet…and the one before that…)

Timely reminder: “A fool with a tool is still a fool” (Grady Booch)

Note: This ‘on the surface’ transformation attempt has been likened to organisations going over to Japan in the late 1970s and early 1980s and coming home to fanatically ‘do Total Quality Management’ (TQM)…and then quietly dropping it a few years later. Sure, some organisations sustained it but most didn’t.

Level 2 Transformation: ‘Under the skin’

skinSo it’s now the 1990s. The methods and tools that came out of the initial Toyota factory visit weren’t sustained but the pressure is still on (and mounting) to transform your organisation…and your management can’t help noticing that Toyota are still doing amazing!

“Perhaps we didn’t look hard enough or close enough or long enough…perhaps we should go back and have a look ‘under the skin’.”

…and so you go for another factory visit (once you’ve been given permission following another well written story business case 🙂 ).

This time you take real care – studying ‘at the gemba’ for weeks, asking questions, watching activities, understanding the nature of changes being made to the system before you.

“Eureka! There’s something underneath those methods and tools! We can see that there’s an underlying logic that we missed last time round…oooh, we could codify them into a set of principles!

And here’s basically what you arrive at:

0. Everything should belong to, or support, a value stream (a horizontal flow from customer need, through to its satisfaction)

…and for each value stream we should:

1. Specify value, where this is through the eyes of the customer; then

2. Identify all the actions performed within the value stream, and expose and remove the obvious waste; then

3. Create flow by understanding and removing the barriers; then

4. Establish pull by producing only what is needed, when requested; and finally

5. The ‘golden nugget’: we should continually strive for perfection because this is a never-ending journey

Wow, that was profound – your factory tour team now need to give it a name!

And so, after a fun focus group, a young member of your team called John2 shouts out “It needs less of everything to create a given amount of value, so let’s call it ‘Lean’.”

Whoop, whoop, he’s only gone and cracked it!

You run back home to tell everyone about the wonders of ‘Lean’. You hand out books, provide training courses, coaching and mentoring and you slot all those wonderful tools and methods nicely into their place…neat…this is going to be great!

So what happens?

Well, everyone absolutely LOVES the principles. They make sooo much sense. They particularly liked playing with Lego in the training sessions to demo flow, pull, kanban and ‘stop the line’ thinking.

But after a while (and some short-term gains) you realise that there’s a huge tension building. No one can make those darn principles work because they continually clash with existing management practises.

Your senior management employ a gaggle of so-called Lean coaches to try to change the people at the bottom whilst they carry on at the top as before!

Your ‘Lean Office’ has become an island of coaches doing great work with the people but unable to turn the tide. Coaching conversations end with responses like:

“Yes, I can see that would be the right thing to do for the value stream…but that’s not what my objectives, performance rating and bonus is based on…or what my manager above me would support…so I’ll stick to soul-destroying fighting within my silo. Sorry about that 😦

This culminates in huge frustration; a revolving door of broken coaches; and many a good employee finding a better organisation to work for. If you ran an employee survey at this point, the results would make for ugly reading – you’ve created a complete divide between worker reality and management ‘cloud cuckoo land’.

Oh, and that lean word? Well it became capitalised! LEAN…as if it were a thing. You’ve all forgotten that it was just a label thought up by John in a focus group merely to describe what the factory visit team saw.

Pause for reflection: Taiichi Ohno is considered to be the father of the Toyota Production System (TPS) but he didn’t want it to be written down3 (codified) because he wanted it to remain dynamic.

And as for that name:“Ohno did not call his innovation ‘lean’ – he didn’t want to call it anything. He could, perhaps foresee the folly of a label.” (John Seddon)

Caution: …and if you did this ‘under the skin’ (supposed) transformation within a service organisation, you may find (if you properly stood back to look at it!) that you’d totally f@ck$d it up!

Credit: The ‘Level 2’ principles jotted down above are the core of the 1996 book ‘Lean Thinking’ by Womack and Jones….which they wrote following their research in Japan. They explicitly set out 5 principles, with a foundational one implied (hence why I’ve labelled it as ‘principle nought’).

Level 3 Transformation: ‘In the DNA’

dna…and so to the 2000s. The pressure to change your organisation is relentless – the corporate world is ‘suffering’ from seemingly constant technological disruption…but Toyota continues to be somehow different.

You pluck up the courage and ask for a sabbatical for 6 months – you want to find the meaning of life…well, perhaps not that deep…but you sure as hell want to know what Toyota have got that you don’t…and to work this out, you are going to have to go in deep – to their DNA.

Toyota are happy to see you again. But, rather than repeating what you did on the last two trips, you come straight out with it:

“Okay, you’ve shown me your tools and methods…you’ve let me uncover your principles…and I know that these aren’t the answer! What are you hiding from me?! Come on, I get it, it’s a competitive world out there but PLEASE let me in on your secret.”

The Toyota managers are perplexed. They don’t know what else they can do. They are adamant that they aren’t hiding anything from you.

…and so, rather than go straight back home empty handed, you ask if you can work with Toyota to experience what day-to-day work is actually like. They humbly agree to your request.

And six months later your mind has been totally blown!

You really get it….no, REALLY GET IT!

You couldn’t see the wood for the trees but now it’s as obvious as can be.

It’s all about the environment created by management’s actions, which come from their beliefs and behaviours about human beings: about society, about customers…and, most profoundly, about employees.

This is invisible on a factory visit! But it’s still there. It’s simply ‘in the DNA’.

Sure, you could provide a list of attributes as to what this looks like…but management can’t just do them, they have to believe in them – in fact, ‘be’ them!

Further, there’s nothing to be ‘implemented’ because it can’t be!

Everything flows from management’s beliefs and behaviours: It’s from these that Toyota creates new principles, methods and tools all the time…and throws out old ones that are no longer appropriate. Their systems thinking and human thinking is solid and profound, whilst their method is dynamic and agile.

…and the realisation sinks in: No wonder Toyota are happy to open their door to anyone. The thing that makes them great can’t be copied. It has to be lived and breathed…and nurtured from the shop floor all the way up. Oh sh1t!

…and so to your new headache: you totally ‘get it’ but how on earth do you change your organisational system – now that is THE nut to crack. That would be transformational!

Reflection time:

So ‘On the surface’, ‘Under the skin’ or ‘In the DNA’: What level of transformation are you playing at?

…if you are at level 1 or 2 then it’s not actually transformation.

…if you are truly at level 3, then here’s the final mind blowing bit – it is self-sustaining.


To close: I have been asking myself a HUGE question for a fair while now: Can management’s beliefs and behaviours change within a large floating (i.e. short-term thinking) shareholder owned organisation.  I’m nearly there with writing down my thoughts. Watch this space…

Footnotes:

1. Just Toyota? I use Toyota in this story since everyone knows who they are…and visits to their factories is precisely what happened regularly over the last several decades. But it isn’t just Toyota.

Your own ‘Toyota’ factory visit could be to another great organisation…and it needn’t be a factory making products – it could be a service organisation. Handelsbanken would be a great financial services example.

Though beware, there aren’t that many ‘true Toyotas’ out there. And perhaps none that have sustained it for so long.

2. ‘John’: He’s even called John in the true story – John Krafcik, a young researcher on Womack’s MIT research team…and those were his words back in 1987 (as recalled by Womack) to give birth to the Lean label.

3. Writing it down: Ohno finally relented when he retired in 1978 and wrote a book on TPS.

4. Clarification: I think a great deal of Lean Thinking, but not a lot about ‘LEAN’ – the implementation movement. I respect Womack and Jones, and their writings…but I note that my favourite Womack book is ‘Gemba Walks’ written about a decade after ‘Lean Thinking’ in which he humbly reflects that it was about far more than the tools and the principles. It was really about the management system (or, in my words, the DNA).