“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!

Advertisements

Chapter 1: A long time ago in a land far, far away…

henry-ford…well, about 100 years ago in America…there was a visionary man who led society through a monumental technological disruption – his name was Henry Ford – and he and his organisation changed the world through his desire to ‘democratise the automobile’.

His success in putting the internal combustion engine on wheels devastated the ‘technology’ it replaced – the horse – and its many related industries (stables, horse feed and bedding, saddleries and tack shops, blacksmiths and farriers,….) although, on the plus side, it dissolved the huge problem of ever increasing amounts of horse manure pilling up on city streets!

We talk about modern technological disruptions, like the mobile phone or internet, happening quickly (in years) but we should reflect that profound technological shifts can occur pretty swiftly, whatever the age.

I imagine that once one ape invented the spear, then the rest changed ‘technology’ quicker than you can say “I wonder what those long pointy things are that I can see hurtling through the air towards us?”

The change from the horse to the car was pretty dramatic too:

horses-and-cars

Okay, so Henry Ford was on the right side of a technological disruption…but, whilst this was necessary, it was much more than luck that made the Ford Motor Co. such a success2.

So what were Henry’s core philosophies, and what ‘gems’ might we learn from him in this modern time of technological disruptions? These were his foundations:

  • ‘Service power’;
  • The ‘Wage motive’; and
  • ‘Money power’.

Service Power:

gandhi-quoteHenry was fanatically clear that a business is only there because of the people that buy its products and services. Without them it wouldn’t exist and, as such, the customer (the public, society) is the point. Full Stop!

“Since the public makes a business, the primary obligation of business is to the public.”

(He nicely clarified that “Those who work for and with the business are part of this public.”)

This is so much more than the trendy “customer centric” mantra, in which we are usually shown a lovely circle with the customer conveniently arranged in the middle BUT, and this is the problem, all the other ‘conventional thinking’ management orthodoxy is retained around the outside3.

And to make it absolutely concrete in your mind as to what Ford really meant, he explained as follows:

“The true course of business is to follow the fortunes and pursue the service of those who had faith in it from the beginning – the public.

  • If there is any saving in manufacturing cost, let it go to the public;
  • If there is any increase in profits, let it be shared with the public in lowered prices;
  • If there is any improvement [in the quality of the service] let it be made without question, for whatever the capital cost, it was first the public that supplied the capital.

That is the true course for good business to steer, and it is good business, for there is no better partnership a business can enter than a partnership of service with the people.

It is far safer, far more durable and more profitable than partnership with a money power.”

Everything Ford did was with the customer at heart i.e could he provide the public with a cheaper car and yet also make it better than the ones he made yesterday? If he could do this, he knew that customer demand would continue to rise and profitability would be the least of his worries. ‘Customer, customer, customer’ provides growth and profitability – THAT WAY AROUND.

To make it cheaper and better for the customer, Henry was obsessed with constantly studying, experimenting and improving the process – through fanatical cleanliness and maintenance, ever deeper removal of waste (transportation, movement, scrap…), re-use of anything and everything, in-sourcing wherever possible, constant technological breakthroughs, decentralisation to where the work should be…and so on4.

And Henry didn’t just think about his automobile customers, he thought about the whole system (society) because he realised that it was all really one and the same thing. This led him into all sorts of interesting ventures that supported, and enabled, the core purpose.

In short: THE foundational ‘thing’ that made the Ford Motor Co. such a huge success was that Henry truly believed that his master was the public.

The Wage Motive:

your-greed-is-hurting-the-economyAnd so we move from customers to employees (the worker).

The ‘wage motive’ was Henry’s phrase for his philosophy that “one’s own employees ought to be one’s own best customers.” If the workers truly prosper then they will love, buy and advocate for the products (e.g. cars) they make…which will create an ever-improving product, a superb reputation and expanding customer demand…which enables the workers to prosper – and off we go round the circle.

He goes on to write that “If an employer does not share prosperity with those who make him prosperous, then pretty soon there will be no prosperity to share.”

Now, Henry was no Saint – he was a man of his times – but he wanted to do the right thing. Significantly, he learned from his early worker experiences and saw that the best, and only logical approach, was for his system to work with, and for, the worker, not against them.

He paid them high wages (far higher than they could receive elsewhere), provided regular employment (replacing the uncertainty of casual labour with steady work), reduced the standard working week to 8 hours for 5 days, insisted that Sunday was a day off for all, and provided them with excellent working and living conditions. Any worker that wanted more than manual repetitive work was given the chance to better themselves through training and increased responsibilities.

And finally, given that Turkeys don’t vote for Christmas, he was very clear that improvement was about bettering people and not about getting rid of people:

“Nobody with us ever thinks about improvement lessening the number of jobs, for we all know that exactly the contrary happens. We know that these improvements will lessen costs and therefore widen markets and make more jobs at higher wages.”

In fact, Henry got rid of (incentive driven) piece-work and created a profit sharing arrangement in the form of share ownership (more on this in Chapter 4)

Money Power:

And last, but nodead-moneyt least, to money. Over to Henry:

“There’s nothing to be said against the financier – the man who really understands the management of money and its place in life….but it is very different with the professional financier, who finances for the sake of financing and what he can get out of it in money, without a thought of the welfare of the people…

[Moneys] proper place [is] as one of the cogs in the wheel, not the wheel itself…

This is not to say that money and profits are not necessary in business. Business must be run at a profit, else it will die. But when anyone attempts to run a business solely for profit…then also the business must die, for it no longer has a reason for existence….

A business cannot serve both the public and the money power.

Money put into business as a lien on its assets is Dead money, its main purpose becomes the production of payments for the owners of that money. The service of the public [will] be secondary. If quality of goods jeopardizes these payments, then the quality is cut down. If full service cuts into the payments, then service is cut down. This kind of money does not serve business. It seeks to make business serve it.

Live money goes into the business to work and to share with the business. It is there to be used. It shares whatever losses there may be. It is asset to the last penny and never a liability.

Live money in a business is usually accompanied by the active labour of the man or men who put it there. Dead money is a sucker-plant….

Business that exists to feed profits to people who are not engaged, and never will be engaged in it, stands on a false basis.…Profits of business are due:

  • first, to the business itself as a serviceable instrument of humanity [i.e. to constantly improve the service to its customers], and then
  • to the people whose labour and contributions of energy make the business a going concern [i.e. its employees]…

The true course of business is to follow the fortunes and pursue the service of those who had faith in it from the beginning – the public…

The best defence any people can have against their control by mere money is a business system that is strong and healthy through rendering wholesome service to the community.


…and so I (and Henry) have set the scene as to what this ‘story’ is all about – customers, employees and money…and in particular, how do large floating (i.e. short-term thinking) shareholder owned organisations ‘fit’…and most importantly, (how) can their structure be altered to provide a foundation for a long term win/win/win for all?.

Update: Link backwards to Introduction and forwards to Chapter 2

Footnotes:

1. All of Henry Ford’s quotes above come from his 1926 book ‘Today and Tomorrow’.

2. Ford Success: Just in case you doubt this success (and accepting that money is a poor measure) Forbes estimates that, in today’s money, Henry Ford was worth around US$200 Billion….more than double anyone alive today.

3. Note to self: I’ve still got to write the post that slaughters the ‘Balanced Scorecard’ sacred cow! It’s been on my ‘to do’ list for far too long because other stuff keeps on popping up every day.

4. Toyota: If you’re a follower of Taiichi Ohno and, upon reading the above, think “Hang on, didn’t Toyota invent all that stuff?!”, here’s a rather nice quote to reflect upon:

“I met Taiichi Ohno on a Japanese study mission. When bombarded with questions from our group on what inspired his thinking, he just laughed and said he learned it all from Henry Ford’s book.” (Norman Bodek)

The River Rouge – a divergent legacy

ford-model-t-1925-6I expect that you’ve heard of the industrialist Henry Ford (1863 – 1947), but what about his massive ‘River Rouge’ car plant?

If you had gone for a ‘factory visit’ in the late 1920s, what would you have noticed?

The Model T Production line1

Ford wanted to provide a car that the masses could afford to buy – to ‘democratise the automobile’. Enter the Ford Model T – a car designed to be easy to drive and easy to repair, with standard interchangeable parts.

…but it wasn’t just about the car’s design. It was about the design of how the car was made.

In 1906, Ford’s engineers did something different – they experimented with the physical layout of their manufacturing system. They arranged their manufacturing tools in the sequence of processing steps rather than the normal practise of by machine type. This seems ridiculously obvious now (hindsight is a wonderful thing!), and the result was considerably higher productivity. This innovation created a flow in the order of the work but, at this stage of the Ford story, each work step was still done on stationary tables and stands.

In 1913, they took the next breakthrough step: they experimented with the moving assembly line for a small section of the process and, after some fine-tuning, this increased productivity fourfold…..and so the engineers got to work spreading this method throughout the manufacturing value stream.

Ford was constantly reducing his costs, not by ‘cost-cutting’ but through a fanatical focus on creating flow. This was achieved by a combination of continuous (incremental) and breakthrough (step change) improvements…which enabled Ford to pass on these savings by consistently lowering the price of the Model T…which increased demand…which outstripped supply…which meant that ever further production innovations were required to keep up!

Highland ParkA great deal of the experimentation explained above was carried out at the purpose built Highland Park factory. It was six-stories high, with a railroad track running down a central atrium (pictured) and cranes lifting materials from the rail carriages up to balconies that opened to the appropriate floors on either side.

The basic pieces of the Model T started at the top floor and, through the use of chutes, conveyors and tubes between floors and the force of gravity, they made their way down through the various sub-assembly processes until they reached the ground floor final assembly conveyor….and then the completed car could ‘drive off the line’.

River RougeWhilst Highland Park was an amazing feat of engineering, it had its limitations – such as the central crane-way that was probably a huge bottleneck! Henry Ford went for one more innovative jump – he created an enormous horizontal factory complex called the River Rouge2. The site started with raw iron ore and materials and finished with completed automobiles. It had its own ship docks, power generation plant, blast furnaces and rolling mills – all arranged to achieve flow (I’ve added the basic flow over an aerial picture).

“The River Rouge Plant in 1925 produced about one vehicle per minute in a total lead time of about three days and nine hours from steel making to finished vehicle.” (Source: Henry Ford’s book ‘Today and Tomorrow’)

“…as long as it’s black”

You are probably familiar with the famous Henry Ford quote that ‘you can have any colour you like, as long as it’s black’. Today this sounds quaint, even humorous but there’s a seriously important point within: the manufacturing process was not designed to handle variety.

This hadn’t been a problem – people just wanted to be able to afford a car! – but rising standards of living and the birth of modern marketing gave rise to the ‘sophisticated consumer’. The new problem became offering ever wider variety (e.g. different colours, engine choices, trim levels, add-ons….) whilst retaining low-prices (and therefore mass-production costs).

And so to the crux of this post: Lots of organisations from all around America and the world went to the River Rouge to learn…but what did they see…and, therefore, what did they go away to do?

American Manufacturers post World War II.

So American organisations saw scale at the River Rouge.

Unfortunately, achieving the product variety now demanded by customers meant regularly stopping the production line to change tooling to be able to produce the different variants. Delivering variety was seriously hindering speed.

What to do? Here’s what they came up with:

  • Let’s interrupt the flow and decouple the stages within the production line, allowing the different processes to operate independently, and create buffer stocks between each process;
  • Let’s build each process to the largest scale feasible, and then run large batches per product variant through at the fastest rate possible and thus keep the number of changeovers required down to a minimum.
  • Let’s build warehouses to store all the resultant inventory (Work-in-process and finished goods)

This fundamentally changed production from workers producing for the next process step to workers merely producing for inventory. It became a case of ‘make lots and inspect later’. It was virtually a crime to stop the line3 – a disaster for quality!

Of course, once the main process steps were decoupled, their co-location didn’t matter so much. So rather than having a number of end-to-end manufacturing sites across America, the ‘logic’ could extend to…

  • Let’s centralise process steps into ‘centres of excellence’ so that we can increase scale even further! We might end up with, say, a massive steel works in one city, huge sub-assemblies in another city and a mega final assembly yet somewhere else.

…and the above ‘solution’ to variety introduced massive wastes in the forms of transportation across sites; inventory and its motion as it is constantly transferred in and out of the warehouse; over-production and obsolescence; defects through poor quality and rework…and on and on and on.

You could conclude that they ‘unlearned’ (even destroyed) what Henry Ford had achieved before variety had been introduced.

The above led American manufacturers to the hell of:

  • centralised planning, culminating in mega algorithms calculated by Manufacturing Resource Planning (MRP ii) computer applications, producing theoretical answers far from reality; and
  • ‘management by results’ using managerial accounting data (unit costs, rates of return, targets, budgets,…) to command and control the work.

This approach, even though it was hugely wasteful, proved profitable until the 1970s…until domestic demand became satiated and globalisation opened up the market to other manufacturers. Things suddenly became rather competitive….

Over in Japan

The Japanese, and Toyota in particular, saw flow at the River Rouge.

Taiichi Ohno (Toyota) realised that flow was the important bit: “ [they] observed that Ford’s plant conserved resources, by having processes linked in a continuous chain and by running slowly enough so that people could stop and fix errors when they occurred.”  (Johnson4)

Japan, unlike America, did not have the luxury of abundant resources after World War II. They couldn’t afford to create huge factories or tie up money in inventory…so they had to find a different way – to do a lot with a little.

Taiichi Ohno came to the conclusion that variety and flow had to go together i.e. “a system where material and work flowed continuously, one order at a time” (Johnson).

This created some clear challenges to work on:

  • rather than simply accepting that machine changeovers took time, Ohno set his workers the challenge of continuously reducing set up and change-over times; and
  • rather than running high-volume batches per variant, Ohno empowered each worker to design and control the steps they performed so that they could perform different steps on each unit that passed through them

In short, he set his people a huge visionary challenge, of working together as a system to think about the incremental, and sometimes giant, steps they could take to handle variety ‘in the line’.

Rather than centralised planning with standardised work dictated to them, the workers were empowered, and encouraged, to think for themselves, to deal with what was in front of them, to experiment and to innovate….and to share what they had learned.

And, wow, they came up with some fabulous techniques such as ‘Single-Minute Exchange of Dies’ (SMED), ‘pull’ using kanban, product supermarkets, ‘stop the line’ using andon cords, visual management, machine ‘right sizing’…and on and on.

I could write about each of these…but I’m not going to (at least not now). The point is not the brilliant innovations themselves. It is the clear and permanent challenges that were set and the constant progress towards them.

You may copy ALL of Toyota’s techniques but they (and other like-minded organisations) will still leave you far behind. Why? Because, whilst you are attempting to copy them they are racing yet further ahead. Indeed, what you copy (even if you ‘get’ the why) may be an out-dated technique before you go live! (This is to compare a static vs. dynamic environment)

What about service?

The Western (?) ‘solution’ for service organisations has, sadly, been virtually the same – scale: to standardise, specialise, centralise and ‘crank up the volume’.

Yet the challenge of handling customer variety is so much bigger: variety for service organisations is virtually infinite – it’s different per customer and, even for a given customer, it differs as their circumstances change.

So should we just pick up the ‘Toyota tool kit’ and get implementing? No. The techniques to meet the challenge will differ. Service is NOT manufacturing.

But can we learn from Toyota? Most certainly – but this must be at the deepest ‘beliefs and behaviours’ level.

The core message from the above is that service organisations should design their system such that the front line are allowed, and enabled, to absorb variety in customer demand.

If you run a service organisation and you have set up:

  • a front office ‘order taking’ function to categorise demand (which can only be based on the limited information available to them), and break it down into standard ‘work objects’ from an allowable catalogue of variants;
  • a ‘workforce management’ function to: prioritise and allocate (i.e. push) these work objects into ‘work queues’, usually by temporal batches (e.g. by day/ shift or weekly);
  • multiple specialised back office silos to churn through their allocated work, ‘motivated’ by activity targets (and incentives) regarding volumes of work performed; and, as a result
  • a complete confusion as to who is taking responsibility for resolving the customer need

…then you have seen scale, through commanding and controlling the work, as the ‘solution’.

If, however, you are on a journey towards:

  • equipping the people at the point of contact with the necessary expertise and freedom to respond to what most customers will predictably want (i.e. the bulk of demand); and
  • where more unusual demand hits the system, allowing and enabling these same ‘front of service’ people to ‘pull’ expertise to assist, yet retaining ownership of the service provision (thereby speeding up their rate of learning and widening their skills and knowledge)

…then you are on a similar track to Ohno: Pursuing flow for each unique customer demand, through revealing and harvesting the passion and pride within your workers.

Footnotes:

1. Sources: Much of the above comes from early chapters within three books:

  • ‘Relevance Regained’ by H. Thomas Johnson
  • ‘Profit Beyond Measure’ by H. Thomas Johnson
  • ‘Toyota Kata’ by Mike Rother

Other details (including pictures) come from searching around the ‘interweb’ thing.

…and of course the service ending is inspired by the work of John Seddon.

2. Historical point of detail: “The River Rouge was built to produce Model T Fords for decades to come, [but] by the time it was capable of full production later in the [1920s], a factory a tenth its size could have handled the demand for Model Ts.” (Wiley)

i.e. Henry Ford had built this huge production machine but his product had gone out of fashion because its competitor, General Motors, was providing the variety that customers now wanted, albeit using scale to do so. Ford was now in a dash to recover.

3. ‘Stop the line’ crime: Workers knew that managers wanted them to make as many as possible, with no ‘down time’. I understand that this is where the phrase to ‘throw a spanner in the works’ comes from…which refers to a disgruntled worker ‘accidentally’ dropping a tool into the assembly line mechanism so that the line stopped and they all got a break whilst the cause was found and rectified.

4. A fresh giant: Johnson is a giant for me, and I’ve been meaning to add his ‘giant bio’ to this blog for ages now…I have finally done so 🙂

Oversimplification

!cid_image001_png@01D18034So it seems that many an organisation repeats a mantra that we must “simplify, simplify, simplify”…they accompany this thrice repeated word with rhetoric that implies that this is so blindingly obvious that only a fool would query this!

As such, anyone questioning this logic is likely to hold their tongue…but I’ll be that fool and question it, and here’s why:

It’s too simple!

Here’s where I mention the ‘Law of requisite variety’ which was formulated by the cyberneticist1 W. Ross Ashby in the context of studying biological systems. Stafford Beer extended Ashby’s thinking by applying it to organisations.

Now, rather than stating Ashby’s technical definition, I’ll put forward an informal definition that I think is of use:

“In order to deal properly with the diversity of problems the world throws at you, you need to have a repertoire of responses which is (at least) as nuanced as the problems you face.” (What is requisite variety?)

!cid_image002_png@01D18034

Using the diagram above, let’s say that the problem types on the left (shown by different coloured arrows) represent the different types of value demands from our customers.

Let’s say that the responses on the right are what our system* is designed to cope with (* where system means the whole thing – people, process, technology – it doesn’t refer merely to ‘the computer’).

We can see that our system above is not designed to cope with the red arrows and incorrectly copes with some of the yellow arrows (with an orange response)….the customers with these value demands will be somewhat disappointed! Further, we would waste a great deal of time, effort and money trying to cope with this situation.

What on earth are you on about?!

“Management always hopes to devise systems that are simple…but often ends up spending vast sums of money to inject requisite variety – which should have been designed into the system in the first place.” (Stafford Beer)

Many large organisations engage in ill thought out and/or overly zealous ‘complexity reduction’ initiatives (incidentally, system replacement projects* are corkers for this!) that strip out more than they should and the outcome is unusable and/or hugely harmful towards satisfying customer value demands…which ends up creating un-necessary complexity as the necessary variety is ‘put back in’ via workarounds and ugly add-ons and patch-ups.

(* Large public sector departments have been excellent at this….often scrapping multi-million $ projects before a single live transaction gets into a database.)

Note: for readers aware of the ‘Lean Start-up’ thinking, you might cry out that this appears to go against the Minimum Viable Product (MVP)/ experimentation point…but it doesn’t…in fact it supports thinking in terms of target conditions rather than merely stating ‘make it simple’ objectives and setting related arbitrary targets.

Standardisation?

You might think that, because service demand is infinitely variable 2, then I am suggesting that we need to build infinitely complex systems that can cope with every eventuality with standardised responses. Well, no, that would be mad…and impossible.

In service, we can’t hope to know every ‘coloured arrow’ that might come at us! Instead, we need to ensure that our service system can absorb variety! This means providing a flexible environment (e.g. guidelines, not ‘straight jacket’ rules), and empowering front line staff to ‘do the right thing’ for the specific variety of the customer’s demand before them, and pulling appropriate expertise when required.

Standardisation in service is not the answer.

Cause and Effect

Don’t confuse cause and effect. Simplification should not be the goal…but it can be a very agreeable side effect.

“To remove waste [e.g. complexity], you need to understand its causes….if the system conditions that caused the waste are not removed, any improvements will be marginal and unsustainable.” (John Seddon)

If you think “We’ve got too many products and IT applications…we need to run projects to get rid of the majority of them!” then ask yourself this: “Did anyone set out specifically to have loads of products and IT applications?” I very much doubt it…

You can say that you want fewer products, less technology applications, less complex processes…less xyz. But first, you need to be absolutely clear on what caused you to be (and remain) this way. Then you would be in a position to improve, which will likely result in the effect of appropriate simplification (towards customer purpose).

If you don’t understand the ‘why’ then:

  • how can you be sure that removing all those products and systems and processes will be a success? and
  • what’s to stop  them from multiplying again?

The goal should be what you want, not what you don’t want

“If you get rid of something that you don’t want, you don’t necessarily get something that you do want…improvement should be directed at what you want, not at what you don’t want.” (Russell Ackoff)

The starting point should be:

  • studying your (value stream) systems and getting knowledge; and then
  • experimenting towards purpose (from the customers point of view) , whilst monitoring your capability measures

The starting point is NOT simplification.

A classic example of the simplification mantra usurping the customer purpose is where organisations force their customers down a ‘digital’ path rather than providing them with the choice.

  • To force them will create dissatisfaction, failure demand and the complexity of dealing with it;
  • To provide them with choice will create the simplicity of delivering what they want, how they want it…with the side effect of educating them as to what is possible and likely moving them into forging new habits (accepting that this takes time).

In conclusion

So I’d like to end on the quote that I have worn out most over my working life to date:

“Make everything as simple as possible, but no simpler.” (attributed to Einstein)

The great thing about this quote is that it contrasts ‘relative’ with ‘absolute’. “As simple as possible” is relative 3 – it necessitates a comparison against purpose. “Simple” is absolute and, as such, our pursuit of simplification for its own sake will destroy value.

Thus, the quote requires us to start with, and constantly test against, customer purpose…and the appropriate simplicity will find itself.

Notes:

  1. Cybernetics: the science of control and communication in animals, men and machines. Cyberneticians try to understand how systems describe themselves, control themselves, and organize themselves.
  2. Infinite variability: We are all unique and, whilst we will likely identify a range of common cause variation within service demand (i.e. predictable), we need to see each customer as an individual and aim to satisfy their specific need.
  3. There’s probably an Einstein ‘relativity’ joke in there somewhere. 

I’m just a spanner!

spannerSo there’s a TV programme that I love called ‘How it’s made’. It takes the viewer through the manufacturing journey of a unit of production. An episode might focus on something small, like making a can of fizzy drink. Another episode might focus on something HUGE, like building a cruise ship…but there is a similarity within.

The other day I watched an episode that showed how a spanner was made (a ‘combination wrench’ if we are being techy). Watch it here (it’s only 5 mins).

Once you’ve watched it, I’d ask you to put yourself in the place of one of those wonderful spanners (call yourself Sammy if you like and have a think about yourself)….I did, and here’s what I thought:

“I’m just a spanner….

  • I don’t have a brain
  • I’m not purposeful – I just ‘am’
  • I don’t have a genetic make-up passed on to me – I don’t have a mum and dad!
  • I have no memory of my past experiences from which to form opinions
  • I’m not capable of emotion
  • I can’t respond to things that happen to me or make choices for myself

In short: I cannot think or communicate, which is ironic given that I appear to be writing this post J.

Further, all of this is relatively static – it doesn’t change over time…other than perhaps the ever-so-slow process of entropy as I likely corrode.

…and so, given this I really don’t mind that:

  • my destiny (to be ‘that spanner’) is predetermined for me, and completely specified ‘up front’ by my makers…without any input from me;
  • there is nothing unique/ special about me: I am treated exactly the same as every other ‘standardised’ spanner;
  • I am bundled together with other spanners in convenient batches as and when my makers see fit;
  • I am passed from process to process as my makers determine, for their benefit;
  • I sit around (in piles) waiting for when the next process is ready for me
    • which may be days or even weeks…in fact whenever my makers wish
    • …and nothing really happens to me whilst I am waiting
  • …and so on

Each process knows exactly what it is getting from the last one and knows exactly what to do (e.g. I will arrive at process ‘x’ as a blank and I will then have a hole stamped through me, ready for process ‘y’)

It doesn’t really matter what mood each worker on my production line is in, how they are presented…even what language they speak or views they hold. They will ‘process me’ and move on with their lives!

This arrangement may very well work out just fine for our Sammy the spanner…but now let’s turn our attention to service organisations (and service value streams):

If you go back to the monologue above and substituted a customer into the role of our hero, the spanner, you would find that all is most definitely NOT okay! Go on, take a short minute to do it – it’s a good exercise in realising how and why service and manufacturing are VERY different.

Treating customers as brain-less, purpose-less, emotion-less and lacking in memory is not recommended. “Fine”  I hear you say ”….we’d never do that!”

But, now consider whether many (most?) service organisations:

  • attempt to standardise customers into a service ‘straight jacket’;
  • pass customers through rigid pre-defined processes (e.g. from front office to back office; through vertical silos of order taking – assessment – solution – payment and closure…and then ‘after care’)
  • juggle customers between multiple members of staff (with no-one really taking responsibility);
  • put customers into queues to process at the service’s convenience (perhaps using computers to elicit ‘data attributes to classify, sort, prioritise and schedule’*)
  • treat the customer’s time and effort as free; and
  • decide when the customer’s need has been fulfilled (rather than allow the customer to determine this for themselves)

* If that sounds awfully boring and techy, it’s meant to because that’s what computers are good at – algorithms, not people.

Now, you might yawn and say “Steve, you are on your ‘service is different’ band wagon again” and you’d be right! You might even point me at some posts that I have already written in a similar vein.

But the fact is that every single day we, as customers, experience service organisations treating us more like a spanner than a person. This likely causes huge frustration, failure demand and negativity towards the service being experienced.

I want a service organisation to understand:

Many a service has gone down the wrong path. It is time for them to wake up…

“No matter how long you have been on the wrong road, turn back.”

Do you sometimes feel like you are being treated like a spanner instead of a customer?

Conversely, if you work in a service organisation (or service value stream), what do you think your customers feel like?

A final reflection:

It’s worth considering the following quote: “In service, the best hand-off is no hand-off.”

I’m not saying that this is necessarily achievable…it’s more of a challenge towards which we should be pointing. At its most basic it is a sobering antidote to all those out there running in the other direction whilst chanting the ‘standardise and specialise’ mantra.

False Economies

chasing moneySo I expect we have all heard the phrase ‘Economies of Scale’ and have a view on what is meant.

The phrase is probably covered within the first pages of ‘Economics 101’ and every ‘Beginner’s book of management’. I think the idea has even leaked out of these domains and is used in every-day parlance. It is seen merely as ‘common sense’*.

(* please read and reflect upon a hugely important quote on ‘common sense’ when you get to the end of this post)

So what is the thinking behind ‘Economies of Scale’?

Let’s start at the beginning: Why is it said that we benefit from ‘economies’ as an organisation grows larger?

The idea in a nutshell: To run a business you need resources. As you grow, you don’t necessarily need a linear increase in those resources.

Basic example: A 1-man business premises needs a toilet (if he needs to go, well he needs to go). But when the next person joins the growing company he doesn’t get his own personal toilet written into his ‘remuneration package’. No, he has to share the existing toilet with his fellow employee. You can see this logic for lots of different things (one building, one IT system, one HR manager….), but I reckon a toilet is about as basic as it gets.

The theory goes that as the volume of output goes up* then unit costs come down (where unit cost = total cost/ units of output).

(* I’m writing generally now…I’ve moved on from toilet humour 🙂 )

It should be noted that the classical economists that came up with the theory did accept the idea of ‘diseconomies of scale’: that of costs rising as growing organisations become more complex, more bureaucratic…basically harder to manage.

You’ll likely see all this expressed in economics text books with a very simple diagram (below) and, voila, it is surely so!

economies of scale

Getting into more specifics about the phenomenon, three distinct reasons are given for those scale economies:

  • Indivisibility: Some resources aren’t divisible – you can’t (easily) have half a toilet, a quarter of a receptionist, 1/8th of a manager and so on.
  • Specialisation along with Standardisation: this reason goes way back to the writings of Adam Smith and his famous book called ‘The Wealth of Nations’ (1776). In it, he used the example of a pin factory to explain the concept of ‘the division of labour’. He explained that one person performing all the steps necessary to making a pin could perhaps make only 20 pins a day but if the pin-making process were broken up into a series of limited and standardised operations, with separate people performing them in a joined-up line, productivity could rise to thousands of pins per day per worker.
  • Machinery: Investing in ever larger machines mean that they can turn out more and at a faster rate…and our beloved unit costs come down. In service organisations the equivalent could be a ‘bigger, better’ telephone system, IT system,…etc.

Sounds like a water tight case to me – ‘Economies of scale’ proven, case dismissed!

Not so fast…a few dissenting voices:

“All the above seems to be about managing our costs? We are concerned about where this might lead – shouldn’t we be first and foremost focused on delivering value to our customers?”

“We’ve got really low unit costs at lots of our activities…and we keep on making ‘economies of scale’ changes to get them even lower…but this doesn’t seem to be reducing our total costs (they remain annoyingly high)…are we missing something?”

“Gosh, that ‘economies of scale’ average cost curve looks so simple…so all we need to know is when we are at the optimum size (Q) and stop growing. Easy! Can someone tell us when we reach that point? How about a nice warning signal when we are getting close? What do you mean it’s just ‘theoretical’ and no-one actually knows?!”

“I’ve heard that ‘behavioural economics’ is debunking a central assumption within Adam Smith’s classical economic ideas. Apparently we are all human beings (with our own unique purposes), not rational robots!” (Nice link: Who cooked Adam Smith’s dinner?)

“We don’t make pins. We are a service organisation. We have much variety in demand and our customers are ‘co-producers’ within our process…specialisation and standardisation can do much harm to them, and therefore us!”

Meanwhile, on another planet…

Taiichi Ohno developed the Toyota Production System (TPS). In so doing, he used totally different thinking, with profound results.

(Note: Historians have identified a core reason for this difference in thinking as the heavily resource-constrained context that Japan found itself in after the 2nd world war. This was in complete contrast to 1950s America that had an abundance of resources and booming customer demand. In short, Ohno had to think differently to succeed.)

The big difference – Flow, not scale, as the objective: Ohno concentrated on total cost, not unit costs. He realised that, first and foremost, what matters is how smoothly and economically a unit of demand is satisfied, from initial need through to its completion (in the eyes of the customer).

The flow is everything that happens between these points and, as well as all the value-adding steps, this includes:

  • all the time that nothing is happening (a huge proportion of a traditional process)
  • all the steps that occur but shouldn’t really need to (i.e. they are non-value adding);
  • all the repeat and/or additional steps needed because something wasn’t done right; and (the worst of all)
  • everything needed to be done when the customer returns with the good or service as not being acceptable (where this could be days, weeks or even months later)

There’s no point in a particular activity being made ‘efficient’ if this is detrimental to the flow.

‘Economies of scale’ thinkers (and their management accountants) are obsessed with how much each activity costs and then targeting reductions. Their belief is that, by reducing the costs of each activity, these aggregated savings will come off the bottom line. Such thinking has led to:

  • ‘large machine thinking’ (which also relates to centralisation/ shared services);
  • ‘batch thinking’ to make these resources work (allegedly) more efficiently;
  • ‘push thinking’ to keep these resources always working – high utilisation rates are king; and
  • inflexibility due to highly specified roles and tasks

…which cause a huge amount of waste and failure demand.

Ackoff made incredibly clear in his systems TED talk (using the automobile as his example) that trying to optimise the components of a system will not optimise the system as a whole. In fact, the reverse will be true and we can expect total costs to rise.

Rather than trying to get the cost of a specific activity down, Toyota (and other system thinkers) focus on the end-to-end horizontal flow (what the customer feels). This is a different (systemic) way of thinking and delivers far better outcomes.

It is no coincidence that Ohno is also credited with much of the thinking around waste. It is only by thinking in terms of flow that waste becomes visible, its sources understandable, and therefore its reduction and removal possible.

In short, Cost is in flow, not activity.

Flow thinking has led the design of systems to:

  • ‘right-size thinking’ and ‘close to customer thinking’;
  • ‘single-piece flow thinking’;
  • ‘pull thinking’; and
  • handling variety ‘in the line’ thinking (Note to self: a future post to be written)

These all seem counter-intuitive to an ‘economies of scale’ mindset, yet deliver far better outcomes.

(How) does this apply to service?

Okay, so Ohno made cars. You might therefore question whether the above is relevant to service organisations. Here are examples of what the ‘Economies of scale’ mantra has given us in service, broken down into comments on each of specialisation, standardisation, centralisation and automation:

Specialised resources: Splitting roles into front, (middle) and back offices; into demand takers (and ‘failure’ placators), transactional processors, back room expert support teams and senior ‘authorisers’…meaning that:

  • we don’t deal with the customer when/ where they want;
    • causing delay, creating frustration – which needs handling;
    • incorrect setting of customer expectations;
    • unclear ownership, leading to the customer having to look out for themselves
  • we have multiple hand-offs;
    • causing batching, transportation, misunderstandings, re-work (re-reading, re-entering, repeating, revising);
    • we break a unit of value demand into separate ‘work objects’ which we (hope to) assign out, track separately, synchronise and bring back together again (…requiring technology);
  • we collect information to ‘pass on’ (…requiring technology)
    • often passing on incomplete and/ incorrect information (or in Seddon’s words “dirty data”), which escalates to the waste of dealing with the defects as the unit progresses down the wrong path;
  • we categorise, prioritise, allocate and schedule work around all these roles (…requiring technology)
  • …all of the above lengthens the time to deliver a service and compromises the quality of the outcome, thus generating much failure demand (which we then have to deal with)

Standardised activities: Trying to achieve a standard time (such as Average Handling Times) to perform a standard task (using standard templates/ scripts) that appears to best fit with the category that ‘we’ (the organisation) jammed the customer into

  • rather than listening to the customer’s need and attempting to deliver against it (i.e. understanding and absorbing customer variety);

Centralisation: Seeing ‘shared services’ as the answer using the “there must be one good way to do everything” mantra.

  • creating competition for shared service resource between business units and the need for SLAs and performance reporting;
  • requiring some ‘super’ IT application that can do it all (“well, that’s what the software vendor said!”);
  • ‘dumbing down’ the differences between services (and thus losing the so-called ‘value proposition’)
  • loosening the link between the customer and the (now distant) service.

Automation: Continually throwing Technology at ‘the problem’ (usually trying to standardise with an ‘out of the box’ configuration because that will be so much more efficient won’t it) and, in so doing, creating an ever-increasing and costly IT footprint.

Whilst technology is amazing (and can be very useful), computers are brilliant at performing algorithms (e.g. calculations and repetition) but they are rubbish at absorbing variety, and our attempts at making them do so will continually create failure demand and waste.

In summary: ‘Economies of scale’ thinking is more damaging in service because of the greater variety in demand and the nature of the required outcomes.

To close:

This post isn’t saying that scale is wrong. It is arguing that this isn’t the objective. Much harm is, and has been, done by blindly following an activity focused logic (and the resultant ‘specialise, standardise, centralise, automate’ mantra)

Further, I get that some of you might say “you’ve misunderstood Steve…we aren’t all running around saying we must be big(ger)!”…but I’d counter that the ‘economies of scale’ conventional wisdom is implied in a relentless activity cost focus.

Put simply, “Economy comes from flow, NOT scale” (Seddon)

End notes

Beware ‘Common sense’:

“There is a time to admire the grace and persuasive power of an influential idea, and there is a time to fear its hold over us.

The time to worry is when the idea is so widely shared that we no longer even notice it, when it is so deeply rooted that it feels to us like plain common sense.

At the point when objections are not answered anymore because they are no longer even raised, we are not in control: we do not have the idea; it has us.” (Alfie Kohn)

Credit: The ‘Economies of scale’ explanation comes from reading a John Seddon paper.

Being fair to Adam Smith: He understood that the specialisation of tasks can lead to “the almost entire corruption and degeneracy of the great body of the people [the workers]. … unless government takes some pains to prevent it.” i.e. it might be great for the factory owners…but their workers are people, not machines.

Pulling Power

Beer pumpThere are two very different productivity ideas:

  1. Make as much as you can! …meaning that:
  • you are always busy (it is a ‘corporate crime’ to be idle!);
  • it is irrelevant whether the next activity down the track is already snowed-under with work or even if it is available….you just keep pumping it out! They aren’t your problem;
  • the ‘performance police’ are likely measuring the cost of the activity being performed, and judging you accordingly.

…this reflects a Push system, which fits with an ‘economies of scale’ efficiency mindset (“how many did you make!”).

  1. Make only what is needed when it is needed…meaning that:
  • each person is highly connected to the next activity down the track (because they need visibility of how the next step is going);
  • it becomes immediately obvious if there is a blockage and where it is;
  • the process performers can:
    • collaborate on making improvements at the (now visible) bottlenecks; and
    • see and measure the overall flow, from customer demand through to its satisfaction.

…this reflects a Pull system, which fits with a ‘flow’ effectiveness mindset (“how did we all do together for the customer?”)

Now, you might think that push will cost a lot less than pull because everyone is always working flat out, not waiting to do something….but you’d probably be wrong, and by a profound margin.

What’s so good about pull?

Here’s a simple ‘push’ diagram from the Lean Enterprise Institute to assist:

overproduction-e1351860597383

Stick man ‘A’ is happily making stuff, much to the despair of ‘B’ and, given that a real life process will have far more steps than A and B, you can imagine what this looks and feels like on a bigger scale – organised(?) chaos:

  • work will pile up throughout the process, meaning that there will be loads of ‘work in process’;
  • process steps might be working flat out, but it takes a really long (and usually increasing) time for a unit of work to get from start to (proper) completion. It spends a massive amount of its overall cycle time simply waiting;
  • defects are hidden within this mess, so it takes a long time for them to surface….with the time and cost to rectify the defect rising alarmingly as more work is performed on the defective unit of work;
  • changes in specifications or customer needs whilst units are (a long time) in process mean a huge amount of rework, and even scrapping of work done to date (Customer: “In the time you’ve taken, things have changed….I don’t want that anymore!”);
  • the long cycle times will create a huge amount of failure demand (blue marbles) from customers asking where their unit of value demand has got to and how long it will be.

Is this relevant to Service?

Absolutely! But, like most things, it can be a bit different to manufacturing.

THE big difference in service is that the trigger to start work is pull by default i.e. you can’t make a service in advance ‘and put it into stock’…you need to wait for demand to trigger the work. But, just because we have a customer pulling the demand lever doesn’t mean we should then be pushing their unit along a value stream before the downstream activities are ready for them.

For a really obvious example, let’s take a natural catastrophe (flood, earthquake, etc.), which results in an insurer getting a huge spike of claims demand. The insurer wants to help everyone as soon as they can but they a) are still getting the necessary processes defined ‘on the ground’ and b) have limited resources to do the work.

Now, this is a challenge: Insurers want to be seen to be pro-active and ‘getting on with it’ for their customers. But beware of creating a seemingly good short-term impression at the expense of a huge longer-term mess.

If you push claims through a process that isn’t yet defined and resourced then you can expect to:

  • only partially perform the necessary work, but not realise this;
  • set expectations that turn out to be incorrect (e.g. what you thought looked clearly a house rebuild turns out later to only be a repair…and vice versa);
  • go back and perform a great deal of re-work (ending up in multiple site visits, ‘reconciliations’ with previous findings, defensive explanations and compensatory actions);
  • throw away old work and virtually start again to cope with changing customer circumstances (“I was okay with you doing that 6 months ago…but not anymore”); and
  • lose the trust of the customer (your unintended mistakes are seen by them as malice and trickery)…which creates much failure demand, to be cautiously tip-toed through.

If you hear management say “right, let’s get all the claims through ‘assessment’ by [date x] and then we’ll focus on the next stage”, you know you’ve got push and all its associated problems.

This doesn’t mean that you don’t do all you can to make sure your customer is okay whilst you work things out (e.g. temporary repairs, emergency accommodation) and explain to them what is happening (including what you haven’t got in place yet)…but it is saying pull work through your flow when, and only when, you (& they) are ready for it.

This means that you focus your attention on defining and refining the flow, rather than wasting it firefighting each and every ‘undoing what’s already been done’ disaster.

A specific example for the catastrophe claims scenario: If a builder has a number of house builds on the go, don’t push any more on them (they may very well tell you they can take them!). Instead, allow them to pull the next one only as and when each build is satisfactorily complete. This will mean that the builder is focused on making their build processes effective, rather than trying to stockpile work for the next few years.

Moving on to ‘workflow management’:

Okay, so thankfully catastrophe management doesn’t happen all the time…so what about ‘day to day’ pull in service?

Who works in an area that has a ‘workflow management’ role (or even team) that sorts out work as it comes in the door by briefly looking at what it is, categorising it and then assigning it to people as fairly as they can? This is pushing.

What does this cause?

  • Incorrect classification: As explained in ‘The Spice of Life’, there is huge variation in service demand. It is impossible to properly appreciate the necessary work content until you do the work; which means that…
  • Feelings of unfairness: …it is impossible to fairly divide up the work. This wouldn’t be such a problem if judgement and rewards weren’t hanging on it…but they usually are! This creates a constant tension between the work assigner and the workers; leading to…
  • Dysfunctional behaviour: …people will do what they can to protect themselves. You can read ‘The trouble with targets’ to see the general techniques that people understandably use to survive;
  • Re-working the workflow: So the work has been carefully assigned for the week ahead but Jack’s work is turning out to be slower than expected (Bob’s is easier than expected but he isn’t going to tell you!), and Jill is off sick…this only comes to light mid-way through the week so customers in Jack and Jill’s trays have been waiting in vain. Push requires a constant need to review and re-sort allocations between queues as circumstances (always) change…which is pure waste.

What’s wrong with people pulling work from a central and highly visible ‘pile’?

‘Command & Control’ Manager: “Well, people can’t be trusted to do this can they!”

Counsel: “Eh? Why ever not?!”

Manager: “Well, they will slow down and look for the easy ones.”

Counsel: “and why would they do that?

Manager: “Erm, because of their personal metrics…needed because their performance is being judged…which will affect their linked rewards/awards.”

I hope you can see that this is a classic case of looking past a logical tool/technique (in this case ‘pulling work’) and seeing the root causes within the ‘command and control’ management thinking.

If the team:

  • had a capability measure as to how they are all doing (so that they could see the system, rather than being blinded by personal targets);
  • were being coached, not judged (so that they wanted to improve, not protect, themselves;) and
  • were sharing in their success (so that they wanted to collaborate, not compete)

…then a) designing an initial* pull system could deliver great results and b) the workers would likely look for, and make, continual improvements to it…so that it worked better and better and better.

* don’t try to implement the perfect pull system: let the workers move towards pull through experimentation….but management must remove the constraints that are in their way.

Examples of service moving from push to pull:

In fact we have all felt moves from push to pull. One obvious area has been customers (that’s us) being able to book appointments (pull) rather than being assigned a slot (push). This has happened from medical appointments, through school parent evenings, to home deliveries.

Note that ‘pull’ is actually an ideal, not a tool. You need to think widely (and differently) about achieving it. It isn’t an easy journey…but it’s well worth the effort.

How about this one from John Seddon: When a contact centre agent gets a customer demand that they are unfamiliar with, they should ‘pull’ in the necessary expertise to handle it, instead of ‘pushing it’ to the expert to perform. In this way, the agent is developing on the job and the customer feels that one person is caring for/ owning their need…developing great trust: a win/win.

Pulling is linked with continuous improvement, like an umbilical cord.

Notes:

  • Pull is a key part of the Toyota Production System (TPS), and is the 4th of the 5 ‘Lean Thinking’ principles;  
  • Kanban is a Japanese word and refers to a visual signal (often a card) used to trigger an action. The downstream process provides the kanban (signal) to the upstream process (i.e. it pulls the work along the value stream).
  • You can substitute the catastrophe example used above with any service process where a) the process isn’t yet properly defined and/ or b) a spike in demand has to be handled (i.e. exceeds capacity)