Do lean manufacturing methods translate to service organisations?

I have had occasion to look at a number of ‘lean’ projects in service organisations run by people who learned lean in manufacturing. Typically they start – as they do in manufacturing – with 5S. 5S is all about ‘cleaning up’ so you can see the flow, and getting things in the right place, so you can begin problem solving. Very important in manufacturing, for if you cannot see the flow and you haven’t got things in the right place you can’t make a start. So how does this go down with people in service organisations?

It might not surprise you to learn that it is received as ‘tidy up your desks you slovenly lot’. Even the consultants are open about the fact this causes ‘resistance’. That we should run an intervention that risks pissing off the people is one thing, but worse it is the wrong thing to do. The context for improvement in manufacturing is how things are made, so you need to get hold of the flow. But the context for improvement in service organisations is the nature of customer demand because the customer is
involved in ‘production’.

The problem with our service organisations is they are managed top-down, as factories. To the worker this means being measured on activity, for managers are pre-occupied with resource management. Managing in this way managers inadvertently cause costs.

The only way to ‘see’ the problems is to look outside-in and study how the system responds to customer demands. When you see for yourself how current measures and methods impede flow and hence add costs, you realise the need to change the measures. So the starting place is to acknowledge to the failure of the current methods for design and management of work to achieve the organisation’s purpose. It is not to ‘tidy up’.

The revelations that come from studying impedance of flow are constructive insights to those who do the work. They ‘know’ the measures in use are dysfunctional but they generally don’t know why. Being given a different view on something they ‘know’ that makes sense, because it describes how the work works, engages the workers and begins the process of change.

From what I’ve seen, the use of lean manufacturing methods in service organisations typically fails to work against demand and, worse, typically does not lead to changing management’s measures. I wonder why these things are ignored, for I learned from the same source (Taiichi Ohno) in developing the Vanguard methods. Maybe it is because the stuff being sold by the lean consultants appeals to command and control managers; the sales pitch is ‘we’ ll get your people to do it’ not ‘this means you too’.

The managers are responsible for the system.

Seddon’s law

As managers of service organisations are pre-occupied with costs I sometimes get their attention with, what I call with all humility, Seddon’s law:

‘If you run your service organisation on ‘command and control’ principles, your costs will rise in proportion to the variety of customer demand.’


Seddon promotes ‘tosh’

Last summer call centre managers in a financial services organisation described my call centre methods as ‘mumbo jumbo’. This visitor to the Vanguard web site obviously agrees:

He wrote:

‘I have not had such a good laugh reading such utter tosh in years as the findings & theories in the article section. For example the theory that variability in individual performance is down to the ‘system’. Err sorry? the system failings generally are common to everyone ergo similar results should be achieved.’

Correct – and he uses the word SIMILAR. We wouldn’t expect results to be the same, so when do we attribute a numerical difference to an operator and when should we not? The systems solution is to use capability measures – measures that show you variability and help you separate signals from noise. If you blame an operator for a result when it was beyond the operator’s control, you stress the operator out. By contrast, when the operator and team leader are involved in understanding and acting on the causes of variation, performance improves (morale improves too).

He also wrote:

‘This sounds like the lament of the Operator who proclaims ‘I get all the difficult customers’…yeh right.’

Both managers and operators become adept at making excuses. Isn’t it interesting that he chose to use an ‘operator excuse’? The pre-occupation of call centre managers is ‘manage the people’, they would be better off knowing how to work with their people to manage the work. Managing the people is working on the 5%. Is that what we pay managers for?

‘Oh yes & by the way these staff are the same ones who you say you are amazed at their ingenuity at getting round the targets set, err couldn’t this have just a teensy weensy bit to do with variability?’

No. Whenever you use measures that show and help people understand variability the ‘cheating’ stops, for there is no need to cheat. Cheating is a systemic (normal) response to measures that are arbitrary and conceived by a hierarchy – operator measures in a call centre are just one example.

And finally he wrote:

‘The rest of the articles are equally flawed and generally of little use to improvement in Call Centres.’

Can’t win ‘em all can I?


Will the Chancellor call?

Earlier this month I wrote to Gordon Brown, the UK’s Chancellor. He insists that all investments in improving public services must be coupled with a return. He has promised £200M for the implementation of the Department of Work and Pensions service standards for benefits payments. I wrote to tell him I have evidence that the imposition of these standards is actually raising the costs of benefits payments and, moreover, we have examples of a better way where costs of processing have fallen from as much as £60 to as little as £10.

Do you think he’ll call?

Public Sector news

This month two articles by yours truly will be published on the topic of public sector performance improvement. ‘Ministers should get out of management’ will be published by European Quality and ‘The Modernisation Agenda: Public Services in a Dark Age’ will be published by the Public Management & Policy Association.

You can read this article at

Targets – a dead horse

In response to my last piece on targets (government’s logic: targets don’t work so lets have fewer of them), a reader wrote:

‘Earlier this week I came across the following. After the initial laugh it caused me to reflect on just how easy it is to ‘inadvertently’ get sucked in to attempting to do ‘the wrong things right’ (ref article in your last newsletter).

Dead Horse?

The tribal wisdom of the Dakota Indians, passed on from one generation to the next, says that when you discover that you are riding a dead horse, the best strategy is to dismount.

But in modern business (and education and government) because heavy investment is taken into consideration, other strategies are often tried with dead horses, including the following:

-Buying a stronger whip.
-Changing riders.
-Threatening the horse with termination.
-Appointing a committee to study the horse.
-Arranging to visit other sites to see how they ride dead horses.
-Lowering the standards so that dead horses can be included.
-Reclassifying the dead horse as ‘living-impaired”
-Hiring outside contractors to ride the dead horse.
-Harnessing several dead horses together to increase speed.
-Providing additional funding and/or training to increase the dead horse’s performance.
-Doing a productivity study to see if lighter riders would improve the dead horse’s performance.
-Declaring that the dead horse carries lower overhead and therefore contributes more to the bottom line than some other horses.
-Rewriting the expected performance requirements for all horses. And, as a final strategy:
-Promoting the dead horse to a supervisory position.

sounds familiar?’

Maybe someone should tell Tony.