Dumb sigma

Readers may know I regard Six Sigma as TQM on steroids; more ‘tools’, lots more training, stronger reporting requirements etc. It appeals to command and control managers (‘what can I buy to get them to do it?’). If you throw enough money at anything and surround it with a punitive reporting regime you’ll get ‘improvements’ but they are as nothing compared to changing the system.

I have collected a few examples of dumb six sigma projects from people who were trained as ‘belts’ and who have since learned the Vanguard Method:

“I taught a black belt the first step in the Vanguard Method, how to study demand. He learned the service had some 45% failure demand. What did he do? He inserted a choice on the IVR to out-source this work to India! Unbelievable!”

Cheaper handling of failure demand has little impact on the true (end-to-end) cots of service. And you’ll never know the unknowable cost: people who refuse to buy from you in the future. But it would have been reported as improved transaction costs, ignorant of the real costs.

Another ex green belt wrote:

“I was told that our process time for re-keying proposal forms was too long and that we could reduce the number of people if we could improve it. I set up a team of three people to capture data on how long it took people to key. Using my new-found tools (a green belt in 6 sigma) we calculated how much data we would need in order to have a representative sample. It took us 3 months to get the data we thought we needed.

Once we got it we compared people’s times. This, to our joy, showed us one person was significantly faster than anyone else. We then mapped their process and, now, even happier, we enforced this process upon all the other workers, using a team of coaches to point out where they deviated from our ‘perfect’ process.

After much beating and hammering our people into shape we then re-captured more data to prove our new process had reduced keying time and we could lose 2 people. The whole thing took about 6 months.

Why was it dumb? Well firstly what we did not know then but do know now (having used the Vanguard Method): the end-to-end time from the customers point of view was originally around 14 days and even though we decreased the time of keying, over the same period the end-to-end time went up by about 15 days. What did we do as a consequence? We added a process to sort proposals alphabetically so that when the customer phoned chasing their new policy, we could find it. Managing failure demand. Madness.”

Talk about the wrong focus, never mind how long it took. However, some manager somewhere may have been proudly reporting lower keying costs. And firing two data entry people would be recorded on a different budget to the one being used to pay for the coaches.

And another wrote:

“I led a project where we reduced the number of calls per claim from five to three. We did it by introducing an out-bound call. So I guess the truth is we had four calls. It never occurred to me to re-design claims so we could do the value work in one call.”

At the heart of these and similar problems is management’s preoccupation with transaction costs. Because the Six Sigma ‘improvement’ model (DMAIC) starts at ‘Define’, project definitions are based on management’s current (and wrong) preoccupations.

Six Sigma: high cost, poor quality. A plausible but flawed extension of command and control. It is cheaper and more effective to change the system. The place to start is ‘check’, studying the current organisation as a system; it changes your definition of the problem.

Fear and therapy

A public sector manager (who is a Vanguard practitioner) sent me a mail that gave me the horrors:

“The culture of fear, based on central plans and targets, has been driven into all public services. Targets are increasingly being backed up by financial penalties. Managers and staff are pulled every which way by the fear, but it is tempered more and more by the equally pernicious force of therapeutics. To cope with the fear, where we are treated like recalcitrant children who need ‘discipline’, we are told we need individual therapy, as if we are helpless victims who need ‘stroking’. Either way, passivity is the order of the day.

As a senior manager in a local authority, I have been dragooned into 3 ‘leadership training programmes’ – as an individual manager, a member of the corporate management team and as part of a ‘partnership community’. After over 20 years as a manager in local government, I have had more therapy than I can cope with. It seems all to be designed to put me back together after the grinding round of visions, values, budget cuts (known as Gershon), BVPIs, KPIs, LPIs, Quality of Life Indicators, Procurement Indicators, Best Value Action Plans, Priority Plans, Improvement Plans and Service Plans.

This contrary, complex, contradictory and corrective approach (remember the 4 Cs of Best Value?!) from Government contrasts with the simple and dignified manner with which systems thinking puts people at the centre of the organisation.

I came into local government because I wanted to deliver services to others and, if allowed, deliver them better. I didn’t come into local government to be an agent of central government, be bullied by inspectors and offered the solace of therapeutic training. Systems thinking offers the opportunity to restore focus from Government to the customer. It requires staff and managers to work together as adults who all contribute to service improvement. By supporting each other, we can challenge the fear and therapy and get them out of the workplace.”

One of Deming’s 14 points was: “Drive out fear”. Systems thinking gives you the means. What will all this therapy achieve? Why are Ministers doing this?

No benefit from redesign

The press has been reporting an increase in errors from the newly designed job benefits service. This ‘modern’ factory design, a Gershon ‘flagship’ programme, is a ‘front’ and ‘back office’ factory design; when you go to a job centre to claim benefits you get told to ring the call centre and when you have got through that, often after many calls, your forms go off to the back office factories. Ministers have been persuaded this will realise economies of scale.

I haven’t been in there but I am betting one would find lots of batching, queuing, sorting, handling and so on, ‘managed’ by IT systems with rules and ‘controlled’ by managers acting on activity data. These design features cause errors and other forms of waste. I am also willing to bet managers are trying to deal with errors by working on the people (training, inspection etc): the wrong thing to do. The errors are designed in; it is the system stupid! I know from people who work in these factories they live with high levels of failure demand, no surprise.

We are very active in housing benefits and from there we are seeing job benefits taking longer to process as the new design gets ‘rolled out’ around the country (you cannot process housing benefits if jobs benefits are not sorted). If time is going longer, costs will be going up.

I am also willing to bet someone somewhere will be crowing about achieving their transaction cost targets in the new factory design. Bonuses all round!

No credit on tax design

I watched a TV programme about family tax credits (an idea introduced to help single parents and poor families). Every complainant case they showed started with someone telling the taxation agency of a change in their circumstances. Obviously the system was not designed to deal with this; people were told ‘not to worry’, ‘the money was theirs’ and so on.

When the system finally ‘caught up’ with them they were harangued for the debt. When they called the (no) ‘help line’ they only got more frustrated.

The cause, I am sure, will be activity measures in the call centre and training (what there was of it) focused on the legislation, no training against demand. If only they knew. We should hold the minister accountable. These people had such a bad experience they never want to make a claim again. Was that the purpose?

The blame game (NHS)

Leaked e-mails reveal the IT people blaming managers for the NHS system being late and unworkable. Managers, they claim, keep changing the specification. It is a problem I have talked about often, it is down to the way we go about IT. The use of specifications assumes both parties actually understand how the work really works. If you want to read more about this see the article: “Is IT bugging you?” at: https://www.01handshake01.com/v1_lib.php?key=bugging&id=702

Last year “In Business” wanted someone to talk about why the new NHS IT system would fail, I got the job. I summarised what I had to say in the November 2004 newsletter.

I have to say I told you so.

The blame game (Benefits)

The chief executive of the Audit Commission is blaming the Department of Work and Pensions for the costs of Housing Benefits processing, because they keep changing the administrative structures and regulations. But he too is in on the act. It is the Audit Commission that is encouraging local authorities to create ‘shared back office’ services and other (misguided) specifications to be complied with. More than that his inspecting function creates costs for both parties. While we’re at it we mustn’t leave out the Benefits Inspectorate and I am sure there are more who drive up costs in the name of improvement.

A growing number of Vanguard clients know that benefits processing in local authorities is best designed as a front-end service – designed against demand. No back office. Customers cannot believe it, staff and energised, costs are down and they are in a better position to detect fraud. Do you suppose anyone is paying attention?

If you missed it, I posted a transcript from the recent show describing how Ministers are driving up the costs of Housing Benefits processing at: https://www.01handshake01.com/v1_lib.php?current=930

By the way, whenever I walk into a Benefits service I am amused to see a sign saying ‘people who behave badly will be dealt with’, I always reflect on why they should behave badly. You would. The Minister should give it a go.

A low appetite for change

At the same time the Audit Commission published a report recommending more shared back office services for Housing Benefits processing. This is despite their report being clear on the lack of reliable data for understanding the costs of the service; it showed that costs are highly variable and the authors were unable to account for the differences. So no one knows exactly why.

But ‘shared back office services’ is the ministerial mantra of the day. The Audit Commission’s report said there are ‘considerable barriers’ to this change amongst local authority people. If I have done anything to help put the barriers up, taxpayers should be grateful. If local authority people want a Vanguard expert to show up and explain why you should have no appetite for this change, please e-mail me.

Common sense from the Swedes

Speaking at a public sector convention in Sweden, I took the opportunity to listen to a man from Tony Blair’s ‘strategy unit’. He was banging on about ‘choice’. A Swede pointed out the purpose of health care should be to give people what they need, not what they want. People are usually not the best judge of remedies.

Now in his hole, the man from the ministry tried to explain being given the choice to go to another hospital when yours has been unable to admit you for six months as ‘choice’. The Swedes were polite. What people want is a health service that works.

Recent data published by Reform shows productivity down in the public sector, massive investment with no or negative return. I think I know why. The Ministers needs to know their interventions are driving up the costs. I don’t think the Swedes will be following the UK.

The Mayor on Education

Following my intervention with the man from the ministry (I know…. Just couldn’t stop myself), the Mayor of Gothenburg sought me out to talk about Education. His schools are inspected once every two years. All they want to know is are you following the national curriculum (which is very broad, providing scope for choice) and do you have a plan?

If anyone in Gothenburg wants to send a child to any other school in Sweden, the Mayor has to pay. For him a simple contingency that encourages him to get involved with the quality of education.

They don’t know what they don’t know

A reader writes:

“Have you ever heard of an organisation that goes through a change programme using the Vanguard Method, saves a shed load of money in one year and increases income by 70%. Then another manager takes over the operation and guess what………… things are being changed BACK to the pre-systems thinking design!!”

Happens all too often. Typically the incoming managers regards the things achieved to be ‘just good management’ and are concerned that their normal tools of trade (command and control measures especially) are absent; so in the name of ‘getting control’ they re-impose what the systems design took out. They just don’t get it; they don’t know what they don’t know.

And Vanguard gets another job applicant!

Any Japanese readers out there?

Kenichi Tokunaga is translating “Freedom from Command and Control” into Japanese. He has completed most of the work and has some summary material that he wants to distribute to Japanese readers.

Join us for breakfast in Ireland

In December John Little and I will be speaking at breakfast seminars in Ireland, December 7th Belfast and 8th Dublin. The breakfasts herald John Little’s arrival in Ireland as a trained Vanguard practitioner.