How great was Jack?

Jack Welch, chief executive of GE for 20 years is often quoted as a management hero. Read what Will Hutton writes about him:

“Even before Welch took it [GE] over it had enjoyed years of sustained profits growth… but what Welch saw was that if GE redefined it priorities to mirror those of Wall Street it would win a star rating. GE’s business aim is would move from excellence in engineering to excellence in financial engineering…. His priority was cost reduction, which he achieved by massive redundancies and allowing the R and D spend to dwindle… everything was subordinated to ensuring that profits grew smoothly quarter by quarter. Contributions to the pension fund were reduced… accounting conventions were stretched… the company stood ready to buy back it own shares to ensure they sustained a high rating, putting a total of $30 billion into stock buybacks rather than investment in the core business.”

I recommend his book: “The World We Are In”.


Did Jack ‘do’ six sigma?

Jack has been used as a marketing device by the six sigma providers. Their blurb reads: “GE did it, it made them loads of money, you’d be a fool not to ‘do’ six sigma.” Regular readers of this column will know of my views on six sigma, for new readers and those who can’t remember here they are in a nutshell:

Too much training. You never need all those tools to solve most problems; the training and accreditation process just makes loads of money for the providers.

Transfer of responsibility to the line. The consultants typically do an analysis by interviewing managers about their problems; then they train the managers in the tools and then tell them to ‘go do it’. It is a con, for the original analysis rarely provides knowledge. To get knowledge you need to do ‘check’ – study the ‘what and why’ of current performance as a system. It shows you what is possible and it shows you the means to achieve it.

Managing for ‘results’. The consultants typically manage the project reporting system and cajole the managers into reporting their successes. It leads to ingenuity employed in both starting projects (anything you want to do has to be called six sigma) and reporting projects – results are reported upwards with all the distortions and elegances well known to command and control systems.

Probability data. Probability data is flawed; it is based on a statistical convention (data are normally distributed) that has never been shown to be true with organisational data. This leads to the risk of treating common cause as special cause, a big mistake in that will result in increased variation and, hence, less control.

Other than that… I guess it must be good; so many people are doing it.

Jack showed he had been taught the probability curve, he instructed his managers to fire the bottom 10% of performers each year. Obviously his six sigma consultant (clearly an ass) had taught Jack this was the way to get better people. If Jack had been taught about time series data he might have learned that he was treating common cause as special cause. He was terrifying the work force for things beyond their control. There ought to be a law against it. Of course the managers, being sensible people trying to survive in the command and control system, would just cheat. They’d hire temporary people just to cull them for Jack.

Which brings me to the final and most important criticism of six sigma: There is no requirement for management to change the way they think. I don’t think Jack did six sigma, I think Jack had six sigma done to his people.

I am interested in people’s experiences with six sigma. If you are or have been doing it and you want to pass on your views please get in touch.


Call Centre NVQs

Call centre NVQs are the feedstuff for outsource service providers, they think if they tell you their call centre has NVQs, they will be seen as credible and you’d want to pass work to them. So what do we find in the curricula of call centre NVQs? How to set targets, inspect your workers, deal with performance problems and so on. All the stuff that gets call centres into trouble, for the major causes of variation in performance are in the system – the way the work works – not the workers. To treat workers this way is to cause stress and make invisible the means for improvement.

It’s getting like ISO 9000, we should assume any outsource service provider who trumpets attainment of NVQs is one to avoid. The same has to be said for the Call Centre ‘Best Practice’ Standard.

I am encouraging my client to write NVQs based on the systems solution: training against demand, methods for understanding and improving the work, team leading as acting on the system and so on. They will catch on. As Deming sort of said: “Money talks, eventually.”


The costs of poor service

A reader writes:

“Ikea have the worst customer service I have ever experienced. I had the misfortune of ordering a kitchen from them last year and I was hopeful that having ordered it 3 months before I wanted it to arrive that they would have plenty of time to get my order ready and delivered on the date agreed. How wrong can you be!

If you need to phone Ikea to enquire about your order, you have to phone their call centre. During trying to get my order delivered I called them 27 times and experienced an average wait time of 18 minutes before speaking to a human. Even when someone did speak to me, their procedure involved looking up my customer details on their system, which took around 5 minutes. Their agents then told me they had no idea what was happening and had to refer me to a supervisor. They were not allowed to find out what was happening and call you back. Nor were they allowed to transfer you to a supervisor because, apparently, all the supervisors were busy (I can believe that). The best they could do was email the supervisor who would get back to me within 48 hours. They could not put me through to a manager or a complaints department either.

Ikea supervisors would generally phone you back within 2 to 5 days from logging the previous call with their call centre. If you were not available to take the call when they called you, you had to start again and phone the call centre, who were, frankly, no help, and then request a supervisor to call you back. To get through to someone that could help would take on average 8 days.

The supervisors generally took some details from you that Ikea already had, and made a promise that they would look into your case and call you back within a day or too, in fact they even promised to phone me back the same day once. Again after waiting a few days, all I could do was call the call centre again, wait 30 minutes while a money takes my details and wait a few days for another call back. One day I had 3 people from Ikea supervisors calling me, obviously responding in an uncoordinated manner to all the calls I had placed with their call centre. I once again told them what they already knew but they did not let me know what was happening or why it was taking so long – to be frank I don’t think they knew! Finally they said that the kitchen had been dispatched from the Ikea warehouse to a shipping agent and there was now every chance that now it was out of the Ikea system I would have my kitchen.

After 5 weeks of this (after my order was supposed to have been delivered), I decided to ask for the address to write to the complaints department, as they could not be contacted by phone. Two weeks after writing to them, they called me back to ‘handle’ my complaint. Luckily for them my kitchen had arrived the day before they called me, and they had no idea my kitchen had been delivered.

I think Ikea must take the biscuit for wasting so much of their own time and money responding to my order – it must have eaten up all their profit on my order, especially as they had to offer me compensation for such a bad service. It just goes to show that bad service can cost you dear. I wonder if anyone from Ikea’s management has ever looked at their system from the outside in? Somehow I doubt it.”

I wonder if they have NVQs….

The Support Economy

This month Radio 4’s “In Business” programme featured a new book entitled The Support Economy. The authors claim the new economy will feature confederations of information and service providers using intermediaries like concierges who look after all our needs. I wrote to the producer:

“I have to say (and it is probably untrue) the authors must be backed by IT companies, for their solution will create demand for IT as we have seen demands created by previous management fads, for example knowledge management and CRM.

Computers will never bridge the relationship gap. Computers only do as they are told. The authors tell us computers will look after all our needs and even anticipate them. To do that we would need to spend vast amounts of our own time feeding data in to the machines, we would need decision-rules written by ourselves and others; and that would take time and money, and we would always fail to be satisfied, because people are people. Their vision is one where we become dominated by technology, not served by it. It will only serve us to the extent that we serve it.

The authors are right to assert that the century old manufacturing paradigm is failing, this is not news. Many point to the failure of command and control. The authors rightly point to its excesses – cheating on a major scale. They are right to say people don’t like dealing with their service providers and that the fundamental cause is the way the service providers design and manage work.

Two years ago you ran a programme entitled “Why is service costing more?” The commentators failed to get to the heart of it; service costs more because it is badly designed. Top-down functional hierarchies damage the way customers are dealt with. In pursuit of economies of scale managers worsen service, but they remain unaware of the extent, for their measures keep them blind. Cheating is ubiquitous – throughout operations, not just at board levels – the requirement to serve the hierarchy competes with the requirements to serve customers. Peoples’ ingenuity is engaged in survival
not improvement.

The solution is to fundamentally rethink the way we design and manage our service organisations. The authors’ solution would subordinate our poorly performing service organisations to a technical infrastructure that we would be supposed to use to meet our unique, individual and special needs. Bill Gates told us we would be using mediators on the Internet. It has plausibility; the Internet provides so much that is rubbish from any individual’s point of view; a mediator could alert us to things we are interested in. But how many of us use them? Even if we did could it do any more than we tell it?

I share the authors’ analysis but I think their solution is to create another management factory. They themselves disparage the separation of decision making from work but they claim we should add to the already heavy management factory another technological and hence, organisational and managerial level. I think we’d be better off learning how to dismantle management factories and replace them with more productive organisational forms.

I am in the final stages of a book on just these issues, moreover I have a lot of evidence that a new management system works, putting people back where they belong: managing relationships. Paradoxically it is not a ‘people solution’, it is a design of work solution. In these solutions IT often has to be discarded. If the authors succeed in convincing managers to follow them there will be yet more to discard.”

I strongly recommend you encourage your senior managers not to follow the authors’ recommendations.

You have performed an illegal operation

Roy Madron, joint author (with John Jopling) of ‘Gaian democracies: Redefining globalisation and people-power’ (another book I recommend) tells me the Japanese have replaced impersonal and unhelpful Microsoft error messages with Haiku poetry messages, used to communicate a timeless message, often achieving a wistful, yearning and powerful insight through extreme brevity. Here are some examples:

Your file was so big.
It might be very useful.
But now it is gone.

Chaos reigns within.
Reflect, repent, and reboot.
Order shall return.

Program aborting:
Close all that you have worked on.
You ask far too much.

Yesterday it worked.
Today it is not working.
Windows is like that.

Stay the patient course.
Of little worth is your ire.
The network is down.

Three things are certain:
Death, taxes and lost data.
Guess which has occurred.


Seddon goes to Dublin

On September 16th, in conjunction with the Call Centre Association for Ireland I am running a one day workshop on Lean Service at the Burlington hotel, Dublin.