UK tax on health – where will it go?

The UK’s Chancellor has levied a tax for the reform of our health service. Tony Blair, the Prime Minister, has said he will be held to account for the reforms working. So what do the government do to protect their investment? Appoint inspectors. They have said they will set up a commission to ensure the money is well spent. How would they know?

In the UK we now have Parish Councils with budgets in the few thousands being charged as much as sixty per cent of their budget on inspection costs – they call it ‘audit’, I can think of a truer term. In our Local Authorities the Audit Commission, the hive of public sector inspection, has broadened its role from protecting the public interest to taking a view on the quality and methods of management. An extraordinary idea. We now have people taking a view on the managerial behaviour of others with no yardstick of what makes for good management. As the scope of the audit has grown so have the costs. So the questions for Tony are: What will the inspection regime cost? Will its activities be conducive to performance improvement?

Neither managers nor inspectors can take a view on improvement without knowledge. A systems thinker would say knowledge starts with an understanding of current capability – how well the system responds to demand. To my knowledge (and I have asked around) the health service has no data about the type and frequency of demand, nor the capability of the system to respond.

I have not worked in the health sector, but I ‘see’ systems issues when I listen to people who do. Everyone accepts the madness being driven by targets is not adding any value to the system, is causing ‘bad’ behaviour’ and should be stopped. But there is not agreement about what to ‘do instead’

The principle should be ‘design against demand’. I regularly hear of failures of the health service to diagnose problems – patients find themselves having to ‘manage’ the system to get what they need. Doctors rightly complain there time is consumed with ‘demands’ that could easily be handled by others. Physiotherapists argue they are too far down the pecking order of decision-making and could prevent people waiting for remedial action if patients were screened by physiotherapists at the earliest point.

So many people I meet who work in the health service tell me; ‘if only people who made the decisions saw the work from my point of view’.

That will only happen when the health service is seen and managed as a system. The current management – if what I am told is correct – are not even at first base. So what will the inspection regime bring us? What is this costing? Wouldn’t we be better investing in understanding the ‘what and why’ of current performance? That would start with an understanding of demand and capability, the very thing that keeps the Japanese railways on time. Now there’s a thought.

More bad news for ISO 9000

The Engineering Quality Forum has published a report entitled: ‘The true effectiveness of quality related initiatives in the UK’. It reports the results of a survey of executive opinion. Of course this is not an assessment of ‘the true effectiveness’ as one would have to assess that in operations (as I did in my book, I am bound to say) but it was at least a good move to ask executives and not the quality fraternity.

To quote the opening paragraph of the report:

‘The notion of improving the UK’s industrial competitiveness through enhancing product and service quality has been a feature of government industrial policy for more than two decades. Central to this has been the formulation and implementation of initiatives aimed at increasing quality awareness and achieving better performance, for example the Quality Enterprise Initiative of the ’80s, etc. Despite this effort the UK has slipped down the competitive tables although this country is by far the main
user of one of the initiatives, quality management standards, based on ISO 9000.’

So it’s not working then?

The results reported include these:

‘ISO certification has become a business requirement for marketing rather than quality reasons. There is no consensus that having an ISO 9000 certificate is cost effective with 68% of respondents feeling that it is marginal, or not cost effective at all. Whilst quality related initiatives in the engineering sector are numerous, 28% of respondents believe they result in confusion regarding their true effectiveness, and that there is insufficient guidance as to ‘what to use and when to use it’.’

The report concludes: ‘It appears from the findings of the survey that there should be more focusing of such initiatives, sector by sector or company by company onto the specific benefits and specific obligations relating to any particular initiative. Furthermore there should be a clearer message from institutions and trade bodies regarding the various initiatives.’

Looks like we are stuck with trying to do the wrong thing righter. Wrong answer.

How do we complain against ISO 9000?

A reader wrote to me at the beginning of last month:

‘My husband and are having a car restored. We get an estimate (with a plus or minus 10% confidence interval on it) for basically a new body, mucho expensive, but doable if they stick the estimate. The bills come, we pay, more bills etc. I get suspicious, do some maths and realise the company are 26% over the estimate and the thing isn’t painted. You could argue we were naive not to spot it sooner, but hey, we trusted these people, they never gave any indication it was costing more than the estimate.

As you can imagine we are now in dispute over the whole thing. I did notice that the claim to work to ISO 9002, which means that they ought to have in place some sort of monitoring of the cost of jobs So I think, ‘How can I get the BSI accreditation taken off them?’ Who do I complain to say they are not following their procedures etc?’

Her question to me was: Do I know who to talk to about getting the registration removed? She tells me the BSI web site is a complete waste of time, she said it seems to be a process that excludes the customer. But I assured her BSI would have a procedure for this and I asked her to persevere to find it and, when she gets there to ask: how many people like her register these complaints and how many organisations lose their registration.

She got back to me last week. This is what she had to say:

‘Well BSI is about much use as a chocolate fireguard. The upshot basically is:

You complain to them and they will audit the company ‘bearing your complaint in mind’. They may then consider de-registering, but instead will give them a list of things to correct. They obviously have a nice long procedure to deregister people, giving them very opportunity to stay in there and be a nice source of revenue to BSI.’

I guess we can all feel confident that the system works then? She added:

‘They couldn’t give me figures about how many deregistered, as they claim there are over 70 certificating bodies in the UK and didn’t give figures. When I asked about BSI specifically, they didn’t know.’

I think the minister should make them publish these figures – it would be the most useful thing any minister has done for enterprise for some time.

New books from Vanguard

For fun Richard Davis and I wrote ‘The Alchemist: getting gold from ISO 9000’. It tells the story of a man who was coerced to get ISO 9000 being guided in his work by a systems thinker. I think it’s a practical and educational read – you go on his journey, which includes frustration and counter-intuitive moments as he learns to ‘see’ his business as a system. Sadly we have yet to find a publisher. Maybe the ISO 9000 market is saturated, but there is nothing like this. If we cannot find a publisher we may publish it over the web. Any ideas?

Over the last few weeks I have been writing (working title): ‘Lean Service: systems thinking for service organisations’. It will be a definitive explication of what Vanguard has learned over the past fifteen years, developing methods and models for systems thinking in service organisations. Watch this space for further announcements.

Are call centre jobs going to India?

In the new book I describe how call centres get out-sourced. The decision is driven by cost. So it makes sense, for example, to use bright labour in other countries at a fraction of the cost. The UK media is full of woe about the call centre industry closing down as this work is sent to India. Of course managers cannot ‘see’ the real costs. When they out-source the work they out-source all their ‘failure demand’ – demand caused by a failure to do something or do something right for the customer. Being 3000 miles away just makes it more difficult to work on this stuff. Moreover when the contract is set up on the basis of costs per call, it is in the provider’s interest to ignore this problem. Though in truth neither party is aware of the problem, working as they do with volume and cost data.

We first saw this problem when everyone was sexed up about moving call centre work to Ireland. Nothing much changes.

Systems thinking in the public sector

On June 6th we are running an event for the public sector. You can see the practical steps taken to improve performance in local authorities, police, housing and fire services. You will take away frameworks for action. Our public services are universal – the fundamental purposes and processes are the same all over our land. The principles that have been used to improve performance in one circumstance will apply to them all. It is rare that such knowledge has universal applicability – and you can get it from those who have already made changes that have produced incredible results: Halving the time for Planning Applications, cutting Voids to days, cutting repair time from hundreds of days to within a week, and so on and so on. If you have responsibility for improving performance in local authorities, police, housing and fire services, you should be there.

To read the agenda go to the Vanguard web site: or e-mail the office for a brochure:

Signals from noise

We now have a demonstration version of what I think is the best product I have seen for years. It helps prevent managers treating noise as signals – one of the most pernicious diseases and terribly common. I predict every call centre will be using this or something like it in a few years and this will finally remove the ‘sweat shop’ conditions – created, quite simply, by managers treating agent performance data in the wrong way (assuming the agent should be held responsible for his or her work when in fact the major causes of variation in agent performance are in the system – the way the work works). If you want to see this product you could join the Vanguard Network and attend our May Network day (e-mail for details), or you could e-mail me: and I’ll see if we have a Vanguard person in a town near you!