On being controversial

A reader writes: “I receive and read all of the e-mail communications that flows in [the Deming] arena. The tone of much that I read (as well as see and hear at conferences) is ‘What will we do?’ or ‘What should we/you do?’ There is, of course, one notable exception. Vanguard News seems to discuss what is actually being done – and on fronts others are not pursuing. I find this especially interesting as the Deming community seems to have branded you a fringe member and always introduces you as controversial.”

To be controversial is to disagree, that’s all. The trouble is there are many who don’t like to be disagreed with.

When I disagree with people I am open about it. How else can we learn? With regard to the Deming crowd, I disagree when they say ‘change takes a lifetime’; you can change a service system in weeks. I also disagree with their methods. They all promote training and tools. You can’t change a system with training and tools.

So I am controversial. Should I worry?

Dan’s a naughty boy

Many readers have written to me to tell me Dan Jones is ‘nicking’ my stuff.

[In case you don’t know Dan Jones and Jim Womack were catapulted from being lecturers in economics to ‘management guru’ status by writing “The Machine That Changed The World”, a book I recommend.]

In particular Dan has been writing about ‘failure demand’ in his recent newsletter. I raised this matter with him (‘hey Dan, I originated these ideas, you should acknowledge that’) and he replied:

“In my experience trying to discover exactly who did what first is usually a losing game – ideas in the air at the time usually bubble up in many different places at once.”

My response to Dan was as follows:

“These ideas are hardly ‘bubbling up’. The vast majority of service organisations know nothing about the nature of demand from customers; instead, as I explain in my book, they treat all demand as ‘units of production’. The only people using my ideas are my clients. Because we have put the ideas into the public domain we find some people trying to work with them but they make common (‘command and control’ thinking) mistakes. They do get some value but they don’t get the real prize.”

So why should Dan, an academic, want to avoid attributing the ideas to me?

One reader wrote:

“John, I did a quick check on Google with ‘failure demand’. Shows Vanguard first, and other sites all acknowledging John Seddon except Dan’s. Funny that. Anyone know the Japanese word for it?”

Of course there isn’t one, it is not something Ohno needed to work with; it is a service phenomenon.

BTW, Dan is using Steve Parry to run a training event. If you go you will see what Steve has been doing with Vanguard ideas (yes he is an ex client), and those of you who are up the learning curve will notice what aspects of the system Steve does NOT change (prizes for the right answers). This is not a ‘training and tools’ issue, it is a change the system issue, more on this in future newsletters.

Simon’s a good boy

On the management page of last Sunday’s Observer, Simon Caulkin wrote a piece all about how IVR (interactive voice response) doesn’t work. He brought together the following Vanguard concepts: failure demand, IT ‘solutions’, designing for variety, the real relationship between service and cost. In fact the whole philosophy of design against demand, the stuff that Vanguard developed that Dan and Co. do not have (yet). And, honest chap that he is, he attributed me as the source of the ideas.

‘Not lean’ lean

Following my recent pieces in this newsletter about lean in manufacturing, a reader writes:

“I am involved implementing Lean Manufacturing into a global packaging company, and find much of what you write about very thought provoking. While we take waste out of the factories, the management of the system overall is absolutely infatuated by targets.”

And so it is with so many ‘lean’ applications. This is not ‘lean’ as I know it. The best they will get is short-term gain, the long-term (and far greater) gains come from changing the whole system and measurement is at the heart of that endeavour.

I guess the ‘lean’ promoters are either frightened of telling managers they need to change the system or they know no better.

Because of our (Vanguard’s) concern about what is happening with ‘lean’ in manufacturing and, moreover, how the ‘tool heads’ are moving into service organisations and doing the wrong things, we are running a special Vanguard Network day on everything you need to know about the lean manufacturing tools and why they won’t work in service systems. This event is for Network members only and is on October 7th.

‘Mean’ lean

A reader writes:

“This company is a ‘renowned’ and ‘successful’ manufacturer of PCs.

The company keeps no stock on its factory floor, stock is held by suppliers in adjacent warehouses. The suppliers have to keep stock levels at the company’s projections of usage. These levels typically tend to be not only unreliable but are invariably on the excessive side. For example If the company says it will require 1000 units of part X in the next month the supplier usually knows they will need 500 but in addition the company insists they keep an additional 2 weeks supply as backup. So the supplier is forced to inventory 1500 units that will last 3 months rather than 6 weeks. With rapidly changing technology there is a risk to the supplier.

When parts are required on the line they are taken by the box (e.g. 20 units) from the adjacent supplier warehouse and delivered to the production line. At this point the supplier can invoice for the goods delivered.

The company is about to change this policy. When a box of parts is delivered, they will first be built into PCs. Now for example say that 19 of these 20 PCs work first time and they think the failure is possibly due to the supplier’s part. This faulty unit will go along to the techs for test etc. A process that can typically take days and usually results in it being a bad cable or something else, so the supplier’s part is a No Fault Found (NFF) and it is sent back to inventory. In the mean time the 19 good units make their way to the end of the line where they are boxed and are ready to ship. It is at this point that the supplier can now invoice for working 19 delivered units. This means that the manufacturer only actually owns the PCs from the time they are sitting on the dock to when they are shipped. In fact
since many PCs are paid for before they are shipped they already have the money.

Some people might think this is lean manufacturing but to me it seems more like pushing costs down on your suppliers. Also there is less incentive for the manufacturer to design out failure in their operation as they are not even paying for the faulty unit, they are outsourcing that responsibility to
the supplier.”

This is not lean, it is ‘mean’. A lean thinker would work with suppliers to reduce inventory for all. Any financial gains would be shared; lean thinkers know it is in their interest to cooperate with suppliers.

Good service is anything but standard

Further to my discussion of should service be standardised, one of the Vanguard consultants writes:

“A good example of the problems with standardisation in service: A customer complains that: ‘After three phone calls and a letter of complaint my problem has still not been resolved, to make matters worse you write to me using standard letters, and your operators tell me they can’t help because my problem is unusual. I don’t believe it.’

Service in this organisation was poor. An analysis of demand and capability showed that only 45% of calls were being handled at the point of transaction. The other 55% were passed to other parts of the organisation. On average 20% of calls were then sent back to the originating department. Training was product centred but customers had few questions about the product, mostly their questions related to fitting the product, and troubleshooting. To exacerbate the problem, staff were incentivised on the number of products sold; this meant that there was no reason to try to handle a call if it would not lead to a sale. Also managers were concerned about their departmental abandon rates and rather than trying to understand the nature of demand, spent most of their time telling staff to ship calls to the other areas

The demand analysis showed 85% of calls related to 43 types of demand. All the targets and incentives were removed and a measure of one stop capability was implemented. A member of the technical team worked closely with one member of staff; soon a second and third were added until everyone in the contact centre was working to close enquiries one stop. Managers were given the role of designing training to suit demand, and removing the causes of failure demand. All standard letters were removed. Today one stop capability is at 90%.

Changing from a standardised design to design against demand took four weeks. It improved service, reduced costs and massively improved morale”

You’d think everyone would be doing it(!)

Government beats public sector up

Having read Wilma’s piece, reflecting on the day with the NHS (see last newsletter), a reader who works for a local authority wrote:

“I attended a similar event – on the same day – organised by ODPM and (No) IDeA (aimed at ‘helping’ ‘failing’ Planning Authorities). Wilma would have seen and heard the same things there too. No surprise really – that’s command and control thinking for you.”

This kind of behaviour first came to my attention when the ODPM (Office of the Deputy Prime Minister, responsible for local government in the UK) were reported to me to be telling local authorities that if they did not get on and decide their call centre / CRM strategy, they would be (expletive deleted) ‘told’ what to do.

I guess they are frustrated. Everything they are doing is not working, so like mad men they try harder.

BTW, he describes the IDeA (a local government advice and consulting centre on change) as ‘(No) IDeA’ (I assume) because this is the way I describe them. The IDeA promulgates terrible stuff they think is ‘modern management’. I expect they also do ministers’ whipping when the other civil servants have had enough.

Government wastes our money while doing nothing for our health

In the March Newsletter I included a piece from a fellow systems thinker about NHS 24, essentially saying it creates demand and does not solve patients’ problems. My correspondent writes again:

“NHS 24 is a nurse led service. It’s the first step along a journey that will eventually replace GPs doing out of hours work with a telephone help line. The government want it that way because it’s ‘cheaper’ than paying doctors to do out of hours work – now, just hold that thought because I’ll
come back to it later. Having a nurse led service means that highly qualified and highly paid nurses man the phones and give advice. Now, we already know that they don’t use their expertise because they use a technology based diagnostic tool – what a dumb thing to do and what a waste of money and talent!

I’ll give you an example of something dumb that happens with computer diagnostics in medicine. The patient calls and says, ‘I’m phoning you because I’ve had a headache for 3 days and it doesn’t seem to be getting better’. What would you ask? What matters to this patient? Does this demand give you any idea what their headache is like? No, of course not! A GP would ask open ended questions like, ‘Tell me about your headache?’ ‘How did it start?’ ‘Where did it start?’ ‘Where is it concentrated now?’ ‘Has anything happened to you in the last three days?’ Questions like these allow a GP to make a well informed and educated diagnosis – more often than not, the right diagnosis.

What happens when you phone NHS 24 with this demand? The nurse looks up his/her diagnostic tool and the first question they’re told to ask the patient is, ‘Did your headache come on like a clap of thunder?’ This indicates severe brain haemorrhage. Now the chances are that if the patient had suffered a severe brain haemorrhage 3 days ago, they’d be dead – but common sense doesn’t prevail. The patient thinks about the question and predictably says, ‘Come to think of it, yes it did’. The nurse then sends an ambulance sprinting to the patient for nothing more than a simple headache. Computer diagnostics don’t work when the root causes of a patient phoning are so varied. They don’t let your system absorb variety because they standardise the response AND don’t use the skill and expertise of the people using them. As a consequence, the ambulance service is now complaining to NHS 24 that they’re being sent to far too many non-emergency calls.

This of course is all waste – very expensive waste! Now, who do you think the NHS 24 managers are coming down hard on – you guessed it, the poor nurses manning the phones and using this dumb tool. The nurses know that it’s rubbish but no-one listens.

Coming back to my first point about this all being ‘cheaper’. The new GP contract has discouraged them from performing out of hours – they’ve basically been told, ‘We won’t pay you for it’. Who are the best people to do it? The GPs of course! GPs are now saying that they don’t want to do it – even when everyone knows its the best thing for their patients.

Patients who have chronic illnesses and rely on their doctors (the people who know them well and help manage their conditions) are very, very frightened indeed.

Why would you do that to the people who voted you into office?

Anyway, out of hours services have, more often than not, moved to the A&E departments of hospitals. Hospital managers are having chronic problems trying to staff these clinics – adding to their work and adding to their waste. As a consequence, hospital managers recruit locums to do the work. Who are the locums, the very GPs who the government have discouraged from doing out of hours work in the first place. Here’s the clincher, locums cost more money!

Now, I have no idea why anyone would think that this is a good way to run a business!”

You can’t be sure of Shell

A reader in Holland tells me Ronald Plasterk, a leading Dutch scientist, has been writing about the problems in Shell. He says the new managers at Shell have brought in a culture of consultants. Technical know how is considered less important, the focus has gone from deeds to plans, and from plans to words. With hardly any new oil fields discovered, technicians are being bumped off, while the ‘new Eunuchs’ – as the new managers are referred to in the company – take over.

CEO Watts set the target of 10 percent growth for Exploration and Production, a colossal ambition. Many experts were irritated: that kind of growth is, they said, virtually impossible. Shell didn’t make it, but it did set the scene for overrating the reserves. This wasn’t done by the geologists, but by the new eunuchs, the managers. Setting high targets while cutting costs on expertise.

Ronald Plasterk is concerned that less and less students study technical sciences and more of them study management and accountancy. He calls it the ‘why by a scientist if you can be his boss?’ syndrome.

Vanguard goes Dutch

At the Lean Summit in Amsterdam I met the leader of a Dutch group of lean consultants. He has invited me to meet their group with a view to establishing Vanguard’s expertise in Holland. The event is on November 26th.