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The RAG trade

John Dunnion 2John Dunnion, Vanguard Consulting

When Lester Wire, a Detroit policeman, was trying to solve the problem of reducing car accidents at city junctions in 1912, his invention of red and green traffic lights seemed like a really good solution.

Eight years later, William Potts, another police officer, added a subtle improvement – the amber light. This allowed drivers and pedestrians alike to make the necessary
adjustments for the impending change ahead.

Problem – solution. Job done.

And so it was. More than a century later, the first thing every new driver is taught is Wire and Potts’ colour scheme: red for ‘stop’, amber for ‘prepare’ or ‘caution’, and green for ‘go’. Yet, as proud as they would have been of their device, our police officers would probably be rather more surprised to discover that many large multi-million pound organisations have co-opted their simple signalling sequence to manage processes in their complex multilayered businesses.

On the surface, using red-amber-green (RAG) traffic lights to monitor the state of business processes seems like a perfectly reasonable and rational approach – inspired, even. Let red indicate ‘immediate action required’, amber ‘investigative action required’ and green ‘no action required’ – and managers have an immediate visual signal that something does, or doesn’t, need to be done. What could be wrong with that?

Plenty. In business this approach was born in the manufacturing sector, then going on to colonise project management before finally installing itself across the service industry, where it has been sold by glib sales people – the RAG rogue traders as it were – as the silver bullet: the all-purpose answer to the problems of service management.

But that is to start at the wrong end. The real culprit is not the answer but the question: What is the problem to be solved?

If the problem is defined as, ‘I need a simple system to highlight what my business performance is, when compared against a number or arbitrarily agreed limits (usually service level agreements, or SLAs)’ – then, yes, RAG is the answer: tick!

If on the other hand the problem is defined as, ‘I need a system that gives me measures that will help me to understand and improve my business and its performance’ – then RAG fails miserably.

I have worked with front-line workers, managers and leadership of dozens of service organisations and witnessed the impact of RAG management on them for more than 20 years. On that basis, there is only one conclusion possible.

RAG doesn’t work. Worse than that, it makes performance worse – every time.

In point of fact, and even scarier, in almost 100% of cases green is actually red.

Imagine the chaos if that was the case in traffic management. It would not take long to fix it. Why? Because the result is obvious, tangible and visible. Car crashes can’t be ignored.

In services, car crashes happen every day; but they go unseen. At least, by the leadership that is – they are only too visible to the people on the front line. The customers experience them, so they see them too. The damage is palpable. But managers and leaders remain oblivious.

Applying traffic lights to business is as dangerous as driving blind. Here’s why.

As with all targets, 100% of the time it surreptitiously alters the purpose of the organisation using it. The avowed purpose will be, ‘Put customers first!’, or some variation on that theme. Using RAG, the de facto purpose becomes, ‘make it green.’

‘Make it green’ is the constantly-repeated mantra. As a result, making it green becomes the day job of everyone from the front line up.

Does it matter how green is achieved? Not really. Does it matter how customers are affected? Not really. Does it matter that morale is being eroded? Not really. Because what matters is that the light is green.
Make it green and the pressure goes away. We pat ourselves on the back and congratulate ourselves on being effective and efficient leaders and managers. Relax. No action is required.

And if it’s red? Well, that’s another matter. Let the games begin.

The justification game

This is the most common game. It is based on the medieval practice of locking offending villagers in the stocks and pelting them with rotten fruit.

Some poor team manager has to stand and invent excuses why his group has not ‘made it green’. Staff absence, illness, holidays, bank holidays, unexpected levels of demand, training, work complexity, backlogs etc form the basic pick’n’mix of excuses that are rolled out every week. Threats and insults are hurled back, usually over a conference phone, and apologies and promises are made. The whistle blows and the game is over. Until Groundhog Day comes around again and the process is repeated, ad nauseam.

The alchemy game

The alchemy game is used to turn red to green. This sleight of hand involves preventing the light from going red by pausing, stopping, resetting, returning, reversing or rejecting work in a way that still allows the SLA to be met, regardless of the effect on the customer or the resultant overall increase in the end-to-end time to deliver the service. This is the inevitable result of thinking about work as transactional. It’s ‘widget management’, as in, ‘The widget was dealt with within 3 days. ‘Dealt with’ and ‘completed’ of course being two different things.

The ‘kidding-yourself-on’ game

A remarkable thing about RAG management is that everyone knows it is junk. As a practitioner of the Vanguard Method who has worked in some of the largest service organisations in the UK and beyond I can say unequivocally that everyone I have worked with, from front-line administrators to senior leaders and all those in between, knows that RAG management is a nonsense, an illusion. The most basic analysis always shows the same thing: arbitrary targets being met in the only way it is possible to meet them, by rational manipulation and gaming.

Never once have I seen an example of RAG management leading to better service, greater efficiency, higher morale, or lower operational costs.

The obvious question then is: why do we continue to be slaves of this thinking, and this approach to the design and management of work?

The reason is simple. It is endemic, an integral part of the traditional command-and-control thinking that pervades the service industry. We know it’s useless – shrug – but that’s the way it’s done.

Here is a real-life example of the futility of the pursuit of green in action.

It is 16:45 hours on a typical Tuesday afternoon in the busy contact centre of a well-known high-street bank. To achieve ‘green’ the resource desk must be able to report that 80% of inbound calls are being answered by agents within 20 seconds. The clock is ticking.

The service level shows that currently just over 78% of calls have met the standard. This is bad news. Questions will be asked. Someone will be answerable. The light is not flashing green.

What is to be done?

The team can’t play the justification game because it did that last week and had to commit to achieving the 80:20 standard.

So it’s the turn of the alchemy game. To anyone in the know, what happens next is entirely predictable. The staff on the resource desk carry out a quick line test. They start calling available operators to ‘Check that their telephone lines are fully operational’.

Quickly realising it is the resource desk calling, agents duly answer, naturally within the 20-second deadline. Just as naturally, the line-checks cease as soon as the 80% service standard is reached. The traffic light has gone green, occasioning a big sigh of relief from the resource desk for a job well done. Senior managers congratulate themselves for decisive action taken the previous week at the justification-game meeting.

In the real world, of course, the front-line staff are shaking their heads at the sheer bampottery of it all, and the customers – yes, you’d forgotten about them in the middle of all this, hadn’t you? – they still can’t get through and are pressing 1, 2, 3 and 4, furiously wishing they could just speak to someone who could help.

So if RAG doesn’t work, what does? What is the alternative?

There is a straightforward answer to this. The Vanguard Method has taught us that all the measures any service organisation needs can be mined from two things:

1) What is the purpose of the organisation from the customer’s perspective?
2) What matters to the customer?

Only when the business can clearly articulate the answer to these two key questions can it start to define the necessary measures – measures that will absolutely help managers to understand and improve the service the business provides; that front line staff can use to improve the work; that allow managers to make better decisions; that properly inform the business strategy; and that help identify and act on the real risks that the business faces.

I own up to a personal bugbear: if there were one term that I could remove from the vocabulary of business, it would be MI – Management Information. I detest the inference that only management needs data. Everyone in the organisation needs data; everyone needs to be involved in shaping the organisational direction. Ignoring the people who are closest to the customer and systematically excluding them from the decision-making process is one of the biggest mistakes that businesses make. It is like severing the spinal cord between the business brain and the business body. Successful organisations work to keep them tightly connected, continuously learning, improving and moving forward together using measures focused on a clear purpose and continually delivering what matters to customers.

Leave traffic lights to solve traffic problems. That’s their purpose. What is yours?

john.dunnion@vanguardconsult.co.uk