- Getting to the minister
- Out-sourcing attractive to investors
- Public sector being urged to take the same road
- Six Sigma on the rocks
- Tartan Blitz
- Should I write about success?
Regular readers will know how often I have written to Ruth Kelly (minister for communities and local government) and her predecessors about how the targets and specifications regime is creating waste in local authorities and housing, and how there is a better way. What I have learned is my letters and papers never get to her. Someone in her organisation decides the minister does not need to read my missives. I’d like to know who this is and why.
A senior manager from the Chartered Institute of Housing told Ruth Kelly she had bumped into some amazing work going on in a housing association. It was, of course, one of our clients. The minister despatched a special adviser to find out more and when she spoke at the big housing conference in Harrogate, she mentioned she had come across a housing organisation that had developed innovative ways of measuring and improving services to tenants.
That, it seems, is how you get onto a minister’s radar. It’s how we got to the minister for adult care and the minister for health. Just think about it, ministers have massive apparatuses for ‘improvement’ that become dull to their purpose, the people just do their jobs, which means translating ministerial ideas into prescriptions for others. When something comes along that does not fit their prescription they ignore it. To get to a minister you have to go around this hierarchy.
The new prime minister promises we are to have a listening government. The failure to listen lies in their system. Oh, and the arrival of the new prime minister means all the ministers who were listening to us have now moved on … hey ho.
On my recent travels I read an article in an international investment magazine describing how investors are finding the out-sourcing market very attractive. I can imagine why. When private-sector organisations out-source work they usually do so on the basis of contracts for transaction volumes. Of course this means that if the work contains waste (for example failure demand) it suits the provider not to improve (more demand equals more revenue). Worse, if the volumes of transactions are increased for whatever reason the contracts provide for an increase in revenue for the out-source
From an investors point of view it is a safe bet. The out-source provider is not subject to normal market conditions; while the host organisation may be perishing slowly the parasite will flourish. It cannot last forever.
In what was described as a ‘hard-hitting’ speech to the Chartered Institute for Public Finance and Administration, Rod Aldridge, former boss of Capita, said that public sector organisations were failing taxpayers by failing to adopt shared services.
He was reported as saying: ‘Let’s be honest, the logic for shared services is obvious but the execution is pitiful.’ I have to disagree with him. I can see that to a command-and-control thinker the logic might be obvious; but it is a flawed and costly logic.
Aldridge said public sector organisations should look abroad. ‘How long can off-shoring be ignored by the public services? All the major business processing companies now have significant off-shoring capabilities.’
But those who know better are bringing their work back home. To keep it at its simplest: if one lower transaction cost drives up the total number of transactions customers have to experience to get a service the actual costs of service are higher. The costs are in flow, not transactions. Something that Mr Aldridge would know nothing of, nor, I expect, take an interest in. Capita has grown by taking on such ‘transaction’ services.
Another advocate of this kind of thinking is Sir David Varney. In his recent report he encourages public sector organisations to build big ‘factories’, call centres and back office services. We should remember he was the leader of Her Majesty’s Revenue and Customs (newsletters passim). Factory thinking has destroyed morale and, I am confident, will result in higher costs and worse service.
These people have got it wrong and we should argue with them; their ideas will lead to massive waste of public funds. I shall be pursuing both of them for the evidence. I am sure they won’t have any.
Business Week published an article last month on how 6 Sigma has destroyed U.S. organisations. One, Home Depot (a retailer) ousted its Chief Executive who was, apparently, devoted to Six Sigma. ‘Facts are friendly’ was his mantra, but constant measurement of the things required for reporting in their six sigma programme irritated people at the retailer’s stores, it sapped time given to customers. At Home Depot profitability went up, but worker morale drooped, and so did customer satisfaction. Home Depot dropped from first to worst among major retailers. The same story apparently is unfolding at 3M and GE.
I have to say I told you so, and I explained why (newsletters passim ad infinitum). The main faults with six sigma are: It starts with ‘define’ so the wrong (command-and-control) problems get tackled, not the actual problems, which will only be revealed when you study the organisation as a system (starting at ‘check’). Loads of money is spent on training tools, most of which will never be used; and tools are not the means for changing the system. The reporting systems ensure benefits are ‘realised’ but they are, most often, spurious (for example claiming productivity improvements through speeding up part of a process (with no knowledge of the impact on the end-to-end process). It has been used to focus on cost, a command-and-control thinker’s pre-occupation. Managers should instead get focused on value the better way to reduce costs) and increasing capacity. In short, six sigma is a classic packaged invention aimed at gullible managers. The wrong facts are misleading; we should salute its demise.
A systems thinker in a Scottish local authority wrote to me about the Kaizen Blitz event we are running:
‘I was pleased and disappointed to see that you are doing this session in Bathgate on 3rd July. Disappointed because I have to miss it – I am on holiday. However, pleased because it could not be more timely. You are right that there is plethora of Kaizen Blitz type initiatives cropping up all over Scotland. Maybe we should rename them Tartan Blitz.
I am seeing all over the place people using tools, websites being developed describing (often very well) a range of tools. What is lacking is a change of thinking.
I am afraid I have seen too many instances of tools being used to get better at doing the wrong things, then processes having to be invented to clear out these wrong things because there is more of the wrong thing happening and they get into the system faster.’
Kaizen Blitz is appealing to the command-and-control thinker; the tragedy is the small improvements that follow (for any process intervention in broken systems will produce a ‘result’) will be assumed to be what you get from ‘lean’. It will blind managers to the real (and massive) opportunity. We shall see how this argument goes down in Scotland; many in the audience are from the Scottish Executive. Let’s hope their system is not as dysfunctional as Westminster’s.
This criticism of the newsletter comes up from time to time. On this occasion a reader writes:
‘The newsletter sometimes reads like a bit of a polemic and feels like a disproportionate amount of time is spent lamenting other approaches shortcomings and failures. My guess is that in most cases you’re preaching to the converted, but I think the readership might spread and be more accessible if there were one or two more positive stories e.g. where application of systems thinking had the kinds of effects that you consistently illustrate are missing from other organisations.’
I have misgivings about promoting results and solutions. Managers might be attracted to systems thinking for the wrong reasons! Because systems thinking is more economic (you make more money) – and by far – they might want to ‘buy it’ without recognizing this means them too: you have to be prepared to change the way you think about the design and management of work.
I have learned the right way to get started with systems thinking is to get leaders curious. If you are curious you will invest the time and energy to find out more; it becomes easier to recognize that this is a challenge to convention (how you think about the design and management of work) if you are doing that realizing for yourself.
The newsletter is written to promote perspective and, hence, curiosity. As I ‘lament’ other approaches I communicate a systems perspective; it gives people a ‘thinking’ shot in the arm. But what’s your view?