How do you take out waste?

How do you take out waste?

Simon Caulkin wrote a powerful article in the Observer recently. (You can read it at:
http://observer.guardian.co.uk/business/story/0,6903,1598492,00.html)

He began with two pieces of research: “Management consultancy Proudfoot calculates that on average a whopping 37 per cent of all working time is wasted – that’s equivalent to 7.5 per cent of UK GDP. A Mercer-Gallup survey finds that while 73 per cent of workers are ‘disengaged’ from their organisation, 19 per cent would happily sabotage it.” The bottom line: Our organisations are full of waste and people who work in them suffer from the consequences. It is a problem in both the private and public sectors. The primary cause is the way we design and manage work.

And Caulkin wrote: “Proudfoot sees the answer as a better and more tightly operated command and control process. ‘Having a well designed and effective management operating system,’ says the report, ‘is the single most important change firms can make to improve labour productivity.’”

Proudfoot is just one of many who offer what he describes as more tightly operated command and control. Over the years we have seen how much of a stronghold these ideas have become in our service organisations; whole bureaucracies exist to manage operations with a plethora of activity data. Many years ago I was approached by Proudfoot, they wanted people like me (occupational psychologists) to work alongside their operational consultants to, to put it bluntly, get the managers to buy in to whatever it was they were doing.

I thought the more important question was are they doing the right thing? Many years later I have learned the right thing to do is change the system. Waste is a consequence of the command and control design. The best you can get from more tightly operated command and control is doing the wrong thing righter.

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Toyota is the exemplar

Caulkin pointed out that the West has failed to learn the lessons of Toyota. Only by putting control in the hands of the workers can you improve the system. He wrote: “In complex human systems, autocratic control is an illusion. The only way of retaining control is to give it away, producing to real demand and placing decision-making on the front line, nearest to the customer. This is the case for service companies as well as manufacturers.”

And in service organisations giving control to the workers enables them to absorb the variety of demand; customers get what they want quickly and efficiently. It is not a matter of empowerment; it is a matter of design.

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Management factories are part of the problem

So while better and more tightly operated command and control is attractive to managers it actually compounds their problems. Today we have vast management factories in the public and private sectors and they serve mainly to drive waste into their systems and demoralise their people.

Out-sourcing to anywhere is fuelled by an obsession with transaction costs, but the reality is the true costs of service are end-to-end from the customers’ point of view. In managing transaction costs managers bear down on the workers with arbitrary data, forcing them to meet activity requirements regardless of the impact on costs and service.

It is the same in the public sector, incredible numbers of ‘authorities’ sit over public services demanding that their prescriptions are followed and their requirements for reporting fulfilled; and the people who work in these services ache with the pain of compliance. Demoralisation is the most pernicious form of waste.

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The NHS is amongst the most sick

A reader writes:

“The focus of NHS senior management on targets and ‘choice’ i.e. introducing more private providers and restructuring (again) to facilitate this has gone into hyper-drive in the last two months. It reminds me of a quotation from Dr. Bill Maynard & Tom Champoux in ‘Heart, Soul and Spirit’ ‘When what you are doing isn’t working, you tend to do more of the same and with greater intensity.’”

And Tony Blair laments his failure to push harder when it comes to public sector reform. What will pushing harder do?

He also writes:

“It certainly isn’t working – the £98 billion they have spent has produced a pathetic 3% improvement in productivity. John Hutton isn’t the sharpest knife in the box; these are not his ideas. I’d like to know exactly who are the advisors behind the scenes who have convinced Blair/Hutton/Hewitt/DOH that this is a sensible strategy, so that we can expose their ideas and engage them directly.”

I met two such advisers earlier this year. They had been brought in from the private sector and were tasked with a major restructuring of a national government service. I was told they were on a bonus for completing the work; their behaviour showed they were more interested in ‘delivery’ than whether it would work.

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The Minister is grateful
As regular readers will know I have been in correspondence with Ministers responsible for public services; recently, in particular, housing benefits processing. My last letter from the Minister tells me he ‘is grateful’ for the work I am doing in the public sector. I don’t want his gratitude; I want his understanding. It is an incredible thing; you write repeatedly and with detailed arguments to say that something they are doing is driving up costs and worsening service and never in any of their replies do they deal with the substantive matter. I’m not giving up.

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And for starters…

If you want to read what is happening with Housing Benefits, go to:
https://www.vanguard-method.com/v1_lib.php?current=930. The article is a transcript from the show (“Freedom from Command and Control”), it shows what people learned when they took a systems view of Housing Benefits processing. In short, they learned two things: how to re-design the service to make it far better for claimants AND reduce costs; and just how misguided the Minister’s guidance is.

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Scotland is being Blitzed

Kaizen Blitz has become popular in Scottish public services, egged on by Ministers who are persuaded that if these ideas worked for manufacturers they’ll be powerful for public service organisations too. It is a tool head prescription. It appeals to command and control thinkers. If only they knew. Stuart Corrigan of Vanguard Scotland has written a short lament, you can read it at: https://www.vanguard-method.com/v1_lib.php?current=924