Failure in public sector – The Reprise

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I read Vim‘s article on What Does Failure Mean for Public Services  and I wanted to respond. I wanted to build upon Vim’s thoughts from my own perspective. I’ve developed that perspective over a couple of decades working across front-line teams and supporting teams, transforming workforces across public and private sector. This results in me having to balance many different levels of change (including success and failure) ranging from a conversation discussing funding allocations over £100m, followed by a conversation discussing attitudes to change, shortly followed by another discussing the approach for very local decision-making such as choosing the ideal location for a printer.

It’s mostly the same

We should see failure in the public sector in the same way that we see failure in the private sector with the one, not so subtle difference; the public sector is there to make a difference to the population. Pick a public sector service, if it’s not making a positive difference to the population, then it’s failing. I can’t think of a simpler definition. Every other private sector metric (perhaps with some tailoring in the case of profit metric) should apply to the public sector.

Unfortunately, the more we pick it apart, the more difficult it becomes to define failure. And most of that difficulty comes from the difference between providing for the population and providing for an individual.

Most of the failure is seen at the individual level, but not extrapolated quickly enough to realise that the service is failing. Most of the success is also seen at the individual level but we don’t really celebrate these as much unless they’re specifically health-related. For many services, we only notice when they go wrong. For instance, how many local authorities celebrated 0 people in the queue for social housing back in the 70s when it was feasible? Perversely, we may be able to achieve 0 in the queue now, but that could be because eligibility thresholds have risen. It’s not the same service or the same level of service anymore.

At one extreme, we see the death of an individual, we see one person homeless. Then we see multiple people homeless due to congregating together, but it takes longer for social consciousness to become more aware of the deaths of increasing number of individuals. All of this could be failure.

Criminal or Incompetent?

“He’s either criminally incompetent or incompetently criminal”

It’s a phrase I heard years ago from a charitable organisation that raised no money after holding an event where lots of people attended and money changed hands but no profit was made to turn into funds for the charity. We’re talking small money here, margins were very tight, but even so, no-one quite knew what happened.

That’s partly how I think about the systemic failure within public services although I’ll broaden the definition of criminal to include unethical, immoral or against the mass of service users you’re meant to be serving. When a service is failing, I wonder where the decision was that caused it to fail. Was someone competently unethical or incompetently ethical? Competently immoral or incompetently moral? Bear in mind that leaves out the options of competently ethical (where they’ve chosen to improve services and made it happen) or incompetently unethical (where they tried to restrict services but enacted it poorly).

Was it an implementation or management decision by the team manager to assign a lesser-skilled worker to the case where a more experienced one was required? Implying incompetence on the manager’s part.

Or was it because there wasn’t enough money to pay for more experienced workers, resulting in only newly-qualified workers being available? Implying a deliberate decision to underfund on the funder’s part.

Did the funder underfund because they’d allocated more funds to other services? implying an incompetence on the funder’s part.

Or did that funder not have enough money to distribute to the services because of a reduction in centralised funds, e.g. from central government? Again, implying a conscious decision to underfund numerous services.

Expectations

Public services are funded to meet the demand that’s expected to present to that service, e.g. through referrals from other services and bodies, through walk-in or through outreach (where the team goes out educating the population on the service available). It’s always a balance between who is at most need of the service, the funds available, the skills and experience of the team available and the time available to respond.

Considering public services have a duty to provide for the population, if a service cannot meet the demands placed upon it, who is criminal and who is competent/incompetent?

The manager should understand the costs of the service and the variation based on demand being presented. At the point that it becomes underfunded, it’s time to shout. For many services, that point was passed many years ago. Underfunding results in some people not being served or the quality of service (in terms of what can be provided, e.g. the duration of engagement such as number of CBT sessions) is reduced. That then has a further human impact, e.g. people being homeless or in debt which both can lead to homeless and in debt, which leads to decreasing health, which leads to inability to work (but possibly not recognised as inability). Even one day of no service provision can escalate quickly, exacerbated by the climate of mistrust and unbalanced power between those services with funds and those people applying for funds. That one day can result in missing benefits, resulting in deteriorating health (have to choose between rent, paying heating/lighting bills, feeding children and self, getting to a job interview, clothing, etc). So underfunding a service so that it can’t provide to all it’s designed to deliver to has a cascading effect on the system through shifting referrals elsewhere or to a position of no services available and has a cascading effect on the individual.

When viewed that way, is the funder criminal (or at least unethical or immoral) if they don’t fund the service?

Reducing Inefficiency

The issue and opportunity to this point over the last couple of decades has been the inefficiency inherent in the public sector system. Public sector services do not get the same level of investment as private sector. A telco can choose to spend multiple millions of pounds on a transformation programme and it will happen. No questions (or at least no scrutiny other than board approvals and monitoring). A public service has to jump through many hoops (each costing time, effort and money) to prove it’s spending the money wisely. So public sector transformation programmes usually start smaller than private sector counterparts to make the programme easier to approve, and end up being smaller still after being watered down through many approval boards. Each of these transformations leaves an effect, usually positive in terms of efficiency, but often negative in terms of morale and capacity to flex for the next transformation.

There is still room to go in terms of efficiency. There are still pockets with severe inefficiencies, but they’re rarely on the front-line teams to the scale that’s expected. And it’s these teams that are usually the focus of funding pressures, especially in response to changing demographics, e.g. people living longer and living with more serious needs.

Active Maintenance

In addition, services need active maintenance, to some extent in the same way that you take your car in for regular maintenance. However it’s more than that. Active maintenance is not simply day-to-day management and keeping it running. It’s observing the service from multiple angles to understand what’s happening that shouldn’t be, to uncover why it’s happening and to resolve it so it doesn’t happen again. That takes an investment of time and energy.

In most public sector hierarchies that responsibility falls to the manager. The better managers (there are a few of them) have empowered their team to do this daily. They’re succeeding in keeping the service to acceptable levels (although still probably underfunded to do the job they were originally tasked to do) and keeping ahead of changes in demand. Then there are others who are just managing the day-to-day or take on adapting to change themselves. Even if competent as day-to-day managers, they’re incompetent overall since the service remains static.

Failed Culture

Vim mentions that “Failure in the public sector is also rooted in a culture that means you can’t fail”. The issue is wider than that. It’s already failing. It’s already underfunded. Austerity or not, there isn’t sufficient money to meet front-line services at their current level of demand in the way that they are currently working. Asking a team to be prepared to fail is an awkward request since in their hearts, they’re already aware of the people they’re not able to help. Most of the professional health colleges put a focus on treating the person in front of you, not those in the queue later on. Give proper treatment to the person that you’re currently treating. In a throughput setting, such as a hospital ward with a flow of patients in and out, that makes sense. In a setting where you have a caseload, such as found in most social care settings, that makes less sense overall. The opener to this conundrum of supply and demand is that we may be able to help more people and help them better than now through experimentation. And that has to be allowed to fail. 

Even with that opener, bear in mind that there are ethical considerations in most public sector departments, especially those in education, health or care settings. The Authority has a duty to treat everyone from an equitable position, not necessarily equally. So it can’t create an experiment that disadvantages a customer segment. This can be inadvertent, e.g. by promoting one customer segment’s needs, it alters that principle of equitability. So by improving the service for one segment, it can’t make the rest of the service worse. It’s also widening the gap between the treatment of segments. That’s not a blanket “no”, just be prepared to think it through and complete an Equalities Impact Assessment before you start.

The First Draft

Running with Knickers on Your Head

I’m pleased to announce that the first draft of my book on achieving change in front-line services is available. It’s been many years in the writing as I’ve changed direction a couple of times, adapted to newer, emerging methods, but recognised that the core of the book is still as pertinent now as it was when I started writing it.

It’s the first in a series of books. The rest should be significantly quicker to appear and will cover more strategic elements. This is the practical book for anyone.

I’ll be launching the book on Amazon, initially for Kindle, however there’s a chance to get it for free. I’ll put details up soon.

New Year, New Gym, New Business Model

Direction of Travel for Gym Business Models

The business of gyms is an odd one. It’s full of business principles from the 1970s with a thin veneer of customer service from the 1990s.

What’s the modern approach?

Let’s look at the typical issues with modern gym memberships. If you search on a few review sites or social media, you’ll commonly see a number of prospects who turned their back on transitioning to customers mixed with disgruntled customers. From a cursory glance, there are significantly more unhappy customers than happy customers and the gap between is wider than in any other industry that I can think of.

So what’s the reason behind this? I think it could be due to gym managers and owners applying the wrong business model.

The Continuum

From a very simplistic viewpoint, we can fit products onto a continuum from commodities, feature-based through to bespoke.

Feature Continuum
Feature Continuum

 

A commodity is the same wherever you buy it from. It’s not different if you buy from a or b, the same experience applies. In the end, you’ll own the same product.

 

Moving from commodities, we encounter feature-based products. Here the differentiator is the set of features on offer. This is where we start to introduce concepts of value in relation to the features provided. Some features cost more than others, but in the end we’re buying features, so we’ll try to choose the features we want, or at least those that we think we want. On the other side of the negotiation, we see salespeople selling features or solutions to problems or issues.

Further up the continuum and we move to customisations, where we can take a feature-based product and have it customised to our needs. The cost is a combination of the product, the features, the customisation and the perceived value of the brand.

At the far end of the continuum from where we started are the bespoke products. These are developed from scratch to meet our requirements.

Service Quality

We can also introduce the concept of service quality. This could range from no service (e.g. simple automation with no choices), through a service wrapper to complete bespoke services.

Features vs Service Quality
Features vs Service Quality

Depending on the offer, we may have to take into account the total cost of the purchase (e.g. including the transaction fees, shipping, etc). So the differentiator becomes how cheaply, quickly we can receive the product and how much we’re prepared to pay for the total combination.

Moving further along, we encounter products that are becoming commoditised, i.e. the same product, but the differentiator could be the service wrapped around that product. This is where we start to see our perception of the brand in how it will look after us if something goes wrong with the purchase.

Customised products, by necessity of the interaction involved, include a higher level of service quality than the pure commodity products.

Where do gyms fit in?

Depending on the gym chain, they may have a sales and service model for the wrong type of product being offered.

Position of current gym business models
Position of current gym business models

Gyms as a whole tend to be following a sector-agnostic trend of delivering cheap as cheaply and simply as possible or selling quality as expensive. But there is confusion in the industry. There are a number of chains who don’t seem to have decided on their position. We see that by how they respond to complaints, by how well they maintain equipment, by how smooth they make the enrolment process, etc. In other words, they’re branding themselves as quality, but not following up on the offer. Customers and prospects are beginning to notice this. More importantly, with the advent of more pervasive social media and review sites, their opinions are more public and wider-reaching than at any time before. This will impact the pricing model, since it will become more difficult for a gym chain to obfuscate pricing per customer.

At the higher end of the chain,we see that expensive gyms hide the pricing structure which is indicative of bespoke services and possibly higher-end customisation. But neither of those attributes ever apply. At most, a gym is feature-based. So we find ourselves in an odd mix of worlds, where:

  • the monthly cost is expensive or very expensive (depending on how good your haggling skills were) considering the feature-based angle,
  • the sales approach is based on selling bespoke products
  • prices are hidden
  • the salespeople are usually too junior/low paid if a gym for selling bespoke services (but probably appropriately paid when we consider it’s a feature-based or commoditised-product sale)
  • customer service, whether as resolution of complaints or, more importantly, how customers are treated in terms of contracts, doesn’t reflect the levels we’d expect of bespoke dealers

If we relate this the world of cars, we could consider the lower-end of the market as the Škoda – perfectly good cars, made for a cheaper segment with fewer features than in more expensive cars. The higher end would be comparable to the more expensive Audis or Lexus. That also leaves room at the extremes, e.g. for Bentley and Rolls Royce at the top end. For each of those car companies, there’s a different sales method. We’d expect to see the salespeople on different packages. Similarly prices are more transparent at the lower end of the market.

Let’s put this back together.

If we take a lesson from car brands, combine with the industry-agnostic trend, we end up with a split:

Basic

  • Transparent pricing
  • either commoditised-product or feature-based product
  • implying limited features (think of the basic features from a Kano model)
  • simple sales, maybe even automated

Feature-plenty

  • Transparent pricing, more expensive than low-end
  • simple sales, more likely to be human, but still a simple process
  • better features
  • better customer service

Exclusive

  • Different pricing model
  • Scarcity, e.g. limited memberships
  • bespoke features
  • immaculate customer service
Loci for Future Gym Business Models
Loci for Future Gym Business Models

Looking at it from this angle, we see that there are gyms which attempt to avoid the low-end of the market, but are not at the exclusive end. But they don’t fit comfortably in the Feature-plenty. Bear in mind that Audis, Lexus and Škodas are still bought on a combination of features and brand. They’re still cars that you can order online. If you can’t find one local, you can simply find one somewhere. We can’t say that to the same extent for Bentley or Rolls Royce.

In most industries, we may be able to predict congruence with the trend, however the gym industry seems based on 1970s principles and exhibits a complete inertia to listening to customers, let alone delivering what customers want.

In the UK, we’re seeing more budget-brand gyms following the Basic model above. Prices are listed online and with fewer surprises or secret, it permits an automated sales process. Even so, they’re still applying joining fees rather than increasing the monthly fee by a small amount. Although that may be because the memberships gyms are already priced at triggering amounts, e.g. £14.99 + a £25 joining fee sounds better than £17 per month.

We also see very exclusive gyms with limited memberships, exorbitant monthly fees and joining fees, but catering to those that can afford it and those that want to be seen in the places to be.

Unfortunately the middle ground is badly managed. If they remain as they are, with the same customer-unfriendly practices, they will lose customers to the better basic gyms. This will become more prevalent as the basic gyms continue to reinvent what a gym means, by adding better customer service and as the basic gyms increase their offer by heading towards the feature-plenty model described above. Some of the customers will move to the truly exclusive gyms.

Direction of Travel for Gym Business Models
Direction of Travel for Gym Business Models

To counter this, those middle ground gyms will have to change. They can choose to be Basic, Feature-Plenty or Exclusive. Whichever is chosen, all 3 options require change.

At first glance, Feature-plenty appears to be easiest since they’re already charging more than Basic gyms, providing more features for that charge, but it would require a wholesale change in customer experience, from the sales process, on boarding, through to day-to-day experience, resolution of issues and membership retirement. That may look like a lower profit but there are enough case studies proving that focussing on the customer experience results in higher profit.

The change to Exclusive may be better done with a rebrand. Keeping the same brand will not carry the same perceived value regardless of what is done to the chain, at least not in sufficient time frame to prove return-on-investment.

The change to Basic may not be feasible for all the middle ground gyms due to the size of gym involved. The Basic gyms are typically smaller than the middle ground gyms. That’s possibly because they don’t rely on numerous features and so don’t need as much space to accommodate those extra features. Or it could be a attribute of the building costs, i.e. simpler to find a smaller space than a larger space suitable for a gym.

 

Look at the Evidence – the Spike and Delay Pattern in Social Care

signature
A number of years ago, I was transforming a city’s social care directorate and, as part of that transformation, we aimed to reduce the time it took to do anything when interacting with the service. The transformation was based on a more fundamental need to free up workers to be able to do the work they were meant to do rather than having to fight the fires caused by delays and resulting failure demand. I instigated a methodical approach for identifying which cycles to focus on first. As the team progressed through the cycles, I noticed a pattern; it’s the spike of activity followed by a lengthy delay as discussed in a previous article.
As we looked in particular at a few cycles of spike followed by a delay, I routinely advised the team to question the need for that common feature of bureaucracy: the signature.

Why require a signature?

In the case of social care, signatures are often required from service users or their representatives. This can be as proof that the content of a form is accurate or as a record of the service user providing consent (either for data to be shared from the form or for the authority to request data from other agencies).
These signatures create the spike-delay pattern in which a short spike of activity is followed by a lengthy delay while the authority sends the form to the customers and waits for the return of a signed copy. Part of that delay is caused by the postal service in both directions. Part will be the time it takes the service user to open the letter, read the form, make amendments, find an envelop and stamp and then go to the post box. Considering the high percentage of infirm service users compared to the general population, that sequence of activities can take a long time. Then we have the additional wait time caused by processing the response as it arrives into the authority.

First approach

So, my first instinct is to remove the need for a signature and thereby remove the need for the spike-delay round. This could be changed from requesting a signature to providing information on the form that the data will be used. If you don’t agree, don’t submit the form. The response from staff was that we needed the signature as a record of consent and/or accuracy, depending on the form in question.
On the fact of it, that seems a reasonable and fair response.

What does the evidence say?

However, the data showed a different reality. What actually happened is that, even if the form wasn’t returned, the process could still go ahead. True, it didn’t go ahead for every service user, but the fact that it could proceed implied that the signature wasn’t always required. Or rather, wasn’t required all of the time. We were able to look at the data to understand how many service users progressed without signature, we were able to look at common characteristics, etc.
By presenting this understanding back, we ended up moving forward in our joint understanding of the process; joint in that the consultant and the team had the same understanding. Before that point, they had had different interpretations.

So where does that leave us?

An undocumented process or exception is a risk. In the above case, we had uncovered that some of the cases were allowed to progress without signature, but there was no documentation defining which cases could proceed and which cases had to stop. Instead it was left to individual judgment, but again without defined criteria. So what happens if the usual staff members weren’t present? Were the decisions they made equal and equitable to all involved? How did we measure the outcomes?
Depending on the type of organisation and service involved, there will be a different focus regarding the risk involved.
In this case, we had a process with an unclear gateway, e.g. do we continue or do we halt and wait?
  1. Complete the analysis in terms of understanding when the process can continue.
  2. Engage with service users to understand what they need out of the process, what their engagement should be
  3. As a team, choose a default option, either they progress by default or they pause by default
  4. Help the team define the rules that govern the exceptions
  5. Implement a training and induction programme for ensuring that everyone knows how to apply the rules
I always prefer the default option to be the one that improves efficiency, e.g. the one that’s the most common option or the one that removes a spike-delay pattern.

Impact

The wider understanding that, in most cases, the signature wasn’t required let us to a better solution. Had we not challenged either with data or further questioning, we would have been left with the difficult situation of lack of signatures stopping the process and the resulting action of requiring signatures in order to proceed. Instead by challenging the assumption and developing solutions to the issues of the spike-delay caused by several signatures for a sequence of documents, we were able to reduce the expected time from 6 months down to just over one day (actually 2.5 completions per week). That’s a massive difference in expectations for customer and the organisation serving the customer.
Anything to say, get in touch at @alanward.

The Delay Following the Spike – Issues with Cycle Time in Service Industries

speaker
How long does it take you to do what your customers want? Not just the first part, but the whole of it?

1. The Pattern

I see this pattern commonly replicated across service industries. It involves a very short spike of activity (e.g. 5-20 minutes) followed by a lengthy delay where something is sent to the customer and the organisation waits for the return. This is followed by a 2nd spike of activity which in turn is followed by another lengthy delay. Depending on the bureaucracy involved, this process may involve several rounds of spike and delay, each adding to the overall delay in service for the customer and, most likely, increasing failure demand on the organisation.

2. Some Samples

Let’s have a look at a few industries and see how this pattern plays out:

2a. Retail Industry

Bed
A bed to sleep in: What the customer wants
Take for example, ordering a new item of furniture. We’ll start at the sales phase – although the complete process starts before then with marketing or customer acquisition – where the customer is in the retail store.
The customer, let’s call her Lilly, is buying a bed. Lilly spends up to an hour viewing and trying beds on a Saturday afternoon, talking to the sales advisor and then committing to buying one particular bed. The sales advisor creates the order, takes details in order to arrange finance, takes some information regarding proposed delivery times.
This is the first spike. There may be finance involved and almost definitely delivery involved. Lilly is told that the delivery company will contact her by the end of the week. That’s the first disappointment, can’t they arrange delivery now for later that week? Instead, she begrudgingly continues with the order hoping for a delivery time that meets her needs.
Some customers stop the order and go elsewhere. They’ve arrange finance, but may not have committed at this stage. For Lilly, who continues with the order, she goes home, then spends her week as normal waiting for the phonecall. This is the first of the delays. In Lilly’s case, the delivery company ring her on Tuesday, two working days after the order. Two days is a long time when you’re waiting. And it’s definitely a long time when compared to the processing time in the showroom on that Saturday afternoon. So it would not have been surprising had she rang the salesman on Monday or even Tuesday morning, creating failure demands disturbing him from achieving more sales.
The delivery company have a van that delivers to Lilly’s area on Tuesdays but she’s missed the delivery for that week so it will be the following Tuesday. This is the second spike followed by the second delay.
The week passes and Lilly receives the bed at her house. She finds there’s a part missing and calls the number. There’s a spike of activity as the after-sales staff figure out what’s missing, decide what to do with it and then initiate that action. For Lilly, it’s a small part that’s missing, so they’re going to post it to her. A few days wait ensues and, on Saturday – that’s 2 weeks after the order was placed – she receives the part.
It’s broken, either in the post or during the picking process. Again she calls the after-sales and they go through the same conversation as the previous week; this time a bit more aggravated. The part arrives intact on Tuesday and 2 weeks and 3 days after the initial order, Lilly has her bed.
If we take into account a pro rata of the delivery effort, we end up with about 5 hours activity across 17×8 hours = 136 hours. That works out at 3.7%. If we look at the actual value-add activities rather than all activities, that’s probably a lot less (i.e. the original order time plus the delivery, but not arranging the bed delivery or arranging for delivery and redelivery of the missing part). Let’s say that’s 1.5 hours including ordering, picking and delivery that works out at 1.1%. That also assumes that we’re looking at working day hours, not full 24 hours as customers are becoming more accustomed to. Had we considered 24 hour days for 7 days a week, that 1.1% reduces drastically.

2b. Service Function

speaker
A working bluetooth speaker
Michael is returning a bluetooth speaker to an online retailer. It’s Saturday evening but, like most, the website is 24×7. First he logs onto the retailer’s website, looks at his past orders, finds the order for the bluetooth speaker and submits a complaint. This is the start of the RMA process that’s commonly used for returning (technical) goods.
On Monday afternoon, Maria a member of the service function, replies to Michael’s email. Maria expresses regret about the fault and attaches a fault reporting form for Michael to fill out. Michael’s a bit annoyed about this; he’s already provided some of the information in his original email to the company. However, he does accede that they will want some additional information in the form.
He has to print the form but he can’t do that until he’s next using a computer that can open the pdf document and print it to a nearby printer. So on Wednesday evening, he prints the Fault Report form, writes the details and then scans it. He emails back the completed form that evening.
On Thursday morning, one of Maria’s colleagues, Zoe reads the form, agrees that the bluetooth speaker is faulty and then sends Michael the RMA note, authorising the return.
Michael has to print this out, so again has to be next to the printer. He does this on Saturday morning, boxes up the speaker and posts it on Saturday afternoon. The parcel arrives on Tuesday morning, opened by customer returns who agree with the fault, authorise an exchange to be sent to Michael and inform Michael of such. Michael reads the email on Tuesday afternoon, around the same time that the warehouse dispatch his replacement to him.
On Friday morning, the delivery company attempted to deliver the replacement speaker to Michael’s address, but as he was working, it was returned to the depot. “Fortunately” for Michael, the depot is open on Saturday morning, so he drives to the depot and collects his blue speaker. That’s not really fortunate since a better solution would have been to have checked with Michael when he would be available to receive the package. But it could be worse, the depot could work standard mon-fri office hours.
Almost 2 weeks have passed since Michael reported the initial fault, with more effort required of the customer than of the retail company (so far). Michael has probably spent 4 hours of his time in sending emails, reading emails, printing, completing forms, boxing, arranging for delivery and subsequent collection. The retail company spent 3 minutes in the initial fault report form, 3 minutes reading the fault report form, 5 minutes arranging for the RMA, then 5 minutes despatching a new one. Less than an hour. They’d also have disposal or return of the fault item plus accounting and other supporting activities. However, having spent less than an hour of “value” time in the returns process, the company managed a process that took two weeks. The ratio of value added activities to the length of time to complete the process is low, 1 hour to 24 hours x 14 days = 0.29%. That’s not uncommon.

2c. Local Authorities

signature
signature
This is where I first encountered the pattern. Instead of writing about it in this article, I’m going to save it for its own article as I’d like to explore it in more depth. The pattern is rife in local government and related services. I’ll post a link here when the article has been published.

3. The Calculation

There’s a term for this concept and formula for calculating it. It’s called CPE for Cycle Process Efficiency or occasionally PCE for Process Cycle Efficiency.
In this case, I’m calculating the time for the whole end-to-end service process. If our examples are consistent, then the service function is showing a Process Lead Time of 2 weeks per unit. That’s the elapsed time it takes from the point that the customer first contacts us to the point that we deliver the solution back to the customer.
We also require the Value Add Time, i.e. how much time per customer is spent creating or transforming value? This may actually be easier to arrive at the Value Add Time as equal to the Process Lead Time minus the Non-Value Add Time. It’s often easier to identify the steps that do not add value. Whichever route we take, we’re aiming to identify the Value Add Time for this process.
The PCE is then the Value Add Time divided by the Process Lead Time. It’s usually way lower than you initially think. If it’s above 70%, then you probably haven’t identified all the non-value add steps. To put that statement into perspective, I’ve seen PCEs lower than 1% for appallingly bad processes and improved them to 25% for a drastic improvement. Unfortunately, finding PCEs <1%  is not that uncommon.

4. Resolution

So what can we do about the pattern?
1) Recognise if the pattern is active in your organisation’s services.
2) Focus on the delay. You’ll almost always achieve more value and improvement from resolving the delays since they outweigh the spikes.
3) Consider different methods for removing each round of the spike-delay pattern.
For example, in the returns process, the fault reporting form could be on the website, ready for customers to complete. In addition, the organisation could implement automated authorisations when submissions meet certain criteria. This could include printing returns labels on the invoices packaged with the original goods. That would be 2 of the rounds reduced.
There’s no question about the fact that fixing the problems so that they do not happen again is the most important step and will have a greater impact on CPE than any factor. However some of the above issues with CPE don’t involve a failure (such as a defective part), but are due to the inefficiencies present in the process. These are often caused by a bureaucratic need to manage risk. The question then becomes one of addressing that risk through other methods.
Do you want to comment, get in touch at @alanward.

Finding a balance between the needs of the organisation and the needs of the customer

Checkout Till
Some companies are immature in their approach to customer relationship management (CRM), but at the heart is a desire to get something for free. And that’s wrong.

The scenario

You look around a shop, you pick something up, take it to the checkout, wait in a queue. You notice that the queue is moving slowly, despite most customer only having a handful of items and then paying with credit card. Maybe the link to the credit card authoriser is a bit flakey today? It’s your turn at the checkout. Once the greeting and the small talk is out of the way, the dreaded question is delivered by the sales assistant “Can I have your email address please?” or some variant on that request for your email. This may be followed with “can I take your postcode?” or “do you already receive our newsletter?”.

The analysis

What’s happened is that the company’s desire for collecting valuable customer data got in the way of its prime purpose and I’m guessing the prime purpose is to make money by selling goods that customers want to the customers that want those goods.
There are other methods for collecting customer data. Some methods cost more than others, some are more accurate than others, some are more comprehensive than others. More importantly, some are less demanding to the customer and even less demanding to the customers in the queue behind them.
Often the desire is created due to a new multi-channel campaign that wants to treat all customer channels equally, not recognising that there’s a different social contract in place when you’re in a store to the one that’s in place when you’re buying on line. Companies that slow down the queue in order to collect information have broken that social contract.

Exceptions

While I’m against slowing queues down, I can concede that short analyses are valuable. This would mean performing the data collection during the natural queue created by your checkout processes. Even then, I’d be concerned that you have a queue and, while it may be acceptable to have queues, I would question an organisation if it counts queues as excellent customer service. If the answer to that is no, then we can prompt other questions such as relative priorities, but that’s for a different article. The take-away here is that companies usually choose acceptable customer service over exemplary customer service.
There are potentially other methods that they could use in store. One that never seems to be used apart from by car salespersons is the option of walking up to a customer, engaging in a conversation and then asking for their contact details. Can you imagine this working in your supermarket, the next time you buy a phone or the next clothing shop you go into? While I don’t believe we should all move to the used-car sales model, I do believe there is room to find a better balance.

The Real Issue

There is no need to wait until the checkout to ask for this information. In fact, asking at the checkout is contrary to the purpose of the checkout.
What’s missing is that the company is trying to build a relationship with the customer. But rather than trying to do that in an underhanded manner at the checkout till (sometimes in the guise of asking to email a receipt), why not engage with that customer while they’re perusing? This highlights the actual issue. It’s not what the company wants, but what the customer wants. What value is the company going to deliver to the customer in exchange for a longer-term relationship?
So rather than trying to obtain an email address for free, consider what you’re going to provide so that the customer would actually want to provide their email address. When viewed in that light, a 10% voucher may not be sufficient.

Alignment

I take issue with any company that slows down the purchasing process for the purpose of collecting customer information. Whether it works financially or not, it’s a bad customer experience and not one I want to see implemented in any shops. I believe in a managed flow from a lean perspective (that’s Lean, not Lean Startup) and so, simplistically, anything that gets in the way of that flow is waste and should be avoided. Instead I’d provide options for collecting emails while people are queueing, while they’re on their way out (e.g. a pedestal table, pen, cards and a ballot/post box on the way out) or have it built into the product itself (like the cupcake liner mentioned in an earlier article).
In short, engage with customers at a more appropriate time (or stage of their purchase) and collect data that’s appropriate to collect for your future interactions but don’t make the purchase process worse just so that you can collect that data.
Any comments, you can find me @alanward.

How Might We Apply Service Design to the Enterprise?

Business Architecture and Service Design

I simplistically take the view that Service Design is the concepts and methods of Design Thinking applied to making services work better for their customers. It’s a definition that works in the circles I most commonly move in, i.e. directors, programme directors, etc. It allows me to set the stage in which service design and design thinking both play.

However on the same stage, we commonly find KPIs, OKRs, Business Architecture, etc. And the stage starts to look crowded very quickly. We also start to see people pulling in different directions, like someone has let a mouse loose in the chorus of an Italian opera.

Operas and plays have directors, often many directors each responsible for their own domain, but with one artistic director responsible for the overall vision.

Envisioning

Now imagine what would the stage look like if the director asked the question “How might we…..?”.

It’s the opening line of many a design thinking ideation round. And it serves many purposes, explained better by others elsewhere.

Taking the stage analogy further, I hear questions such as “How might we produce more colourful costumes?”, “How might we light the back of the stage better?”, “How might we fill this part of the stage?”.

All of them are good questions and relate to the specific problem that has been uncovered during the discovery phase.

What they’re not doing is thinking of the entirety of the show. They just resolve the problem that was uncovered for their part of the show.

How might we approach this differently?

What they’re not doing is asking “How might we aim to deliver a better show?

Business Architecture and Service Design
Business Architecture and Service Design

Let’s look at that question more thoroughly.

It’s got the typical format of “How might we…?” introducing the concepts of inclusion, a shared problem, and an indication of possibilities and potential.

I didn’t stop at the simpler question of “How might we deliver a better show?”. That’s where service design typically fits.

If we step back from the stage and consider an organisation, even applying service design in this way would be a stretch. At this scale, we’d be trying to apply service design to the whole organisation, e.g. how might we deliver better services? Where typically each service would have its own change activity, often in the form of design sprints, etc. Instead, the simpler question of “how might we deliver a better show?” could be translated into a top-down design question for an organisation of “how might we deliver better products and services?”, “how might we become a better organisation?” or similar organisation-wide design questions.

However, the question I introduced earlier focusses on the aim, not necessarily the end result. It asks about how might we aim to deliver. In focussing on the aim, it allows us to explore the goals and how goals are set. It leads us to question what goals would be required in order to deliver a better show. In understanding the goals, we have to understand what good looks like, what counts as successful and not just in the eyes of the board, but in the eyes of customers. If we set the concept of goals smart enough, this could easily set the scene for continual improvement.

Alignment with Business Architecture

Back to the organisation, now that we’re asking about the aims, and we’ve looked at the goals, we can start to see how the goals for the enterprise could be set. This brings Service Design up to the area where it aligns with Business Architecture. While this may seem at odds with a top-down approach of setting KPIs, we have to ask the question of why wouldn’t we want to develop an organisation that is driven by achieving its goals that deliver value to customers?

Alternative Business Motivation

By combining Business Architecture with Service Design, there is the possibility of redefining the concept of Business Model Modelling. Typically that’s a top-down approach, modelling external influencers, assessments, goals, objectives/outcomes, etc. Taking the combined service design/business architecture approach would result in metrics that matter to customers as the metrics percolate up through the organisation, not cascade down as is more common.

Whereas the concept of One Metric That Matters may suit startups as they redefine/focus on a different metric per stage of development and growth, it would not be expected to change as often in a more mature organisation. Instead, we may see a single metric that is of most interest for a cycle of improvement. But here’s the clincher – that metric would be an aggregate of the metrics defined by exploring the problem space with customers, not one that’s defined by an executive board.

However we may see a situation where an executive board decides to steer the organisation away from its current model towards a different business model. In that case, we would consider a more top-down approach.

Confirmation bias in design thinking

Post-it Notes

Every few years another fad comes around.

Workshop
Workshop

Look back long enough and you’ll see lean, systems thinking, TQM, CRM, structured systems and many, many more methodologies and/or approaches.

The problem is in the delivery of the projects when the terms become more widespread.

Background

What we’re seeing is the climb of two methodologies: Service Design and Design Thinking. You can probably add in Human-Centered Design and Inclusive Design into that mix. Many organisations are adopting these methodologies to solve their existing problems, switching from a lack of methodology or from more formal, structure methods to ones centred around design.

I’m increasingly seeing Design Thinking heralded as the way forwards, but there are some issues with that approach.

To be clear, I’m a supporter of Design Thinking and many related methodologies. I’m not necessarily a supporter of how those methodologies are implemented in many organisations. I don’t believe design thinking is a fad or at least a significant number of its concepts will remain even if a newer or revised method takes pole position.

Question

What we’re not seeing though are the reports of the design thinking projects that have failed. I find it hard to believe that design thinking and similar, related methodologies are the magic bullets that we’ve all been waiting for.

So do failed projects exist?

For every other methodology, there are numerous reports about how it has failed the client. The application of Six Sigma to Nortel comes to mind as a famous example. But there are plenty of other reports detailing failed projects.

So where are those reports for Design Thinking? It could be that it’s too early to tell since we’re on the early adopters curve.

Analysis

Methodology Maturity

Gartner produce the hype curve for technology adoption. It describes how people react to new technology, by relating their emotions to the stage of the technology and their use of it. We can apply a similar description to most methodologies.

They usually start with practitioners noticing something wrong in their current way of implementing projects. So they add, modify or remove elements. This may be a 2.0 version of the original method. Or if sufficient changes have been made, then it becomes a new method. Occasionally changes are blended from another method or a practice outside of the change domain. This new 2.5 version may take on a life of its own and become yet another rebranded method; this time at 1.0. So this fresh 1.0 version has only been used on a few projects and has had great success from the perspective of the facilitators. Therefore it’s a brilliant solution to fixing any problem and becomes heralded as the latest and greatest. Unfortunately those implementations are only just becoming lived-with, i.e. the changes occurred but they haven’t had time to become embedded in the organisation. That’s when murmurings of disgruntlement appear, sometimes with a “told you so” attitude depending on whether or not the change team had listened to the advice of their subject matter expects. Often the change team has moved on to the next project, this time with a couple of tweaks to their methodology, so version 1.1 which addresses some of the issues they were confronted with at the time of making their changes, but importantly, not those that appeared following the change.

The combined status of design thinking is relatively immature, compared to SSADM as an example and I’d measure that maturity through the age of the methodology, the number of project years it has been exposed to and the rigour involved in the definition of methodology. Design Thinking could potentially have more project years (due to the vast number of projects running now), but many of those projects would be, themselves, immature (due to people trying it out for the first time). Moreover there’s no single agreed definition of the method to follow, but instead many different flavours as different authors, consultancies and training organisations create the latest version of design thinking.

So whereas other methodologies are further along the hype curve, with many of them on the “slope of enlightenment”, there are times with design thinking when I think we’re at the “peak of mount stupid”. I could probably say that about a number of projects, regardless of methodology employed, it’s just that more projects now are aligned with design thinking than before.

Confirmation bias and success bias

We only want to hear what we want to hear and what we’ve planned to hear. So we will either not hear or discount information that contradicts our beliefs or expectations. This selective perspective allows us to promote one methodology above another without viewing all the evidence. It takes time and experience to continue to assess beyond those initial boundaries and look for evidence that contradicts our expectations.

I suggested that the reason we’re not hearing about the failed design thinking projects is that they haven’t been in place for long enough for us to realise they were failed projects. But perhaps, it’s that there’s something more insidious about the design thinking movement, in that only the positives are celebrated. Even to the point that failed projects receive political spin so that the positive elements of them are celebrated.

I’ve seen examples where the design team ran their sessions and sprints, came to implement new organisation designs, process designs, etc and were heralded as successful, even as leading lights as other similar organisations came in to learn how to achieve the same magic. However that same team hadn’t engaged with many of the other departments required to make the changes work, most notably IT. That meant that they had a great design that would take 2 years to implement if and only if the IT department had the same vision and decided to implement. Remember that IT was just one of the forgotten departments. Would the design have looked different had the other departments been involved? I’d bet money on it.

I’ve also wondered if it’s the age and associated behaviour of the people performing these sprints. Remember that most of these will be millennial, coming from a segment of society that did not get overtly negative feedback at school. There’s no right or wrong there, just a different perspective and a different approach to giving and receiving feedback.

Conclusion

Many change professionals have been combining elements from numerous methodologies or creating some methods almost from scratch for years. You can only do that successfully and repeat successfully with the experience of having first worked with a number of different methodologies. Once you have the background of what works and what doesn’t, then you can better understand what is likely to work in any one situation.

That leads to a few issues that we can learn from:

Issue 1: Vanilla Method

My view is that no methodology should be applied to an organisation without some tailoring. Applying the out-of-the-box tasks and activities makes a mess of an organisation, where the objectives become secondary to the method. Part of the skill of any methodologist or senior business analyst is in knowing which parts of a methodology can be removed while still providing acceptable risk to the organisation and its objectives. Otherwise, we would all be producing documents for every part of the methodolgy rather than getting any work done.

Issue 2: Inexperience in change

Reading the book doesn’t make you an expert. Methodologies take tact, understanding and planning to implement. They also take the extrapolation of what’s worked and what hasn’t worked so well. Without that analysis, whether seen first hand or learned from others, the method is untested.

Issue 3: Inexperience in business

A significant number of people I see involved in design methodologies are new to their careers; any career in fact. Would I expect them at the start of their career to know how HR, OD, IT and legal interact. I’ve been doing this for years and I still have to question each of my clients what their HR function actually does. I learnt to ask since in some it’s purely advisory, in others in full-stack recruitment, sickness management and training. It’s different in every client (with a few common patterns appearing if you work across enough clients). That’s part of what we need to unpick before we can figure out who needs to be in the room. I wouldn’t expect that from a relatively new starter.

Issue 4: Underestimating

Not only underestimating the number of people that need to be involved in the change, including taking those off the front-line so that they can contribute, but also underestimating the skill set required to facilitate changes through implementation and beyond, or better still, underestimating the skills set required to have the changes graciously accepted.

Issue 5: Learn from mistakes

We all make mistakes. Even the best project has had a few errors. Learn from them and take action to not repeat them. By moving design teams onto new challenges too quickly, they won’t be in a position to receive that valuable feedback that is required.

Issue 6: Implement

Design with a view to implementation. Design for design’s sake will get you so far, probably for your outputs to sit on a shelf. If you’re designing to implement, then you’ll think differently about who to include and also how to include them. Thinking about the fact that it needs implementation forces you to think through timescales (e.g. what’s feasible?), think through the politics and governance, think through the people you’re going to affect internally.

Afterword

Think of this current article as being a first draft. It’s likely that my thoughts will clarify as I hear of other projects and have further discussions about this concept. If you’d like to discuss it more, get in touch at @alanward

How a Simple Change Can Bring Multiple Benefits

calendar
calendar
calendar

I’m often designing change programmes for large organisations. I’m an external consultant, an outsider coming into the organisation that already exists.

There are already governance boards in place, whether for operational, financial or change governance. These boards happen on a regular basis, often on a set day of the month. As an outsider, I’m not going to be able to change those days. At most, I can influence the shifting of one or two on ad-hoc and in very rare occasions, the executive sponsor is senior enough to be able to change the day because it suits her as well. But remember that a lot of other activity is set around these events and most organisations will resist changing the day.

So why do we need to change the day?

If you think of a typical design sprint, then it’s a week long, starting on a Monday and finishing on a Friday. But we want approval to proceed from relevant sponsors before moving onto the next stage. Or we want guidance or steer or  budget to be able to continue.

Depending on the rate of change, the organisation may not wish to see the delivery delayed as one team finishes on a Friday, then has to wait until Wednesday or Thursday for approval (or rejection).

The solution

So the really simple trick I’ve employed is to build the executive boards into the design sprints by changing the starting day of the sprints.

Figure out your approval mechanism before you plan the sprint, find out what date it meets, gain agreement to present on a regular basis (even if it means extending that board by 30-60 minutes until they become used to the type of content), then plan the start day based on when you’ll be ready to present.

It is that simple.

Typically, for a Wednesday morning board, this will mean starting on Thursday the week before. This cascades back into the planning sessions for the sprint, these will typically have the same starting day once you’ve found your pattern.

This ensures a smoother design-approval-implement pipeline than we’d otherwise achieve.

Additional benefits

The additional advantage is that the weekend provides a break. Sprints can be intensive, should be intensive, and for attendees not used to that level of continued, deep thinking, there are often casualties in terms of attendees not wishing to continue, still trying to carry on with their day job, etc.

The weekend break gives you all chance to refresh, gives the facilitator change to revive spirits on the Monday as it’s only a few days left, not a whole week, and gives you all time to reflect on the positive work you conducted the previous week.

Potential issues

There are three issues that I’m aware of from having done this with numerous clients.

  1. As mentioned above, you need to engage with the board and modify the agenda before you attend for the first time requesting approval. Request additional time for the first round, or create a separate session immediately after the board but with the same membership.
  2. Talking about weeks can get a little confusing, but easy to clarify once you get more rigorous about your choice of words.
  3. You’re more likely to cross into someone’s unavailability due to annual leave.