Successful re-structures as part of a transformation

Peter R. Scholtes was a genius - he certainly knew his stuff, but just as importantly, he was clever enough to make it easy for everyone else to understand.

One of his books, The Leader's Handbook, would have the title: "The Complete and Practical Lean and Systems Thinking Workshop Manual (for Dummies)” if it were published today!

I use one of his models explained in the book all the time, and keep referring my clients to it - to three clients in the last three weeks alone - From Purpose to People:

How many times have you seen the announcement come through “We’re having a restructure!”, and then asked why?  Or seen restructures heralded as the solution, which months later seem to have had little impact.

It starts with purpose - it always does with Deming's thinking - then examines how best to deliver the service against demand.

The physical restructure of an organisation is 6th out of 7 in the list - there’s plenty of steps required beforehand if you really want to make transformation stick - and how often are these done first?

From Peter R. Schultes: The Leader’s Handbook

Characteristics of Emotional Intelligence

In the change management arena, people interactions are key, especially for those in the consultant’s role.  I continuously refer to Daniel Goleman's work, an American psychologist who developed a framework of five elements that define emotional intelligence.

Self-Awareness – People with high emotional intelligence are usually very self-aware. They understand their emotions, and because of this, they don't let their feelings rule them. They're confident – because they trust their intuition and don't let their emotions get out of control.  They're also willing to take an honest look at themselves. They know their strengths and weaknesses, and they work on these areas so they can perform better. Many people believe that this self-awareness is the most important part of emotional intelligence.

Self-Regulation – This is the ability to control emotions and impulses. People who self-regulate typically don't allow themselves to become too angry or jealous, and they don't make impulsive, careless decisions. They think before they act. Characteristics of self-regulation are thoughtfulness, comfort with change, integrity, and the ability to say no.

Motivation – People with a high degree of emotional intelligence are usually motivated. They're willing to defer immediate results for long-term success. They're highly productive, love a challenge, and are very effective in whatever they do.

Empathy – This is perhaps the second-most important element of emotional intelligence. Empathy is the ability to identify with and understand the wants, needs, and viewpoints of those around you. People with empathy are good at recognizing the feelings of others, even when those feelings may not be obvious. As a result, empathetic people are usually excellent at managing relationships, listening, and relating to others. They avoid stereotyping and judging too quickly, and they live their lives in a very open, honest way.

Social Skills – It's usually easy to talk to and like people with good social skills, another sign of high emotional intelligence. Those with strong social skills are typically team players. Rather than focus on their own success first, they help others develop and shine. They can manage disputes, are excellent communicators, and are masters at building and maintaining relationships.

Emotional intelligence can be a key to success in your life and in your career. The ability to manage people and relationships is very important in all leaders, so developing and using your emotional intelligence can be a good way to show others the leader inside of you.

Bullet-proof Change Management

I stumbled across this wonderfully vivid explanation of the key elements to a successful change management initiative.

Changing an organization from doing business one way to doing business another way is like a theater company changing from one play to another.

Of course it’s never easy (even though we’d like it be) but it helps us remember that we need to change from top to bottom, the big picture and the detail, the words and the hearts & minds.


To change to a new play, the Director must:

  1. Select and hand out the new script

  2. Identify the roles in the play

  3. Design sets and costumes for the new play

  4. Get actors under contract … and rehearse them to perfection

  5. Have a “transition plan” that shows when contracts need to be signed, when costumes will be fitted, when rehearsals will start, etc. 

It’s easy to see what would happen if one of those steps was left out - right?


To change an organization to a new way of doing business, we need to:

  1. Communicate the Vision (script) for the desired new way of doing business

  2. Alter the work processes (roles) to enable the vision

  3. Alter the equipment (sets, costumes) to fit the altered processes

  4. Enlist the workforce and get them under agreement (contract) and trained (rehearsed) to use the altered processes and equipment for the new way of doing business

  5. Have a master schedule (transition plan) that shows “what to do when.”


Leave out any one of the five steps above and now what would happen?  It’s easy to see in the example - it’s no different in the office.


From the book by Dutch Holland & Deborah Salvo:

Change Management: The New Way: Easy to Understand and Powerful to Use

If you always think as you’ve always thought...

If you always think as you’ve always thought,

you’ll always do what you’ve always done.

If you always do what you’ve always done,

you’ll always get what you’ve always got.

If you always get what you’ve always got,

you’ll always think as you’ve always thought.

Is encouraging Local Authorities to share and/or merge the right thing to do?

For years (centuries?) there have been boundary issues, discussions and disputes between parishes, districts, boroughs and counties.  Where are the lines to be drawn, and who takes responsibility?

Each political area then has its own structure of management – and in most cases consists of:

• unpaid political leaders and members to give the strategic direction as voted for by the population, and
• a paid CEO, directors and managers to lead the staff.  

With over 350 councils in the UK, that’s a lot of management.  At quite a cost.  Central Government continues to struggle to control budgetary pressures, and continues to restrict the funding to local councils.  So how do you do more for less?

In the past, central government has taken control of some of these boundary issues – with varying degrees of success.  Why not merge councils together by changing boundaries?  It’s unlikely they will want to do that directly now - it’s politically sensitive, to say then least! - and a battle they don’t need to fight.  Will councils do it themselves - and vote themselves out of a job…?

Many turn to shared services.  If two or more councils can share a finance department, or IT department, then it only requires one set of managers.  A simple economy of scale - and there are some advantages to this.

The Government are now encouraging closer working by given additional funding to Councils who merge themselves: £15m is being made available for 2014/15 for district councils working together and/or with a county to share Chief Executive’s and SMTs. It’s the sort of thing that Mid Suffolk and Babergh District councils are working on right now.

But what I see so many times, is the failure to recognise that the existing service is almost always highly inefficient with waste work and failure demand in abundance.  So it should always be economies of flow first.

• Understand the customer demand
• Design against purpose
• Reduce/eliminate waste.

This removes all the unnecessary steps leading to improved customer service and reduced cost.  Ask yourself the question: “Do I really understand what the customer experiences when they contact my service?”

Then, there may be possibilities for merging to improve economies of scale.  Do we really need over 350 Council Tax departments across the country, all managing their own, very similar, systems and support hierarchies?

Keeping things simple?

Do you ever think that some of the management books and technical jargon are far more complicated than they really need to be?  A recent podcast by the Freakonomics team reminded me of some simple service “production line” stuff that seems to get forgotten.

Over the years, I have worked in many claims processing systems, and we undertook the usual “work-flow” analysis of all the steps – the usual post-it notes on the wall etc – we’ve all done it.  

There were 300 steps.

When you look at which ones actually add value, there were only three (I’ve worked with many teams - it always boils down to three steps): 

1. meet
2. assess
3. pay

All the other steps were there to patch-up all the other steps that weren’t working properly.

The team realised that they were actually spending time doing part of the work, finding themselves in the position of not being able to complete it, asking for more information, whilst the customer would phone into a separate help-desk in need of assistance.  This would be repeated on a number of occasions over a lengthy period of time.  Stylistically, spending 4 lots of 15 minutes over the period of about a month:

The team I was working with experimented with a “Right-first-time” approach.  The experts in the process (rather than the administrators) spent a little longer with each customer, working out the best and quickest way to complete each transaction. Where the work could not be completed, they examined why this was, and looked for different ways to improve this too.

Within a few weeks, half of all claims were being completed within 1 hour.  And the average time for all claims reduced from 13 days end-to-end 6.5 days.  It looked more like this:

Why does this matter?

1. It’s great customer service.
2. It costs less too.

For half of the customers, we had taken away the need for them to call in chasing their claims – a saving of over £100,000.

A systemic solution, that saved money, and improved customer service – perfect!

Want to know more:
 - about Matt Arnold

 - give me a call on 07775 595 595

 - email on matt595@me.com

What is Apple’s customer service number if your 69p app fails to download?

Or perhaps another questions for anyone that owns an iPod, iPad or iPhone: when was the last time you pressed “Buy” in the app store and it didn’t work?

For me, this is at the heart of Systems Thinking.  What does the customer want? –then design a process that delivers it right-first-time as quickly and as effortlessly as possible.

Apple may not be perfect, but they do work hard at get the customer experience right.  They avoid the need for a “Customer Services” desk – because they put all their effort into making sure it never goes wrong.

Can you imagine the size of the call centre if only a very small proportion of the 50,000,000,000 app downloads had gone wrong…

When was last time you were “on hold” or had to call back on numerous occasions when something went wrong with your bank / insurance / cable / mobile / benefit / claim?  Why couldn’t they design it so that it always worked?  Why are you left to feel like it’s your fault?

What’s happening in your “Customer Services” desk?  How many calls are being received that are chasing previous errors, mistakes or delays?  How much is this costing your business?

Cost exist to be reduced.

I was reminded of this great quote from the master of the Toyota Production System today:

    Costs do not exist to be calculated.

    Costs exist to be reduced.

  

      - Taiichi Ohno

As a Chartered Accountant, I am well trained to understand cost - especially with respect to Activity Based Costing.  Understanding the cost of every element of the process is clearly important.

However, it is all too easy to then assume that these activities are actually necessary.

In my work, I have helped many teams discover that amongst the 300 steps in their back-office processes, as few as just 3 actually add value.

When you examine the end-to-end process from the customers' perspective with a real sense of "What is the purpose of the system?", you soon discover that many of the the activities are there to:

• prop-up the failure of not doing things right-first-time

• mask the organisation's failure to organise themselves around the demands of the customer

• respond to multiple customer "chasing" contacts as they as wait for service.

By redesigning around the customer demand, with a real understanding of where value is added, many of the activities can be reduced or eliminated.  And this saves money.  I regularly see systems and processes where costs can be reduced by around 20%.

It sounds easy - and to some degree, it is.

Why doesn't everyone see it? - because not everyone looks.  It requires someone to see both the big-picture and the detail - at the same time.

Want to know more:
 - about Matt Arnold

 - give me a call on 07775 595 595

 - email on matt595@me.com

“Do we need to understand Psychology?”

“Do we need to understand Psychology in the business environment?” – yes.

But we probably don’t all need degrees in it.

What I think is essential for leadership, whether in operations or change management, is basic emotional intelligence - some understanding and empathy with those you work with.

From my experience, these aspects can very quickly get forgotten - especially in times of pressure and stress.  However, these times are exactly when patience, understanding and empathy can make the difference between success and failure.

As a Deming fan, a good leader should be able to display a clear and accurate picture of their business as a process.  But they also need to understand people and their behaviours in that process to be able to maximise its performance.

See LinkedIn discussion for more.

Can a senior management team use systems thinking for strategic planning?

Of course the answer is yes. As long as you can get into a position to see the organisation as a system, including the context in which it operates.

One of the fundamental concepts of Lean and Systems Thinking is taking an outside-in perspective – typically from the customers’ perspective. At a strategic level, this may include other stakeholders such at shareholders. Being able to get far enough away from the business to see it in its context can be difficult for managers – so some help is often needed here.

When the managers are in the right place – then it’s back to basics:

• what is the purpose of the organisation (from the customers perspective)?
• who are the customers? and
• what matters to them?

In my experience, this reduces ‘thinking linearly’ because they are thinking from a fresh perspective, rather than from their current position. It’s not unlike the Einstein quote of doing the same thing over and over again and expecting different results.

You have to be in a different place to be able to see that something different can be done. And help to establish the greatest point of leverage is almost always necessary.

From A to B. The difference between Change Management and Work Design.

When I explain to people what it is that I do, the end result is often “Ah, you’re a change consultant.” The conversation rarely begins with “What are you actually changing to?”

It’s a bit like talking about a journey from A to B – and focusing solely on the car you’re driving, without ever considering where you’re actually going, or asking what’s wrong with where you are?

During your last ‘transformation’ programme, did you really know what you were aiming for? Did you scientifically know how best to design your work process? Did it at any time feel like you might not hit the target?

We may already know about various change methodologies. Kotter, for example, understood how people and teams work, and how to help them move in a different direction. Chip & Dan Heath have taken this type of thinking even further, with some really practical advice when faced with issues in the work place – and they make it look easy.

But this is all a waste time if you don't understand where you are now, and where you want to go. I find many people forget this – it’s very easy to be in the place called “It’s always been like this?”, and few question the status quo.

It’s the role of the management team to ask the ‘big picture’ questions, and find ways to do more for less. They need to be asking:

• Why can’t we fix this “right first time”?
• What’s stopping us from processing that paperwork immediately?
• Can we use less material in that part?

This was Deming’s forte, and others like him. He understood what was wasteful in a process, and could see where re-work, error and cost had been accumulating in a system. He also understood what could work better.  He had method – Lean and Systems Thinking.

Modern names for this type of consultancy include work design, business process re-engineering, change management and business transformation.

But the original term was Operational Review:

• Understanding the waste in the detail.
• Analysing the effectiveness of the management team.
• Bringing the whole team together to design “What good looks like.”

Want to know more:
 - about Matt Arnold

 - give me a call on 07775 595 595

 - email on matt595@me.com

Visit to the Czech Republic

I recently travelled to the Czech Republic to visit a training organisation, Centrum Andragogiky. 

Lean and Systems Thinking is well embedded in the Czech Rebublic and Centrum Andragogiky currently train many organisations both in service and manufacturing.

They know their stuff, both theory and practice.  Working with Laurie Denton and Paul Thomas from LD Associates we spent two days learning new strategies and tactics for establishing this culture.

Check the Management System

Business issues can often feel either complicated or complex – and sometimes both. And yet I regularly see senior management trying to find a simple solution. If only life were that easy!

I’m frequently asked to help diagnose serious business situations spanning 100s of employees doing their job, together with their team leaders, managers and directors.

What I’ve learned over the last decade, is that the individual problems I see are all quite simple – but that there are very many of them, and they all interact. They form a large ‘dynamic’, where everything impacts everything else. It is this that leads to the often-overwhelming sense of scale and complexity.

So what’s the solution?

It’s simple.

If the problem is a large collection of small/simple issues all working against you, then the solution is a collection of fixes, interactions or changes, that must happen together, and work together, to bring about a complete turnaround.

My most recent assignment, a logistics organisation with over approximately 350 employees, had such a business issue. They were a leading player in their field, and doing a good job for their customer. But the senior management understood that being good was not good enough – they needed to be excellent. The service to their customers needed to be second-to-none, which would lead to winning more business, continued growth, and margin improvements.

Our diagnosis found over 100 specific improvements that could me made to the overall process. But fixing these alone would not be the answer. The whole management system needed fixing too, including:

• Designing a process flow that worked the way they wanted it, moving away from the one that had ‘evolved’
• Creating a robust feedback loop – from the experts at the ‘sharp end’ to the management team, and back again
• Project managing a Top 40 list of fixes and improvements
• Ensuring the management team spent time at the ‘sharp end’ so they could see the work for themselves
• Learning to experiment with different ways of working before a full roll-out
• Converting vast amounts of data about the current state, and converting that to real information about what, where and how to make real change
• Developing a new management method that encouraged continuous improvement and made it normal.

It's the way that the two systems worked together that proved to be the key - to ensure the management team understood the detail, but could climb back out and lead too.