Process Blindness

I went to see a client a little while ago and followed some work while I was there. The work was basically to receive a paper form from a client and enter the data into a database that made it available on the web site. The wrinkle was that the main office received the forms and logged the receipt and then batched and packaged them to go off site for the the data capture.

I would just like to bring to your attention one little part of the process.

When they had accumulated a pile of like forms together, they would take that pile from a big table and bring them over to their desk where they would take twenty forms at a time and read the bar codes from the forms into a spreadsheet. They would press a button on the spreadsheet and it would print two top sheets. They would write a batch number on both the top sheets. One sheet would be put on top of the twenty forms, secured by an elastic band, ready to go into a crate and thence off site. The second sheet would be scanned and then filed. The scan of the second sheet was kept in their electronic file system and could be searched if they needed to find out which batch a particular form was in.

Phew. Was that paragraph as boring for you to read as it was for me to write? Imagine if that was your work every day? Now imagine if you were a customer who came to the office to watch how the data you neatly inscribed on the form got onto the web site and instead you saw that?

The value for the customer was to see the data on the form, up on the web site. If you can manage it, re-read that paragraph and see if you can find any step in there that contributes to that value.

No? That's because there is no value to find.

They didn't see the problem and the difficulty they had was not a lack of intelligence but process blindness. They had been doing it that way so long, they could no longer see another way to do it. This was where having defined value to the customer was so valuable. When customer value is your only criteria for judging a process then the scales fairly spring from your eyes and you see your process afresh.

They don't get it

There is an article in the Guardian newspaper which discusses Lean and once again they don't get it. I quote:

Radnor recalls a housing director who was approached by two employees who claimed they needed another team member because they were unable to manage their current workload of dealing with complaints about unfinished repairs.

After examining their current processes, a barrier to flow was identified. It was found complaints couldn’t be logged properly because not all the required data was in place and that the team spent the majority of its time going back to retrieve missing information. It was suggested the form used to log complaints was redesigned.

Wrong. If they were unable to manage the workflow of dealing with complaints, then management need to change the system that produces the complaints to produce fewer complaints, with the goal (not the target, the goal) of producing none. That is Lean.

We must not be deluded and mistake making current processes more efficient with changing the system as a whole to more efficiently serve the customer. The difference in wording is slight, but the outlook is very different and the results wildly so.

It does say a little later in the article:

While the customer is very much the focus of Lean [...]

So maybe they do get it, I don't know, but they must have loads of examples to choose from and they picked one that shows that they probably don't.

It's the System, Stupid

On the front of today's Guardian newspaper is an article about the Bank of England, inflation and interest rates. To partially quote it:

The government is on inflation alert amid fears that dearer petrol and food will herald the start of a year of bad news on the cost of living and limit the Bank of England's ability to cut interest rates.

...

An explanatory letter from the governor to the chancellor is required once a quarter for as long as inflation is more than a percentage point higher or lower than its target. Speculation has mounted in recent days that today's figure will edge up from 3%.

This to me is a classic example of not thinking about a system as a whole.

One of the first things that the new Labour government did after being elected in 1997 was to make the Bank of England independent and give it a target to keep inflation below 2 per cent. The mechanism to do that was to change the Bank of England base rate of interest.

This is not an article about economics, I am not an economist, but even then that struck me as simplistic. The Bank must keep inflation at 2 pc and the only lever they can pull is interest rates. What about balance of trade, house prices, world commodities, credit and financial markets. They can't change the tax system, print money or borrow.

The UK economy is buffeted externally by world events, international speculators, trade relations and a myriad other things. Domestically 60 million people make economic decisions every day. Not to mention government policy about tax and borrowing.

So does anyone really think that the Bank of England can control inflation by changing interest rates? I don't.

I think the government should take back the setting of interest rates. The argument that you bring back political influence is a slim one when they still have control of tax, money supply and how the budget is spent. They should look at the system as a whole and do their best with it. Actually, an almost impossible job, I think.

But thinking that the "interest rate" lever is directly connected to the "inflation" read-out is plain silly.

The lesson for other organisations (which have to deal with much simpler systems than the UK in a world economy) is not to make the same mistake of attaching one single input to a single output. Even simple systems do not usually work like that. You must conduct controlled experiments and measure the outputs and look out for unintended consequences. And remember always measure against the purpose of the system (to serve the customer, in the case of a company).

Also, what is this stupidity of sending of a letter to explain what has happened? That will fix it!

Good one

I normally will be on here pontificating about how to do it better. But I must give praise to the DVLA (Driver and Vehicle Licensing Agency in the UK).

I filled in the online form to change my address on my driving licence, sent the old one back on Thursday 29th May and received the replacement on Monday 2nd June.

I have to say I was very impressed. I had expected that it would be three weeks at least. And you know how they are... Well in fact they were not like that at all, they vastly exceeded my expectations.

Well done the DVLA!

I wonder how they did it...

Best Service Is No Service - book review

I have recently finished a very interesting book called "The Best Service Is No Service: How to Liberate Your Customers from Customer Service, Keep Them Happy, and Control Costs" by Bill Price and David Jaffe.

The premise is in the title. Basically they are saying that the way to please customers is to give them what they want right first time so they never have to call the call centre and access the Service Department. They are also very keen on Self-Service. They want companies to provide as much of their offering via the web or IVR (Interactive Voice Response) systems. The book has lots of examples of good and bad cases.

The case that made me laugh was the bank who thought that higher value customers should be given a more personal service. They provided an automated telephone system for lower rated customers to find out their balance but the high value customers were recognised and routed to a call centre agent every time. Obviously people with a lot of money don't want to do thinks quickly and easily they would rather have to talk to someone every time!

The parts about having a system that doesn't generate failure demand I agreed with wholeheartedly, but the over emphasis on self service was a bit strong. They tried to balance it out to say that call centre agents should be able to teach callers how to use the web or phone systems and that you shouldn't have channel wars where the web team and the call centre team try to out do each other. They also said you should make your company easier to contact at the same time as putting more functions onto self service.

Personally I like self service and as long as it is backed up by reliable internal processes such that things go right and I don't have to call a company to get things fixed all the time, then it is a good thing. I just wouldn't want anyone to read this book and then throw everything up on their web site without fixing the broken processes first.

Two more things, they love Amazon. And there is also a weird bit where they draw a Pareto chart for the amount of failure demand for each type (they call failure demand "dumb contacts") then they suggest attaching the cost of resolution. So it ends up that the call type that is 18th in the list for number of calls is the one to tackle first because the cost x quantity calculation is greater for that type of call. I would always start with the problem that is causing the most problem for the customers. And to be fair in the rest of the book they are very customer focused, just in this little section do the authors have their head turned by internal cost saving.

All in all, worth a read for some good ideas, but keep you wits about you and analyse for yourself what it being said.

Best,

Rob

The Customer Sets the Ideal Value

When we consider customer value, we should be aware that this can be quite a subtle concept and that it can vary for the same customer at different times.

The customer sets the ideal value.

We should be familiar with this. If the customer wants it fast, then get it to him as fast as possible. If the customer wants it cheap then do it. The internal workings of a company mean nothing to the customer. They really don't care about targets for Average Handle Time for calls in a call centre or utilisation of servers or the cost of desk space. They just want the service or product they asked for at the right time and price.

But we should wait a moment before throwing our processes and our system on their heads to give the customer what they want. Ideal value is a changeable thing even for the same customer.

When doing a bit of DIY, trying to level a floor in my flat, I sawed through a central heating pipe. What was my ideal value for the service from the plumber? GET HERE NOW! I have my finger on the pipe and the water is going through the ceiling below.

Last month I phoned the same plumber to get my boiler serviced. Ideal value? Convenience of the appointment. I am home Tuesday, but not Wednesday and could do Thursday morning.

Most of the times I buy a book from Amazon I like the free delivery option. I don't care that it takes a few more days to get here. It is a book. What is the rush? Ideal value? Low cost of shipping.

But the other day I had to buy a birthday present at very short notice. (I didn't forget, I just couldn't think of anything until the last minute!) So I ordered from Amazon and was happy to pay the extra for the next day guaranteed delivery. Ideal value? Don't look like a chump with no birthday present to give.

So we need to revise our statement above and say:

The customer sets the ideal value at the time of request.

This is a reminder that your system needs to be able to absorb variety and standardised work will interfere with that.

Best,

Rob

Right is Cheaper

Getting it right is cheaper than getting it wrong.

On the first pass they both cost the same. Send out a product to the correct address costs the same as sending it to the wrong address.

It is the rework that adds the cost. The customer calls asking after their product (cost to take that call), you have to verify the address (cost of investigation) you then have to order another product (cost of replacement) and send it (repeat of postage costs). Plus the customer thinks you are rubbish (reputational cost).

So if anyone tells you that higher quality is more expensive ask them to correct themselves and count the calories they burn as they do so.

Best,

Rob