changing management thinking in service organisations · thinking design to service the value...

www.vanguard-method.com © Vanguard Consulting Ltd

Changing management

thinking in service

organisations

Jeremy Cox

Vanguard Consulting, UK

[email protected]

mobile 44 07973316234

mailto:[email protected]


How to take a penalty (1975)


How to take a penalty (1976) “After each training session I used to stay behind with our

goalkeeper to take penalties – we would play for a bar of chocolate

or a glass of beer. Since he was a very good goalkeeper it became

an expensive proposition for me.

I got the idea that if I delayed

the kick and just lightly chipped

it, a goalkeeper who dived to

the corner of the goal could not

jump back up into the air, and

this became the basis of my

philosophy. I started slowly to

test it and apply it in practice…”


Changing thinking…

Antonín Panenka


It’s a thinking thing!

We are used to thinking

of organisations as top-

down, functional

hierarchies…

This is ‘common sense’


BUT when we think about organisations

as SYSTEMS…

We discover

counter-intuitive things about the

design and management of work…


The first counter-intuitive idea

Value demand

& Failure demand

All demand is ‘work’


Demand Exercise: UK Police Force

1. I want to report kids causing a nuisance

2. I have had an accident questionnaire, what do I do?

3. I have some information for you about an accident in Bolton

4. We have detained an intruder

5. I'm thinking of organising an event, what do I need to do?

6. I've reported an incident - why haven't you turned up?

7. Police kicked the door down thinking uncle was ill. He was in

hospital, who is going to pay for the door?

Value demand = the demand we want; it relates to purpose in

customer terms

Failure demand is CAUSED BY a failure to do something or do

something right for the customer


Demand Exercise Value demand

I want to report kids causing a

nuisance

I have some information for

you about an accident in

Bolton

We have detained an intruder

I'm thinking of organising an

event, what do I need to do?

Failure Demand

I've had an accident

questionnaire, what do I do?

I've reported an incident - why

haven't you turned up?

Police kicked the door down

thinking uncle was ill - he was

in hospital, who is going to pay

for the door?

We typically expect to see between 40% and 60% failure

demand in service systems


The bank: 1.2m calls a year

THINKING Design to service the value demands (30%)

SYSTEM

• Train all staff to deal with value demand at point of transaction

• Move value work to the front end

• Management role from managing staff to leading learning & improvement

PERFORMANCE What happened to call volumes? • Reduced from 1.2m in 2009 to 0.8m in 2012

• Failure Demand 70% to 18%

• Took new work into the contact centre

0

0,4

0,8

1,2

1,6

2008 2009 2010 2011 2012

Mill

ion

• NPS from -5% to +36%

• Complaints from 200 per week to

20 per week

• First point resolution up 60%

• Employee engagement 37% to 85%

• £2.5m cost savings even with

repatriation of offshore work


Thinking governs performance

The way we think about the design and management of work…

…governs the system…

…and performance is affected as a consequence Performance

System

Thinking


Single Loop vs Double Loop Learning


What management assumptions have NOT been

challenged?

How could we THINK differently about this?

How would you STUDY?

Single Loop vs Double Loop Learning



Performance

System

Thinking

Stu

dy

Imp

rove


Typical results

Increased capacity

Better service

Lower costs

Improved morale

So why isn’t everyone doing it?


BLOCK 2

11:00 – 12:30 Check on service centre

12:30 – 13:30 Lunch

13:30 – 15.45 Check on service centre


The purpose of ‘Check’

To gain a thorough understanding of the

‘what & why’ of current organisational

performance

To create a shared view of the problem

To create informed choice on the direction

of the solution


The Vanguard model for ‘Check’

What is the Purpose (in customer terms)? 1

Flow : Value Work + Waste 4

Capability vs Purpose 3 Demand :

Type & Frequency

Value & Failure

What matters?

2

Thinking 6

System Conditions 5

C

U

S

T

O

M

E

R

S


Framework for study Core Work

Purpose

Demand & Flow

Capacity = value work + waste

Capability

System of Management

What are the primary measures

in use?

How were they defined?

What are front-line managers

paying attention to? How?

What are senior managers

paying attention to? How?

System Conditions?

Governing assumptions?


Framework for consolidation

What is the typical customer experience?

What are the front line staff doing?

What do front line managers pay attention to?

How are senior managers making decisions?

What are the governing assumptions?

Build

this

wa

y…


BLOCK 5

Block 5 Vanguard Method – Check of the service

09.00 – 12:00 Slovak colleagues presenting results of analysis Discussion lead by Jeremy Cox


Friday session

Feedback from the Slovak team

Questions for clarification only please

Observations, questions and discussion

around issues arising from the One Stop

Shop fieldwork

(further structured input on method to follow)


Two fundamental questions

Performance

System

Thinking

1.

How does the

system work today?

2.

Where & how would

you intervene to make

it work better? Stu

dy

Imp

rove


BLOCK 6

Block 6 Vanguard Method – Deeper view and reflections

12:30 – 13.30 Jeremy Cox provides deeper view into VGM

After the late lunch, Jeremy will be available for any additional consultation

for the Slovak team (eventually also other members of the network)


Questions to think about

How do you change thinking?

Explore some more counter-intuitive

ideas & results

“What shall I do on Monday?’





…and performance is affected as a consequence Performance

System

Thinking


So how do you change thinking?

1. Option one: force

people (coercion)

Teachers Hail Michael Gove’s

Departure.

Classroom unions claimed the

Education Secretary had paid

the price for his “ideological

drive” to overhaul the schools

system in the face of huge

opposition from many in the

teaching profession.

Telegraph.co.uk July 2014




people

2. Option Two:

convince them with

evidence (rational)

Galileo Galilei (1564 - 1642)


WTF?!

In a new survey, 1

in 4 Americans

believe the sun

revolves around the

earth

Tom Yulsman, Discover

Magazine, 17th February 2014




people

2. Option Two:

convince them with

evidence

3. Unlearn & relearn

(normative change)

When you change the way

you look at things, the

things you look at change

To create a change in

perspective, you have to give

people things to do…

FROM

“all demand is work to be done”

TO

“Value & Failure demand”


Normative Change…

Tell me, and I will forget

Show me, and I will remember

Let me do it, and I will understand

Confucius 551-479 BC

Anything can be improved if you know how to look Taiichi Ohno


The Vanguard Method… normative by design

2. Plan

3. Do

1. Check Study:

understand,

unlearn

Relearn:

test & learn

with new

principles

Make normal: align the organisational systems


Another counter-intuitive idea

Specify, standardise,

and specialise

Design against demand


Stroke care, Plymouth

(Dr Steve Allder)

Same basic process for all patients

Functional focus for departments

Looked at ‘length of stay’ for four years with no insight:

technology, clock-busting drugs…

THEN

Started designing care for patients according to their ‘shape’

Studying Flow/Value from citizen’s perspective:

demand, diagnosis, treatment, rehab…


Stroke Care: design against demand

Time from A&E to stroke ward

» Ave 1.6 days to 2 hours

Mortality rate (HSMR)

» amongst worst to best ten

Admitted as ‘outliers’

» 40% to nil

Days in hospital: 16 to 6

Number of Beds: 56 to 39

Cost per patient £6k to £3k

Neurology budget 23% reduction

Clinical indicators


“The way you think actually

determines the way you

conceive the problem that you

are facing…

Because I think

‘systems’…that allows me to

think about clinical problems in

a completely different way”

Dr Steve Allder

Stroke Care: design against demand


Another counter-intuitive idea

Manage unit costs Cost is in flow

How do we reduce

the cost per call /

kilo / visit /

employee…?

What does it cost to

provide service end-

to-end? How much

capacity is wasted?


A typical example Renew waste joint

1. Raised 27.09.01 completed (not fixed) 02.10.01

2. Raised 02.10.01 cancelled 08.10.01

3. Raised 08.10.01 completed (not fixed) 09.10.01




7. Raised 04.01.02 COMPLETED 10.01.02

4 months end to end from the customers viewpoint

7 works orders completed within target

Management Reports look good


Three crucial insights

1. Managing costs often increases your costs

2. We need to understand the causes of cost

3. Reduce cost (and improve service) by

learning to design for value

Demand Value Flow


Counter-intuitive ideas

Method

Measures

“Manage by the numbers”

1. Cheat the numbers

2. Cheat the system

3. Improve the system

Creates a ‘de

facto’ purpose


De-facto purpose? “For many years fiddling the figures has been part of the

everyday reality of British policing”

“…outbreak of cheating forced on teachers by this

government's performance indicators.”

“From the health service there have been repeated reports of

executives massaging the numbers on waiting lists to hit their

government targets”

“The FCA [UK financial services regulator] found that in many

instances customers did not need the products they were being

sold but staff were paid bonuses for selling them, while

employees who failed to hit targets faced demotion. Salaries

varied by up to £70,000 depending on how much individuals

sold.”

Source: Guardian.com


Top Six banks cumulative provisions 2010-2014

Euro 17bn

Example: top down measure = sales targets


The Alternative to MBO: “Can you demonstrate that you have measures that

lead you to learn & improve?”

Method

Measures

• Establish clarity of Purpose in

customer terms

• Establish measures that relate

to purpose, with the people who

do the work

• Measures used by front line to

control & improve the work

• Leaders take action on the

system

Purpose


Jeugdbescherming Regio

Amsterdam

Winnaar

Beste OverheidsOrganisatie van

het Jaar 2014

Amsterdam Youth Service

Dutch Public Sector Organisation of the year 2014

From:

– measures = meet the standards for forms, assessments…

– multiple agencies: “we do what we do”

TO:

– Clarity of Purpose & citizen-shaped measures

– Cross-agency action to respond to client-defined needs


Jeugdbescherming Regio

Amsterdam

Winnaar

Beste OverheidsOrganisatie van

het Jaar 2014

Amsterdam Youth Service

A ‘Purpose-Measures-Method’ intervention

Results:

60% reduction in ‘out of home’ placements

Protection orders down 50% , probation measures 45%

Referrals to the service have fallen by 28%

Staff sickness reduced by 26%

Client satisfaction increased 34%


The jury said: “Youth Protection Region Amsterdam has made a profound change

in its methods and culture with a lot of guts and passion. Passion,

pride and professionalism in this organization is nicely connected.

This has led to a dramatic performance improvement and a big

increase in well-being and professional pride of the staff. In a

system that is grim, gripping and tough.

The success achieved by contemporary mobilization of ‘bottom-up’

learning from the professionals. The organization has become

substantially cheaper and the quality of its performance has

improved tremendously.”


counter-intuitive ideas

Performance = “we have

a people problem”

Motivation = extrinsic

Performance = 95% System

Motivation = intrinsic


Counter-intuitive ideas


The Vanguard Method… emergent by design

2. Plan

3. Do

1. Check Study:

understand,

unlearn

Relearn:

test & learn

with new

principles

Make normal: align the organisational systems


Test Question….

Performance

System

Thinking

1.

How does the

system work today?

2.

Where & how would


it work better? Stu

dy

Imp

rove


Citizen / Business face many front doors….

Police Mental Health

PS Hub

Ambulance

N’hood

GP

Fire

Housing

Trading

Standards

JobCentre+ Housing Benefits

Children’s

Social

Care

Adults Urgent Care

Vulnerable Adults

Early Help

Third Sector

A&E


Receiving Specialist Services

Complex individuals / families

– OCG, CSE, Probation, acute

mental health…

Don’t meet the thresholds,

off the radar…

Self-sufficient

individuals

Not Coping

Well-adapted /

Universal

Well-adapted /

Universal


How the system works for the people who are “not

coping”

Screen Assess Action

Not for Us

No Further Action

Refer

1

15

6

7

8 31

66%

Deteriorating

33% Stable

0% improving

This

costs

lots of

££££


Test Question….

Performance

System

Thinking

1.

How does the

system work today?

2.

Where & how would


it work better? Stu

dy

Imp

rove


Most people imagine that the

present style of management has

always existed, and is a fixture.

Actually, it is a modern invention:

a prison created by the way in

which people interact W Edwards Deming

To summarise…


Henry Ford

Frederick

Winslow Taylor

Adam Smith

Joseph Whitworth

Alfred Sloan

B. F. Skinner

Henry

Gantt


Traditional Thinking

Top Down

Functional specialisation

Separated from work

Budget, activity, targets,

output, standards

Manage budgets

& people

Contractual

Extrinsic

Vanguard Method


Alfie Kohn

Stafford Beer

Taiichi Ohno

Peter Checkland

W. Edwards Deming

Different Thinking

Peter Senge

Chris Argyris Russ Ackoff

Johh Seddon

James Lovelock


Traditional Thinking

Top Down

Functional specialisation

Separated from work

Budget, activity, targets,

output, standards

Manage budgets

& people

Contractual

Extrinsic

Outside in

Demand value flow

Integrated with work

Related to purpose, variation,

& learning

Intrinsic

Act on the system

What matters

Vanguard Method





…and performance is affected as a consequence

Performance

System

Thinking


Systems Thinking helps you

improve service, efficiency,

revenue & morale all at the

same time…

…you just need to be willing to

change the way you think !!

The Vanguard Method for service

organisations


What to do on Monday? Take the day off!

Then go into work anyway…

Go somewhere that work is being done and STUDY:

– What is the real nature of demand in customer terms?

– How well does the system respond in their terms?

– Where is the value work?

Then reflect on the levers for change:

– WHY is it designed this way?

– WHAT are the key management assumptions?

– WHICH organisational system conditions need to be tackled?

Grab a colleague and take them to see what you have seen…


THANKS FOR LISTENING!

changing management thinking in service organisations · thinking design to service the value...

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