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Tripp Babbitt

Quality Insider

That Giant Sucking Sound from Missed Opportunity

The greatest area for improvement effort lies with management thinking

Published: Tuesday, January 4, 2011 - 05:30

Missed opportunities for improvement represent a 20–60 percent chunk carved out of the bottom line. Scores of programs and projects that claim improvement but never materialize in the financials are a travesty. The Wall Street Journal reports that more than 60 percent of improvement efforts fail. But the biggest failure occurs in the minds of executives.

The traditional approach is to get executive sponsors for improvement efforts. They say a few words and “throw their support” behind the effort. Then they return to their offices while the team toils to find some process to improve. The result is usually negligible or nonexistent improvement that is unsustainable—particularly because executives are quick to overturn improvement efforts with wrong thinking.

Because improvement efforts are pushed down to the front line and specific processes, the largest area for improvement—changing management thinking—goes unnoticed. Many areas that require executive self-reflection are completely ignored. They include:

• Hierarchy and the waste caused when a worker must seek approval or write reports, meanwhile accomplishing nothing
• Structures and a functional separation of work that create barriers and suboptimization
• Targets, financials, budgets, and other arbitrary measures that optimize functions at the expense of the system or keep workers focused on the wrong things
• Economy-of-scale thinking instead of economy-of-flow thinking
• Standardization, centralization, and simplification efforts launched without evidence that they actually improve things
• Applying automation and technology that trap workers in poor work designs, particularly when they could be more effective doing many tasks
• Outsourcing to save money when the existing work design is full of waste
• Sharing services without understanding whether departments have the same demands—or whether that back office is even needed

 

In general, these issues are the result of thinking without knowledge. By leaving the existing structure, work design, and thinking in place, some big opportunities for improvement are unaddressed. Instead, improvement efforts are demeaned by small scopes and the hope that “someday management will get it.” That day will never come unless a company starts by improving management thinking.

Executives must be curious, but most lack the moxie. Too often, they rationalize that improvement is for everybody else, not them. They have built their companies’ human pyramid for protection. The curious leader must learn to break the cycle of waste and despair. Rational arguments won’t change thinking; improvement efforts that focus on process rather than changing thinking only perpetuate and embed the current thinking.

Once their curiosity has been awakened, executives must go through a normative experience, not a rational debate. Armed with a set of questions that reveal the truth about performance, executives can discover for themselves opportunities for improvement. They can begin to understand the correlation between management thinking and system conditions that either entrap or enable work. Additionally, once they see the damages that result from their current thinking about the design and management of work, they can see the scope for improvement.

It’s possible to discover new, counterintuitive truths, but focusing on process or traditional approaches to improvement won’t get you there. That giant sucking sound from the bottom line is the missed opportunity to address the big problem—management thinking.

Discuss

About The Author

Tripp Babbitt’s picture

Tripp Babbitt

Tripp Babbitt is a service design architect who helps organizations discover a better way to improve thier service. His 95 Method is about giving organizations a method to try out different design ideas leading to better service.  Start by downloading his free ebook or book an on-site workshop. Babbitt can be reached at tripp@newsystemsthinking.com. Reach him on Twitter at www.twitter.com/TriBabbitt or LinkedIn at www.linkedin.com/in/trippbabbitt

 

Comments

Questions and approaches

Wondering in your experience what questions an executive may ask themselves and others on the way to a "normative experience". Does such an experience require active involvement in the work? Interested to hear about recent, real cases (with suitable renaming of course).

Not being an executive I am wondering how one might well awaken their interest.

Awakening an Executive

An executive has to want to be awake and have some insight that things are not optimal despite their power of influence, bonus and other factors that make it harder to be curious. Most executives already know that their systems aren't optimal, it takes guts to do something about it.

Case studies are a slippery slope, because many readers will say "I don't have that problem" and move on. The truth is they all have many types of problems that may morph themselves into different forms or different ones. The fear is always copying. Each system has different problems, it's the nature of systems. I will digest your comment as the editor wants my next column to have case studies. But the bottom-line is that you have to go to the work.

Which is a good segue to an executive being in the work. Like bond prices and rates there is an inverse relationship . . .The less time executives spend in the work, the more bad decisions that are made. I am yet to see an executive walk away from a normative experience without having changed their mind about something in their system.

Thanks for the feedback.

You wrote that executives

You wrote that executives too often do not improve the obvious like "Standardization, centralization, and simplification efforts launched without evidence that they actually improve things." Centralization is a strategy that works in some instances when quick wins are needed. De-centralization can exceed expectations when each node can learn at its own pace what works and what doesn't. The result is not like machine learning models, however. It is untidy, and chaotic and requires much of that scarce resource -- management attention.
Standardization can prove itself but requires assumptions like a stable process. What about unstable ones? Markets change, you know. What is the executive to do when there is no workable business or market model to ponder? How can the executive know how the new change will affect the system using the unknown process? What if the executive standardizes on a poor process? Chicken-or-egg? Maybe standardizing is like driving a stake into the ground and the unstable process, tethered to it, will gradually stabilize. What is causing the instability? A good model with fidelity fine enough to see functions and malfunctions would suffice. Who is to make such a model? How will we know that it is correct?
How would you advise the executive on these issues?

Do they come from knowledge or plans?

The question about standardization, centralization, and simplification has to do with coming from knowledge instead of assumptions (like copying or best practices). Your key to your comment is "some situations", not all situations.

Markets, like demands change all the time. Standardization does not allow absorption of variety. The instability of a service system is a function of this variety in demand. Assuming that standardization is a good place to start is misguided. Demand and customer purpose are always helpful in understanding what to build or improve.

Missed opportunities in Management Thinking

"They have built their companies’ human pyramid for protection." While this may be true, an alternative explanation is that "They don't know any better." Consider an example from education: a child goes to school and is enculturated into the school system. As they progress, they decide that they might become a teacher. They go to college (a similar system with similar classroom expectations), receive their teaching certificate and go back into the classroom prepared to teach. If they teach the way they've been taught, are they building the classroom for their protection (to keep their job) or is it because they don't know any better?

A corollary to this is that, once someone achieves a management position in a system, they are reaping the rewards of that system. If they were to change the system, they would jeopardize their position in the system. It's hard to step outside of a "nurturing" system into something unknown when you don't know another way to be and are unwilling to lose the perks of authority earned through the system.

"They don't know any better"

I agree with your alternative thought. It was why we say "management is guilty, but not to blame" the system has indoctrinated their thinking. This is why I like the words . . ."brain enema" to describe what executives need to do.

All you say is true, but there is a better and proven way that is "safer than a known way" to quote John McConnell. The curious will move forward and the satisfied will continue to bury their heads - it is an individual choice.