Thursday, January 05, 2017

President Trump - Please be careful about Bottom Line" decision making.

The Post below was written in 2011 when then newly elected Governor Snyder from Michigan began his so-called customer focus and leading by the numbers and facts decision making process (bottom line end results). Without understanding systems thinking and the impact it has on the whole system, is a very dangerous way to lead. 

I'm re-posting this because there will be a large number of CEO business type people moving in to key government positions. Too many of these people rely on accountants and financial honchos for making decisions. This is the same path that Michael Hammer took with "Reengineering" in the early 90s. I attended his seminar and all he did was talk about faster and cheaper and saving money. During a break I asked him "What about the People" and he responded "What about them". I said there would be no long lasting positive change without considering all the people involved. He laughed and said that is the problem with the Total Quality movement.

Unfortunately, too many businesses and education systems today still are managed by Bottom Line (I call them Bottom Feeders) Leaders who are steeped in the financials but have no idea or understanding on where and how peoplevariationknowledge and systems thinking must fit in to the equation. Without the ability to determine if your processes or systems are capable and/or in control financials will only serve as result measures that provide information on a particular function or unit NOT the system as a whole which is critical to the success of any organization, company or school system.

For example - Flint Water Problem

"They don't listen to nobody," longtime Flint City Councilman Scott Kincaid said of emergency managers. "They don't care about the community. They just care about fixing the finances." Kincaid and others said the managers' tendency to ignore local complaints played a role in the water fiasco, since residents had complained about taste and color of the water.

For example - Michigan Unemployment Debacle

"The system is flawed, claimants allege (and the state's response to such criticism has seemed to acknowledge) sometimes pursuing penalties from Michiganders who were entitled to the unemployment benefits they’d received."

2011 - Governor Snyder of Michigan - "Dashboard Metrics" - HUH!

“The data collection process must be driven by the question that we formulate based on our needs. In short, know what the question is to be answered before collecting the data.” - Dr. J. M. Juran

Governor Snyder of Michigan is implementing "Dashboard Metrics" across the state of Michigan to measure progress. Great idea. However, do the people know what dashboard metrics are and what do they represent. Do the people collecting this data know what to collect. 

Are the data being collected going to be shown as "Results" measures as opposed to also including Process Measures? 

CRITICAL POINT 1: I suggest and hope the governor is aware of the difference between Common and Special Cause Variation. And, Dr. Deming's System of Profound Knowledge. If you really want to improve Governor Snyder please study and adopt the System of Profound Knowledge.

Do any of you reading this know what I am talking about? Some of you will, the majority will not. We are all more concerned if the changes being introduced by the governor will affect us personally. Heck, we like change as long as it is not happening to us. 

I would recommend all officials read and digest this book.

CRITICAL POINT 2: Before implementing these type of measure you must make sure you are using a systems thinking approach and by that I mean include all your principal people from each step of the process/system. By not including front-line/customer facing employees (Especially in the design stages) you are doomed to failure. Why? Because you will ultimately be a "Results Oriented" Leader which happens when you are surrounded by business/government bureaucratic who manage by the "Bottom Line" and do not take people in to consideration when making systemic changes be them small or large.

Dashboard Metrics 
Perhaps the picture below will give the best example of what they are and what they look like if done correctly. The pictorial illustrates a company that needs to respond to a customer inquiry for service or repair. While the charts below show bar graphs I would also add control charts when the proper amount of data are collected to make sure the process is in control (Control can be good or bad).

Click on Pic to Enlarge 

The following provides a method for setting up effective measures: 
METHODOLOGY FOR DEFINING AND ESTABLISHING CUSTOMER 

FOCUSED MEASUREMENTS
Measurements should track how well our processes are performing according to:
• Customer Expectations (including customer perception) and Organization Objectives
• Customer Satisfaction • Value Drivers
• Competitive Benchmarking • Employee Satisfaction The above stated types of measurements will help determine the overall quality, efficiency, and effectiveness of all processes.
The activities involved in defining and establishing measures include:
1. Determining effective measures
2. Reviewing and validating existing measures
3. Implementing new measurements
4. Install a measurement and reporting system
5. Establish a feedback and monitoring system
6. Monitor measurements

1. DETERMINING EFFECTIVE MEASURES
Purpose:
Effective measures provide an insightful means about the efficiency of a process. Measures of this type are meant to track and align performance (process) and results (quality) indicators of a business process. 

Establishing Effective Measurements:
Create effective measurements based upon the following:
• Customer expectations/requirements
• Practical to implement
• Easy to comprehend
• Consensus of agreement by group
• Able to help drive culture change

What to Measure:
Establish measurements based upon customer expectations and business objectives. These measurements should measure what our customers care about and what will drive our Value Drivers toward exceeding Operational business objectives.

Develop objective measures of customer satisfaction. Without measures, we have no means by objectively assessing the magnitude by which our processes are performing to customer and business requirements, and whether or not our improvement efforts and newly implemented systems have improved the process.

These types of measurements should provide objective data that will drive decisions that will produce long-term customer preference. 

If suppliers are included, be sure to measure input characteristics and services.

How to Measure:
Implement simple, easy to understand measurements whenever possible. Measurements that are complex will not be used.

It is vital that our measurements be easily defined, understood and communicated to assure common understanding.

A small amount of meaningful measures are worth 10 times more than a large amount of nice to know measures (non-value added).

It's OK to experiment with measures, if they don't tell you what you need, stop measuring and create new ones.

If at the beginning measured identification is difficult, start with customer satisfaction, every major process has a customer.

Don't just measure one aspect of a process. Your measurements should be balanced with variable, attribute and some subjective characteristics like time, cost, quantity and customer perception.

Evaluating Measures:
In the beginning it might be best to implement a few strategically based measurements. As stated before, it's best to experiment and monitor the effectiveness of few, rather than implementing a large amount and never monitor.

2. REVIEWING AND VALIDATING EXISTING MEASUREMENTS

Purpose:
Once we've identified and understood what makes effective measurement, it is necessary to assess measurements that are already in place. Effective measurements provide input data that drive motivation for continuous improvement. Those that do not measure up should be changed or eliminated.

Measurement Balance:
If current measurements are only measuring internal business objectives, move to measure the effectiveness of our processes or solutions from a customer perspective.

Measure Behavior:
Implement measures that level to desired behavioral results. Verify the measures do not drive undesired behavior by our workers or to your customers. For example, many companies have found that they speculated "speed of answer" as a desirable measurement for customer satisfaction. Customer survey and interviews found that quality of service provided was more important than speed of answer.

3. IMPLEMENTING NEW MEASUREMENTS 
Purpose:
It is vital that any new measurements implemented are effective and efficient and that it is collected, analyzed, and used in a way that motivates positive behavior and not punitive threats to workers.

Data Collection:
Make sure those responsible for collecting or installing new measurements are familiar with data and are part of the implementation plan.

4. INSTALL A MEASUREMENT AND REPORTING SYSTEM
Purpose:
Installing a measurement and reporting system requires an action plan of implementation that identifies the roles and responsibilities of the Process Owner and Sub-Process Owners who will be accountable for the measures.

This also requires agreement on what measures will be reported and that method and system support is available. The Action Plan must include trend analysis and plans of who will respond to them in a timely basis.

Automation:
Whenever possible and cost effective, automate as many measurements as possible. The advantage is more accurate and timely data collection and analysis. 

Share Measurements:
Post measurements data in visible places, so that results can be shared by workers in the process. It's also a good idea to keep everyone in the process informed from end-to-end.

5. ESTABLISH A FEEDBACK SYSTEM 
Purpose:
By establishing a feedback system, employees will keep abreast of changing expectations and update the current process as required.

Sharing Feedback:
Corporate Quality, Marketing, Sales and Front Line customer facing employees must keep upper management aware of changing customer needs so that business objectives and measurements may be changed accordingly.
It's also important to share feedback with workers in the process as well as customers and suppliers.


6. MONITOR MEASUREMENTS
Purpose: 
Employees identified as measurement owners must constantly evaluate their measurements, reassess customer needs, and continuously search for new ways to use data for continuous improvement.

Evaluate Measurements:
If your measurements are not accurately reflecting process performance or drive undesirable behavior, they should be removed. Update or install new measures as needed.

Benchmark Measures:
Benchmarking your process measurement performance relative to your competitors will be vital to competition. Benchmarking provides information to leaders that helps establish performance targets based on data from the marketplace. Benchmarking is a useful method to supply additional data and information but not to be used exclusively for changes or measurements. It's also important reminder that if you want to use Benchmarking as a means to be the best please realize you will not obtain that goal by simply Benchmarking another company (They will always be better than you).

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