Systems Thinking, Cultural Change is Free

I have really been inspired by John Seddon’s Cultural Change is Free video (skip the first 5 minutes intro/waffle).

Here are the key points I took from his talk (which you may find useful if you dont have the time to watch the whole talk):

When asked how much work we have coming in, how many people we have, and how long it takes – the normal answer is to set targets. Morale goes down having to work to arbitrary targets.

If you are incentivised to sell only high value items then what happens to the majority of low value work? It gets ignored. When you incentivise behaviour you get less of the work you want, people get focused on the incentive not on doing the work.

You need to understand type and frequency of demand in customer terms; What is the customer trying to pull from your system?

  • Value demand – thats why we are here
  • Failure demand – failure to do something or do something right for the customer

Failure demand often runs over 50% of the system e.g. “you sent me a blue one and I wanted a green one” “it didnt fit” “it doesnt work”

Study demand in customer terms until you predict demand going forward. A lot of demand is predictable. Its only the predictable failure demand that you can turn off. Turning off failure demand is a massive economic lever. Deming says things will always go wrong, you need to find out what goes wrong predictably. Only the predictable is preventable. The only way to turn off predictable failure demand is to redesign the service.

Obsession with costs is the wrong obsession. If you manage costs your costs go up.

Variation is in the work, not in the workforce.

Working on people only tackles 5% working on the system tackles the other 95%

Study the work, study the causes of variation, what are the causes; the system is 95% of the answer. Take the big ones and then go to work on changing them, you will then see dramatic improvements. For example

  • Is the worker trained on what the customer wants?
  • Has the management studied demand?
  • Are procedures working?
  • Is the IT system working?
  • Have the people in marketing sent something to the customer that others arent aware of?

Train your workers on high frequency value demand; stuff we get a lot of. They will get demand they are not trained for, they need to recognise this, when it happens they pull support from a specialist or their manager, the work stays with them and they work with the manager or specialist to complete it. The rate of learning for the worker becomes very fast.

Inevitably some of the work has to go elsewhere, so we need to concentrate on flow. Does the person about to hand off work understand what “clean” looks like to the person receiving it in the flow? They visit the person who will receive it and ask “what do you do with it” “what do you need from me for it to be clean when it arrives?” If everyone does this through the value chain you see vast improvements and far less rework.

You design the system to see the waste, when it is removed the system improves. When you improve the design to handle demand that hits the front of the system and the flow of work that gets handed off – costs go down by a lot.

If you want someone to do a good job then design a good job to do. The worker has to be responsible and have the means to control their own work. The job of management changes to a co-operative role, working on the system, fixing things outside of the workers control.

Counter intuitive truths

  • Cost is not in activity, cost is in flow
  • Standardisation does not give control, it creates waste
  • Targets and all other abitery measures make your system worse

Systemic relationship between Purpose -> Measures -> Method

When you impose arbitrary measures such as targets into your system you create a defacto purpose which is to meet the targets, and you constrain method.

When you derive your measures from the purpose of the service from the customers point of view, and put those measures in the hands of the people doing the work, you liberate method. Innovation occurs, we are bringing the brain to work, we are using ingenuity; not to survive in the system, but to be engaged and understanding how to improve their work. When you design systems this way people actually work harder and they are less stressed!

There are 3 things every manager needs to know about targets

  1. Targets and all other arbitrary measures always make performance worse
  2. There is no reliable method for setting a target
  3. When you use real measures derived from the purpose of the work from the customers point of view, in the hands of the workers, you achieve a level of improvement you would never have dreamed of setting as a target.

Culture change is free. Change is emergent. When you change the system, the behaviour changes.

The nature of change; we are taught if you want to change something you have to have a plan, set some milestones with some deliverables, and perform cost benefit analysis. Systems thinkers say there is no requirement for a plan, the only plan is get knowledge, change starts by studying the current system.

Follow the value work through the flow, see where they go. There is only 2 types of work going on; the work the customer wants to pull and everything else is waste. Forget the 7 wastes in manufacturing.
You cant get rid of waste until you understand its causes, so you need to understand what is causing the waste; design of you system, targets, IT systems etc

As you start a change by studying the work, you start to learn this mean me too! If you stop doing the wrong thing you stop getting worse. If you want people to innovate the responsibility has to be with them. Ask what measures are you using to understand and improve the work?

Economy comes through flow and not scale, the only way to absorb variety is to use people; to design them into proper jobs in these systems, we need human solutions to these human problems.

2 thoughts on “Systems Thinking, Cultural Change is Free

  1. Thank you so much for this summary. Reading it was very helpful along with watching the video. I was reminded of much of what I tried was involved in doing as part of Process Review and subsequently as Head of Organisational Engineering at BP Exploration. Then as now, the shift from ‘what’ to ‘how’ in the daily operations was both the most difficult and most effective way to achieve lasting change and deliver results.

    Incidentally, your post was highlighted as connected to my latest entry at
    http://normanstrauss.wordpress.com/2009/07/31/systems-thinking-in-public-sector-has-the-application-time-finally-come/

  2. Pingback: Kanban Results « Lean and Kanban

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