MicroManaging the cups and saucers

Have you noticed how some big organisations micro-manage to an astonishing degree? I heard recently that one such organisation currently experiencing hard times, shedding staff whilst reorganising to “cut costs” couldn’t decide where to relocate the crockery used to serve refreshments in meetings.

In fact the final decision had to be delayed until the Regional Director returned from vacation. This in a company that is struggling to meet productivity targets, where managers report working long hours and weekends, and who are struggling to identify waste and non-value-adding work to eliminate.

Beating the Management system in Star Trek Voyager

In a Star Trek Voyager episode, the Doctor is kidnapped and taken to a facility on an alien planet where he is required to carry out treatment as ordered.

The Top People on the planet get the best treatment and an allocation of sufficient drugs. Lower level people have only a very small allocation and so are generally just left to die.

The Doctor is ethically disgusted. He discovers that, for the top level, the allocation of drugs is based on usage during the previous month. If patients are cured, the allocation of drugs diminishes.

The Doctor discovers that if he lies about his cure rates, his drug allocation remains high, so he can use the surplus to treat the low level patients also.

PRISM Consultancy International : Training and Courses for Process Improvement

Using Control Charts to predict number of potential customers - Part Two

In this control chart, managers are looking at the number of visitors to the show sites who have shown “more than a passing interest” in buying. This is subject to a good counting process with workable operational definitions, of course.

But comparing this chart with the previous Total visitors chart is interesting. The apparent winter/summer split is replicated, as is the special cause signal at Easter, but not so at August Bank Holiday. The summer system is more or less stable, with an average of 56 qualified prospects, varying predictably between 28 and 85.

So only around 1 in 4 of all visitors to show sites look like real potential customers. So is management trying to increase the total number of visitors to site? Or trying to improve the conversion process from what is known in the trade as a “carpet-treader” to genuinely interested prospects? It depends on their knowledge of the local situation, of course, but these are important questions that show that management is looking at the System, and not wasting their energy on the week-to-week vagaries of natural variation.

As a twist to the tale, management had a theory that increased spending on advertising at holiday time merely increased the total number of visitors to site, without a commensurate increase in nett visitors. So the following year, and with not a little trepidation, they did not spend additional money on holiday-time advertising. The result was as expected. The nett visitor numbers behaved exactly as they would have done with the advertising, and the Regional manager had saved £100,000 on the advertising budget which could be spent on other marketing experiments.

Using Control Charts to predict number of potential customers

Here a Region of a national house-building company are using process behaviour charts to understand the pattern of visits by potential customers to show home sites across the area.

Noteworthy are; (i) the two special cause signals of Easter and August Bank Hols; (ii) the apparent split of the pre-Easter/end of Winter period with the more promising spring/summer months; (iii) the otherwise stable pattern of visits with an average of just about 210 people each week, varying predictably between 126 and 293.

Any inclination by managers to get excited/depressed with the ups and downs of the numbers will be completely wasteful – this appears to be the natural variation of whatever system of house-buying is at work. If they want to increase the visitor numbers, they need to work on understanding what they need to do to intervene in this system and create an increase on a sustained basis.

The Chancellor, Gambling, and Systems Thinking

I saw this excerpt in the Guardian in March - sometimes even the Chancellor can see a System at work, and act accordingly so that everybody gains!

"Gordon Brown’s budget initiative to abolish betting taxes for punters has turned out to be a brilliant gamble, the National Audit Office reveals today.

The switch from a betting tax on punters to a tax on the profits of the bookmakers has led the three biggest firms……..to repatriate their offshore operations from places such as Gibraltar back to Britain, creating jobs.

Betting stakes … have quadrupled since the law was changed, and the value of bets has nearly doubled from £27bn to £53bn.

The change means the government gets much less money from individual bets, yet nearly all the revenue is recovered because punters place more of them.

MR BROWN DECIDED TO CHANGE THE SYSTEM after Customs and Excise predicted a huge drop in gambling duties because punters could avoid paying the tax by betting online. All the big operators set up offshore companies to compete with foreign rivals.

The change in the law meant it made no difference to punters where they placed their bets, and this has stemmed Treasury losses. "

Labour doesn't listen to its Customers

Justine Greening - newly elected Tory MP for Putney gives an interesting perspective on Labour and the electorate in a Guardian interview (9th May).

"My economics background tells me that if the Labour Government was a company and ignored its customer, increasing its cost base as much as Labour have, shareholders would sack the directors. If it ignores people and increases their taxes........taxpayers deserve just as much consideration"

The cost and the value of performance data

It certainly costs money to collect data about the performance of your assets and infrastructure. This, of course, should represent an investment, giving insight into what's going on, notice of possible problems ahead, and signals for improvement.

All too often, the accountants see the cost of this, but not the value - and it becomes an easy target for short term cost savings.

"Modern Railways" for May 2005 gives an example. The train company First Great Western is getting very worried about increasing numbers of speed restrictions on the routes they run on. Too much make-do-and-mend by Railtrack has left a huge backlog of work.

Also, the removal by Railtrack of a "proper monitoring system" has led to "regular embankment collapses" which now require massive works to stabilise and rectify.

"A stitch in time saves nine" - but of course you need the data capture facility to know where and when a stitch is necessary.

Newspapers - report elections or sway elections?

"It was the Sun what won it" is an apochryphal newspaper headline from an election gone by. Today's Guardian carries a piece about tactical voting, urging readers to be sceptical about the extent that newspapers can influence their audience.

"Whenever tactical voting is mentioned, someone usually mentions the Observer polls of marginal seats in 1997, which are credited with helping to defeat a string of Conservative MPs, including Michael Portillo.

It was, it claimed, "the Obs what won it". Yet there is almost no evidence that these polls had any influence on the result.

The polls showed the Tories in deep trouble and heading for a string of defeats, and four days later, hey presto, that's what happened.

The Observer observed - it did not influence."

Some might say - the difference between enumerative and analytic studies.