Knowledge: The Prerequisite for Profound Change


In Part 1 of this series John Seddon argued that Agile, as practiced, is bereft of knowledge, hence its ubiquitous failure. Here he argues that ‘get knowledge’ is the starting-place for effective change.

Part 2: Knowledge: The Prerequisite for Profound Change

It may seem heretical to suggest that we make change without knowledge, but, as Deming pointed out, experience is not equivalent to knowledge; you can spend 20 years in an organisation without knowing how to change it for the better. Leaders, clients and stakeholders describe requirements or problems to solve on the basis of their current world view, governed by information from their current control systems, but what if their world view is flawed? What if there are bigger and different problems to solve?

In Part 1 I introduced the concept of failure demanddemand caused by a failure to do something or do something right for the customer. Managers of service organisations are usually unaware of its existence and importance. Their world view is locked into a performance paradigm that asks how much demand is occurring, how long do agents take to deal with demands and, therefore, how many agents do I need? If theirs is an organisation stuffed with failure demand they are missing a crucial lever for improvement. Instead they would seek to solve problems as defined by their current paradigm: How, for example, can we reduce transaction times and so cut costs? So leaders set targets for shorter transaction times or announce strategies to move transactions to digital channels and so on.

But if, say, their organisation exhibits 75% failure demand, imagine the economic improvement that could follow its eradication. Failure demand is an easy concept to understand. Clearly it represents a significant cost. But it also easy to misunderstand; inherent to their mental models, managers assume it is caused by failure in people and processes. But failure demand, by definition, is a signal that services don’t work effectively for customers. It signals a system problem. Tinkering about with people and processes won’t lead to its eradication.

The analyst’s job is to uncover the causes and they are all linked to the current control systems. Activity times, standardisation, specialisation, inspection – all of which (and more) appear on management’s dashboards – prevent the system from absorbing the variety of customer demands. You discover that ‘green’ on the RAG status is actually ‘red’ from the customers’ perspective. The reality is confirmed by analysis employing more useful measures, all derived from the purpose of the service from the customers’ point of view; true end-to-end times, on time as required, solved at the first transaction and the like. These expose the failure of the current system; they are a shock to managers who think their current “customer” measures are telling them something else. But they also reveal the opportunity. What if we could always deliver precisely as the customer wants? That is the bar for eradicating failure demand. It may seem high, but it is surprisingly easy to achieve if we change the way we think about control. The controls we need must be derived from the purpose – giving customer exactly what they need when they need it; the three most important of which are knowledge of customer demand (in customer terms), a focus on what constitutes value work for customers and achievement of purpose in customer terms.

Take, for example, Aviva UK’s repatriation of calls from India. Troubled by the increasing loss of customers they had the problem of moving the work of 500 agents in India back to the UK, where they had 200. When we met they had a plan which, naturally, was based on the assumption they’d need 500 more UK agents trained. But they followed the outline described above and as a consequence, created a far superior service in the UK with only 300 people. Who’d have put that number in any plan?

Portsmouth City Council in the UK was the first repairs organisation (in their case housing repairs) to create a service that delivers repairs on the day and at the time customers want. If your utility could do that you’d be delighted – and these designs operate at as much as 40% lower costs.

These and all other examples illustrate the profound benefits of making knowledge of the ‘what and why’ of performance as the starting-place for change. They learned, though analysis, the illusion of control provided by conventional means; they developed better means of control which eradicated the dysfunction caused by conventional controls and, as a consequence, experienced a profound improvement in performance, a level of improvement that never would have been countenanced in a plan. The result – customer-centric adaptability – is more in keeping with the spirit of the Agile Manifesto than Agile as currently practised.

Moreover the demonstrated benefits far exceed the benefits anticipated in strategic plans for digitising services. Evangelical digital advocates take note. Those employing “knowledge first” create better service designs without major IT programmes, indeed the current IT is often put to one side during the change and decommissioned as having been exposed as being part of the problem. The mantra for this approach to change is “IT last”. First is “get knowledge”, second “redesign” and then, and only then, should one turn to what IT can do to make further – albeit more marginal – performance improvements.

I’ll expand on “IT last” in Part 3.

Author: John Seddon, Author of Beyond Command and Control & Professor at Buckingham University

John Seddon is a management thinker and commentator, and currently a visiting professor at Buckingham University Business School. His latest book Beyond Command and Control is a detailed account of how leaders of service organisations have changed the way they think about the design and management of their organisations and achieved profound results.


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