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Vanguard News - February 2010
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In this issue:
Do charities soak up the cost of failure?
HMRC doesn't pick up the phone
Lesley is too busy...
Culture change is free
Should we legislate to drive costs up?
IT goons reap as taxpayers pick up the costs
Evidence on the folly of out-sourcing
Volume is not value
CBL doesn't provide choice
Re-thinking lean service, the video
A new book
Looking for an interim systems thinker?
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Do charities soak up the cost of failure?
Last month I learned more about what is going on downstream from HMRC. On example
illustrates: A charity provides volunteers to sort out peoples' tax problems,
because these people have difficulty getting service from HMRC. The charity helps
about 20,000 people a year and by their estimate 95% of this work would not occur
if HMRC worked. Yes, it is failure demand, and abundant.
The people running the charity have worked out it would cost HMRC about £500K if
HMRC were to help these people. The charity receives less than 20% of that from
HMRC, requiring some financial support from other sources, and is only able to
operate because most of the advisers give their time for free. Many of these
advisers used to be tax experts working for HMRC. Now they delight in being able
to help people solve their problems (without recompense), something they were
unable to do while employed by HMRC.
The people at the charity reckon that if the work they do were provided by the
private sector it would cost the poor punters about £2.5M in advice fees. They
also expressed concern that most of the people they help are not on the internet.
With Gordon Brown's promise (labelled 'Smarter Government') of internet-only tax
services and all politicians' belief in the private-sector being better, what can
we look forward to? Only monstrously expensive inaccessible services for those who
need them most, with expensive 'advice' eating into the monies they are owed.
This government used to talk about social exclusion, yet these services exclude
by design; dumber government I'd say.
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HMRC doesn't pick up the phone
Last month the National Audit Office reported that HMRC failed to pick up 44
million calls over the last year, 43% of the total. If you did that in the private
sector you wouldn't last long.
As I have noted in previous newsletters, much of this will be failure demand -
entirely under HMRC's control and caused by their wrong-headed design, foisted
on gullible managers by the lean tool-heads. HMRC doesn't study demand because
the tool-heads don't know how to study the system, instead bashing out their
tools to standardise the work - a cause of failure demand - and getting workers
solving management's wrong problems (in the name of being a happy problem-solving
culture - see next).
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Lesley is too busy...
I have been trying to get hold of Lesley Strathie, the new boss of HMRC. I read
that she intends to tackle morale which is reported to be shockingly bad, along
with sickness and absence. These are always signs that the system is at fault,
and I wanted to help her understand that. I wanted to advise her that to do
anything to the people - a 'culture change' or 'people programme' - would not
only fail to address the causes, it would be counter-productive. In any event,
Lesley might want to ponder on why it is that the happy-clappy team problem-solving
culture brought in by the lean tool-heads hasn't done the trick. [They get people to
problem-solve why they haven't met today's targets... you couldn't make it up]
Lesley, sadly, is already doing the wrong thing. HMRC has had something called a
'cultural inventory' - a complete waste of time and money - the results of which
fingered 'management' as the problem. We can anticipate lots of wasted effort on
HMRC's 'management culture' while the system over which management presides fails
to achieve its purpose.
I anticipated that Lesley might have heard of me as I have been a regular critic
of HMRC's 'lean' programme. I wanted to tell her that I had offered her predecessors
a meeting to explain these criticisms, but none had taken it up. Lesley claims to
be a big advocate of 'lean' (oh dear), so in the hope of getting her curious about
what has gone wrong at HMRC I sent her a copy of my article explaining the reasons
for the failure of 'lean' ('Re-thinking lean service'). I also wanted to encourage
her to read the book I mentioned in my last newsletter - all about how 'lean' has
undermined morale in manufacturing.
But Lesley was too busy to come to the phone. Just like the rest of HMRC.
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Culture change is free
If Lesley hadn't been too busy I would have explained not only that the current
morale problems are due to the system but, more importantly, culture change is
free! She does not have to waste public money trying to do the wrong thing. By
changing the system around to achieving its purpose she'll drive out costs as
service improves and because the right system would put people in control, doing
a great job, morale would be transformed.
I discovered of the folly of culture change programmes years ago, indeed I used
to do that junk myself. I gave it up when I learned how dumb it is; I saw for
myself the impact of a system change on behaviour (profound and immense). I never
looked back. I wrote about the experiences that taught me this for Quality World.
You can find the article at: http://www.systemsthinking.co.uk/6-seddon-jan10.asp
You might like to send it to Lesley; she needs help.
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Should we legislate to drive costs up?
Last month a goon from one of the big consultancies suggested in Local Government
Chronicle's pages that local authorities should be legally mandated to share services.
Just look around. The shared services programme for the Research Councils (sharing
IT, HR and finance) was bought at £40M and is now forecast to cost £120M, and it
ain't over 'til the shared services work (which they don't and probably won't).
Much the same has been reported with the shared services initiative at the Department
for Transport: Sharing HR and finance was supposed to save the taxpayer £57m; but
it is now on track to cost £81M.
Meanwhile a spokesman for CIPFA (the mouthpiece for accountants in local government)
claims shared services will work if services are simplified and standardised. He has
bought the line peddled by the big consultancies; 'simplify, standardise, then
centralise' is their mantra. All plausible stuff to the wrong-headed thinker.
The evidence for the efficacy of shared services just isn't there. On the contrary,
all the evidence points to expensive failure. Why do they fail? Because simplifying
and standardising stops the services from absorbing variety; locking these designs
in, by control through IT systems, means you lock in high costs while the 'new'
services fail. Further, this means spending more money on changing the IT systems
incrementally (when they should be abandoned). These follies get on track to consume
money as they compound failure with more failure.
Its only people that can absorb variety; and it is for that reason that amazing
improvements can be achieved through re-design - designing the services against
demand, putting people in control. The results from re-designing services: anything
between 40 to 100 percent improvement in efficiency and, always, massive improvements
in service. The results from sharing services if you do it right: a few percent
through fewer managers, buildings and the like. If we make it a legal obligation
to share services we'll drive in costs for the long term. The only winners will
be the goons.
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IT goons reap as taxpayers pick up the costs
Just the most recent in a line of reports and publications on the massive costs
associated with IT-dominated public-sector reform:
http://www.independent.co.uk/news/uk/politics/labours-computer-blunders-cost-16326bn-1871967.html
It is the approach - the way we go about IT - that is at fault. For more read 'Is
IT bugging you?' in the articles section of the web site.
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Evidence on the folly of out-sourcing
Along with sharing services, 'out-sourcing' has been a favoured mantra of the regime;
the centre publishes 'strategic advice' on the need, and the Audit Commission bullies
local authorities into compliance (you get approval for having a plan for 'partnerships'
which can include private-sector partners). Yet we find that many local authorities are
now 'in-sourcing' - a euphemism for discovering that out-sourcing was costing a fortune
and rescuing the service back in-house.
A report by the Association for Public-Sector Excellence shows the primary reason for
getting out of out-sourced contracts is cost. No surprise there then. I have been amazed
at the ways in which private-sector providers ('partners') stitch up local authorities
into deals that can only get more expensive. The classic is to contract on the basis of
transaction volumes then through providing a lousy service they watch the volumes - and
their revenue - go up.
I recall talking with the chief executive of what was then HBS. We were standing in
his 'back-office' for out-sourced benefits processing in a town up-North. He had
seen the results of our work using systems thinking to re-design benefits and was
saying he wanted to take the ideas and sell them to other councils. Aside from
whether his organisation had that competence, I told him the place to start could
be with those councils for who he was providing an out-sourced service. I said he
could go to them with an amazing proposition: to help them design their benefits
service so all benefits could be processed in less than a week and without any
need for out-sourcing. He just looked at me and said 'that wouldn't be very
commercial'. He thought I was naive. You can guess what I thought of him.
You can get the APSE report at: http://www.apse.org.uk/publications/order-form/iinsourcing.pdf
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Volume is not value
The Audit Commission seems to be getting lots of copy in the public-sector media;
I think it smacks of desperation to make its case for survival. One example is its
crowing about the number of 'hits' the new 'Oneplace' web site is getting. Oneplace
publishes all the Audit Commission reports for local authority services. Apparently
in the first nineteen days the site had one million hits. The chairman of the Audit
Commission said '[Oneplace is] an instant hit with those who use, pay for, provide
and report on public services'. Oh really?
I've been asking around. I am finding (and no surprise) that the people who are
clicking on Oneplace are local authority people who want to see what the Audit
Commission has published about them. I have yet to find a citizen who has used
it to find out anything about their local authority. It is to make the most
fundamental error in the web world; knowing the number of clicks tells you
nothing about the value that people are trying to 'pull'.
Further, and as all systems thinkers know, the ratings and assessments provided
on Oneplace are unreliable; they are the products of the current assessment regime.
No surprise then that local authorities are now arguing with what has been published.
Oneplace? No. Dumbplace, certainly.
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CBL doesn't provide choice
In the last newsletter I mentioned how Steve Bundred (chief executive of the Audit
Commission) thought of choice-based lettings (CBL) as an 'innovation'. Another
person present in our meeting pointed to the fact that I had written a whole chapter
on why it was a dumb idea. More evidence has been published at:
http://www.insidehousing.co.uk/story.aspx?storycode=6508214
But it seems Bundred is not interested in evidence. As he replied to me (see last
newsletter): if he doesn't agree with something he takes no interest. Just what
you want from a public servant.
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Re-thinking lean service, the video
For those of you who prefer watching TV to reading, I did a speech on how 'lean'
went wrong and it was videoed. You can watch the video at:
http://www.infoq.com/presentations/rethinking-lean-service
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A new book
In March Triarchy Press will be publishing a book of case studies, written by
systems thinkers from the public sector. As you might imagine, all the cases
show massive improvement and were only achievable by ignoring the nonsense rained
down from above. We are having a launch event in London on March 9th. If you want
to pop along get in touch with Charlotte Pell: charlotte.pell@vanguardconsult.co.uk
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Looking for an interim systems thinker?
I know of a couple of Vanguard-trained competent systems thinkers looking for
interim work. If you are looking for an interim systems thinker to make a real
difference, let me know.
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Thanks for reading!
John Seddon
john@vanguardconsult.co.uk
Author: 'Systems Thinking in the Public Sector', available from Triarchy Press:
www.triarchypress.com and 'Freedom from command and control: a better way to make
the work work' available from Vanguard (www.systemsthinking.co.uk).. 'Freedom from
command and control' is also available in the US from:
http://www.productivitypress.com/productdetails.cfm?SKU=3276
Vanguard Consulting: Developers of the Vanguard Method, helping organisations change
from a command and control to a systems design. Beware of imitators, as Vanguard has
developed solutions for sectors others claim to be able to provide the same service.
If providers are not accredited to the Vanguard Method you should not expect a
Vanguard service.
www.thesystemsthinkingreview.co.uk A web-site devoted to Systems Thinking in the
public sector.
Systems Thinking People - a service helping systems thinkers find suitable work
and helping organisations fund suitable systems thinkers. www.systemsthinkingpeople.com
Vanguard Capchart - simple-to-use tool for creating capability measures.
http://www.vanguardcapchart.com/
Other Vanguard sites around the world:
Ireland: www.vanguard-ireland.com
Scotland: www.vanguardscotland.co.uk
Netherlands: www.vanguardnederland.nl
Denmark: www.vanguard-consult.dk
Sweden: www.vanguard-consult.se
USA: www.newsystemsthinking.com
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