Knowledge-Based Change – The Vanguard Method

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Our guest is John Seddon from Vanguard Consulting, an author of a number of books including “The Vanguard Method” and “Freedom from Command and Control: Rethinking Management for Lean Service”.

In this interview, John shares with us how command and control is failing us, his thoughts on leadership and an insight into the Vanguard Method, a method that has saved service organizations millions upon millions of dollars.

Transcript from Episode 65: “Knowledge-based Change – The Vanguard Method”

Could you give a brief review of your background and how you came to write the book “Freedom from Command and Control”?

In the 1970s, I was a prison psychologist, a clinical psychologist working with prisoners in prisons. I met a professor of occupational psychology who said to me “Instead of working with individuals, why don’t you work with the whole system? You will have far more impact.” You hear people say things like that and you think that there must be some truth in that. I went to study under him for an MSc and I switched then to occupational psychology. I became very interested in a subject called Intervention theory, which is how you go in and help people change, so they can carry on doing things for themselves, in essence.

Then I got lucky in two ways. By the early 1980s, I was being asked to study TQM programs. This is where we give people training and tools and send them out to do projects on the problems that managers think they’ve got. I had to read all of the quality gurus. I was hugely influenced by the work of W. Edwards Sterling who reminds us that we invented management, mankind invented management so we can change it if current management doesn’t work very well and that’s absolutely true. And he said that we must understand and manage our organizations and systems. And I said how do you do that in service organizations.

Then I got lucky in another way, I met a man called Peter Edwards who was the director of the division of a company, subsequently executive in series of companies and we worked together for about 12 to 13 years, turning companies around. That’s when I really developed an understanding of what to do and how to do it. So, “Freedom from Command and Control” which was published in 2003 reflected all of the learning that was going on through the late 80s and then developed through the 90s, in terms of – How do you do this?

How do you take a service organization, study it, redesign it and make it a whole lot better? I think all of the books that I have written are really as much as I knew at the time. That 2003 book,  which still sells around the world, was what I knew in 2003. It sells a lot in Russia, you wouldn’t believe that, would you?

While you were writing it what were you hoping that the readers would get?

Command and control is a man-made paradigm. I don’t know what it’s like in Ireland but in the UK, we are always getting reports of how we are left behind the world in productivity. At a personal level, we have become very irritated with companies that say they are into customers, but do anything other than be into customers. The customer service is no more than a slogan.
We have service organizations which have people where morale is low and so they think it’s a good idea to try and engage the people. But that’s not the problem. Basically what command and control does is it hides the major opportunities to improve. The clients that I work with get massive jumps in revenue in the quality of service, in their costs they fall dramatically and most importantly, big improvements in morale because you change the way work’s designed.

In terms of command and control, how do you believe it’s actually failing us?

I think it’s really interesting, the book “Freedom from Command and Control” sells because it’s got the phrase command and control. I think a lot of people know that there’s a problem with command and control. And of the two words, people tend to concentrate on the first word “command” you know, bosses are being too bossy and that’s not good, so let’s have some empowerment programs or engagement programs, let’s be nicer to our people, let’s have leaders be coaches, you know that kind of stuff. I think that’s fundamentally wrong.

The word we have to look at is “control”. Our theories of control are the problem in our organizations and actually, our methods of control send them more out of control than in control. This is part of what leaders learn when they go to the Vanguard method. Without changing the theory of control, you won’t change the performance of the system.

How control actually leads to out-of-control?

Let’s take an example. When you think about service organizations, one of the dominant archetypes in service organizations is the kind of call center, back office design. Call centres happened in the mid 80s because along came automated co-distribution systems which means you can take calls out of departments, stick them in the call center, put the call center in some low-wage part of the UK or Ireland or indeed overseas and you worry about how much work is coming in, how many people have I got, and how long do they take to do stuff. I will come to the controls in a minute. The next kind of event in industrialization services is the back office.

This idea was “Okay, so, we’ve got a call center and they call centers working but you know people have to do things after the call which they used to call “wrap time” That’s the problem because customers are still ringing. We invented this idea, it is actually an American who invented it, the back office which was let’s decouple the customer from the service who will find out in the course and find out what they want, send it to the back office. Now, no interruptions from the customers and we can really sweat the labour. That’s really what that kind of service is about, it’s about sweating the labour.

One of the principals of controls is an activity, the number of things you do, how long you take to do things, whether you do things according to service levels, standard times and everyone’s work is inspected. I suppose most of you recognize that don’t you, I’m sure a lot of your listeners will recognize that it’s the most common archetype for service design. All around the world, you know wherever we go in the world it’s the same kind of thing.

So, in terms of counteracting that or improving that, what’s the solution?

If you stand up in a room and say to the managers “This is a kind of design you’ve got and it doesn’t work very well” they’ll become quite defensive. It’s important that you don’t do that. It’s important to take the managers out to study. If you’re going to study that kind of system “you got a call center and back office and the work is going through it”, one of the things that you study is demand. In other words, the calls that are coming in from customers, and when you do that, there are two kinds of demands to focus on.

The first is the value demand, that’s why we’re here, these people want the service, they have got a problem and they want you to solve. The other type of demand I call failure demand, which is demand caused by a failure to do something or do something right for the customer. You sent me a green when I asked for a blue one, it hasn’t arrived, it isn’t fixed, that kind of things.

You might be surprised to learn that in utilities, for example, failure demand can run as high as 80 to 90% of all the demanding to the system. In insurance companies 40 to 60% of the demand into the system, in the health service very high. This, in a sense, starts to open the box “oh we’ve got a problem” Now, if you’re a conventional command and control thinker and you learn that 80% or whatever of demand are failure demands, you will be naturally inclined because you think that way, to blame the people. If these bloody people would follow the processes, if they were doing as they’re told, they served the customer, we wouldn’t have failure demand.

Well actually, that’s wrong and so you have to kind of help them to continue to study and what they learn is that all of their current controls are the problem. If you got a front office and back office, you got two views of the customer. One is based on a conversation with the customer and another based on a series of rules or protocols. If you’re managing people’s activity and limiting their time then that will stop the system absorbing variety and so a lot of customers won’t get satisfaction and you will create a failure demand. Same if you work to standard times. If you specialize the work which is quite common, you increase the number of handovers that increases the errors.

If you inspect people then the people worry about meeting the requirements for the inspection, which is not the same as serving the customers. Basically, what it teaches you is your system doesn’t work. It’s the system that’s creating failure in demand. Now you got people in a place where they go “Okay, I understand, this isn’t working. What are we going to do about it?” Then we help them redesigning.

That is basically, redesigning their whole system?

Yes. The interesting thing about redesigning the service is that they are gonna do things that otherwise they never would have thought possible. For example, if you say to a leader “What we really want to do is to improve the services and give customers what customers need.” They go “Don’t be silly, John, if you do that they will want the shop” Well actually they don’t. If you say to them “What we’re going to do is to make sure that the frontline can handle more and more customer demand” they go “No, no, no, my people can’t learn everything” but actually they do.

So the basic architecture for the redesign is, first of all, to understand demand and in this case value demand and study them until you can predict demand going forward. So now we know, I mean this is something else they wouldn’t believe “You can’t predict demand” but actually you can. If you studied demand, take time series data and when you are in a position where you can predict the type and frequency of demand coming into your service organization, then you can move to a place where you can build the expertise in the first point of transaction, to handle what customers want.

Typically, what you do is you teach the people first of all to handle the highest frequency demands and stuff we’re going to get a lot of. And you put them into work. Now typically the insurance companies that reduce the training time from eight weeks to two and they go to work confident, they can handle stuff that they know it’s coming in. When they get something they are not trained for, because we know it’s coming because we have understood the predictability of demand, we can build expertise around them where these people can help them learn things that they yet don’t know how to do. When you get what you’re not trained for, you put up your hand you get help.

This is a very interesting world of work that we measure the actual time it takes to solve customer problems, so there are no more arbitrary measures when you got to do this in 3 minutes or 10 minutes or whatever it is. The consequence is that you have got a design now where people go to work every day, they solve problems for customers and they learn how to solve more problems for customers and they got a first manager who is helping them do that. And we separated the resource planning work from the operation of the business. Then that improves the resource planning work, as well. I mean imagine the impact of that on the worker.

Instead of being somebody who sits on the phone and gets paid attention to when the activity steps don’t look right by some idiot who sits in the glass box down the end of the corridor, you are now working in a place where you go to work every day, solve problems, learn how to solve more problems, and you got constructive collegiate relationship with your manager. And the failure of demand goes down. Because if you design an effective service, then you don’t get the failure demand.

Can you share just a couple of your views on where we might be going wrong with our leadership strategy and potentially training?

I often work with leaders that say they’re going to be entirely committed to this change and I’ll tell them I don’t want commitment, what I want is understanding. It’s really not uncommon for us to go into an organization where the leader says to us “Look, what you do is really good, we have seen the results people get, now go and do it with these people over there, sort out those services out” and basically we say “No.

Because you see if we go and help them and they understand things that you currently wouldn’t believe are true, then you’re going to have a train crash and I don’t want to be part of that.” So, the leaders have to understand this and therefore to understand it the leaders have to start the work with studying themselves. And when they can see the opportunity, when I can see the economics associated with that opportunity, then we help them build a plan for change, which they lead through their organization.

Can you tell us a little bit of what is Vanguard method and how it works?

It’s a very unusual way of approaching change because most often we think we should start a change with some kind of place we want to be in or have a cost-benefit analysis, deliverables, and milestones, that kind of stuff. We don’t do any of that. We simply say that change is based on knowledge and the work that I’ve developed is the work that helps you study and get knowledge of a service organization. There are many different types of service organization but basically, the Vanguard method is a very structured way to study to get knowledge.

Then on the basis of that knowledge, redesign it and in the course of doing that you help people understand the relationship between the performance of their organization, the system they have designed and the way they think. Ultimately we’re looking to change the way they think and if you don’t get a change in the way you think, you won’t get the change in the system, you won’t get a change in performance.

How is it kicked off within an organization that invites you in, is it a workshop type format?

The very first that we do is that we go and have a look ourselves – what we call familiarization. We mustn’t assume that this organization is the same as every other one we walked into that does this type of thing. We just go and have a look, see what controls are being used, how the management roles are designed, what measures are being used. As a result of our familiarization, the only thing we are going to do next is to take the leaders out on what we call a scoping exercise, so we can show them things that would not otherwise believe are true. And a scoping exercise is efficient for them to see the size of the opportunity.

Does something have to go really wrong in an organization before they call you guys in or what typically kicks off their “we need help” kind of thinking?

Not at all. Some are clearly are in trouble. A lot of companies I worked in the 90s were losing money, that gets you focused. There are many companies in which really the leaders come to it, they are curious, they have some have thoughts in their mind that what they’re doing isn’t working very well. I remember a guy called Owen Buckwell, one of the first people we worked with in housing repairs and local authority. He was rated by our audit commission as being a 4-star service but he knew in his heart it wasn’t good because he could feel how the tenants were talking about it and the complaints that he had. People come at it in a variety of ways, they are not all in the desperate straits.

Is there a particular sector or service type of organization that really needs this method, that is typically getting a lot of this stuff wrong?

I mean we work exclusively in service, in the service organization sector. Within that, we work with utilities, insurance, banking, local authorities, police, court services,  telecoms, construction sector, all sorts. And personal services, all sorts. And all of these, if they have a conventional command and control design, then you know we’re good for them. Of course, the question is if they are aware that we’re here and that they’d have to change the way they think. There’s plenty of work to do, tons of work to do.

We have listeners in the service sector. Is there some self-check they can do?

The simplest thing to do to start opening the box is what I talked about earlier – get yourself down to the frontline where customers are ringing in or turning up and to study what the customers say and ask yourself the question from a customer’s point of view “Is this a value demand, why we are here, or is just a failure demand, representing a failure to do something or to do something right?” That starts opening the box. If you got a conventional command and control design you’ll have a lot of failure demand. Then you mustn’t make the mistake of blaming the people, then you gotta take the steps to understand how the system creates it and that will create an agenda for you to change the system.

Do you see it occurring in the software industry?

Oh yeah. We do a lot of work in software development. In fact, we do a lot of work with IT generally. Most of our big clients, of course, have big IT departments and typically what happens is we go in and help them redesign their services to improve the quality of the services and then they turn around and say “We have to go and change the way we think about IT because we’ve had this conventional view that change has to be led by IT, that we have to have loads of projects and we have to bid for money, for resources.” We teach people that’s the wrong way to go with IT.

Even with agile. I mean I regard agile as just doing the wrong thing faster. Our approach is to involve the IT people right from the start, in the study phase and in the redesign. So, three steps are – study, redesign to improve the service and then where the IT is involved, the third step is to pull the new IT into a new, better, stable redesign. The consequence for big companies is they save hundreds of millions on their IT because now they’re only getting what we need as opposed to trying to design everything through IT.

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