John Seddon’s Thoughts on Systems Thinking and the Public Sector

1. John Seddon’s Thoughts on Systems Thinking and the Public Sector Jim Mather MSP

2. John Seddon ‘Systems Thinking and the Public Sector’ • Systems Thinking • Current problems & the need for Systems Thinking • Public Sector Specifics • How Systems Thinking can work for us • Conclusions, Costs and Choice

3. Systems Thinking • Systems Thinking is the Central Idea the relationship that links: • Purpose • Measure • When you derive measures from purpose you liberate method • Method • By deriving measures from purpose (defined from the customers' viewpoint), you liberate method: • Innovation and Improvement in the execution of work follow

4. To start at the start • The first question the systems thinker asks is • "What is the purpose of this service from the customers point of view?” • The purpose of Service Organisations is to absorb the variety of demand ( the starting point of the systems approach) • It is essential to know what the demands are • If you want customers to "pull value" from your system, you need to know the nature of the demands that customers place on the system in customer terms • A customer typology of demand is essential to the design of the system • Systems designs put people at the heart of the enterprise enabling them to contribute. • People are key to absorbing variety • Whenever you hear the word "Best" think "Better" for everything can be improved. • Everything you need to know in order to improve something will be found in your own system, if you go looking elsewhere you are looking in the wrong place

5. Customer Demand & Waste • Think of the system as one that brings (largely) intangible expertise together in response to the variety of customer demands • Ohno* taught that focusing on demand and flow optimises the use of resources because it exposes waste and the causes of waste. • Paradox • Focus on the flow and costs fall • Focus on costs and costs rise • Remedies and Solutions • Turning off the causes of failure demand is one of the greatest economic levers available to managers: • It has an immediate impact on capacity • The fast way to improve the capacity of a system is to remove the WASTE. • You cannot remove the waste without removing the causes of waste. * Taiichi Ohno is considered to be the father of the Toyota Production System

6. Demand Predictability and System Design • Before managers act on demand it is essential to know whether demand is predictable or unpredictable • Systems Thinking Designs challenge the current norms of "dumbing down" service - e.g hire cheap people, give them scripts, and computer based diagnostics. • Alternative smartening up - more salary costs but overall lower costs and more business. • Most Managers have little idea how current systems inhibit contribution from staff • Principles for Systems Designs • Train against demand • Make the worker the inspector • Measure for Control and Improvement • Define the manager's job as being to "Act on the system"

7. Cooperation between Agencies • When their joint activities are based on knowledge and a common "super-goal" - example: • Food Standards Agency: • Original Goal – “Minimise Risk to Public Health” • Super Goal – “Work with the food industry to progressively increase the volume and value of safe, healthy, nutritious food to improve public health and well-being”

8. Making a start - Implement the Vanguard Model for "Check" • What is the purpose? • What are the types and frequencies of demand? • How well does the system respond to demand? • It is this measure that gives managers their first shock. • For their existing measures will have been telling them something quite different • Studying the flow • Follow successive "pieces of work" through the system to build and understanding of what is happening • Understanding System conditions • Waste is man-made • Remove the causes of waste • Management Thinking • See what is wrong in current thinking - targets and procedures • Recognise that at the heart of a system is a change to MEASURES

9. Legislation & IT • If legislation turns out to be wrong, you have to change the law - as indeed happened to "Best Value" - which was removed from the Statute Book without fanfare • However, incapacity to act is often a feature of "The System". • The better way to introduce IT is to... • 1. Understand the work as a system • 2. Improve the way it works without changing the IT (treat it as a constraint or turn it off) • 3. And when the design is stable "pull" the new IT into the new design.

10. Reforming the "Regime" • Managers fear anarchy and the loss of "control" • They fail to realise that the regime is not exerting control – instead: • It is driving public services out of control • It is already anarchic • At best the regime is in control of nothing • At worst it is damaging service and morale

11. There are 5 types of waste associated with the current regime: • The Costs of people writing specifications • Guidance, Standards and Reporting Schedules etc. • The Cost of inspection • The Cost of Preparing for Inspection • The Cost of Specifications being Wrong • The Costs of Demoralisation

12. The Efficiencies released by stopping the regime are incalculable • The steps needed are.. • Changing the locus of control • Instead of compliance we need innovation, freedom to allow people to meet real demand • Allow people to derive intrinsic motivation from their work • Delivering "inspection" as ONE question: • “What measurers are you using to help you understand improve the work?” With the Measures framed in terms that matter to the customers • Removes waste - nothing should be created for the regime or its inspectors

13. The Steps (2 of 2) • 3. Learning about what works • The efforts of the centre should be focused on understanding what works and disseminating information about method • But with no mandatory PUSH • Leaving downstream managers free to decide what best suits their circumstances • 4. Developing a better view of human nature • Healthier Assumptions • People are more motivated by the desire for self esteem • They are vocational and they want to serve

14. There are good reasons to be positive about people • They are more than capable of using their own ingenuity • They want to take the initiative • Most are open to the idea that Cooperation will serve our purposes better than competition and disunity • Hence they are keen to accept a unifying goal • Peoples' behaviour is a function of their system • Only by changing the regime can we expect to change behaviour – Method- Purpose - Measures

15. "Front Office - Back Office" splits introduce waste. • One of the most alarming drivers of failure demand is the government drive for "Back Office" functions. • Moving work to a central back office: • Removes Continuity • Creates waste - handovers, rework, duplication • Lengthens the time to deliver a service • Creates yet more failure demand • And it isn't long before managers deprived of local admin finds way to recreate and duplicate it locally • When telephone activity becomes disconnected with the rest of the work waster ensues • Standardisation inhibits the systems ability to absorb variety and meet customers’ needs quickly and efficiently

16. Specifications & Targets • There is now an industry - a management factory - concerned with writing specifications. • The specifications are always quite simply wrong • Because codifying method is to impedes thinking. • They do not constitute the best way to design services • Worse, they drive in waste: poor service, high cost and low morale. • “94% of the problems down to the system” – W. Edwards Deming • Targets • Targets drive people to use their ingenuity to meet target, not improve performance. • It is not a matter of having fewer targets we should have none • Their encouragement to cheat is "systemic"

17. Economies of Scale & Activity Management • Ideas like "Economies of Scale" and "Activity Management" are thought of as "no-brainers" • But their manifestations: call centres, back office factories, targets etc., are forced on the public sector without evaluation • Companies committed to "Economies of Scale" inevitably find the approach bankrupt • Toyota approach is an "Economy of Flow" • The cost of service is in flow, not in transactions: • Failure demand is under the organisation's control • It is a direct result of poorly designed flow • You discover these phenomena only when you learn to study demand • i.e. Why Customers Call – the nature and drivers of these calls

18. The Purpose of Service Organisations • To absorb the variety of demand • The starting point of the systems approach • To do that - it is essential to know what the demands are

19. UK Government's Reform Regime • "Takes a dim view of people" • It is based on negative assumptions about public servants • Promulgating specifications assumes that they do not know what to do • Further it assumes that they don't know what to change and • It assumes that they will need to be coerced or incentivised to act • Yet Intrinsic Motivation is what brought the vast majority of them into the job. • It does not foster knowledge - instead if fosters copying without knowledge.

20. Barber and the Prime Minister's Improvement Unit • Barber describes ‘deliverology’ as "world class tools and processes" • Seddon says:- • "I think of it as Mickey Mouse command & control. That is being generous to Barber and unfair to the mouse.

21. Barber and the Prime Minister's Improvement Unit (2 of 2) • The plausible ideas - the questions and issues of deliverology - were not ideas that would foster knowledge; quite the reverse, they would foster more inappropriate and wasteful: • Planning • Project management • Reporting • Rationalisation …….and other dysfunctional behaviours • Barbers methodology falls short on method and it's only method that can answer the question how can services be improved. • Barber's de facto method is to create bureaucracy for measuring reporting that deludes people into thinking his improvements are real – (see the negative impact this has had on the Police Service in Case Studies)

22. Impact of ‘Deliverology’ on the Police • Barber and the Police Service • The "science of delivery" has spawned a bureaucracy that stifles achievement of purpose • While the waste is palpable • But the waste associated with the police's morale and their reputation with the public is incalculable. • An Insidious culture has been created • Officers much less able to use discretion and therefore be responsible • Increased risk aversion • Citizens ‘encouraged’ to be less responsible • The relationship between the police and the policed is distorted, perverted and sub-optimised • See also - Scottish Criminal Justice System - below

23. Police II • The Experience of Sgt Norman Dixon after Service redesigning 2005 • Police Force at local level designed in complete ignorance of demand • In this instance the majority of demand was youth disorder • But the ability of the then current system to respond was shocking resulting in: • Further demand and unhappy citizens who took a dim view of the police • Redesign Criteria was set as being: • The Ability to turn up quickly and deal with youth disorder • Result • Dealt with those responsible • Restored the faith of the community • Also engaged other parties: Education, Community Councils, Councilors, Officials, Parents, Young people and faith Leaders to: • Channel energy into positive activity and • Create amenity for young people that was valued by them

24. Police III • Where police work studies demand enormous improvement follows quickly • Also demand for ‘Police Services’ first occurs in Schools and Social Services: • Identifying problem families is straightforward • But historically - instead of gathering knowledge about causes and working on them - police forces are paralysed by the reporting demands of the current system • The solution that is work in progress is to recognise that • The thing that binds the system together is measurement - NOT TARGETS & ACTIVITY - but measurement of demand and capability • e.g. of those we apprehend - how many are convicted?

25. Sir David Varney • His gloomy vision - should be avoided at all costs • Varney and the regime are promoting more and bigger service factories • Public Service Factories - (PSFs) • It is clear that Varney et al did not study demand • Which is the only method to provide a reliable insight into what matters to customers of a service • PSFs will be driven by Key Performance Indicators, Inspectors who will be seeking evidence of compliance will make these into meta-systems for non-learning

26. Varney cites local authorities who have created shared services centres as ‘Exemplars’ • However, when Seddon visited these exemplars he found • No proper evaluation of the change to the quality of service provided to citizens • No information on Cost Benefit changes • No evidence that sharing services produces economies • Plenty of evidence that sharing can lock in costs and worsen service • A better way to share services is to conduct "Check“* in situ for services that might be shared:- • Improving them where they are and then, on the basis of knowledge gained determining whether and how to go about sharing them * – Seddon’s “Check – Plan – Do “ cycle of improvement

27. Seddon Observations on Legal Services • Contracts for the delivery of Legal Services are only open to those who create PSFs:- • Thus small (local) providers will be driven out of the market • Costs and failure demand are ‘locked in ‘ • Providers use their ingenuity to maximise the benefits to themselves "under the rules“ • It is not in their interest to improve service and reduce costs • In legal services this has meant turning cases into multiple cases and limiting involvement in complex cases • Cases are "Closed" to get them into the billing cycle • When you use standard prices to manage costs you only drive costs up • It is hard to learn how to improve when you are fighting to optimise your OWN position - as both parties will

28. Public Sector Basic Problems • Public Services are often the only option for many people • Therefore High Demand • They are historically designed as Command & Control hierarchies • They have back-offices and a distinct lack of accountability for flow • They often are or seem insensitive to the needs of customers • They are rarely synonymous with crisp efficient services • Hence sub optimal and full of waste

29. Planning Process Specifics • The purpose of planning is to say "Yes" to good development • When you study the current Planning Process as a system, you discover that the 8 week target leads to:- • More refusals • Withdrawals and/or • Planning consents with conditions • …..All ruses enabling the achievement of the target • Those who have adopted the systems route to redesigning development control achieve all decisions in less than 30 days - for what are termed delegated decisions that don't go to committee - and that includes the 21 days notice period - with the notice on lampposts • See also Seddon’s Case Studies on: • Housing Repairs, Rent Arrears, Void Lets, Housing Allocations, Police, Social Services, Trading Standards etc.

30. Scottish Criminal Justice System • Learning about Demand • The majority of crimes committed by the same small group of people • Best to focus on the Criminals and not the crimes • Currently, those who ought to be the focus of police attention are dealt with by many groups: • Hence Duplication of activity by Police, Probation Service, Social Services, Health Service and DWP. • Crime is highly predictable by • Type • Time • Geography • But many Police Forces ignore this and do not study demand

31. Adult Care • People deteriorate if their needs are unmet • Often simple solutions could have prevented the need for more expensive care • But Sub Contracting care organisations are paid per hour of provision - so there is no incentive to reduce the amount of care • Also many Local Authority managers work on belief that subcontractors cannot be trusted – as a result:- • Resources are allocated to control and inspect their work • Costs increase • Contractors are NOT seen as part of the system • Contracts and measurements are not focused on the degree of independence or improvement achieved for the clients • And in Scotland SWIA audits divert resources that could be focused on improving services

32. Adult Care II • The problem is exacerbated because we fail to harness Volunteering potential because: • The need to be trained and certified turns many good people away • Like the police service, adult social care is designed as bureaucracy to feed the regime - not as a service to older peoples' needs • There are three major types of Waste in Adult Care:- • Waste in Administration • Form filling, duplication of assessments, re-work, errors and delays • Paperwork is intrusive and bureaucratic for both the care worker and the client • Plans & reviews never have value to these people doing their work - their only purpose is to feed the regime. • Waste of material resources • Assets rarely properly recycled & reused • Waste associated with the failure to care • Unintended consequences • Depression, medication, dietary impact.....and massive deterioration in client condition

33. Adult Care III Solutions • The key to this system is understanding the expertise required to assess and provide and that means thinking "Outside-In". • Improve System - smarten up the Front End • Deliver what is important to the patient • Trigger increased independence - family and volunteer involvement

34. Public Value • Seddon believes we ought to take a look at what Public Value means by asking the Deming Question: • By what method? • i.e. “Do you understand the work – and are you improving it?” • Citizen Engagement in helping to define and improve “Method” • The key requirements for method is: • The involvement of right people in both understanding the problems (an essential first step that is often ignored or assumed) • Working together to study the problem makes it far easier for the different parties to cooperate • It leads to solutions that would not have been considered from an individual or narrow perspective • Freedom means the freedom to choose method, which will require a fundamental change in Public Sector regimes. • They will need to avoid detailed prescriptions for action

35. Public Centre Call Centres • Up to 80% of resource consumed by "Failure Demand" • It appears that Ministers and Senior Civil Servants assumed that ‘access’ was synonymous with ‘service’ • To illustrate the folly: we have seen how private sector organisations "off shore" calls to low cost economies to get lower transaction costs • However, when they learn that lower transaction costs can actually drive up the number of transactions - the calls the customers have to make to get service - they change their point of view. • Indeed it is in the interest of the service provider for demand to grow • They can and do benefit from "Failure Demand"

36. Costs • Focusing on costs drives costs up • Managers need to learn to focus on value

37. Current compliance effort excessive - based more on opinion than knowledge • There is now a vast bureaucratic factory dictating how services should be designed and managed:- • Tragically their specifications are based on flawed ideas • They are pre-ordained to perform badly • In this climate greater diligence on the part of the workers will make no difference - flawed systems have design and performance problems. • Inspection is concerned with compliance and is an integral part of dysfunction, poor performance and failure demand

38. Choice • When it comes to Public Services - "I do not see any evidence that people want choice - I see instead plenty evidence that people want services that work • Systems Thinking approach can meet that expectation….have a look at: • http://www.lean-service.com/home.asp