Good News, We Have A Customer Complaint!

Posted on May 3, 2011 by Chris Niccolls

We’ve all had it hammered into us… improve services, eliminate complaints, make the customer happy. We all want to provide a service that makes our clients happy, and never receives a client complaint. If customer satisfaction has been your big goal of the year, when the next complaint comes (and they always come) it’s like a punch to the gut. You (or your staff) may be thinking, “Don’t they realize how hard we’re working to make things better? Why are they complaining like this… the mistake is completely understandable given the circumstances, and this complaint just makes all of us look bad!” OK. Fair enough. But now I’m about to completely turn your life around. Ready?  Here it comes. Ahem. COMPLAINTS ARE GOOD! Got it? Uhhhh… why don’t I hear dancing in the streets? OK, let’s break this down a bit.

Almost every customer has a certain adversarial relationship with every service they receive. This is especially so when the services are not competitive, and therefore do not offer exciting new options to buy their product. For example, you are probably more excited by something that you want and is always new and fresh (new Plasma Screen, cell phone, dinner at a great restaurant, a vacation at a top resort, etc.) in contrast to a non-competitive service that you are required to use (renew your license at the department of motor vehicles, request a city permit to add a room to your house, etc.). If you run a service in a big firm you are more likely to be categorized as the DMV than dinner at le Bernardin. But even at the best restaurants in the world, things go wrong. Your reservation is misplaced, a friend joins you and the extra seat requires a very long wait, they are out of the special… all kinds of things go wrong all of the time. But a great restaurant is incredibly good at managing complaints.  

Last week I was eating at a very good Italian restaurant, Alfredo’s near Rockefeller center. Their specialty (surprise!) is Fettuccini Alfredo, and their Fettuccini Alfredo is truly excellent. One of our party ordered the Fettuccini, and was the first one to finish the meal. Across from him, Claudia (who happened to be a very experienced restaurant manager), asked him if he was still hungry.  He said. “A Little.. but it was very good, so I’m happy”. Claudia shook her head and said, “The restaurant wants you to be happy. Happy customers are loyal customers. They don’t just want you to come here once. They want loyal customers. Think how much money they are going to lose over the next 10 years if you never come back here again; you shouldn’t do that to them!”  She then called over the waiter and said, “My friend didn’t have enough to eat, he thought the plate would be a bit larger. I just thought you should know.” The waiter nodded his head and said he would check with the cook. Instead he went to the manager, who said something to him and then the waiter disappeared. The waiter was back a few minutes later with desert menus and said, “We have some excellent deserts today (hands out dessert menus), but while you think about your orders the chef wanted to be sure that everyone was satisfied with your main course.” And then another waiter showed up to give each of us an appetizer plate of Fettuccini Alfredo. Claudia looked, nodded and said, “The manager did the right thing.” I’ve been to Alfredo’s before, and I sort of like the place. Now, I will absolutely go out of my way to go there again.  

That’s the magic of complaints. It wasn’t even my complaint, and I feel all warm and fuzzy about Alfredo’s. We are used to having an adversarial relationship with services. Even when you get that new cell phone that you want, aren’t you annoyed when they get to, “That’s a phone with a spare battery. OK. Are you interested in the $39.99 option for our extended warranty service, so that when your phone breaks we will acknowledge that A) you are fact a human being and B) you are standing in front of me with a broken phone in your hand?” That’s when you stop thinking about your beloved new purchase and consider the technical burden you were suckered into buying.  What can I tell you, customer loyalty is fleeting. But when you do have a problem, and you reluctantly trudge into the phone shop and someone smiles at you, shows you it’s just a little problem and hands you back a functioning phone…  you think, “Hey, I made a pretty good purchase after all. I’m smarter than I thought!” We get past the anxiety of what could go wrong and we’re happier about our purchase and a more loyal customer than we were originally. How can you leverage the power of customer complaints?

  1. Track complaints: Every organization has complaints. If all complaints suddenly stop… BEAWARE! This is rarely a sign that everything is running well. It is more likely a sign that your client are afraid to talk to you, or that registering a complain never leads to a satisfactory resolution. Instead of talking to you, they are talking to other clients. What are they saying? Basically, that your service stinks. According to one study, every complaint leads to a conversation with 14 peers about what is wrong with a service. There are lots of numbers and lots of studies, but they are unanimous in this: unreported problems lead to whispers and rumors about service problems that become very difficult to resolve. Don’t just wait for complaints. IF you are tracking metrics, go to clients who received poor service and did not complain. If you went to a restaurant and weren’t seated on time, there were errors in your order, and the quality of the food was bad… wouldn’t you complain? If you didn’t, was it because you just didn’t care anymore if the restaurant improved? Think about this in terms of your own services.
  2. Focus on complaint resolution: Once you can identify complain opportunities, you need a comprehensive process to turn around customers… convert them from complainers to evangelists. Are you sure you’re capturing all complaints? How would you track and treat an active complainer (filed a complaint) in contrast to a passive complaint (the metrics say they had a problem, but you haven’t heard from that client). Are you just tracking that the problem existed, or that it was resolved. How much effort is there to problem resolution (do you have a formal tracking sheet for each incidence, names of people involved, methods of resolution, post resolution issues… such as is the client happy?).  
  3. Provide solutions: If the managers of your services are like the managers in a restaurant, how much latitude do they have for resolving a problem? Services are very diverse, and the types of resolutions will vary greatly. Furthermore, if you speak with your clients you may find that they have VERY different ideas about how a complaint should be resolved. In a restaurant, if you hate your meal, the manager may take it off of your bill. But for corporate services, the individual receiving the service may not be the person who is billed (some services don’t ever bill). Find out what your clients want. Can you provide some or all of these options? Are managers or supervisors empowered to apply these options? When a salesperson has no expenses, they are going to be questioned by their manager, asking why they aren’t taking clients out to dinner, or golfing or SOMETHING! If your staff is not using resources to address client complaints, they are hurting your organization. Remember: Complaints that are handled well are one of your best opportunities to improve customer satisfaction, make the maximum use of this opportunity.          
  4. Build Stories: It’s one thing to tell everyone that you now want to see more complaints, it’s another to get everyone to change their behavior. One of the best tools for changing behavior is to tell stories that support the change you want. Tell stories of great success you have had, tell stories of great stories form other firms, even competitors. If all else fails, make up some stories (you can even tell everyone that you made this up), and tell everyone that this is an example of the stories that you want to hear about your group. Also, read the literature on problem resolution. One report to read is, “From Disgust to Delight: Do Customers Hold a Grudge?” by Tor Andreassen (http://www.kundebarometer.com/discourse/delight-grudge.pdf) . It’s pretty academic, but it tells you that rather than holding a grudge, exposing and resolving complaints builds client satisfaction and support.

There you have it. Complaints are good… if you resolve them. Make sure you have a credible number of complaints, track active and passive complaints, give your managers latitude for dealing with complaints, resolve complaints and ensure that your entire organization understands that you are serious about exposing and resolving complaints. And that’s my Niccolls worth for today!

Posted in Best Practices, Decision Making, Delivering Services, Improvement, Continuous or Not, Unique Ideas | Tagged , , , , , , , , , | Leave a comment

Is Quality Control A Waste of Time?

Posted on April 28, 2011 by Chris Niccolls

WasteIf we roll back the clock just a bit, the support services provided by most large corporations lacked any formal quality control. You had people who were dedicated to performing a function, but there wasn’t formal training or process controls. Still, having a dedicated group of people to provide a service was a big step forward. Before that, the service was provided occasionally or not at all. As the demand for the service grew, so too did the complaints. Many different employees were now touching the same product. With so many individuals involved, you need to set and enforce standards, or the number of problems will get completely out of hand. Eventually, the volume of work is great enough for justify investment in a new group to review and correct work before it is returned to the customer. This is how most manager’s start-up a Quality Control (QC) group. But managers often forget that this necessary step, is not the final step.

Every time a new management philosophy pops up, it either comes packaged with a new set of buzz words or existing words are redefined. Six Sigma is no exception. The term “waste” is redefined as the difference between potential quality and actual quality. In plain English, it is the difference between perfect work and the work that was actually done. Waste is all of the errors and mistakes that need to be worked on a second time to be fixed. Lets also limit our definition to work performed BEFORE it is reviewed by Quality Control;  organizations with multiple levels of QC often measure “baseline quality” from different starting points. Theoretically, this is the best work your production staff can perform.  Everything you do to re-work errors, the “waste” that raises the cost of production, could be avoided if you redesigned your production system to eliminate the cause worker errors. Fewer worker errors, means less rework, and lower total cost. Pretty straightforward!

Six Sigma (and its cousin Lean… often used together and called Lean Six Sigma), asks the question, “Why do you want to keep paying for a big quality control group? Wouldn’t it be better to investigate why the team makes these errors, and then find a way to make them go away?” It’s a very good question. Identifying and fixing the source of errors is almost always more cost-effective than continuing to fix errors after they occur. The QC group is a necessary step along the way in the evolution of your service. The next step in their evolution is to move from fixing individual products to fixing the production process: identifying and eliminating the sources of errors. Do you need to follow the Six Sigma process to do this? Absolutely not. However, if you’re going to pick a method and follow it, Six Sigma is as good a method as any and better than most. Let’s take a look at what a Lean Six Sigma analysis might tell us about a typical Document Center (Microsoft Word and PowerPoint, with a few other applications, producing templated documents).

Cost: When we create a QC department, we often forget about or lose track of, the real cost of this service. You not only pay for QC staff and processes, you make the production staff more expensive and less productive. That’s the part that is often forgotten. Let’s figure out the details. Proofreading and QC in a document center usually takes between 25% and 50% of the original editing time, depending on the QC process. For every hour of time spent editing the document, you spend an additional 15 to 30 minutes on QC. But what happens when QC finds a problem? The document then needs to go back to production, to fix the errors. Let’s give production 10 minutes to read and make (or question) corrections. If you can/should wait for the original operator to make the corrections (there may be questions for the operator), it may take a bit more time.

Whoever makes corrections, the document then goes back to QC to go through the document a second time, and: look at the original request, check that the original edits were not disturbed, that the second round of corrections was performed, and that no new accidental or interpretive changes were made. Whew! Make this an optimistic 5 more minutes. If two different QC’s look at the document and have different opinions of what’s right and wrong, it might generate a third round of corrections. The original production work took one hour, and the QC process took a minimum of 30 to 45 minutes. That means that 33% to 43% of the total work is (by Six Sigma definition) waste. It’s probably higher, because the QC and production person probably hand their work back to a supervisor, or workflow coordinator or other administrator.

Time: It’s a gross simplification but Six Sigma focuses on cost and Lean focuses on time. How much time are we losing to waste? Not surprisingly it’s a LOT more than 33%-43%. Here’s why… if this is a reasonably well utilized document center, people aren’t sitting around with nothing to do. When the production person is ready to hand over work to the QC person, the QC’er is probably working on something else. Likewise, when the work is handed back to production for corrections, that person is working on the next job. Therefore, work waits between hand-offs until the next person is available. Let’s call this “idle time”.

To understand how much idle time exists, let’s assume that all document work averages one hour and all QC work averages 30 minutes, and that we have the two-step correction process we discussed in #1, above. With QC work averaging 30 minutes, the idle time waiting for the next available QC’er will be the midpoint of that time, or 15 minutes. Likewise, the operator will have an average of 30 minutes. This is a very general estimate. If our hypothetical document center performs other functions, a much more sophisticated model may be needed for a fully accurate estimate. However, for a quick estimate, this is sufficiently accurate. That means that the idle time is 15×2 for QC and 30×2 for  production time, yielding 2 ½ hours of total idle time. Now add the work time of 1 ½ hours.

That means that in order to complete your 90 minutes of work, your document needs to sit in the document center for a minimum of 4 hours. In reality, there will additional administrative overhead (paperwork to complete, calls to update customers, copying of documents, checking print-outs to verify changes, etc.) which will add to the time it takes to return the work to the client. And of course, when the center is busy and work piles up, it could be hours before your document moves to the top of the queue for someone to work on.

Continuous Improvement: In this example, or in any center of a reasonable size, when the QC’er hands back the reviewed work, it will usually be handed back to the next available production worker… not to the production worker who performed the original edits. Unless the center has nothing to do, the original worker has taken on other work. How does the original worker ever learn about the mistakes that are made, or even if the worker agrees that they are “real” mistakes?

Going back to our document, after it is returned from the 2nd operator, it now goes to a second QC’er, further diluting the opportunity to learn from previous mistakes. The production worker may get a report at the end of the month that lists all mistakes and comments from QC and/or their own managers. Now, more time will be spent to discuss these mistakes, but at the end of the month key information (such as verbal discussions with the customer) may be forgotten or confused.

Without the context of the original work, while all of the information is still remembered,  the operator is unlikely to learn from these mistakes and improve work. Without real-time interaction with the QC’er, additional rounds of corrections may be required after the client sees the work, and differences/mistakes between QC and production training will persist… generating additional waste and idle time as the work goes back and forth between QC and production. Special training sessions can be set to review weekly errors with production and QC, but if this just becomes an ongoing part of the production process (and not a Six Sigma-like “find and fix” process), then this becomes yet another contributor to waste.

Is Quality Control a waste? Only if you pass up the opportunity to leverage each QC review to improve training, eliminate errors and raise quality standards. Correcting the same mistakes, over and over, doesn’t make any sense. The tools exist to fix almost any production problem. In fact, your biggest decision may be to choose the tool that will work best (but many, many tools will do just fine). In just this one example we can see how cost can be 33% to 43% higher and the time delay from all the QC hand-offs can be several times greater than time it takes to do the work itself. You have a HUGE opportunity to improve your service if you change your focus from fixing individual errors to finding and eliminating the source of errors in your work process. And that’s my Niccolls for today!

Posted in Best Practices, Decision Making, Improvement, Continuous or Not, Learning and Development, Unique Ideas | Tagged , , , , , , , , , , , | 1 Comment

Outsourcing Analysis Part III: Building Your Toolkit

Posted on April 26, 2011 by Chris Niccolls

For the last two blogs we have been building a tool to help you evaluate your current sourcing decisions, in other words where your staff resides and how they are employed (employees, temps, outsourced, etc.) to perform your business functions. In part I we went over location options, and you collected information on the options that are available in your firm. In part II we looked at the concept of “gates”: progressive groupings of questions that identify one or more of the available locations or methods of staffing that constrain the sourcing options for the function. Today we will put together the information we’ve collected and create your tool. Here we go!

Open the attached spreadsheet (“Click Here” ), and take a look. All along I’ve been using the outsourcing of legal functions as my example, so that I can provide you with real examples. The list starts with legal groups, and then places specific functions under each group. Of course, in your organization the structure of the Legal department may be different, or you may need finer details, but this should serve as a reasonable template and can easily be adjusted for other groups. Now, let’s take a look at the column headings.

This example uses seven gates, starting with the Core and ending with offshore outsourcing. Within each gate, there are several questions. The first question is the most important constraint in that gate, and the last is the least important  constraint. When a constraint applies, you put an “X” in that cell. Some functions may have multiple constraints. This way you have a more or less graphic view of how “far away” the functions could be sourced. The greater the distance from where the work is currently performed and where it could be performed, the more likely that this could/should be sourced differently. Furthermore, you will see that some functions have many items checked and others have just a few that are scattered around. Both the importance of the constraint and the number of applicable constraints count in evaluating  sourcing options. You can give points for each question, but that’s a refinement for future versions.

Let’s take a closer look at our first gate, “Core Functions”. The questions are graded from most important (is it illegal?) to least important (is it traditional to do the work here?). This last question (tradition) is different from all the others. Tradition is not a justifiable reason in most firms, but you do want to put this down if there is no other reason. As stated in the footnotes for this item, the reason for the question is to dig deeper and find if there are any other reasons. If there are no real constraints you move on to the next gate, until you hit a constraint. You should continue on to the end, in case other constrains apply.

When this is completed, others may disagree with you about a constraint. If this happens, then you may remove a check mark, and then the function continues to move to the right until it hits the next constraint. The last constraint is where the function could be performed most efficiently. You may find that a disturbing number of functions could move one or more gates to the right. And you may not believe that these moves are the right thing to do. If that’s the case, please remember three things:

  1. Fewer changes are made than could be: Firms that execute on every project that they should are rare indeed. This process tells you what you what could happen. You need to weigh in on what should happen.
  2. This is an iterative process: After your first go through, you may discover that there are many other gates or questions that need to be included. If you feel in your heart that something is missing from the analysis… find out what it is an add it.
  3. Improve the service and change the options: Services with the highest quality, the best cost per unit, and the greatest client satisfaction levels are rarely on the list for outsourcing, regardless of the analysis. If you resolve any outstanding issues for these three areas, you become an unlikely target for a move to the right of the chart. Remember, this is a tool to help you manage your services. A big part of management is awareness. If you are now aware of problems you need to resolve, then that’s a win.. right?  

That’ about it. You have a basic, but flexible tool that you can customize for your organization. After you’ve had some time to get familiar with how this works, we will revisit this tool and add more functionality. But for today, that’s my Niccolls worth!

Posted in Best Practices, Common Sense Contracting, Decision Making, Delivering Services, Improvement, Continuous or Not, Uncategorized, Unique Ideas | Tagged , , , , , , , | Leave a comment

Outsourcing Analysis Part II: That’s My Core?

Posted on April 25, 2011 by Chris Niccolls

In our last Blog we talked about how we source for a function, which is to say the process of deciding (and executing) the “how and where” a function is performed. In the last few years the movement has been once-sided, with functions primarily being outsourced. However, every firm has at one point or another also “insourced”, taking functions away from outside providers and moving the management and/or production inside the corporation. The farther back we go in time, the more likely the sourcing decision was not well discussed or analyzed. These early decisions may have been flawed, and difficult to justify today. Some outsourcing decisions are corrections to older decisions. Add new technologies, changes in regulations and changes in business practices, and it becomes clear why there has been so much focus on sourcing decisions in most major firms.  Each of you needs to understand and fully participate in the sourcing process. Our last Blog asked you to look at the current sourcing options your firm uses. If you missed the last Blog, take a look a then catch up with us.  With sourcing options in hand, today we are going to look more closely at the justifications for each location. Let’s start with The Core!

Seak to managers who regularly work with Outsourcing projects; they will tell you that you never outsource core functions. But when you try to get a definition of  the Core,  agreement breaks down. The best answer may be that the Core is a combination of business practices and cultural imperatives. An undisputed Core function in one firm maybe Non-Core in another, and constant changes in technology, business practices, and regulations modify out Core definition. You need to know what is your Core, and you need to periodically re-evaluate your Core… just as you need to preiodically re-evaluate your budget. Today, we’re going to pick up where we left off yesterday, and continue to build our model for Legal processes. Lets dig in and see if we can define what is core for thes serrvices.

  1. Regulations: Do you,  or your firm, believe that it is illegal or that it would be an infraction of government regulations to outsource this work?    
  2. Contractual Obligations: A contract can specify that work is restricted to employees. Some US government contracts restrict work to US citizens. How many contracts carry these restrictions, and are they all restricted by exactly the same (standard) clause? Is there anything in writing, but outside of the contract, that restricts sourcing of workers?
  3. Verbal Agreements: A bit more difficult to deal with is a verbal agreement. Who made the agreement and when? How is the agreement documented (in an email, the minutes of a client meeting, CRM notes)? If there is no documentation, how do you know the client believes that is an agreement?
  4. Legal Ethics: Unlike most other professions, law has very specific (and numerous) ethical rules. Does an outsourcing project violate a rule of ethics? For example, maximizing profitability through outsourcing might be an ethical violation (an issue previously raised with paralegals). Of course, sharing the financial benefits of outsourcing with clients might resolve the issue.
  5. IP Risk: Do you have truly proprietary processes that cannot be exposed to the outside world? Is this process quantitatively different from the process used by your competitors? Are they patented, trademarked, or otherwise protected? What is the monetary risk from exposing your processes?
  6. Efficiency: Can the work be performed internally more efficiently (better quality, lower cost, faster turnaround) than through any other means? Be prepared to quantitatively support this position.
  7. Tradition: More often than not, this is how the Core is defined. But in a firm wide discussion of sourcing options, this is not a strong justification for employee workers/managers. Are there other factors to be considered? Re-review this list. 

This is just the 1st “gate” that a sourcing decision must pass. Your organization may have additional, or different, Core issues than this Legal example.  Still, this exercise should help you. The next gate might examine if the work should remain in-house, but be performed by temporary or outsourced staff.  Next, at least for legal work, would be to determine if the function could be performed by outside legal counsel (usually not though of as “outsourcing”). Then you should move on to “gates” such as near shoring, and offshoring. Each gate will have several questions that you need to ask about the function. For example, under local outsourcing you might ask if moving the function to a different location will interfere with the performance of the function. There are obviously many other questions. Build a spreadsheet based on these options and let’s compare notes in tomorrow’s blog, when we put the finishing touches on our outsourcing tool.

Remember, you can make your analysis process as simple or as complicated as you like. Tomorrow I will provide you with a spreadsheet based on this discussion. You can then add to it, or remove sections, as you see fit. But for today… that’s my Niccolls worth!

Posted in Best Practices, Common Sense Contracting, Decision Making, Delivering Services, Improvement, Continuous or Not, Uncategorized, Unique Ideas | Tagged , , , , , , , | 1 Comment

Outsourcing Analysis Part I: How Far Out Do You Outsource?

Posted on April 25, 2011 by Chris Niccolls

Everyone talks about Outsourcing, but much of the time the talk seems to treat all Outsourcing as the same, with teh assumption that all projects end up with everyone working in a call center in India. Outsourcing predates India and predates “offshoring”. In fact, on of the things that has dropped out of the discussion is that “sourcing” is usually not just a one-sided process. Over time sourcing decision have oscillated between outsourcing and insourcing, where services that were once performed by outside groups are moved back into the firm. If you look at any large IT department, you’ll see that some functions have been moved in, then out, and then back again. A few services have gone through this cycle several times. Look at corporate websites. Today every major firm has an extensive web site, but just a couple of decades ago it was rare. A decade earlier, websites were a rarity. Early websites relied fully or partially on outside services, but as corporate websites became part of normal business practices, development of the website moved in-house. Today, the trend is to look for Cloud services to handle this work.

Despite appearances, outsourcing isn’t driven by cost savings. Savings are just a result of properly executed outsourcing. Instead, outsourcing is driven by: advances in technology, changes in the business environment, shifts in regulations, and individual preference. The technology part is fairly obvious; without cheap computers and communications, knowledge work could not be outsourced. You couldn’t get the work to where it needs to go. Reliable and inexpensive technology is necessary, but it was changes in the HR business model that moved recruiting processes to the web, then Monster.Com and currently… Twitter. In the last decade, corporate documents morphed from paper into emails and PDF’s, creating the necesary conditions for the outsourcing of legal discovery; but it tool optinoin from the court  on the validity of legal outsourcing to fuel the recent boom in outsourcing. But that final variable, individual preference, is much nore difficult to understand. So, lets focus on how preference works.

We take it for granted that almost anything could be sent offshore,and probably will be… soon. But which functions are at the greatest risk of outsourcing? Which have a much lower risk? The answer to this question is often driven by individual preference. Some firms follow a specific philosophy, that may not follow simple cost analysis. For example, JP Morgan Chase’s CEO (Jamie Dimon) is famous for promoting offshoring while discouraging outsourcing. Most firms have less coherent philosophies, or have multiple  philosophies that differ from department to department. Older examples of outsourcing are generally less consistent. Independent procurement departments are a recent event. Before they were created, any “deep reasoning” or analysis of the cost and benefits were not widely cirrculated or simply unknown.

Not surpisingly, if re-examined today some of these decisions may be very difficult to justify or just plain wrong. Part of today’s outsourcing wave is a long overdue correction. But with your world filled with overdue “corrections”, new technology driven opportunities, changes in business models and new regulations… how do you sort out which services should or shouldn’t be outsourced? If you can quantitatively answer this question, you are in a better position to deal with the groups in your firm that make or influence sourcing decisions.

For you to understand how to do this analysis, you need to understand all of your sourcing options (how/where you can get the work done) and the advantages/disadvantages of each location. When you bring these two variables together you have a powerful tool  for determining outsourcing options. Let’s take a closer look at locations:

  1. In-House:This means physically within the walls of a facility that belongs to your firm (owed, leased, etc.). There may be additional nuances, such as your headquarters vs. other offices (in the same city, in different states, or countries) that may be part of your decision making process.
    1. Core Functions – Like they say, never outsource the core! In tomorrow’s Blog we’ll go how you identify your core in more detail.
    2. Temp or Contract – While it’s not quite outsourcing, you should have a specific justification as to why a temp or a perm is the right worker for a specific function.
    3. Externally Managed – An external manager on site (managing oursourced staff, temp staff, etc.).
    4. Outside Legal Counsel: Many Corporate legal departments rely almost exclusively on outside litigators, with the internal legal staff dealing with more administration and policy matters. How much work should go here and why?
    5. Local Outsourcing: Since the local  economics are the same… pay, benefits, electric, taxes, equipment, etc. … when does your organization use this option… and why?
    6. Near Shore: You may have a general near shore, or tiered near shore. Your tier 1 may be locations that are no more than a two hour flight or one plane ride away, and tier 2 is more than a two hour flight or a connecting flight away. The former might be easier to manage and the latter might have better cost factors.    
    7. Offshore: Here too you might have different tiers (locations), based on labor availability and cost.

Check out this information. See what your options are, pull it all together, and tomorrow we’ll go over the next steps. But for now, that’s my Niccolls worth!

Posted in Best Practices, Common Sense Contracting, Decision Making, Delivering Services, Uncategorized, Unique Ideas | Tagged , , , , , , | Leave a comment

Grime and Punishment: Why Best Practices Matter (Part II)

Posted on April 21, 2011 by Chris Niccolls

Yesterday we looked at CLI’s (Central Line Infections), a type of infection that results from the use of a Central line, the needle and flexible tube used to insert an intravenous drip bag. CLI’s are extremely dangerous and expensive, infecting 100,000 Americans and resulting in 30,000 fatalities annually. We went through a few steps and estimated that CLI’s probably increase medical costs by at least a billion dollars a year. Yet these costs in human terms and in dollars largely result from a simple failure by medical workers to ensure that their hands and the insertion site for the central line’s needle is clean and sterile. Today, we’re going to see what we can learn from this case study and how we can apply what we’ve learned to your operations.

In looking at the issues we discussed yesterday, didn’t you think that by the 21st century basic sanitary issues were under control in most medical facility? If you’re the chief administrator of a hospital, you probably thought that these issues were resolved long ago. You are shocked that your staff has failed to take preventive actions that would save the lives of your patients. Then why is this happening? Well, the management of the hospital may not know how to convert the recommendations from these studies into an action plan. They would need to ask questions, such as “Do you know which disinfectant should be used when inserting a central line: soap and water, 70% alcohol solution, Chlorhexidine, Iodine, or something else?” And, “How much time should you wait for each type of disinfectant to kill contamination, before you insert the needle?” Questions like these are needed to develop the SPECIFIC, reliable, repeatable training needed to eliminate CLI’s, and save thousands of lives. Most nurses wouldn’t be surprised by these findings. An experienced nurse could probably identify a dozen other issues (and solutions) that could improve patient health and lower cost.

If any hospital administrators are reading this, and CLI’s occur in your facility, you need to ask yourself if your organization has agreed to best practices, if they follow the practices they agreed to, and if you have a system to verify that best practices are followed (metrics + relevant reporting + a governance system to follow up on issues). If you are not a hospital administrator, the stakes may not be quite as high, but the opportunities to identify and resolve problems are probably just as numerous. Would you like to make some improvements in your organization? Then, without developing any new best practices, collect information on the best practices that you believe your organization follows:

  1. Choose just a few of the most important best practices that you (or your managers) agree they are following. Practices that are supposed to deliver work on time, reduce errors, manage costs, etc.
  2. Identify the outcome your best practices are supposed to bring about. Taking a simple example, if your group produces written reports for customers (word processing, research reports, financial report summaries, etc.) every document should be fully spell checked. Is this a best practice for your workers? If so, good… let’s go to the next step.
  3. Is this best practice in writing? If so, where are these documents and who reads them? Are wrokers responsible for locating and reading the document (how do you verify that it was read and understood), or do you provide a class or online training? Have you ever personally reviewed the materials or attended training?
  4. Is everyone 100% compliant with this best practice? Who is everyone? Do you have a list of who has been trained, by position, and how long ago training took place?
  5. How do you track that the best practice is followed? Have you identified metrics for tracking? Which reports use this metric? Who reads the report… the individuals that are responsible for following the best practice?
  6. Finally, if you have a best practice to bring about (or eliminate) a specific outcome, have you achieved this goal?

In our example we wanted every document spell checked. If you have reporting on this in place, are documents still going to your users without being spell checked (easy to verify in Microsoft Word)? Are you testing the work as it is performed by your document creators, or are you only checking the work as it is recieved by the client? If you don’t check the creators’s work, you don’t know if tehy are contributing effors and relying on layers of proof readers and quality checkers to fix the document. When the original “creator” performs the spell checking it is ALWAYS more cost effective and improves the user experience for your clients. (The reasons why will be discussed in another Blog in a few days.)

What have we learned? I think we’re learned that organization as large, as sophisticated and as regulated as a hospital, organizations that are filled with incredibly educated individuals, can still still miss basic best practices. We’ve also learned that failure to follow these best practices can be incredibly expensive and dangerous. Given this, it’s pretty likely that your organization has at least a few gaps in its list of best practices, or in the way those best practices are communicated, or in how they are reported. Check some of the steps above with your staff and see what you find. You may identify opportunities to raise service levels and resolve long standing problems by taking very simple steps. And that’s my Niccolls worth for today!

Posted in Best Practices, Decision Making, Delivering Services, Improvement, Continuous or Not, Learning and Development, Uncategorized | Tagged , , , , , , , , , | 2 Comments

Grime and Punishment: Why Best Practices Matter (Part I)

Posted on April 20, 2011 by Chris Niccolls

We’ve had a lot of discussions on this Blog about metrics and best practices. Because they’re very important. Whenever I talk to colleagues who haven’t adopted a policy of best practices, they assume that A) It’s very difficult to identify best practices that will have a big impact and B) Putting these best practices in place will require tremendous effort. While I can’t deny that this can sometimes be true, a lot of best practices are a lot easier to deal with. That includes practices that can save huge amounts of money and even save lives. To demonstrate this, today we are going to look at best practices in health care. Specifically, we are going to look at the growing number of Central Line Infections that occur in hospitals.

A Central Line Infection (CLI) results when a “central line”, the needle and flexible tube, is inserted into a patient to connect an Intravenous feed to deliver drugs or other materials directly into the blood stream. A CLI is extremely serious, dangerous and expensive to the individual and the hospital. Let put a few numbers to this. Studies on the cost of a stay in a hospital, especially a stay in Intensive Care (your likely destination if you have a serious infection), and studies on the number of CLI’s each year, vary tremendously. However, we can do a quick estimate on the minimum cost. There is general agreement that at least 100,000 CLI’s occur annually in the US with 30,000 becoming fatal. To put that in context, in 2009 15,000 American’s were murdered. CLI’s are twice as deadly as all homicides. That’s pretty huge. The cost? In 2005 RTI International released a study of Michigan hospitals that estimated that a day in ICU cost $2,400. Let’s assume that a survivable CLI costs two days in ICU and a fatality costs four days, plus additional death costs of $10,000 (administration, autopsy, burial, etc.). The literature tells us that our estimate is low, because the first day or two in ICU is usually much more expensive, and the costs tails off in later days. But let’s stick with this very conservative estimate. Which doesn’t address other costs, such as law suits from the surviving members of the family.

That’s an annual cost of $336 million for survivors and $588 million for fatalities, just short of a billion dollars and 30,000 dead Americans! If you think that your operation is under pressure to improve performance and reduce costs, imagine the situation in health care today (just watch the battles over the Federal budget). How difficult would it be to reduce CLI’s? It turns out that comprehensive reports were developed at least as early as 1996…. 15 years ago, or  450,000 deaths ago. The literature outlines a laundry list of changes to procedures, which would reduce CLI’s by 66%. Some hospitals have followed these guidelines and completely eliminated CLI’s. How complex are these procedures? Well, we are talking about the complex world of modern medicine, so these procedures may be too technical for some of you but please bear with me. Here are the top recommendations:

  1. Clean your hands, before sticking a needle into a patient: Your mother may have introduced you to the best practice of cleaning your hands some years ago. Apparently, it’s still a best practice.  
  2. Clean the insertion site on the patient, before sticking a needle into the patient: OK this is more complex. If you grandmother ever cleaned some dirt off your face with her saliva, this is NOT a best practice. Training to “use a recommended disinfectant” may raise the cost of training.
  3. Use gloves, a mask and a hairnet, before sticking a needle into a patient: OK, grandma didn’t have anything to say about this. But it’s still a good idea.
  4. Don’t use a LCI if you don’t need to: No central line, no CLI. Perhaps a pill will do.
  5. Remove central lines when they are not needed: For example, you were to receive a one-time medication and no other drips are needed. TAKE OUT THE NEEDLE! 
  6. If the items above are too complex to implement, focus on just the first 2, which may deliver 80-90% of the benefits.

I think this deservs a “WOW”. If that much improvement can result form these changes, shouldn’t this already be solved? What’s wrong, and what can we learn from the problems with CLI’s? Tomorrow, I’ll finish this case study and see if we can apply what we’ve learned to your organization. But for today, that’s my Niccolls worth!

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Tail Of The Dancing Rat: Exposing Services to User Scrutiny

Posted on April 18, 2011 by Chris Niccolls

Metrics are all around us, all the time. In fact, some of them are pervasive we forget that they’re metrics. 20 or 30 years ago, if you were in the mood for something to eat you might go to your favorite restaurant or you might ask a trusted friend for a recommendation. There were some books on best places to go, but they tended to be specialized.. best cheap eats, best French food, most interesting décor. In Europe patrons had been choosing restaurants nearly a century based on the Michelin guide. I know what you’re thinking, doesn’t Michelin make tires? Yes they do. Early in the history of the motor car Michelin looked for ways to get people to do more traveling, so that they would need more tires. They came up with the idea of providing motorcar enthusiasts a book about the excellent restaurants of Europe that were… somewhere else. Burn a little rubber, have a very nice lunch, everyone is happy! In 1979 a husband and wife team, who were both corporate lawyers and spend a lot of time in restaurants, had dinner with friends and talked about alternatives to newspaper restaurants reviews. And thus was born Zagats. As consumers we now regularly turn to the metric resources from Consumer’s guides to the annual JD Powers survey of cars. Numeric comparisons help us make our buying decisions. We may not always buy the absolute top rated product because price or some specific aesthetic concern may be more important. But, if we read that the object of our desire is unreliable, poorly built or the service is horrible… we usually look elsewhere.

However, these ratings are often about things we directly experience: price, weight, length of warranty, etc. Other product aspects may be harder to experience directly.  If you’re lucky. Things like, restaurant cleanliness. New York has always had health inspections, but you only “experienced” restaurant closings when there were severe violations. Their inspection results were probably posted somewhere, but I don’t ever remember seeing them. Well that all changed when, after a restaurant closed for the night, someone pulled out their phone and make a video through the front window. When it hit YouTube it went viral. The video showed… how should I put this?… vermin frolics, the rodent rumba…OK, dancing rats! But this restaurant was recently inspected and passed! Naturally, this inspired more people to forward more videos and it looked like this was not an isolated incident. This raised a lot of questions about the value of this not very public inspection process.

Eventually the city responded with a new rating system with letter grades, that now MUST BE POSTED IN THE FRONT WINDOW! As I write this, these ratings have recently been posted for most restaurants I go to. Until these ratings were posted, I didn’t even know how highly I would value this information. Before, if I had to choose between two restaurant metrics it was usually about the food rating; if one had a rating of 28 and another has a rating of 23, I might choose the lower rated one based on the type of food or the décor. But when I stood in front of two restaurants where one had a health rating of “A” and the other was rated “C”, I REALLY gave that rating some thought. What I thought was, “C is passing right.. but what exactly is wrong with this place?” I went to the “A” rated eatery. Metrics do matter to me. Would this matter to you?

What about your organization? How much information do you track, and how much of that information do you make available to your users? If you have a real-time multi-shift production environment (a document center, copy center, receptionists, corporate library, research group, desktop support, etc.),  you should consider the similarities to a service organization like a restaurant or hotel. End user experiences are based on a combination of factors (the room you’re given, the server you’re assigned, specials on different days) that may be controllable… if you only had some key data (which rooms are best, when are discounts given, best travel times, off the menu specials, etc.) Should you show your users ratings by shift or location (on-time delivery, number of errors, customer satisfaction ratings, etc.)? Should you even give ratings by individuals? That’s a difficult decision, but when you show individual ratings you will be amazed how quickly the lowest rated improve or move on.

Individual ratings are not possible or not desirable in your environment? That’s OK, what about applying examples from Hotels.com, Travelocity and other hotel services? They tell us secrets about getting better service. So, why not:

  1. For real-time services, publicly post the current queue. Let everyone know the key metrics, such as how long a wait, how long until work starts on the next job, etc.
  2. You probably have patterns to your work, times when the queue is regularly the shortest. Post a chart about “best times to submit work”.
  3. If your service has special capabilities, but only on certain shifts, tell everyone that they get a special level of service/faster turnaround at those times.
  4. Give frequent users the option to be a “club member”. Club members are the users that  you call when you have an unexpected lull in work. Maybe you even have a platinum club that gets special treatment when you have available resources.

Give it some thought. The more that you share your internal rating with your clients, or let them know when and how you can serve them better, the more you can improve the perception of your services. It’s also an opportunity to get your organization behind a change you want to make. Of course, there are risks about showing your problems and service gaps. But the greater risk is that if your organization lacks transparency, problems tend to grow. Usually because issues have not been identified as problems. Let that go on long enough and you get bad health inspections and dancing rats. Get out in front of your issues, and build the good will of your users. And that’s my Niccolls worth for today!

Posted in Best Practices, Decision Making, Delivering Services, Improvement, Continuous or Not, Unique Ideas | Tagged , , , , | Leave a comment

A Cloud Story III: Leapfrogging Isn’t Just For Kids

Posted on April 15, 2011 by Chris Niccolls

Perhaps the most important outcome of Cloud migrations, the real game changer, is that Cloud services can level the playing field. This is not necessarily good news for service managers in big firms. Fortune 500 firms are largely in the early adoption stage, but small firms and individuals have been deeply invested in Cloud services for years.  Of course, just a few years ago the typical small firm either had no proprietary applications, or just had what their nerdy kid brother could program. It wasn’t very good, and you only built what you couldn’t buy off the shelf at the local Big Box store. Getting access to ANY service that work all the time and had reasonable support moved you light years ahead.

Big firm support groups lived in an entirely different world. A Fortune 500 firm needs to move 10,000 users into the Cloud, in six different countries and they speak three different languages. You have a lot more to consider.  That’s why a tiny two person firm often has access to a very specific service that is MUCH more advanced than yours. Big firms used to have a huge advantage… SCALE! The high cost of new technology and dedicated support made innovative technology the domain of big firms. Only big firms could afford to reap the advantages of new technology and new techniques; smaller firms needed to wait for years until the technology was cheap enough for them to use:  telephones, teletype, faxes, mainframe computers, photo copiers, video recorders, video security, modems, etc. By then most of the competitive advantage was exhausted.  

Take cable TV as an example. The technology is as old as broadcast TV, but was largely limited to mountainous areas where radio waves were blocked. Deregulation in the early 70’s made national cable services feasible, and the growth of skyscrapers in major cities (blocking radio transmissions) created the perfect market for cable. Laying cable was expensive, so Manhattan’s close packed population was the best market for the 13 channels the new service offered. It would be decades before lower density suburbs and outlying towns became cost effective markets. By the mid-eighties customers were fighting to get to the top of the multi-year waiting list for the improved 26 channel service. Out in the suburbs potential users leapfrogged cable and adopted satellite dishes.  BIG, expensive dishes… that were too large for most city users to install. The suburbs now had the best service, at least for a little while. By the following decade tiny, inexpensive digital satellites (and eventually movies on demand and TIVO) were available. In the huge rush towards this technology, areas lacking cable service or unable to install/afford older format satellite antennas did the leapfrogging. Today, you can leapfrog again and use the internet to download free programing whenever you want, pay a small fee for more download movies/programming from services like Netflix, or get free or paid mixed media services (digital “newspapers”, like the New York Times, with embedded videos and slide shows).    

Yep, it’s leapfrog. Whoever is behind gets to move to the front in the next move, and gets the latest technology at a lower cost than the last user. The last user, who entered the game with older and more expensive technology, has to wait. How long… it all depends on how invested you are in your current solution. A Fortune 500 firm may have developed its first CRM tool 20 years ago, and upgraded it to a 3rd or 4th generation tool. But the latest Cloud based CRM (ex.: SalesForce, Microsoft Dynamics and Oracle’s Siebel) started with newer technology, supports a larger population, and provides more frequent upgrades, yielding a better product. Then what is your role as a provider of corporate services?

  1. Evaluate needs: If you’re a document center, and created your own custom macros, do better macros exist on the open market (in the Cloud or elsewhere)? Identify and understand the best products!
  2. Play well with others: Just because you can develop something on your own, it doesn’t mean you should. Work with other corporate groups (IT, Procurement, etc.) to introduce new products.
  3. Consider corporate concerns: Even a simple product (consider instant messengers) can have legal and security concerns. Make sure that you’re not creating a problem for the future.
  4. Think about the WHOLE service: Many Cloud project are focused on transferring a fraction of the whole service… the biggest pain point or the most difficult to manage function. For example: archiving/retrieval of very old files. A document center with a complex technical environment might require frequent outages for upgrades and maintenance; Cloud hosted applications could improve service delivery.  
  5. Redeploy efforts: Migrating a function to the Cloud may not by itself improve services, but it may free up resources for other projects. Choose carefully and you may get a double benefit.

Does that make sense? Look for your oldest functions, most outdated applications and most difficult to support services. Make a map of the functions within your group and how they are currently performed. Are there opportunities for improvement? Have you established metrics, produced management reports or developed customer satisfactions surveys to identify service gaps? A lot to think about but… that’s my Niccolls worth for today!

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A Cloud Story II: Data With A Side of Miso Pork

Posted on April 13, 2011 by Chris Niccolls

Yesterday we spent some time going over a brief definition of the Cloud, some of its history and why everyone is scrambling to adopt Cloud services. Today, we’re going to take a practical look at what it means to the average user to have access to Cloud services. So, let’s take a look at how the use of Cloud services would impact a typical day in the life of a typical user… me!

Last week I was in downtown Manhattan; I had a few meetings around Wall Street and Chinatown. Since New York is largely a walking around town, I was running from one meeting to another. It was a cold, rainy, windy day so it was taking longer than normal to get from one place to another, and meetings that were well spaced are now just possible if I move fast. As I headed towards my next to last meeting of the day, it struck me that a document I had created recently would make an important point and would be very useful. But I didn’t have a copy on me. What could I do?

The person I was meeting with worked at a firm with a very locked down computing environment. They didn’t have a wireless network, and it was unthinkable that they would allow me to hook up my own computer…  even if I had it with me. The only thing I had with me was my phone. Hmmm… I could get to the web (sorry it’s the Cloud now isn’t it?). I didn’t want to stand in the rain spending a lot of time downloading files to my phone. Besides even if I got to what I needed, I don’t want to just show him the file on my 4” screen, and if I handed over my phone to the on-site IT tech I would probably have to debate policy (you want me to plug your PHONE into our network?), MAYBE get the file printed, … too much of a distraction since I only had a limited amount of time to meet. What to do?    

If I worked for a firm that had an office nearly, I might pop into that office and see if I could beg access to an authorized computer, but that’s not an option. I think,”What about an internet café?”.  So, I fire up the smart phone and use an on-line application to locate any nearby cafés…. success!  There’s one on Mott street that’s more or less in the right direction. I head towards it and thin about my next step. Once I get there I’ll have access to the internet and hopefully a printer. While I don’t have my laptop with me, I remember that a few months back I was complaining about the lack of a good backup solution for laptop users. The firm’s IT department had tried a few solutions, but they didn’t work very well. I wasn’t the only one complaining about the problem. The entire sales force used laptops as their primary computers, but weren’t overly computer savvy, so they needed a really robust solution. The answer from IT (at least while they gave the issue more thought) was to approve a Cloud-based (at the time Internet-based, but that’s so 2010) backup and storage solution.

A café  few minutes later I get to the café, and ask for a computer. I get charged $1.50 for 15 minutes use, and log on to the backup service. There is a bit of security back and for to get my file… which is a good thing. While computers swap files, I order an order of Miso Pork (I didn’t get a chance to grab lunch) and a cappuccino to go. I find the file I need, print it out, access my Gmail account and send myself a note to expense the $1.50 Internet charge, and finish lunch… before the 15 minutes are up. I double check that no files were left on the computer, logged off all accounts, took all copies of printouts, and signed out. I’m off to the next meeting!

Nothing in this story is rocket science; rather it is an example of things that happen to real people in real corporations. You need to get something basic (a file, an email, a piece of information), but can’t because of the limits of policy or technology. I could  find the computer I needed, access a file, print it out and start my next T&E without ever directly touching any technology or facilities that corporate ever touched. While many have tried, I cannot imagine any single corporation providing these resources and developing these applications on their own. What have we learned? What have we learned? We learned that any single firm is not able to develop cost effective, quality Asian fusion cuisine that comes close to anything in Chinatown… sorry. We’ve learned that the Cloud can offer services that are either more effective, more available, or just numerous than any single firm can deploy. There are dangers… in this case I could have left files on an “outside” computer, left myself logged into my accounts or just left copies of my printout lying around in a public place. All in all, the benefits definitely outweighed the risks. Tomorrow we will wrap up this story arc with more information on the Cloud. But for today… that’s my Niccolls worth!

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