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Systems Thinking: Purpose by Andy Lipok

The first in a series of blogs to investigate new or different approaches to how we make our work, work better for staff and customers. This week we start with the concept of purpose.  In the midst of social and economic unrest across the globe, in combination with advancing technology creating instant collaboration and news on a global scale, the views of social groups & entire populations are being heard on an ever more forceful scale.

As a result of this backdrop the question of purpose, of banks in particular, has been challenging the Chairs of major companies, presumably not helped by Lloyd Blankfein suggesting Goldman Sachs was doing ‘God’s work’! Whilst the question of ‘What is our purpose?’ should be seemingly easy to ascertain for a Retail Bank, the question of how we focus on this purpose and the subsequent questions this raises holds a more complex series of challenges to traditional management practices.

Purpose

The link between what we focus on or believe – our thinking – has a resulting impact on the designs of work and behaviours in our organisations. Most businesses across the globe have evolved from our industrial past from pioneers such as Adam Smith, Frederick Taylor and companies such as Ford and Toyota – all from manufacturing roots. The beliefs and methods present in manufacturing lead the work to be structured in an efficient flow from raw material to finished product. But does this thinking, applied to modern organisations offering services rather work?

  • We treat all demand from customers as work to be done (with very little understanding of the types and variety of demand we are receiving)

  • We have queues of customers in branch and queues of calls in telephony

  • And because we have lots of demand our aim is to answer the enquiry as quickly as possible to get onto the next one

  • With this approach our problems are how can we best utilise our available resource to meet the level of demand and how can we minimise the amount of time (and therefore unit cost) of dealing with each piece of demand

  • Through the use of activity targets and SLAs we measure our ability to meet demand on our own terms i.e. Have WE met SLA? How many calls did WE answer? What’s OUR cost per call? (This in turn causes multiple issues, which I’ll save for later blogs).

 

In the Service Age many companies have processes that are transactional in nature, i.e. the customer is involved in the process, the services offered are more varied, usually smaller & quicker to complete. If we accept that an organisational design directly affects performance in terms of service, efficiency, revenue and morale of staff, then a factory management approach to transactional service organisations may lead to inefficiency. More importantly, we might be missing out on a greater opportunity to improve quality and reduce costs.

So where might we be going astray? A key factor in our thinking about our organisations is the issue of purpose. It’s often the tensions between the current or default purpose and the true purpose (from the customer’s point of view) that leads to organisational schizophrenia – none more so than the relationship between meeting the needs of our customers and meeting targets promised to shareholders, which almost always result in a conflict of interests, pulling the organisation in two different directions, with only one winner, no-one!

The purpose of increasing share price or dividends is typically reinforced throughout an organisation by measures and targets that underpin this default purpose, in direct competition to the true purpose of the organisation. As we try to increase our control over our organisations we start to introduce other purposes for staff to focus on. For example activity targets for branches and call centres: When a customer visits or calls with a demand to use our service it is not the purpose of that call to have it answered in 20 seconds or for it to be dealt with in 2.5 minutes, the purpose is to e.g. open an account or solve my problem. If we ask the customer what matters they will undoubtedly want a process to be completed quickly but never to the detriment of meeting the core purpose for the customer engaging the service. This tension constrains the methods of working as resources are tied up worrying about, and doing, the wrong things. This is further compounded by existing SLAs, targets and measures showing good performance despite increasing dissatisfaction from customers.

As the true purpose starts to become unfulfilled, customers have to call multiple times to resolve a problem, customers wait an ever increasing amount of end-to-end time to use the service or resolve a problem – the knock on effect is that service quality reduces, costs increase and staff morale diminishes!

 

Systems thinking: purpose

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