Category Archives: Systems Thinking

Making targets work and their impact on the Euro and Greek economy

Previously I have written on the dangers and short comings of targets. Reading commentaries on the fate of Greece suggests part of problem may have arisen from targets.

In the past I have explained how targets can encourage otherwise honest people to cheat. Such can be the pressure to meet a target that we will find any excuse to hit the target. For example we will change or at least ‘bend’ the criteria and find another way of ‘getting the numbers’. In call centres agents failing to meet objectives have been known to cut off calls as soon as the phone rings so as to increase their call volumes and reduce their average call duration.

So where’s the Greek connection?

Well commentators have suggested that there was a degree of manipulation of ‘actuals’ to allow Greece to meet the entry requirements for the Euro. The implication being they would not have been granted entry to the Euro club. At the time, interested parties must have been keen for their admission.

The implications of this ‘cheating’ are now on display for all to see.

Using averages is likely to give average results

Averages are used in lots of situations: batting averages in cricket, wages and salaries, road speed (er sorry, safety) cameras. They’re taught in school as basic maths. Take several measurements, add them up and divide by the number of measurements.  Mathematicians call it the mean.  For example, take a sweet manufacturer who sells boxes of chocolates.  Each box is marked ‘average contents 10’.  The manufacturer checks 10 boxes and records the contents.

Sweets per box
             11
             10
             10
             10
             10
             10
             10
             10
             10
               9
Total 100
Mean 10

The advantage of using the mean is its simplicity. The drawback is that this simplicity can hide knowledge from us. Take this example:

Sweets per box
            25
            16
              9
            23
            10
            10
              2
              2
              2
              1
Total 100
Mean 10

Here the data has the same mean, but the data points are spread very differently.  Compare the maximum and minimum values in each of the examples. Note the number of 10s in the first example and how few there are in the second.

So, in these very simple examples would you prefer to buy a box of chocolates from example 1 or 2.  In the first you will get 9, more likely 10, but may be eleven. But in example 2 you might be lucky and get more than 20 or unlucky and get only 2.  If you only got 2 sweets I suspect you wouldn’t be very happy.

Averages only tell part of the story and can hide the bigger picture.

This is the danger of using averages.

Legally right – morally wrong?

So at last we all know.  The High Court has not accepted a bid from school leaders, teachers’ unions and councils to change grade boundaries in last summer’s GCSE English exams.

Apparently all is well because the standards of our examination system have been preserved. That must be good. A legal decision has been made.

Well that might be the single loop view (as systems thinkers might say)  But take a look at the double loop…..    ….We now have teenagers who are stepping out for the relative cocoon of secondary school, having tried their best, having endured all the motivational techniques their teachers knew only to be punished by the system.  Although I’ve seen no admission I think its reasonable to assume that all English students even those with A, B and C grades have been affected. I deeply suspect English is not the only subject.

Without doubt those who failed to achieve have been dealt a harsh blow by the leaders of our education system.  Those who were awarded D grades are by definition students who are less able than many of their peers. Recovering confidence from one poor grade amongst several A’s. B’s and C’s may be relatively easy, but rising to peak performance when you’re not academically strong and maybe you’re not hard-wired to classroom learning is a much tougher ask.  My heart goes out to the latter group.

Let’s remember the teaching staff too.  They’ve tried hard for these youngsters.

So perhaps there are other loops in play here.  One for teenagers on-going drive and motivation to succeed in their chosen careers; another for the educators who have to be motivated to re-inspire them. Both knowing that statistical fixes can change their path so easily.

So maybe legally right, but definitely morally wrong.

Targets – We’ll hit them if you insist

The thing about staff is that they want to please you.  Yes, I suggest all of them, well at least they want to do everything they can to prevent you telling them they’re not performing well enough.

The reality is increased pressure to meet targets increases the ingenuity applied in response.  Or to look at it from the perspective of an economist, the relationship between ingenuity and pressure is elastic.

In other words people, even ‘honest’ people have a tendency to twist the story to hit the target. In short people will cheat (to a degree).  Parameters are bent to make sure goals are met. 

Take a certain parcel delivery organisation where the objective is (I assume) to deliver packages within a specified timescale and where a house is unoccupied leave a card advising of the attempted delivery.  The pressure to meet the objective creates a situation where the van driver rings the door bell and immediately puts a card through the letter box, driving away before the householder gets to the door.

The pressure to hit the target of delivering all the parcels on the van has motivated the driver to spend as little time as possible at each drop-off point. 

And the impact?

Firstly, the inconvenience to the addressee.  They have to either arrange re-delivery or go to the depot to collect the item.  In either event this has created extra work; the addressee may have phoned the depot, requiring someone there to answer it; finding the parcel at the depot and potentially redelivering it.

The key point here is that a target, probably imposed to increase the productivity of the delivery staff and reduce operating costs has caused inconvenience to the customer, and increased the service centre and delivery costs.

To find out more about the impact of rewards read this article from Freakonomics. http://tinyurl.com/c7qak5t

Getting a drink is simple – Well it is, isn’t it?

Recently I was invited to a breakfast briefing at a major hotel. I arrive the obligatory 15 or so minutes before the published start time to mingle with my fellow guests. Courteously I’m invited to help myself to a drink – tea or coffee.

All the necessary items – sugar, sweeteners, stirring sticks, mugs, followed by flasks – are laid out on a table on the edge of the small mingling area. It’s quite a busy event and the area is a little congested.

Now I’m into process, in fact I’m very enthusiastic about process, you know doing the right thing right.

I must be careful here. I don’t want to spill anything do I?

First things first, I need a mug. Yes mugs are great, you get more in them and you don’t need to balance them on a saucer. That’s good.

Now for some coffee. I don’t like tea, so it must be coffee. What? The flasks aren’t labelled? Which is which? Ah, the chap at the side of me tells me which is coffee. Umm, good job he was there otherwise….. So where’s the milk then? Umm, that’s not particularly obvious either, but with team work we achieve our objective.

So far I’ve been working from left to right along the table. But now I need some sugar, oh and a stirrer. Where are they? What? At the extreme left hand side? Surely not. Oh, yes. I can see them but by now there’s someone on my left who’s guessing which liquid he’s pouring into his mug. Sorry mate, I should have told you about that. Really sorry, honest. Excuse me, I’ve not told you which was tea, but even so would you mind letting me through to the sugar… …err please.

I reach for the sugar and the stirrer, disrupting the flow, trying not to cause me or my fellow guest to spill our drinks.

Success. Coffee in mug. Milk in mug. Sugar in mug.

Stirrer in…. ….where’s the bin?

Why do they do it? These hospitality professionals, supposedly at the upper end of the market but they can’t even organise a cup of tea in a…. …hotel!

It should be so simple. 60 guests wanting a drink. But it’s not.

It’s all in the process. Don’t blame the guests. They’re following the process laid out by the hotel.

I wonder how good their other processes are? Glad I’m not expecting something more complex. How good are the processes in your business? Do the right thing righter.

What’s going on?

OK, so you’re a manager, a head of, or a director.  You’ve got a team of people working for you providing a service for your customers – internal users, external business customers or a personal customer base.   You’ve grown your team and have some good people.  You’re proud to have developed them over a few years.  You’ve handpicked them for their strengths.  Yes, you’ve got a couple who might be a bit flaky but generally you feel you’ve got a dependable crew.

So what are they doing right now?  Yes one’s gone for a quick smoke but they’re industrious when they’re at their desk so it’s not an issue really.  The others seem to be getting on with it.  Yes, but what are they getting on with?

Do you really know?

Yes, you get the weekly stats reports and they tell you everything’s fine – above target.  The boss will be pleased, just like usual.  Occasionally there’s a dip and you get a bit of a grilling but once in a while that’s OK.  After all you are responsible for all those fluctuations in demand caused by err…    …yes, the weather, the sudden closure of a competitor.   Oh well, you’ll have to learn how to use your crystal ball a bit better.

But that’s not the real picture is it?

How much of their time, (your time actually) is spent on their primary task.  Let’s call their primary task ‘value demand’ .  Yes that’s the stuff that you’ve recruited them for.    Go on, check, spend some time with them, observe for yourself.

I strongly suspect the percentage is a lot less than you’d hoped for or imagined.  So what’s the other stuff they’re doing?  Dealing with items which should have been directed to another team?  Customers chasing progress on problems they told you about 2 weeks ago?    Umm, that’ll be failure demand then.

Just think how much better that weekly stats report would look if you could stop it.