Posted tagged ‘Extreme Government Make Over’

To Make Government Cheaper You Need To Understand Its Main Cost Drivers

January 26, 2012

This part four of a four post series regarding Ken Miller’s great book Extreme Government MakeoverIn Part 1 we learned that government is like a house in that most of the important work goes on in pipes hidden from public view behind walls. The problem with improving the performance of government does not lie with employees. Improving government performance requires us to focus on changing the systems (policies and procedures), that employees must work with. Governments system of pipes are broken, rusted and twisted, which limits their capacity to serve the public.

In Part 2 we learned five strategies to make government work faster. In part 3 Miller addressed the concern of whether making government work faster will affect the quality of government services. As Miller explained serving customers faster can actually improve the quality of services.

In this final post we discuss whether making government faster, and better can also make it cheaper? As Miller explains to make government cheaper you need to understand its main cost drivers.

The Five Main Cost Drivers In Government

 #1: Time – Serve the Customer as Fast as Possible. 

The old adage that time is money couldn’t be more accurate for government. The longer something takes, the more it costs. When something flows through our system quickly, there is little need to track it, batch it, inspect the handoffs, expedite the bottleneck, and so forth. The longer something stays in our pipes, the more we have to manage it. All that management translates to more costs.

Nearly every phone call we get in the public sector is a defect; that is, it shouldn’t have happened. Don’t believe me? Go spend an afternoon in your agency’s phone center. The vast majority of the calls are either “Where is my stuff?” or “I don’t understand.” They’re defects. Rather than spending more money to log, track, and quality-control these phone calls, we should instead spend more time eliminating the source of these calls. Great customer service means never having to call.

Cost Driver #2: Transactions – Serve the Customer In As Few Visits As Possible.

In many government offices up to half of the customers should not be there. Many of them are there for the second or third time to get something done. Each visit costs a government office time and money.

“I didn’t get it” and “I don’t get it” are two of the biggest cost-drivers in government. Make things easier to understand for your customers, and you reduce the number of transactions — along with costs.

Cost Driver #3: Mistakes – Do It Right The First Time.

Part of the cost of mistakes is obvious: You have to do the work again. But the true cost goes beyond that. The real cost of mistakes is the CYA they leave in their wake. Someone messes up; they’re told to never do it again; so they build in safeguards. But more CYA measures mean less capacity to do the work itself, which leads to more pressure, more rushing, more mistakes.

Instead of inspecting, we need to be preventing.

Cost Driver #4: Specialization – Have As Few Hands Touch It As Possible.

A Plan Review Specialist III costs more than a Plan Review Specialist II, who costs more than a Plan Reviewer. Higher specialization leads to higher wages and higher costs. Beyond the obvious, though, are the real cost drivers: Specialization creates CYA. Every time we specialize, we create a handoff. You do this, she does that. At every handoff, we eventually have to log work that comes in, assign it, track it, expedite it, log it out, and transport it. None of that stuff adds value. It just adds cost.

Cost Driver #5: Management – Leave People Alone and Let Them Do Their Work

Perhaps nothing drives up cost as much as the good intentions of management. Take a look at your day. What are you doing today? How much of it is mission work? How much of it moves the water through the pipes? If you’re like my workshop participants, you are spending less than 50 percent of your day making the widgets. Where does the other half go? Management. Staff meetings, budget exercises, team-building, accountability sessions, performance reviews, and on an on.

When we talk about “Better Faster Cheaper,” it’s not a best-two out-of-three situation. You’ve got to have all three. And you can. But you have to know where to start. If you start with “cheaper” — that is, with a focus on cutting costs within the systems you already have — you will likely become slower and make more mistakes. Most cost-cutting initiatives — consolidation, furloughs, layoffs, reduced equipment — rob us of capacity. Their effects are compounded when they impact our bottlenecks. Lost capacity slows us down. When things are moving slowly, corners get cut and people rush in order to expedite. These activities drive up mistakes.

If you start with “better” — focusing on quality and on not making mistakes — you will likely become slower and more expensive. When the goal is simply to eradicate mistakes, we often add layers of CYA and additional inspectors. These drive up cost and slow things down. But if you start with “faster,” you’ll actually get the other two. If we speed up the system and unkink the pipes, we can get more done with limited resources. When we go faster, we eliminate the biggest cost-drivers. By going faster, we also increase quality. You can’t be fast and make mistakes — you’ll get bogged down in rework. To be fast, we must eliminate handoffs and CYA and all the things in the system that cause mistakes. By making the system faster, you increase the capacity of the staff, which allows them to spend more time doing quality work.

Better, faster, cheaper. Start with faster and you get all three.

Do you agree that to make government better, faster and cheaper, the place to start is by focusing on doing things faster? Do you agree with the main cost drivers Miller has identified?

Operating Government Faster Improves Quality

January 24, 2012

This is part three of a four post series regarding Ken Miller’s great book Extreme Government MakeoverIn Part 1 we learned that government is like a house in that most of the important work goes on in pipes hidden from public view behind walls. The problem with improving the performance of government does not lie with employees. Improving government performance requires us to focus on changing the systems (policies and procedures), that employees must work with. Governments system of pipes are broken, rusted and twisted, which limits their capacity to serve the public.

In Part 2 we learned five strategies to make government work faster. In this part Miller addresses the concern of whether making government work faster will affect the quality of government services.

How Operating Government Faster Improves Quality

If you watch a few episodes of Extreme Makeover: Home Edition, there’s one thing that you’ll notice pretty quickly. The houses they build aren’t shacks. They’re actually quite impressive. The high-quality homes are built to meet all the right municipal codes and standards. They have roofs, multiple stories, gutters and usually a dozen flat-screen TVs scattered throughout. It’s not as if the builders get to the big reveal at the end of the episode and say, “We only had seven days! You didn’t really expect us to put in windows, did you?” When I talk to people about making government go 80 percent faster, the first question they throw back at me is whether quality will suffer. Won’t going faster make our work sloppier? Absolutely not. I am not advocating cutting corners. It’s not about skipping the windows or leaving off the gutters.

Is Extreme Makeover doing fourteen months of work in seven days? No. They are doing seven days of work in seven days. The way we go 80 percent faster is not by doing the tasks themselves faster, but by radically rethinking the system so that we’re just doing the tasks — only the tasks — with as little lost time as possible between them.

One of the biggest sources of water into the pipes — at DMVs and at lots of other government offices — is repeat customers. In a typical DMV office, up to half the people in line are there on their second, third, or fourth attempt. Despite all the letters the state mailed explaining what to bring in, despite detailed lists on the website and the huge signs in the lobby, customers inevitably would forget to bring all the necessary documents. For the DMV offices Miller worked with, the customer service model had amounted to “Too Bad For You.” Customers were told to go home, get the right documents, and come back again later. In fact, our stats showed that six in ten customers were being sent away. When they would return (angry and frustrated), they’d clog the line and rob us of capacity. We worked with the managers to shift from a “Too Bad For You” approach to a “How Can We Help?” model. For instance, the most common reason customers were being turned away was for failing to bring proof-of-insurance documentation. For lots of people, locating an insurance card is a fool’s errand. It’s just not gonna happen. So under the new management approach, no customer was sent home until we’d done everything we could to find the right information for them. In most cases, this involved having the customer move out of the line while somebody contacted the insurance carrier and had the card faxed over. This worked, but it required a lot of effort. Finally, the management built relationships with all of the major insurance providers to get electronic access to their policy lists. They did the same thing with county tax collectors, because the second most frequently forgotten item was a proof that you had paid your property taxes. Now, someone like me can walk into the office completely oblivious of my civic duty and walk out with a shiny set of plates. These measures led to more than a 50 percent reduction in repeat visitors.

In public assistance offices, Miller has worked with customers who have to go home to get more documents are handed a piece of paper for each document. The papers show exactly what the document looks like — with pictures — along with step-by-step instructions for how to get it and support numbers if any questions arise. Repeat visits dropped dramatically.

The reality is that, when you study your pipes, most of the problems you deal with happen at the very beginning. The very first interface with the customer creates most of the havoc we deal with later on. If a form letter is hard to understand, the customers do the wrong thing. If an application form is too complicated, customers don’t fill it out correctly. If the data-entry screens are too complex, the employees don’t fill them out completely or accurately.

By straightening our pipes, we move people through the system faster. The remarkable thing is that we also do it better. It’s better for the customer — shorter waits and fewer frustrations. But it’s also better for government. When we’re able to help customers right the first time, we’re left with more resources to assist the people who really need our help. We increase our capacity to do more good, and that’s better government. We can make government faster, and we can make it better. But the billion dollar question is this: Does that make it cheaper? Which we will discuss in my next post.

Do you agree that operating government faster can improve the quality of services?

Make Government Faster By Focusing On The Space Between Tasks

January 23, 2012

This is part 2 of my series on Ken Miller’s  great book Extreme Government MakeoverIn part 1 I explained how Miller describes government as a house where the important work goes on in the pipes hidden from public view behind walls. Miller’s position is that the problem with government is that it cannot meet the demand for its services becuase the pipes of government are a rusted tangled mess, which makes it difficult to moves things through in a smart, fast, cheap way.

Miller claims that he can make your program, department or agency operate 80% faster. How? Not by making employees work faster but by making the time between tasks faster. According to Miller the space between tasks is where opportunity lies for improving government performance.

Miller states: “The actual work time — the labor in a process — typically consumes less than 5 percent of the total time a customer experiences. Ninety-five percent of the time a customer spends in our pipes, nothing is happening.”

Miller has five strategies to make your systems faster. They’re focused on that 95 percent of the time that gets lost in the system — not the 5 percent in which the actual labor takes place.

Strategy #1: Triage  

Most pipes in government are of the one-size-fits-all variety. We have one long, twisted pipe, and we make every customer travel through it. One of the most powerful strategies for speeding the flow is to actually create more pipes — that is, give customers other pathways they can travel.

Strategy #2: Simultaneous Processing 

Our pipes are divided into sections, and the water must travel through these sections one at a time. For example, building permits move from plan reviewers to code enforcement to the fire marshal and then the public health department. Your expense account goes to your supervisor, then her boss, then his boss, and then over to accounting, where it is reviewed and then processed and then approved. One of the simplest tactics for moving water through our pipes more quickly is to use simultaneous or parallel processing.

Strategy #3: Bust Your Bottleneck

In your whole agency, I’d bet there aren’t more than five places that are kinking your pipes. So how do you find your bottleneck? The simplest way is to go out and look for it. Put your waders on and find the puddles. In front of every bottleneck there’s usually a pile. It can be physical (stacks of paper, rows of file cabinets, overflowing inboxes) or virtual (a pending file, a queueing system, a workflow management system).

Strategy #4: Quit Your Batching

Batch processing holds one customer hostage to a larger group. Batches can be quantity-based or time-based. A quantity-based batch would be something like waiting until we have 100 applications before we send them on to the next unit to be reviewed. A time-based batch would be, say, a policy to only process payments on the third Thursday of the month. In either case, the customer does not flow smoothly through the pipe. Instead, he has to wait.

With a batch, we’re essentially adding a dam mechanism into the pipe: Water gets stopped until the level rises to a certain point. Then all that water floods into the next section of the pipe at the same time, which often creates backlog. Again, we have sitting water with all of its side effects: phone calls, tracking mechanisms, expediting, and so on. In an effort to save work, we create work.

Strategy # 5: Eliminate Backlog

The DMV is actually a great case study of the effects of backlog; you can literally watch the effects of falling a little behind manifest themselves every day. An office can open at 8 a.m., fall a little behind by 9:15, and by noon there are fifty angry people standing in line. The reason this happens with DMV offices actually has nothing to do with the productivity of the employees. It’s a function of random variation. At DMV offices (or food stamp offices or public-assistance offices), the number of customers who show up at any one time is completely random. With the exception of lunchtime, there’s no rhyme or reason. There is as much probability of four people showing up as forty. If four people arrive at the same time, the office is fine. But if forty people show up at once, the game is over and the office is wrecked for the rest of the day.

Fast-food restaurants also have the same problem of unpredictable customer patterns, with the obvious exception of mealtimes. That is, there is as much a chance of two customers walking in as twenty. If you’ve ever been at McDonald’s when a bus full of customers shows up, then you have seen the chain’s very sophisticated process for dealing with this. It’s called “BUS!” That is, when a bus is spotted rolling into the parking lot, an employee screams “BUS!” and the entire restaurant is transformed. Managers and supervisors stop what they’re doing and double-man the counters. Cooks start making popular items as fast as they can. All hands are on deck to get the line of customers served as quickly as possible — because if they don’t, the lines will be with them all day long. The whole day will be wrecked.

Armed with this insight, Miller created a “bus” process for the DMVs. Whenever a large group of customers all showed up at once, the entire office transformed. The managers came out of their offices and double-manned the counters. Back-office paperwork specialists came out to work the lines. Everybody pitched in until the line was gone, and then they went back to their regular jobs. It was an amazing thing to watch as everybody cooperated with each other. It was hard work, but the benefits were astounding. By not getting a little bit behind, they never got a lot behind. And life in the office got a lot better.

Designing processes so that you never fall behind requires a whole new way of thinking. In government we tend to practice the ancient art of annual management.To avoid ever falling behind, you actually have to manage more actively. For DMV or public-assistance offices, this can be a minute-by-minute battle. For licensing and permitting offices, this may be a week-by-week battle. You also have to cross-train your employees so they can step in to help during high-traffic times. Sound like a lot of management? It is. But not as much management as it takes to handle the call centers, the tracking systems, and the ever-growing pile of documents you get from backlog.

You can make government run faster by focusing on the space between tasks. What do you think of the above strategies for making government run faster?

Want Better Results? Build A Better System

January 22, 2012

Ken Miller has written a great book titled Extreme Government Make Overwhich I am going to write about in a four part series of posts this week. Miller is the founder of the Change and Innovation Agency, a firm dedicated to helping government increase its capacity to do more good. If you are interested in improving how your government agency or department works, I encourage you to pick up Miller’s book.

In Extreme Government Makeover, Miller explains government like a house with many pipes hidden behind the walls out of view doing the important work that allows a house to function. As Miller puts it:

The pipes of government — our systems, operations, and processes — are a mess. They’re kinked up, rusted out, and about to burst. Ravaged by years of budget cuts, reorganizations, and half-finished technology projects, the systems of government simply don’t have the capacity to keep up.

Second, we’ve got mold. Everywhere. Moldy thinking. Old ideas about people and motivation. We’ve come to believe that the problems with government are “people problems” — that public servants are lazy, unmotivated, and need to be incentivized to do the right thing. Oh, we don’t say it that way. Instead, we call it “pay for performance” or we create competency models and performance development plans. But the message to employees is the same: Government will improve when you improve. This moldy view of people has given rise to the accountability movement. And just like real mold, this movement has spoiled the air, damaged the foundation, and is making everyone sick.

Miller argues that the problem with government is not employees but defective pipes (policies, procedures) that do not provide it the capacity to do everything its citizens require. The only way to address capacity issues with a water pipe is to reduce the amount of water coming in or to increase the size of the pipes. Neither of these options is realistic for fixing government pipes. However, there is a third option, that reveals itself when you rip out the walls, tear up the floors and expose the pipes. The third option is to straighten the pipes so that the system can better handle capacity.

Our hidden system of pipes is the culprit for government performance problems, yet we always blame people because we can see them. Systems are invisible and its hard to improve what you can’t see. Miller explains it as follows:

Because the people are what’s visible, they get most of the attention when it comes to improving government. We try to motivate them, incentivize them, train them, and change them. We want them to do more, and do it faster. We want them productive, smiling, and adaptable. As W. Edwards Deming, the grandfather of the quality movement, proved years ago, “Six percent of the problems we experience can be traced back to people. Ninety-four percent are inside the system.” The variation, constraints, and problems are in the pipes.

The fact that government costs too much, takes too long, and accomplishes too little, are capacity issues. These are pipe issues. We have to straighten the pipes to speed the flow and we will get more done without additional resources. Our results come from our systems. If you want better results, build better systems.

As Miller states: The hallways of government are rife with mold. You can’t see it — we’ve wallpapered over it with vision statements, mission goals, customer-service policies, and employee-of-the-month plaques. But it is there, fouling the air, sickening the family, and destroying the energy and vitality of public service. How do you know if your agency has a mold problem? Check the symptoms: Low morale Poor customer service CYA Silo mentality or turf wars Slow processes Few innovations or ideas Constant complaining Apathy High absenteeism, grievances, and turnover Rampant distrust (of employees, customers, and management)

The fear is on the face of the frustrated worker who takes all the blame for the policies but lacks any power to change them. The fear sits in every question on the twenty-page form the customer must fill out, the one that culminates in the signature block filled with menacing legal threats. Everything about the place just screams “no can do” and “you’d better not.” And those are just the visible symptoms.

Want better results? Build a better system.

Do you agree with Miller that focusing attention on employee performance to improve results is the wrong approach? If you want better results do you need to build a better system?