Rubicon’s Lean Service Design
by Jeff Martin
What stops a bank or an airline from selling gas and electricity, or a major utility from providing full banking and travel services? In the near future, nothing. Aided by new technologies and methods, the traditional Service Industry is attempting to evolve and converge into a new economic entity called Total Relationship Management. With a trusted brand name built on easily accessible, enjoyable, innovative and competitive customer experience interfaces which are seamlessly integrated with speedy and reliable delivery processes and systems, any organisation in the future will be able to provide any service, or package of services – travel and entertainment, insurance and finance, utilities and communications, procurement and trading, administration and technical advice, etc. – to any customer or group anywhere at anytime.
That’s the dream. Full realisation will only become possible, however, when businesses can harness their energy and develop the capability to integrate their people, processes and systems into transparent and highly agile total-service streams. In such an emerging scenario, only those businesses which can initiate and maintain high quality, complex and customised portfolios of service provisions, and which at the same time can make customers feel trust and confidence in their company’s competency and competitiveness, will survive. Lean Service Design, as developed by Rubicon Associates, promises to deliver such capability.
During the last few years Rubicon Associates has been active in translating our successful approach to Lean Manufacturing Design into one appropriate for the service sector. We have implemented Lean Service Design projects in banking and insurance companies, and for a major multiple utilities provider. Our experience has taught us that the modern service industry presents new and major challenges to existing methodologies for Lean business transformation.
The universal ideal of service organisations worldwide is to establish a seamlessly automated setup, maintenance and transfer system for all customer files and accounts, as well as to automate all customer communications. However, the continual and accelerating change in IT systems, coupled with constant changes in both customer expectation and business requirements over the last 30 years, has resulted in a less than ideal situation for automated services. End-to-end automation has been achieved through a “bolting” together of old and new systems of various standards and origins. This has in turn led to a high percentage of data validation and cross-database mismatches in the best of systems. Add to this the amount of error and re-work generated by the remote, fragmented, qualitatively inconsistent call-centre approach to data capture and input prevalent today, and it is understandable why a large proportion of a modern service company’s resources get allocated to re-working data fallout.
Due to the above phenomena, a certain dynamic of controlled chaos reigns across much of the service sector. Because the central focus of most service organisations has become the maintenance and management of customer interactions and accounts via major IT systems, and because a significant proportion of customer data “gets stuck or falls out” of these systems in a multitude of places for a multitude of reasons, the primary (and simple) end-to-end economic processes become obscured, and in many cases completely hidden. Where intelligent and skilled staff, enabled by flexible IT systems, should be serving customer needs quickly, efficiently and completely, we have them instead merely serving the requirements of inflexible systems. The majority of service workers are either at the front end of a system trying to put data into it (or only preparing it for others to feed it in) or they are active in trying to “unstick” data arrested on its journey through the system, or they are busy trying to push data back in that has fallen out of the system, or they are passing data on for others to deal with.
This is how the chaos gets established. Its full development arises, however, through the fact that, because the systems are central and the people are peripheral, these putter-inners, unstickers and pusher-inners have usually been assembled – through an historical process of fire-fighting and ad-hoc solutionism – in unaligned, incongruent and fragmented work groups spread out across departments, sites, and countries.
But we said this chaos was controlled. The control has been established through the counting and batching of workflow and the establishment of local, individual performance targets. This is, however, merely apparent control. It might be known exactly how many “pieces of work” someone has done and how long they took to do it, but it is usually not known how much of this work was actually re-work in the first place and if its execution actually brought a customer any closer to being satisfied. This approach also, unfortunately, encourages people who feel the push of the reward system, rather than the pull of the customer, to pass work off to others in order to hit their personal targets.
Therefore we have learned to focus Lean Service Design projects on four major areas of business improvement:
Work Process Transformations and Transactions: Lean Service Design provides a framework for specifying customer value, lining up value creating actions in the most efficient sequence, conducting these activities without interruption and performing them more and more effectively. Thus providing customers with exactly what they want, with optimum human effort, equipment, time and space at an agreed, competitive price.
Organisational Structure: One characteristic of a system that has been leaned is its transparency. Once all non-value adding activities have been eliminated from its work processes, a business’s work groups and management can then be structured according to the end-to-end reality and dynamics of whole business processes, rather than according to sub-units or departments. Such organisational divisions hide the true nature and quality of the economic process from its service providers, as well as from their customers. Lean Service Design includes a specific methodology for achieving lean organisational design – where skilled Business Process Teams are formed to execute complete business processes on a right-first-time basis.
Workflow Management: Business Process Teams should be able to plan, implement and evaluate their own work on an intelligent and responsible basis, thus eliminating such non-value adding activities as sorting, counting, batching, and transporting work around and across sites.
Performance Monitoring and Rewards: In a Lean economic system everyone working in a Business Process Team takes responsibility for the process’s end results – as experienced by its customers – and the quality and flow of communication within such teams reflects this common responsibility. Results are monitored on end-to-end metrics rather than fragmented, local and personal targets. Rewards should also reflect the quality achieved by a team in terms of the whole process, rather than on an individual basis. Therefore, when circumstances change and problems arise for one or more member of a team, the rest of the team will respond to support them rather than distance themselves from the problem or merely remain ignorant of it.
© Rubicon Associates