Archive for July, 2008

Posted by: Peter Massey | 31.07.2008

The contrast in use of tax payers resources, the politics and the bigger system and the good news….

Is my tax £ being well spent?

I love Jeremy Clarkson’s idea that the police shouldn’t be allowed to fine you for car parking until they return your stolen goods!I was struck by the contrasting use of resources around Soho Square as I walked into work yesterday. In Greek St, there was a police cordon around a bar. Uh oh must have been a murder. Two officers, once taking photos of the scene. At the opposite end of the square, parked opposite Soho St, was a Smart car with CCTV on the roof. It was aimed up the one way street from the wrong end. Presumably to catch cyclists going the wrong way up the street, since cars cant turn into the street the wrong way easily given the shape of the traffic islands on Oxford St - itself a street only for buses and taxis so unlikely to generate much “driving” crime. There were two guys sat in the Smart car reading the Sun.

The contrasting focus of manpower is striking in a time of newspaper headlines about knife crime, rising prices and taxes.

The wider system

Not only do cameras everywhere make me feel less safe, but they make me aware of government. It strikes me that everything that is government charged, privatised and vaguely regulated (and I use the two words specifically), or is an effective monopoly is just going through the roof. Parking fines rising to £120, gas going up 35%, my station car parking going up 17%, fuel rising to £1.34 - but more noticeably the gap between unleaded and diesel jumping from circa 6p to 14p. Yet the money raised doesnt seem to make any difference to the services offered.

It seems that an economic downturn is a great excuse to screw customers. Does the government thing that people don’t see the connection between the way government governs and regulates, the way business works and the way investors invest. 

Maybe Mr Brown would be better trying to make the adjustments in pricing happen in the stockmarket, not in the high street. Centrica and British Gas is a great case in point. Poor old British Gas has to hike prices whilst Centrica raises its dividend to shareholders, claiming poor old pensioners need the money from their pension funds. Doesnt matter, its still the customers who fork out more to investors via a business and weak regualtion/competition. It feels like we are just paying for the fact that the government sold all the family silver years ago and can no longer control large multinational players, many foreign owned, who will do what they need to do to keep their shareholders happy overseas as funding gets harder to raise.

So Mr Brown - go find a better lever to pull - talk to the analysts and investors. Unless they expect and accept that profits will suffer as markets restructure, without sacking CEOs or ransacking share prices, the CEOs will continue to pump customers for short term gain.

But what about the good news?

The good news is that there are richer pickings for CEOs and government to be made from removing waste than even pumping customers for money they dont want to give. The Cabinet Office agenda is to save 50% of “avoidable contact” with citizens from every goverement department. Not to sack people and save money, but to free people up to do more valuable things (than catching cyclists….). Now this I get. If CEOs set the same challenge to remove 50% of unncessary contact then there would be real change in the customer experience. At the moment there’s a lot of pussyfooting around with cost savings, not fundamental change.

Why is contact rate so important to the experience and the economics? Take for example, last week I had to get my divorce papers done. I really dont like paperwork, but 8 years hanging around is ridiculous. But heh it’s easy - I managed the hard bits easily with only 2 contacts. (Dont let that give you ideas!).

A visit to directgov led to all the forms and how to fill them in. A copy of the marriage certificate within 24 hours all done online. The only contact was to check the fee to pay - it looked like the figure it was, but it didnt say “divorce” on it, so I called to check - all details being quickly available to do that too. The other contact? Meet with the ex to sign the forms too, of course. Job nearly done. A great experience, very little work for me or anyone else, for a complex task.

Then there was splitting a pension. I shall keep the innocent unnamed since they were very helpful. But suffice to say, after looking at the website and even starting with a personal contact, it took several people to get involved to clearly establish what needed to happen. No action has been taken yet, but I can see why their SLA is 4 months to act! I havent counted the calls or emails but it must have been a dozen. Must have cost them a fortune.

So maybe the goverment’s transformation agenda is working better than we notice. Maybe private business can learn a thing or two. Certainly government is giving The Best Service Is No Service serious attention. And we’re going to try and help with an event on the 29th September - a goverment summit we’re running with Contact Centre Clinic in Liverpool. The Cabinet Office will be speaking along with several top public and private companies. But mainly we’ll be causing people to talk to each other and take back specific actions they can take in their government department, police force, NHS body or local authority. And of course private companies are welcome to learn too. Get in touch with joanne.sparkes@budd.uk.com for more details. PS and its £250 - good experiences are always less expensive to give than dumb ones!

Government, Healthcare, Uncategorized, contact rate, customer experience, the best service is no service | No Comments

Posted by: David Naylor | 18.07.2008

From a host preparing for a dinner party to a country constructing a new national stadium, we all tend to underestimate how long things are going to take - an error that’s been dubbed the ‘planning fallacy’. According to Ola Svenson, contributing to this proclivity for tardiness is our inability to accurately decide between time-saving options.
Consider these increases in speed for a 100km car journey. Don’t work out the detailed mathematics. Rather, for both pairs, just make an intuitive judgement about which jump in speed will make the largest difference to your time of arrival (i.e. save the most time):
a) Travelling at 50km/h instead of 40km/h.
b) Travelling at 130km/h instead of 80km/h.
a) Travelling at 50km/h instead of 30km/h.
b) Travelling at 130km/h instead of 60km/h.
If you’re like most of the participants in Svenson’s study, you will have assumed that option (b) in both pairs is the most time saving. In fact, for the first pair, the time saved is equal (allowing for rounding off), and for the second pair, option (a) saves more time. From analysing participants’ judgements, Svenson found that people seem to be mistakenly comparing the ratios of the two changes in speeds - applying what she calls the Ratio Rule.

It can also apply in other contexts. Consider an administration overhaul at a hospital clinic, such that the number of patients treated by each doctor per day is increased. In each pair, which improvement would free up the most doctors to go and work elsewhere?
a) Each day 11 patients treated per doctor instead of 5.
b) Each day, 8 patients treated per doctor instead of 4.
a) Each day, 8 patients treated per doctor instead of 4.
b) Each day, 16 patients treated per doctor instead of 7.

Svenson again found that her participants consistently applied the Ratio Rule, so that most of them said erroneously that option (a) was more time saving for the first pair, and that option (b) was more time saving for the second pair.
So why do we always apply the Ratio Rule if it consistently leads to the wrong judgement? Svenson said the Ratio Rule works when both options start from the same point (e.g. the same speed, or the same number of patients treated). This may then lead it to become a reinforced and favoured rule applied in real-life experiences.

According to Svenson, this bias in the way we compare time saving options has real-world implications. For example, people who are already driving fast will overestimate the time saved by driving even faster. Meanwhile, politicians may be prone to improving an already fast operation, rather than making improvements to a slower operation with more time-saving potential.

SVENSON, O. (2008), Decisions among time saving options: When intuition is strong and wrong. Acta Psychologica, 127(2), 501-509, http://dx.doi.org/10.1016/j.actpsy.2007.09.003 Author weblink: http://www2.psychology.su.se/staff/osn/

Jonathan Wilson

Strategy, measurement, people, planning, process improvement | No Comments

Posted by: David Naylor | 18.07.2008

In the 1930s, GM was in deep trouble as the Century’s worst recession devastated demand and profitability.They were on the verge of closing Cadillac.  But Nicholas Dreystadt said he had a plan to make Cadillac profitable in eighteen months, Depression or no Depression. The first part of his plan resulted from an observation he had made travelling around the country to the service departments of Cadillac dealerships. Cadillac was after the “prestige market,” and part of its strategy to capture that market was its refusal to sell to blacks. Despite this official discrimination, Dreystadt had noted that an astonishing number of customers at the service departments consisted of members of the nation’s tiny black elite: the boxers, singers, doctors, and lawyers who earned large incomes despite the flourishing Jim Crow atmosphere of the 1930s. Most status symbols were not available to these people. They couldn’t live in fancy neighborhoods or patronize fancy nightclubs. But getting around Cadillac’s policy of refusing to sell was easy: They just paid white men to front for them.

Dreystadt urged the executive committee to go after this market. Why should a bunch of white front men get several hundred dollars each when that profit could flow to General Motors? The board bought his reasoning, and in 1934 Cadillac sales increased by 70 percent, and the division actually broke even. In June 1934 Nick Dreystadt was made head of the Cadillac Division.

He proceeded to revolutionize the way luxury cars were made. “Quality is design and tooling,” he said, “inspection and service; it is not inefficiency.” He was willing to spend money on superior design and better machine tools. He was willing to spend even more on quality control and top-notch service departments. He was not willing to spend money on production itself.

“Nick made us look closely at everything,” one Cadillac executive remembered. “If someone else made a part for two dollars, why did ours have to cost three or four?” In less than three years of this attitude at the top, Cadillac’s production costs were no higher, per unit, than those of General Motors’ low-end Chevrolets.

And because Cadillac still sold for luxury prices despite its drastically reduced production costs, it had become General Motors’ most profitable car per unit. In still-depressed 1937 more Cadillacs were sold than in roaring 1928. 

Jonathan Wilson

Strategy, automotive, process improvement, quality, segmentation, success factors | No Comments