Archive for the 'process improvement' Category

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

Posted by: Peter Massey | 1.12.2007

I’ve had a lot of feedback about the HSBC and first direct credit card blog “1 contact vs 23 contacts“

When I tried to use the HSBC card on Tuesday night to buy some tube tickets for the Chief Customer Officers’ trip across town, as I suspected it wasn’t over yet. It didn’t work.

When I came to pay the bill for the excellent dinner at “Dans Le Noir” it bounced. Now if you saw the size of the bill you wouldn’t be surprised. I did wonder whether I’d bust my limit.

Wednesday I thought ‘one more try’ and tried to top up my Oyster card with it and it bounced.

The following day was a busy one and so on ThursdayI checked with our finance lady and it seemed ok. I called the number on my card to be answered very quickly by a lady of impeccable manners. Strangely she called me Peter before I had given her any details. Clearly they were on my case! The only marker she had was for ‘payment requested over the limit’. The helpful lady suggested that I probably hadn’t bust my limit but had probably bust the aggregate limit on my card.

I accepted the point and talked to finance to sort it out.

So far so good but something didn’t smell right. The first payment that was declined was only for £16. It wasn’t enough to break a limit. Whatever, life’s too short, move on.

Then Friday night I got a text from my colleague. “You’ll never believe it, but I’ve had a call from the HSBC fraud people asking for you to ring them”.

As per the last story, obviously they still had my colleague’s names and details attached to my card and were ringing him.

So I rang the number on the card on Saturday. And went through security. Card number, date of birth and any two consecutive letters from my favourite word. At least they stopped asking me for my postcode and then telling me it was wrong. But I havent given them a special word. “It could be your mothers maiden name” the helpful lady suggested. It was. I realised she obviously had the whole of my mothers maiden name on screen and that the lady a few days before had done the same thing with the same helpful suggestion. Is that security?

Nothing wrong with the balance. No flag on the account. Eventually I got transferred offshore to the fraud department. Just before I hung up after waiting 2 minutes 25 seconds on hold.

She asked had I tried to make a payment in Steam. Avoiding all jokes about trains, I didnt recognise it - but we moved on before I answered yes or no (afterward I remembered the beers late in the night in the Steam bar….). Had I tried to make a payment at Hilton. No, but I had stayed there this week. And not paid anything on my credit card. All cash. Had I paid anything on SE Trains earlier - yes.

OK, she would reinstate my card. It was just a fraud check she said, nothing to do with balances. I didn’t argue because I don’t want to go through 23 contacts again to get a new card.

So the questions that I am left with are:
1) Will they ever get me attached to my phone number and details, not my colleague?
2) Why did my card bounce for £16 when that wouldn’t break the limit? Was it in fact a fraud check?
3) Who tried to take money off my card at the Hilton?
4 ) Why was my card reinstated when there could have been a risk? It was my fault - I just wanted my card working and I need to find out what was going on at the Hilton. I think I know so I took the risk.

I got the outcome I wanted, my card working again. This time in only 7 contacts (me to finance, me to bank, me to finance, finance to me, bank to colleague, colleague to me, me to bank).

But shouldn’t the first 2 contacts have sorted it and left no questions open:

• Bounce at the tube, be it fraud check or balance problem
• Text or call to me (not my colleague)
• I call the bank and we agree it’s real or they tell me I have a balance problem so I dont try and use the card to embarass myself in front of 15 of the top customer experience people in the country

If you’re reading this - do get in touch with your observations at peter.massey@budd.uk.com

HSBC, customer experience design, process improvement | No Comments

Posted by: Ian Morton | 30.10.2007

Having recently joined Budd I wanted to transfer my mobile account from my previous business account, held by Vodafone, into Budd’s business telephone account, also held by Vodafone. Thinking this would be a one call fix, as I was not taking anything away from Vodafone, just changing billing details, I called expecting it to be a simple action. How wrong can you be!

A very polite lady advised me that they would have to send me the PAC number, I asked could it be given over the phone, no, I was told, I had to request the PAC number in writing, an email would do, but it could not be given immediately. She went on to tell me that once Vodafone received my email they could then send me a letter with the PAC number. Could I not receive this information by email I asked?, apologies, but no, this was not the process.

On receiving the letter I was advised, I would then have to send the detail to our internal admin team, who could then call Vodafone, who would then transfer the account billing details. Why, I asked cannot you do this now. Explanation given was that they were on different databases and could not transfer my details but had to go through an internal administrative process to enable another section within Vodafone to handle.

So from a simple request to transfer billing details internally within Vodafone we will generate at least 2 calls and 1 email to Vodafone, 2 internal calls to/from my admin dept, I have received 3 emails so far telling me the PAC number was coming, I have also received a letter from Vodafone with the PAC number and, I think, but I am losing track, there is another letter going to Budd’s admin dept to tell them what to do with it.

By my count that’s around 10 interactions for a piece of internal administration. Why?Surely with the number of people moving between business accounts this process should have been refined by now. Even if the databases do not talk the customer should not see the problem. I understand the need for security, but nothing was said they had to do it this way due to security issues.

So, I’m left a frustrated customer, dreading the day when something really goes wrong. On a high note however, everyone you talk to in Vodafone business team is always friendly and seems to be doing their best. So well done Vodafone business team, just please look at this process and consider how many other processes are frustrating to your customers. Might be time to actually listen to what the customer is saying?

Customer satisfaction, Voice of the Customer, process improvement, reduction in contacts | No Comments