Chapter 7 Molasses in the Works The Bureaucratic Stall "How many bureaucrats does it take to change a lightbulb?" "We'll get back to you on that." Work processes that unnecessarily involve many people will cause your organization and its stakeholders to suffer from delays, misunderstandings, high costs, and minimal effectiveness. Organizations need to eliminate the bulk of these work processes and then simplify what remains. A primary advantage of making this change is to free time and resources to attend to more important and valuable tasks. Like Running a Marathon Wearing Combat Boots: Bureaucracy--Officialism, Red Tape, and Proliferation Organizations usually see themselves as smoothly coordinated operations, even when they are not. A baseball analogy can help us to understand what effective joint participation looks like. Early in this century, the Chicago Cubs team members Joe Tinkers, Johnny Evers, and Frank Chance were baseball's most celebrated double-play combination. Joe Tinkers would scoop up the ball at shortstop and wing it to Evers at second. Evers would touch second or tag the runner sliding toward him, then snap the ball to Chance at first, who caught it before the hitter could touch the base. The line "DP Tinkers/Evers/Chance" appeared on box scores of the day so often that "Tinkers to Evers to Chance" became part of the American folk idiom. I Like Company Most companies start in a Tinkers to Evers to Chance mode. But all too often bureaucracy sets in and the ball gets hung up. Bureaucracy reflects excessive job creation. The stall occurs when more people than are needed are assigned to do the work. Once a bureaucracy is established, job security motivates the bureaucrats to try to propagate the system. It is common sense to use the least number of people needed to perform each activity. High people counts slow things down. By analogy, in a relay race, the more times the baton is passed, the more likely it will be dropped and so thwart a victory. But there are forces at work that encourage ever larger staffs. Notably, the top executive of a large company is usually paid more than the top guy at a smaller one. This message is not lost on executives elsewhere in the pecking order. The more "report to"s an executive has, the better he or she is paid. So executives overhire. For several decades, compensation systems have been based on peer-group company comparisons. There is a great deal of checking going on to see what peers of similar-size firms pay their executives. The CEO's board (or the board's trusted aides) checks the range and decides where it wants to fall in that range. Unfortunately, this compensation approach creates a bias toward bigger organizations: layering, if you will. Layering helps kids survive zero weather, but it can freeze an organization solid. It is not uncommon to create more than a dozen layers between the CEO and the lowest-level troops. The batons fall left and right, and 2,000 percent solutions are lost with each drop. Fiddling With Roman Bureaucracy Bureaucracies often coexist with wonderful innovation, which helps to offset their weaknesses. Some then confuse the bureaucracy with the cause of the success rather than the parking brake on that success. Consider the Romans, who managed to combine a terrible bureaucracy with road-building skills that we are only learning to match at the end of the twentieth century. Much more attention was focused on the bureaucracy than on the roads that were largely responsible for the military and commercial success that allowed Rome to pay for its inefficient administration. As Roman legions spread out from Rome defeating all rivals, Rome installed more and more administrators, eventually creating the worst bureaucracy the world had ever seen. Communication ran like molasses, if at all. But at the same time, the Via Domitia, designed and built by the Caesars circa the first century, effectively bore traffic from France--"Gaul"--to Rome. For its time, this was an extraordinary engineering feat. And the Romans, for their part, believed in building roads to last. The roadbed of the Appian Way, for example, was several feet deep. The Romans discovered that a mix of volcanic ash with cement produced a sturdy road-building material that was to last for centuries. This technique was not rediscovered until recently when fly ash from flues was employed the way volcanic ash was in Roman times. The Via Domitia was a marvel. Residents along its right-of-way watched as civilization passed by in fair weather and foul. Still, this marvel did not cut the time needed to deliver a letter from London to Rome from Christ's birth until railroads arrived in the nineteenth century. Imagine how long it took to get permission to, say, spend money. Assume a response comes back but is unclear. Back by chariot for clarification. How many subadministrators along the way are consulted? Jove only knows. No one would make a move without permission because Roman tyrants were known to chop off the head of any bureaucrat who made a mistake. In time, Rome was not competing well with other civilized peoples operating in parts of the Roman Empire. While Rome helped invent numbing bureaucracy, bureaucracy lives on both in business and in government. It is well known that the bigger the percentage of gross domestic product (GDP) the government spends, the slower the economy grows and vice versa; that is, the less government takes of the GDP, the faster the economy grows. It is also well known that the economically advanced nations do little to reduce the size of government spending, even though to do so would be valuable for citizens they serve. Hands Off! That's My Job At a wholesale drug company in Cleveland years ago, a law student was hired to help two order clerks, Betty and Billie, process sales orders. The orders arrived constantly for most of the day. First, Betty would begin filling in blanks for each order, following a checklist that included stamping a date on the order, putting an "X" in a box to indicate the type of sale--cash or credit--and doing a dozen other checkoff notations. Her chore completed, Betty put the order in Billie's pile. Billie was responsible for another dozen similar checklist steps. Betty was always behind. Billie was swamped. There were thirty-nine checklist items in all. The law student was assigned the remaining fifteen steps by Betty and Billie. No problem. The student laid out orders in rows on his section of the long desk. He sat in a secretary's chair with a wheeled base. To the deep consternation of both Betty and Billie, he would scoot from left to right doing one step at a time sequentially on each order. He finished quickly and would have nothing to do most of the time. One day, when Betty and Billie were at lunch, the student lined up all the pending new orders on this long table and scooted merrily along, doing each step required of all three employees. He completed batch after batch. Very quickly. By the time Betty and Billie returned from lunch, the law student was sitting there smugly reading the paper. All the orders were up-to-date. There was nothing to do. Few orders arrived in the normally light hour between 1 and 2 p.m. They were done at the usual deliberate pace by Betty and Billie. Both were sputtering like July 4th sparklers. With no excuse to scoot, the law student waited quietly for a dozen orders to pile up, then scoot he did. He was insufferable. He admits it. That evening, Betty and Billie, who had worked there for years, complained to management that the law student was handling orders too casually. They had poured over his processed orders and found one series of boxes without an "X" mark. They also griped that he scooted in a distracting, even menacing, manner. Luckily for all, the law student was fired. He found useful work at a law firm. It is not clear that the drug company missed orders by organizing the order-taking process on a two-person basis. But a better way would have been to have one worker follow through in the entire process, making sure the order form was fulfilled promptly. Doesn't seem possible? Well, consider how Motorola has revolutionized the world of order fulfillment. Motorola has what you might call a Tinkers to Tinkers to Tinkers play. Each order moves as fast as a double play and does so without leaving the fielder's glove. Motorola set an objective for filling orders for pagers at a one-hour limit from the time a customer said, "I want to place an order" until the pager was manufactured, processed, and shipped. The trick is that the entire process is handled by one person, working in a totally automated factory. The order person can even arrange for custom manufacturing to a variety of specifications within this highly restrictive time period. In most companies, the order time is protracted. When incoming orders reach the factory, the bureaucratic stall hobbles the process. Sales rarely talks to manufacturing. Manufacturing does not conduct a dialogue with billing, and so on. The ordering department must act first. Then the order goes to the credit department people who must give the customer the green light. There may be individual specifications for the item, which puts engineering to work. Then a bill must be issued. So the billing department gets involved. More than one company has been known to drag this process out for seventy-five days to handle a single order--a ridiculous state of affairs. If At First You Don't Succeed, Try, Try Again Left unchecked, bureaucracies can create redundancies that double or triple the workload and still fail. It can happen in the best of organizations. A student working for a college alumni magazine was warned that a mistaken address for an alumnus would bar the possibility of a charitable gift from that person. So the office created a number of back-up mailing lists. The primary system used metal plates to create mailing labels. The addresses were put on three-inch by five-inch cards, too. There were also handwritten notes appended to a printed alumni book. When the student found conflicts, he was to decide which entry was right, without contacting the alumnus directly; it was considered gauche and self-defeating to make direct contact by this office. Temporary addresses became permanent if the alumnus failed to update. On occasion, the alumnus who did send a notice of return to his or her permanent address was thwarted by the post office that did not get around to sending the temporary address to the magazine until after the permanent address was reinstated. Putting it mildly, the student was never sure which address was right. The new publisher, appalled by the waste of time and money, hired an address service. The service goofed so often that the student was kept busy backing up the new service. The back-up book grew so dog-eared that the binding fell off. Then the student could not use it easily. The student spent one entire school year handwriting the old notes into a new book. The error rate skyrocketed. Stall Erasers Standing Room Only At times, unorthodox measures are needed to get workers to break out of bad habits. It became apparent to a venture capitalist that his two dozen aides were sitting at their desks occupying themselves with administrative chores that didn't add to profits. As C. Northcote Parkinson, distinguished British author, put it, the work expands so as to fill the time allotted for its completion. The venture capitalist's solution: Buy stand-up desks. Almost no one uses a stand-up desk today. And as the venture capitalist had suspected, not one of his dozen or so venture capital aides was willing psychologically or able physically to stand behind a desk all day. They all headed for the field and rounded up prospects, a simple stratagem that brought business. I Love the Sound of My Own Voice In a celebrated recovery that helped put Sears back on track, the company fought bureaucracy with novel practices. Ironically, Sears Chairman Arthur Martinez hired a three-star general to break the bureaucracy stall at what once had been the world's largest retailer. Now it might seem ironic to hire someone who had spent his career working for the U.S. government to break through an entrenched bureaucracy, but in Lieutenant General William G. Pagonis, Martinez and Sears had the right man for the job. As the chief of logistics for the U.S. military effort in the Persian Gulf War, Pagonis ran an impressive operation and managed the procurement, supply, and maintenance of equipment and the movement, evacuation, and hospitalization of personnel. Pagonis proved that the army way of planning, implementing, and coordinating details was the right medicine for a business mired in the mud. He halved the time it took to ship apparel from suppliers to Sears' stores. Following military style, he punished suppliers that missed deadlines by imposing fines. Sears' profits soared. Martinez gives much of the credit to Pagonis. Another improvement focused on cutting back the time executives spent in committee meetings. In a simple expedient (reminiscent of those stand-up desks), he removed the chairs from meeting rooms so those in attendance would get to the point quickly or shut up entirely. Pagonis was convinced that the chairs inspired verbosity. His meetings rarely exceeded fifteen minutes. At these meetings, those with something to say would speak up. The rest did not. In the past, managers felt that they had to speak to earn their keep. Now they knew better and stopped wasting valuable time. In breaking bureaucratic stalls at Sears, Martinez was actually emulating the founder of the company, however inadvertently. Biographers recall that Richard Warren Sears did key jobs himself so that bureaucracy could not develop. He was a walking filing cabinet: Sears ran his company out of bulging pockets that were filled with reminders to himself. After a peripatetic day at the helm, he would labor on into the night, sixteen hours out of the twenty-four, writing copy and otherwise molding and building the business he called the Cheapest Supply House on Earth. His one-man band sounds a little like the one-man ordering system at Motorola. It is rarely a mistake to concentrate activities in one person or, at most, in a few people. Stallbusters Bureaucracies are serving a purpose; otherwise they would simply be eliminated. Usually they proliferate as a result of processes that are ineffective or inefficient. In this section, you will learn how to deal with opportunities to improve. Spot Checking Every organization has more bureaucracy than it needs. You need a starting point to reduce it. A high percentage of bureaucracy involves having checkers checking on checkers, which is usually done in the laudatory name of effectively controlling the organization. The trouble is that much of this checking is unnecessary. Spot checking often works almost as well and is a lot less expensive. How do you determine how many "spots" to check? Find an outsider who knows how to do statistical analysis. It might be a professor at a local college, or even a high school math teacher. Have the person look at all of the areas where you check everything and suggest a way that you could just sample-check a minimum number of instances. As an example of this statistical issue, you will find that a random sample of a few hundred to a thousand or two will often provide useful answers even when hundreds of thousands or even millions of instances are being considered. Have you ever paid attention to the sample sizes (how many people are interviewed) for national elections? Rarely will the number of people interviewed exceed 2,000. Yet the answers will often turn out to be remarkably correct when the final voting returns are in. Airlines rely on this factor to save a lot of money in calculating how much each air carrier owes each other air carrier when passengers have flown on different airlines using the same ticket. Long ago, the airlines found that they could honestly settle with each other by looking at only a tiny fraction of all these transactions. Even the Internal Revenue Service only audits a tiny fraction (usually around 1 to 2 percent) of all the tax returns it receives. By carefully selecting to audit where errors and fraud are most likely to occur, the IRS is able to be effective without reviewing everyone. Improving Processes by Streamlining For many products and services, it takes weeks or months to process orders even when the goods and services are already available. The problem is that the customer's eventual satisfaction has to wait for dozens of people to make one tiny input. The order in process will be sitting with nothing happening for almost all of that time. How can you streamline fragmented processes? Locate all of your activities that are highly fragmented across the organization (such as order processing--which will include everything from credit checking to issuing invoices to planning production). Read articles about how others have redesigned these processes to simplify them, speed them up, and reduce the number of people involved. Go visit some of those companies. Get help from someone with process redesign skill or outsource the function to a specialist. A classic example of this problem comes with ordering a custom item from a company that has little interest in having a large business of producing custom items. You may have to call the order-processing people dozens of times before anyone will call you back. If you are not available when the call comes, you get to start all over again. Once you talk to a human being, there is a lot of information you have to give. Chances are you will provide incomplete or incorrect information. Undoubtedly, this will generate more calls at some point. If the process takes long enough, the materials being used will change, and you will have to respecify your needs before you can have the order filled. At that point, the person who is supposed to take the next step may be fired, get a new job, or go away on vacation. Your paperwork may totally disappear--an enormous cost to you and your company. Another wonderful example of this problem comes when "no one is in charge." Say your organization's telephones develop a glitch. Who will fix it? Will it be the local Baby Bell? The company that made your telephones? The company that made your organization's telephone switch? The company that wired your offices? Your long-distance carrier? A contractor hired by the building you are in? Most people have had the experience of having to hire all of these people to visit at least once before the problem can be diagnosed, so that the proper person can fix the source of the problem. Ma Bell, we miss you. Having considered the problems, let's consider a star. Many people report wonderful experiences placing orders with L.L. Bean. Questions are short, relevant, and delivered in a friendly way. Based on past purchases and your interests, your order taker may suggest other items that you will decide to buy--both because you need them and because the price is right. Your order will soon arrive, without errors. The company employs a sophisticated combination of computers, management processes, and training to give these good results. Large numbers of companies travel to Maine to observe for themselves how L.L. Bean does this. Perhaps you will, too. What more can you do to identify problem areas and effect solutions? Physically follow your products or services from when the customer is first contacted to when it eventually uses what you have provided. Find all of the delays in providing for the customer. Measure how much those delays cost you and the customer. As before, read articles about how others have redesigned these processes to simplify them and reduce the number of people involved. Go visit some of those companies. Get help from someone with process redesign skill or outsource parts of the functions to a specialist. Today, the global standard for elapsed time in most advanced businesses is very short, from a few hours to a few days, depending on how complicated your customer's needs are and the process involved to satisfy those needs. In industries where parts suppliers provide the goods to their manufacturing customers "just in time" (just before the part is used), the suppliers usually determine what and how much to ship to the customer rather than waiting for an order. This form of automatic replenishment is probably going to become a standard for many industries in the twenty-first century. Go for Massive Continuous Improvement Many people are quickly satisfied when they make an initial improvement. That initial change can be misleading because if your performance was awful to begin with, the improved performance may be merely less awful, rather than good. So you must continually improve in these important areas as rapidly as you can. Every time you look at the redefined process, you will find more opportunities to improve. To monitor your ongoing process, ask yourself the following questions: What should you be measuring? Create continuing measures of how effective and efficient you are in those important areas identified above. Effectiveness relates to factors such as customer satisfaction, total time elapsed to perform the total process, avoiding harm to customers, and ease of use. Compare your experiences with service providers that annoy you and those that delight you to understand possible measures of effectiveness to use in your own business or organization. Efficiency relates to the cost of delivering the service and the number of errors you make that do not affect the customer but have to be remedied anyway. How can you measure these areas? Monitor and report how you are doing in these areas using sampling techniques. The frequency of these reports should be quite high because you want to pick up new problems quickly. Some computer systems have internal measures that do this automatically for those who work in the process. How often should improvement goals be set? Set new improvement goals at least as often as annually. If you set improvement goals more frequently and reward people accordingly, results can improve even faster. Some organizations have found it valuable to do this as often as once a month. However, a drawback of too much frequency is that it may focus too much attention on improving what you are doing now, and too little on changing the nature of the benefits you provide to improve things for customers. So it is possible that you get better and better at doing the wrong things. Generally, you will want to spend some time being sure that you are doing the right things first, before worrying about doing them better. This is a source of error that you will constantly have to monitor. Bureaucracies love to create inertia in places where it can be harmful. Quotes / Reviews || Excerpt || About Us || Speaking for You || Services || Buy the Book || Master Process || Stall Reports || Newsletter || Job Search || E-Mail a Friend || Contact Us || Mitchell On Tour || 2000 Percent Puns || Home Copyright 1999, 2000 Mitchell and Company Mitchell and Company Developed and maintained by Interactive Media Advertising Group, Inc.