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People performance vs. system performance

Posted by Stephen Parry on Dec 19, 2010 9:16:34 AM

Extract from Sense and Respond: The Journey to Customer Purpose (MacMillan 2005) Stephen Parry.

People are the problem according to Mass-Production

People performance vs. system performance
When things go wrong in an organisation, managers in the mass-production arena usually start to criticise their staff: ‘You didn’t make your quotas’ or ‘You didn’t make your output numbers’. Yet performance problems can have other causes, such as when demand exceeds the end-to-end capability of your value stream; when an unknown and inappropriate demand enters the system; or when someone along the value chain improves performance locally and inadvertently creates a knock-on effect downstream.

Factors such as these account for over 90 per cent of the variation in service performance (Edwards Deming, 1982).

Most of this variation is outside the power of the individual – individual performance can only contribute as much as the constraints of the current system will allow. Performance is created by the system, not by individuals, so if there are to be breakthrough improvements then systemic changes are needed.

In the Customer Value Enterprise® model (Lean Enterprise), changing the system is the responsibility of those who work in that system.

As has been said above, the mass-production paradigm contrasts significantly with the Customer Value Enterprise® paradigm, and there is no continuum from one to the other.

Most organisations currently work using mass production-thinking so how can one flip from one paradigm to the other?

To make this shift takes strong leadership which allows staff to work in both ways for a short period while transitioning from one to the other.

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Lean teaches us that the system is the problem, but what needs to change?

Three major components are necessary.

First, you need to collect data about how your organisation responds to the real needs – as opposed to the perceived needs – of your customers.

Second, you need to assess how your organisation performs end-to-end in achieving the customer purpose. Once staff have collected the data, they can discuss it with their manager and talk more easily about change.

Third, as well as gathering data, staff also need to understand what the reality is like. As they grasp this reality, they become better able to collect the data. This process thus becomes an iterative one with these three elements.

The type of change we are advocating depends on learning the principles of all three and bringing all three together. Because they are so interdependent, change will occur only when all three are addressed at the same time.

More Customer Value Principles to come.

©Stephen Parry 2010 All rights reserved.

Topics: Customer Value Principles, Sense and Respond Book