216 – Some further thoughts on systems thinking.

Posted by Lancing Farrell                                                                              1600 words

Rodin's The Thinker

There have been a number of posts on systems thinking examining both its theoretical underpinnings and practical application. I recently had reason to consider how systems thinking, or lack thereof, affects organisations from day to day, and the ways that systems thinking can shape or influence organisational culture.

This was prompted by an article by Brian Martens on ‘the impact of leadership in applying systems thinking to organisations’. It is a thoughtful explanation of his research and thinking.

“Systems thinking is a natural way to look at the world and all the relationships and interconnections that are involved in its functioning.”

I think it is the only way to think about leadership or management in councils because connections matter so much in delivering services that meet the expectations of recipients and because resources are scarce and must be shared whenever possible.

People in the community don’t differentiate between local laws, town planning, building control, waste collection, libraries or parks and gardens. They just see ‘the council’. And so should we. In reality each function may operate largely as a discrete service but the organisational context for their delivery should be similar. For example, standards for customer service, regulatory enforcement, and decision making should all be experienced in the same way.

Some of the symptoms of an absence of systems thinking are evident in the community satisfaction surveys conducted in Victoria since the mid 1990’s. Some services are standouts for helpfulness and responsiveness (e.g. libraries and waste management) and others are the opposite (e.g. planning permits and road maintenance). This is discernible from the scores given in ‘performance/importance’ assessments.

There are some intrinsic differences in these services but much of the dissatisfaction comes from differences in how they are managed and delivered. We are not learning from our successes.

Brian Martens got me thinking about some basic organisational leadership challenges for local government in using systems thinking.

  1. Team work

Systems thinking is all about relationships. In local government the building block of organisational performance management is the individual performance plan. Councils prohibit performance plans covering groups. Everyone has to have their own. Team performance is not measured.

In addition, the Executive typically has no collective authority and it is simply a meeting point for key individual members who are each held accountable for managing their own part of the organisation. There is no collective measurement of Executive performance. Many are highly dysfunctional.

Team work depends on the establishment of relationships between team members. Common goals, good communication, sharing responsibility and working together are some hallmarks of team work. Team work is weakened when individual performance is encouraged and rewarded. There can be no system thinking if each person focuses solely on their own area of responsibility.

  1. Job Descriptions

Everyone employed in local government has a job description. It is another of the building blocks. It specifies the attributes of the person required for the job and describes the tasks they must perform. It will say what the hierarchical reporting relationships are for the position but not how the job fits into cross-organisation processes.

This is despite the reality that tasks described in a position description are always part of larger process required to deliver a service outcome. The contract of employment is created for the individual without any consideration of the work system that it is part of.

  1. Risk aversion

Martens cites the work of Kurt Lewin who says that to understand a system you must seek to change it. This is a perceptive observation. Toddlers understand their world by playing with sand and water in the play pit and changing the physical environment around them. They can get dirty doing it.

Similarly, teenagers rebel and challenge the boundaries set by parental authority to understand how they can influence power structures. They can become annoying. Once they get into the workplace, especially one as risk averse as local government, changing the environment around them or challenging authority is discouraged. They stop learning.

We don’t take risks in councils, for reasons that have been discussed in previous posts (see here and here). As a result the boundaries on systems are rarely challenged or pushed for performance so that they are better understood. We tend not to disassemble and reassemble cross organisational processes. There is a lot of convenient thinking that ‘if it isn’t broken, don’t fix it’, when the reality is that many things are breaking but not yet obviously broken.

  1. Specialisation

Systems thinking requires generalist management, much like health care needs General Practitioners. General practice has become a specialist area of medical practice. It is a paradox – a specialism in generalism.

Councils have become increasingly specialised. Over the last three decades new departments and new jobs have been created. Services have also become increasingly specialised. In Victoria there has always been a split between engineering/infrastructure and administration/services under the former ‘Town Clerk/City Engineer’ model. In the 1990’s this was then fragmented further into a corporate structure with functional areas, such as infrastructure, social services, administration/local laws and town planning.

Now we are seeing the addition of departments or units created for fashionable/contemporary functions, such as environmental sustainability, recreation, organisational development, open space, advocacy and tourism. It is not uncommon for a council to have 20 departments with over 50 units, each with a different function. This results in 75 or more organisational leaders. Specialisation increases fragmentation and frustrates systems thinking in the absence if strong generalist management.

If the CEO and Directors come straight from specialised functional areas they are unlikely to have the broad and deep ‘whole of organisation’ understanding necessary to use systems thinking effectively.

In local government the combination of focus on individual effort and performance, risk avoidance and specialisation frustrates systems thinking. The expectation that leaders will look for the big picture and plan for the long-term has proven to be unrealistic.

Martens makes a pertinent point when he discusses leadership in systems thinking:

“My assumption is that thinking about the whole will lead us to the realisation that we are interdependent and, by understanding the whole, we can foster a willingness to ask questions about how and why everything affects everything else.

Instead of focusing on specific organisational or individual problems, leadership can start to understand the interrelatedness between the individual and the organisation.

Systems thinking can help organisations understand their processes, realising that change can take time, small changes can have large impacts, and learning self-organising teamwork benefits the system.

Systems need time to change and natural processes cannot be manipulated. Systems are interconnected, so any change can have a large impact, because it can impact the whole system.”

The challenge is for leaders to use this knowledge to make a difference. It begins with them being able to focus on the particular while keeping the whole context in mind. It continues with them knowing the difference between ‘quick wins’ and the ‘short term successes’ that are made on the way to long-term goals. It is the difference between just reacting to events and really looking hard for underlying patterns and structures. The diagram used by Michael Goodman of  Applied Systems Thinking illustrates this point.

the Goodman iceberg model

Source: Michael Goodman, Applied System Thinking

It is the typical ‘iceberg’ problem – what you see above the water is not enough to understand the root causes. That requires systems thinking.

The reality in local government is that the CEO is held responsible for organisational performance in a system where their future employment depends on the goodwill of the councillors. The councillors expect that the CEO is exercising direct and continuous control over the activities of the organisation. When they report a pothole to the CEO they expect an immediate intervention to rectify the situation.

Telling councillors that an immediate impact isn’t possible because a system is being developed or improved to enable efficient and sustainable service, has its risks. Councillors operate in the short-term. Elections are held every 4 years. Telling them that the organisation is in a long-term improvement process often doesn’t matter to them. The diagram below shows that organisations go through stages in developing the systems maturity necessary for high performance to be deployed in all of the organisation, all of the time.

comfort zones

The lack of commitment to long-term or complicated improvement actions is the main reason why systemic improvement in the sector usually fails. Four year council election cycles, four year Council Plans, five year CEO/Director contracts, and three year contracts for managers – it all mitigates towards short-term decision making.

Even though many councils have 10 year Financial Plans and 5 or 10 year capital works programs, they are often worthless documents. Most are inaccurate and few are actively maintained. They are based on assumptions that suit short-term thinking and reacting to immediate issues. The new rate capping system in place in Victoria will exacerbate this problem.

Councils apply for an exemption from the rate cap based on financial projections for the short-term (this year it was 1 year, next year it will be 4 years). You don’t have to be a rocket scientist to work out that if the problem is in the long-term, and it is related to the loss of compounding effects of revenue increases, that deciding whether or not a council will receive an exemption based on short-term financial performance is nonsense.

This thinking may encourage councils to throw financial prudence to the wind and to spend up to quickly create the type of funding problem that will get them an exemption from the rate cap.

The recent review of the City of Greater Geelong has recommended that planning be carried out over much longer timeframes (up to 30 years) and that their hundreds of plans and strategies are integrated. It sounds like systems thinking to me. Unfortunately, it is unlikely to lead to change in the sector.

Unless change is legislated the sector continues to be shaped by the inherent fragmented thinking.

Martens, Brian 2011. The Impact of Leadership in Applying Systems Thinking to Organizations

215 – From the Archive: Creative ways to make your capital expenditure target. Some ideas.

Posted by Whistler                                                                          570 words

capital expenditure graph

Originally posted 20 April 2015

Yes, it is that time of the year when our engineers and accountants become highly creative.   By June 30 they will need to explain whether or not the targeted amount of capital works has been completed. Often the target is expressed as simply as ‘90% capital program completed’. Usually it is a KPI for the CEO and senior managers. That makes it an important target.

So, why the need for such high levels of creativity?

Delivering 90% of the planned capital works is harder than it sounds. Many councils would have averaged around 60% to 70% over the last ten years. This is partially explained by growth in capital expenditure that has exceeded the organisational capacity to deliver. Another part of the explanation is that capital works programs have become more diverse with more people participating in the planning and delivery across the council. As a result, projects have become more complex and people with inadequate project management skills are often involved.   Finally, councillors have become much more involved and the capital works program will now have projects that councillors, sometimes in response to community submissions to the budget process, have included – often at the last minute.

As the capital works program has grown, become more complex, involved more people with less skills, and started to include projects without adequate pre-planning or feasibility analysis, especially if they require community engagement, it has become much more difficult to deliver the whole program. But the target remains.

This is where the creativity occurs. Everyone involved really wants the target to be achieved. There are just too many recriminations when it isn’t. Not delivering the capital works program stands as a tangible and unavoidable example of organisational failure. So, how do people get creative?

It usually starts with redefining the ‘90% capital program completed’. Is it 90% by dollars expended or actual percentage of works completed for each project on the ground or the number of projects completed? Usually the numbers are run on each to see which is closer. Some councils are a wake up to this so they have said it is dollars expended.

This leads to redefining the amount to be expended. Is it the budget (as set at the start of the year), or the forecasts (revised estimates of expenditure made during the year) or the amount funded from rates (less grants or funding from other sources). Again the numbers are usually done for each using the figures calculated for each of the ‘works completed’ options.

The final step is usually to look at the financial records of expenditure. Will the figure used be the amount paid to suppliers (i.e. work has been done and invoices presented and paid) or that amount plus any committals to pay suppliers (i.e. committed in that accounting period but to be paid in the next) or that amount plus any amounts not committed but requested to be ‘carried forward’ (i.e. you expect to spend them on the project in the next accounting period).

My favourite solution is a suggestion from an engineer some years ago. He thought expressing the target dollar value for the capital works program in $US and the actual expenditure in $AUD would solve the problem. Everyone thought he was joking. He obviously missed his vocation.

In the end, you only need one 90% to get the CEO off the hook for committing to something that the organisation had no capacity to deliver.  Have a go yourself using the example below. See how many combinations give you 90% completion.  The answer is below.

capital example

(eerhT si eht rewsna fi ouy esu DUA$)

214 – Worried about pretend managing? More importantly, are you dealing with real or imagined work?

Posted by Whistler                                                                                                          300 words

imagined work

Colin Weatherby has made some interesting points in writing about pretend managing. A colleague recently reminded me of another important idea – there are two kinds of work in any workplace: the imagined and the real.

He was discussing his work in injury prevention in the workplace. In his interactions with injured workers and their managers he has observed that there are two types of work. The imagined work exists in the minds of the managers making decisions about what and how workers will do their work.

When discussing worker’s injuries with managers, the managers frequently describe their understanding of the work and how it happens. This is imaginary work because usually they have not done the work. Some have not even studied the work. They are in charge of the work being performed and believe they know what is going on.

In comparison, the real work is what injured workers describe. It is how they actually do the work. It includes the short cuts and workarounds that are not in any Safe Work Method Statements. It is what they know from doing the work every day.

It is important for managers to know that there are two types of work and that there is a difference.

If managers operate as though their understanding of work is accurate and complete they will make mistakes. And, according to my colleague, workers will continue to be injured. Recognising that there is real work, and that it is important to understand exactly how it operates, is essential. Organisations need ways for the two types of work to come together. The Service Action Plans described in an earlier post is one way for this to happen.

There is no doubt that pretend managers are a problem. But a pretend manager dealing with imagined work is potentially a much bigger one.

213 – What insight does the capability review of one council and the sacking of another give you into local government culture in Victoria?

Posted by Colin Weatherby                                                                         1500 words

insight light

Two interesting reports have been published in Victoria in the last 12 months – the Organisational Capability Review of Melbourne City Council in May 2015 and the more recent Commission of Inquiry Report into Greater Geelong City Council, released in March 2016. Each report provides an insight into local government culture.

As someone who has worked at three Victorian councils in the last 10 years, and who corresponds regularly with people working at another half a dozen councils, the insight is not surprising.  It reveals a deep malaise in the sector that has root causes in the political system, the ways our leaders are appointed, and general organisational leadership capability.

To begin, what are the discoveries in these two reviews of major Victorian councils?

The review of capability at Melbourne City Council was conducted by the council with the objective of ‘future proofing’ the organisation by strengthening the capability to anticipate and respond to known and emergent challenges and opportunities.

In contrast, the review of Greater Geelong City Council was conducted by a Commission of Inquiry established by the Minister for Local Government in response to a number of issues, the most significant being a damning Workplace Cultural Review by the former Sex and Disability Discrimination Commissioner Susan Halliday.

The Terms of Reference of the Inquiry related to the adequacy of governance structures, in particular the clarity of roles and responsibilities, the efficiency and effectiveness of governance arrangements, the relationship between governance arrangements and the matters identified in the Workplace Cultural Review, and any other factors impeding good government.

The key findings in each report relevant to organisational culture include:

melbourne and geelong culture table

The similarities in the organisational issues identified at each council are noteworthy.

Silo behaviour features in both reports. There is an argument that silos promote specialisation and depth that can be beneficial in organisations because it provides both focus and redundancy. It also creates interfaces that can impede the flow of information, sharing of resources, and quick decision making. In councils, silos are also the way empires are built, and it is a way that our less capable leaders make complex situations simple. Break services down into discrete elements and each bit becomes easier to understand and control. But the impact on the whole service can be to make it ineffective. We see it every day. Melbourne and Geelong are far from unique.

Likewise, leadership groups that lack diversity, reinforce silos, and fail to provide vision are all too common in local government. This can be attributed to many reasons, including male domination of the key local government professions, over-simplification of organisational processes, and bowing to external accountability pressures. In part, I think it reflects the fast-tracking of career-focused leaders who feel they don’t have time to give meaning to, and link together, the activities that collectively make up a service. Doing this also takes experience and skill to organise and motivate people to deliver services to required standards, day in and day out. Unfortunately, many of our leaders just don’t know how to run a council. They might be handy at bits of the job, but they can’t string it all together and create the coherence necessary for effective government and efficient operations.

Council Plans (or City Plans) that have a short term focus on the projects or areas of interest of current councillors are common. After all, it is essentially their plan for their term in office. Why should they care about what has already happened or what previous councils have thought would be a good idea over the long-term? They are required to make the plan shortly after being elected and, not surprisingly, their election platforms always seem to feature strongly in the plan. Even without pet projects, a new council usually doesn’t have the experience necessary to put together a good Council Plan, especially if it is expected to pick up on long-term strategic intent and commitments.

The plethora of strategies and plans identified at Geelong, many of which are not linked to the Council Plan or funded, is also common. Councils can’t resist committing to a plan when action on an issue is obvious but politically difficult. These plans replace effective action and sit on shelves awaiting regular review. If a stock take is done on policies, strategies and plans, and a schedule for reviewing them is developed, it will quickly become apparent that significant amounts of organisational resources are required to do something that adds little actual value. I am all for policies, strategies and plans that are helpful in doing things. However, often, they are not. And when they are not connected to the main plan it inevitably results in confusion and people working at cross-purposes.

I have found that leadership development, talent management and succession planning are random acts at best in councils. The short-term contracts for senior managers (many are now 3 years) creates uncertainty and encourages managers to move rather than stay in situations where contract renewal is not guaranteed. Unlike the private sector, where managers are typically permanent and their performance is closely managed, councils use short-term contracts to limit the risk or poor appointments but it ends up making management of poor performance uneconomic. It is easier to wait and not renew contracts. If there is an easy way to do something and it avoids interpersonal conflict, you can be assured councils will be doing it.

Performance management, of the organisation or individuals, is typically weak where it exists in councils. Whole-of-organisation performance reporting is a figment of leaders’ imagination at councils where they believe they have it. Typically, it will be a collection of measures or indicators that are easy to count, which may or may not have relevance to the activity being reported on. Councils go through the motions of annual performance appraisal. At best, the performance development plan (PDP) and its annual review are part of a ritualised process that anchors the organisation in the past and in mediocrity. It is a barrier to flexibility, innovation and improvement.

The appraisal of the performance of individuals is the cornerstone of the rudimentary performance management system that exists at most councils. They have not always been around. They were introduced when incremental annual pay rises became available to staff in the 1990’s to prevent managers playing favourites. It was an attempt to force objectivity into decisions about pay increases. Unions, not management, wanted it. Of course, some managers like it now because it gives them a sense of control and creates the impression that performance is important. I have yet to see a system that is actively used and the councils that do attempt to use performance appraisal are usually managing poor performance not encouraging high performance. They have a problem to resolve.

The Greater Geelong City Council review included examination of the role of councillors as well as the organisational leaders. There is a connection, as the attitude and behaviour of the councillors towards each other and staff can set the standard for the rest of the organisation. If the councillors cannot or will not address strategic long-term planning it is difficult for the organisation to do so. Some of the findings were:

  • There is a poor understanding by The Mayor and Councillors of their legislated roles and responsibilities, and a continuing focus by Councillors on their individual wards to the detriment of whole of Council planning and decision making.
  • The portfolio system for Councillors has effectively created silos of Councillor interest and undermined collegiality.
  • Council decision making is not transparent, timely or efficient and is not based on any long-term vision and strategy.
  • Councillors have been in the habit of delving into operational matters and seeking to influence or direct Council officers in the performance of their duties. Some Councillors appear to regard Council staff as their ‘front-line instruments’ for responding to community pressures.

I would argue that these findings could also be made at every council in Victoria. Most are not as publicly dysfunctional as Geelong, but then they don’t have a Mayor who thinks Mayoral performance is measured in website hits! And there were numerous incidents of inappropriate behaviour on the part of a number of councillors cited in the report.  But this type of behaviour, usually to a lesser extent, happens everywhere. Councillors want to influence the organisation and provide the benefits they have promised to the community. They feel obligated to deliver to their constituency.

When they come up against policy, strategy and bureaucratic impediments, they often become frustrated. It takes time and skills to amend policy to enable their new objectives to be met. Sometimes those objectives are inferior to the current objectives. Sometimes they serve narrow and private interests, not the broader community. The bureaucracy and their councillor colleagues are not always cooperative. It is important to remember that councils are formed from unaligned individuals who happen to be elected at the same time. Many of them disagree with each other about their political goals.

Councils have not been good at ‘drawing the line’ between political and operational matters. Mark H. Moore would argue that collectively the councillors and organisational leadership form the ‘public management’ responsible for delivering public value. I agree, but it will take a much greater level of co-operation and collaboration than currently exists at most councils.

212 – How do you know if you work for (or if you are) a pretend manager?

Posted by Whistler                                                                                                          1200 words

pretend manager

Have you ever wondered if your manager is for real? Have you ever wondered what they do all day? Has their contribution to work been difficult to see? Maybe you have a pretend manager.

No, this is not a manager bashing exercise. As a long-term local government manager, I respect the effort put in by many of my colleagues. But there are some managers who are just not up to it. And they are not always managers.

Lancing Farrell discussed an interesting book in the last post. I also took a trip down memory lane and re-read parts of The Third Principle. Neville Lake is a practical, perceptive and prescient person. I just love alliteration. His chapter on optimising managers, highlighted by Lancing Farrell, reads as though he looked into the future to see the local government of today. In particular, the sections on eliminating pretend managers and pretend managing resonated with me.

To optimise managers, Lake says you need to eliminate pretend managing and pretend managers.

To start with, Lake says to look for the managers who think their job is to go through the motions of managing and just tick off boxes. He describes it as the belief that ‘if something – anything – has been introduced’ then they have done what they are supposed to do. How will you know this is happening to you? Some of the telltale signs are managers having meetings that they think they should have but nothing of value happens at them. Managers who forward on emails with information that they know you don’t need or won’t use. These managers will rest content that they have ‘done the job of managing’.

“Lots of seemingly useful activities that take time, create work for others and present the illusion that something is being done. This is pretend managing at work.”

Lake says that this lack of real achievement in spite of constant activity often becomes crystal clear when there is a change process and that these routinised management activities are ‘empty when scrutinised’.

He says that pretend managers also often speak in slogans. ‘We will put customers first’. ‘We will cut expenditure by 10%’. ‘We support work life balance’. They say these things without modelling the supporting behaviours or putting processes in place to enable them. The assertions are frequently made without researching whether or not they are feasible.

“It is not heroic for a CEO or divisional leader to make sweeping promises and commit to ever-improving levels of performance. It is pretend managing.”

Lake says that it remains pretend managing until such time as an analysis of what is possible is undertaken and until the steps required to achieve the objective are verified as achievable. He believes that when managers ask for a change in performance that is not substantiated by research, they should be held accountable because of the ‘level of people and process dysfunction that it produces’.

Lake provides three suggestions to eliminate pretend managing.

  1. Select an approach to management that suits the organisation and get to know it really well and stick to it.
  2. Focus on the real value of management activities. Be truthful about the real outcomes.
  3. Be realistic about what is demanded of others.

I found this advice to be heart warming. As someone who abhors pretension, I have low tolerance of my people pretending to manage. The lack of discipline when managers fail to adhere to agreed management approaches is wasteful and extraordinary. Lake says that pretend managers fear that if they are consistent they will ‘quickly go out of date’. They are attracted to fads. They are looking for quick fixes.

In local government, people watch what the organisation does. They notice changes in behaviour and differences between services. If local government, if you don’t stick to the basics and get them right, people think that you are wasting their money. When that happens, they struggle to see either private or public value outcomes. They don’t see what is in it for them or anyone else.

Focussing on value-adding management activities requires personal discipline. Lake suggests keeping a diary to monitor activities and eliminate those that don’t add value. I do this periodically and have found it to be extremely effective but I have not met another manager in 30 years who does the same thing. My diary records what I do, how long it takes, whether or not it was useful to me or others (my own rating out of 10), and an estimate of the cost of the activity.

This is really useful for meetings when the number of participants multiplied by the time and then by $50 (to keep the maths easy) soon adds up. A typical management meeting involving 8 people for an hour costs $400 and hardly ever scores above 5/10 for usefulness. It only takes 3 or 4 such meetings to consume the annual rates paid by one property owner. Some of these meetings are held monthly.

“All this takes a willingness to be different. More different than most politically attuned, ambitious managers can tolerate – sp it means having courage. It means not playing the management game by the old rules.”

Lake says making this change can free up about 2 hours per day.

Now that we have done with pretend managing, let’s eliminate the pretend managers. This is not a straightforward as it sounds. It is not about targeting individuals, as much as it is looking for layers of management that don’t provide value. It is about looking for people with manager in their title who are not (and cannot be) managers. Usually this is because they lack genuine freedom to act, have no real ability to direct the performance of others, and they don’t have the authority to take performance management or disciplinary processes to the final stage.

Lake describes these pretend managers as ‘organisational porridge’. They make the organisation slow and unresponsive.

“They get in the way of good decisions and they sap the energy and confidence of the true managers by trivialising big issues into lists of petty details and by only attending to slices of larger processes.”

Organisations would be better off without them.

Lakes description of ‘organisational porridge’ reflects that of Elliott Jacques who identified a ‘strata of work complexity’ that is useful for finding and eliminating pretend managers.

Jacques levels of work authority

In this model, Jacques describes the work complexity associated with different management roles. If there are more levels than those described by Jacques, they are ‘pseudo-levels’ and the pseudo-role incumbents will be ineffective because they will be bypassed by subordinates going directly to true managers.

In some cases, organisations will have removed one or more of Jacques’ seven layers of hierarchy, in which case, there could be pretend managers in ‘pseudo-levels’ and disconnection between essential levels in the hierarchy. Either way they are pretending and their impact on the organisation reduces its effectiveness.

Jacques, Elliott 1989. A General Theory of Bureaucracy.

Lake, Neville 1999. Third Principle – how to get 20% more your of your business.

 

211 – Unpredictability, interdependence, complexity and chaos – why councils need to adopt the Third Principle: optimisation.

Posted by Lancing Farrell                                                                                              1200 words

the third principle

I recently rediscovered a book that I bought 17 years ago when it was first published. It is one of those useful management books that is an absorbing read when you buy it, and then it quietly sits on your shelf waiting for the day you really need it. It is now a book for the times with rate capping coming into Victorian local government.

Neville Lake’s central idea is that management practice has three fundamental organising principles – effectiveness, efficiency and optimisation. He believes that an organisation can be both effective and efficient but be sub-optimised. This leads to only 80% of its potential being realised.

The other 20% is trapped in processes that don’t work, management models that don’t deliver, and interactions with customers that fail to deliver expected value.

Having worked in local government for 30 years, I have to agree that we are sub-optimised organisations. There are many forces acting against optimisation, not the least of which is the inherent complexity in working in a situation where there can be several ‘right’ answers to problems. Despite this, we can do better and will need to if we are to slow the impact of rate capping to give the community time to adjust. But we need to work out how. Lake provides useful advice.

To begin, he says that many management interventions are essentially about efficiency, not optimisation. He cites shared services, new IT systems, and restructuring. Starting to sound familiar to those of you working in councils? I would add outsourcing after reading the work of Christopher Stone. It is easier in public services to look at inputs and efficiency than to look at outcomes and effectiveness.

Lake’s approach is simple. Don’t get caught up on complicated measurement systems to understand the nature and extent of the problem. Instead, rely on your intuitive understanding of the situation. This is an understanding he reached long before Daniel Kahneman explained so brilliantly how ‘System 1’ thinking is fast and intuitive, while ‘System 2’ is slower and analytical. Letting ‘System 1’ steer ‘System 2’ is effectively what Lake is suggesting.

At a macro level, there are three questions that Lake proposes need to be asked to assess whether or not something has been optimised.

  1. What could the organisation produce if all the processes were optimised?
  2. What kinds of outcomes could you achieve if all your people were as good as your best?
  3. How much more value could you add if you could gain all the possible business from your current customers and continually add new customers? In local government, this needs converting to something like ‘How much more value could you add if you could ensure that customer purpose is fulfilled each time and the favourable attitude to the organisation is increased.

Lake provides guidance on assessing a range of factors affecting the performance of people, customers, processes and measurement. The responses are plotted on the following chart.

Lake optimisation chartFor example, the chart above could show the difference between optimum performance and current performance for middle management (Lake’s chapter on ‘Optimising Managers’ is well worth reading). Lake says that middle management performance is difficult to determine and this might explain why layers of management have been removed with little effect in many organisations.

The idea is that you gauge the difference between what you think is possible and what you are currently achieving. It requires some imagination. Using the example of middle management again, you could ask whether middle managers are adding value by performing activities different to those performed by supervisors or the executive. Are they effectively supporting front line staff with the information and resources they need, and removing barriers that prevent optimal performance? Are they using their time effectively? Overall, what are they currently achieving compared to what they could or should?

Once you have estimated the actual performance and determined the gap with optimum, Lake suggests estimating the dollar impact of the sub-optimisation and thinking about how easy or difficult you think it will be to close the gap and what it might cost and how long it could take. You could make a bit of a list of actions you can take.

Lake doesn’t stop here. He provides three further organising principles that can be useful once you have started to optimise your organisation.

Hierarchy

Lake believes that there is an in-built order in everything in life – nature, economies, and society. In organisations this order takes form as a hierarchy. Alistair Mant discusses a similar idea when he describes organisations as having a ‘depth structure’. He says that the only way purposive task systems operate well is when some people are held accountable for the work outputs of others. This requires hierarchy.

Lake believes that if the natural order is subverted, it will reassert itself given sufficient time. Sub-optimisation occurs when the natural order is ignored or misunderstood. In local government, this natural order is strongly represented in the organisational culture – the ‘way things are done around here’. He provides examples of symptoms of sub-optimisation resulting from failure to understand the natural order:

  • A manager who has no natural status in the group.
  • Second order thinking that happens first. Lake provides a classic example common to local government – the procurement of an IT system before there is understanding of what it needs to do.
  • Work that is dependent on previous steps but is scheduled to be done first.

When things are not going well, Lake suggests asking ‘what hierarchy is at work here?’ It is a good question. Often it reveals the true power structure in place.

Complexity

Lake says that the dominant approach in business has been to reduce complex systems into component parts. Processes are pulled apart to form jobs. Problems are seen to be discrete rather than part of a pattern. In this scenario, individuals become the focus of attention rather than the work system.

Welcome to local government. We excel at separating activities into silos and focussing on making people overcome the problems at the interfaces between them. If they can’t, we criticise them. We also focus on the performance of people and not the contribution of the systems they work in, even though we know work systems are the primary influence on performance.

Lake recommends the following approach to analyse sub-optimised situations that are difficult to understand:

  1. Look for the mathematics. For example, represent the system as a series of mathematical cause and effect relationships – i.e. the output in one location is dependent on the rate of activity in another.
  2. Look for the interrelationships. Seek to understand the relationships between individuals, units, divisions, customers, suppliers, competitors and government.
  3. Look at the models and assumptions being used. If a simplified conceptual picture of the organisation is being used to make decisions, it might only be right 90% of the time. The 10% of the time that it doesn’t apply could be critical!

In understanding models and assumptions, he suggests asking:

  • What model is being used?
  • In what circumstances does it not apply?
  • What are the special cases?
  • What assumptions are being used?
  • How and under what circumstances were the assumptions developed?

Reality

“What is really happening is remarkably difficult to identify.”

Lake identifies a number of problems:

  • Information is incomplete and provides a distorted picture of the organisation.
  • Managers can easily start to believe their own rhetoric when there is no hard evidence to support it.
  • Commonly used words are not well defined – for example, ‘empowerment’, ‘supervising’ and ‘ongoing learning’ have no common definition and they can ‘disguise as much as they reveal’.

He says that in this ‘twilight world of misinterpretation, misunderstanding and misrepresentation’, it can be hard to find the truth. Therefore, it can be difficult to distinguish between what people know and what they think.

“When there is a deficiency in facts and when people are not forced to confront the ugly reality that parts of the business do not work, there will be sub-optimisation.”

Ingrained sub-optimisation can often be attributed to unwillingness to generate objective data, the refusal to challenge a corporate myth, or the inability to see that the facts no longer support the way that results are achieved’.

Lake says that confronting reality means collecting good, hard data. Yes.

Lake, Neville 1999. Third Principle – how to get 20% more your of your business.

Mant, Alistair 1997. Intelligent Leadership.

 

210 – Is innovation over-rated in local government?

Posted by Colin Weatherby                                                         1100 words

patched road

I was recently reading an article in Aeon magazine entitled ‘Hail the maintainers’. The central idea is that ‘capitalism excels at innovation but is failing at maintenance, and for most lives it is maintenance that matters more’. I think you could replace ‘capitalism’ with ‘local government’, although I am not sure that we are excelling. We are certainly preoccupied with trying to be innovative (or at least being seen to be innovative).

The authors, Lee Vinsell and Andrew Russell, believe that innovation is the dominant ideology of our era. Pursuing innovation has inspired both technologists and capitalists. It has also attracted critics.

“What happens after innovation, they argue, is more important. Maintenance and repair, the building of infrastructures, the mundane labour that goes into sustaining functioning and efficient infrastructures, simply has more impact on people’s daily lives that the vast majority of technological innovations. “

The idea that local government must be more innovative reflects the willing (and often mindless) adoption of populist ideas from the private sector by local government.   After all, being innovative is sexier than doing what we have always done but making sure we do it well.

At an organisational level, we frequently decide to go from having a failed or failing manual system of work to the ‘top of the range’ automated system in one go. I have had some experience of this with procuring and implementing IT systems. Councils often have disorganised and inefficient work systems that are not delivering the expected value. So they buy highly technical and configurable software to solve the problem and then spend years trying to understand their own work processes well enough to make the software work.

At the same time the ‘innovators’ at the council keep trying to improve work processes by changing them, and the ‘innovators’ at the software supplier keep improving software functionality by changing it in ways that then cease to match the work processes. Talk about a moveable feast.

Stabilising work processes, understanding them and delivering services that are timely, reliable and consistent before embarking on a quest for ‘innovation’ to improve work processes just isn’t that compelling. There are cultural explanations.

The first is the short-term focus of our leaders. Many don’t know the difference between a ‘quick fix’ and a ‘short term success’. They also don’t have the time to invest in anything that is likely to exceed the life of their contract or delay them taking the next step up the career ladder. Plus it doesn’t look that great on their Resume to have just made everything work really well in a way that goes unnoticed. The sector is looking for leaders who are innovative agents of change, not practical optimisers and improvers of what you already have.

I recently had a discussion with a colleague who commented that many people involved in local government are ‘borderline sociopaths’ because they prefer to let problems occur and then get the kudos from fixing them, rather than to prevent them occurring at all. Being a great problem solver is better for your career than being a great problem preventer.

Vinsell and Russell explain why society prefers to celebrate diversity, novelty and progress rather than uniformity and order. They see innovation, in this context, as a ‘smaller and morally neutral concept’ in comparison to genuine social progress. It allows people to ‘celebrate the accomplishments of a high-tech age without expecting too much of them’. It is an all care and no responsibility approach.

Although they are talking about society and preferences derived from living through the Cold War and the tumultuous social change of the 1960s, the preference in local government is often simply to be ‘special and different’ (even if different is not better). ‘Sameness’ is equated with boring. It is the local government equivalent of the uniformity and order resisted in society at large.

Vinsell and Russell go on to describe new technologies and innovations as being ‘proxies’ for societal progress in a consumer-driven society. Politically it became popular in the 1970s to develop ‘innovation policy’ to try and drive economic growth by encouraging technological change. They make a convincing argument that when limits to economic growth and societal progress are reached, governments resort to innovation.

As a result, for the last 20 years innovation and entrepreneurship have become the mantra of politicians across the world as they have encouraged things like ‘innovation clusters’ and ‘disruptive technologies’ to undermine existing industries to create new fortunes. ‘Innovation’ has become a cloak for almost any political policy objective.

“The trajectory of ‘innovation’ from core, valued practice to slogan of dystopian societies, is not entirely surprising at a certain level. There is a formulaic feel” a term gains popularity because it resonates with the zeitgeist, reaches buzzword status, then suffers from overexposure and cooption.”

This, unfortunately, seems to be where many councils now find themselves. They have given up on other ways to ensure they deliver services that meet value expectations. The answer to all problems must lie in innovation!

Vinsell and Russell pose the question – is there a better way to characterise relationships between society and technology? – and provide three ways to respond:

  1. Technology is not innovation. They say that ‘innovation is only a small piece of what happens with technology’.
  2. Drop innovation and recognise the essential role of ‘basic infrastructures’ of social importance.

“Infrastructure failures – train crashes, bridge failures, urban flooding, and so on – are manifestations of and allegories for America’s dysfunctional political system, its frayed social safety net, and its enduring fascination with flashy, shiny, trivial things.”

Whilst the authors focus on American society, I think the same can be said for local government in Australia – we have let our social and physical infrastructure deteriorate while we pusue the innovative or different.

  1. Focus on ‘old, existing things rather than the novel ones’. Stay in contact with reality that most people outside the ‘realm of innovation’. People need to make, sell and maintain the innovative products or services.

They advocate an emphasis on the work required to slow the effects of ‘entropy and un-doing’. The efforts of people ‘whose work keeps ordinary existence going rather than introducing novel things’. In a rather prophetic close to the article they discuss the term innovation as being ‘completely agnostic’ about whether or not innovations are good.

“Crack cocaine, for example, was a highly innovative product of the 1980s, which involved a great deal of entrepreneurship (called ‘dealing’) and generated lots of revenue.”

Local government could do with a reality check on its preoccupation with innovation. What do we really think will be gained? Why is it that simply looking after, and optimising, what we already have is so unpopular? What drives the craving for innovation?

I think these are questions that should be answered by our leaders.

Vinsell, Lee and Russell, Andrew, 2015. ‘Hail the maintainers’ in Aeon magazine 8 April 2016