Tuesday, 19 December 2017

How to Switch from Legacy to Systems Thinking and Make the Work Really Work for Airlines and Passengers - My Interview with John Seddon

Despite incomparable growth in airlines size, system complexity, and operational dynamics, airline management styles, basic organisational structures, and performance measures haven’t changed much since 1950s. Decisions are still downloaded from the top without taking into account the natural, cross-functional flow of work and its impact on overall performance. Corporate reports are made of disjointed financial and operational figures and are unsuitable for supporting the system improvement. The result: poor service, decline in operational efficiency, and dubious financial results.

Rather than improving from inside, airlines sought relief in expanding through the non-core businesses and passing on responsibility for service quality on external service providers – strategies that only exacerbate problems of their core business. The question is, is there a better alternative to manage an airline, to bridge the gaps between system management and operations, to ensure adaptability of the system that is a part of a bigger system that constantly evolve, to bring clarity to that which appears fuzzy, and make the work really work for airlines and passengers. 

Being personally involved in designing the method that supports these values, I have always been on lookout for new ideas within and outside the airline industry, especially while writing the second, extended edition of my book ‘Beyond Airline Disruptions’. Not long ago I was discussing these issues with people working in financial and insurance sectors and was advised to look at John Seddon’s Vanguard Method which they were considering applying to their work on system improvement. After watching the suggested video ‘The origins of Vanguard Method’, I instantly recognised that this concept is applicable to airline organisations, but it was after I read his books ‘Freedom from Command-and-Control: A Better Way to Make the Work Work’ and ‘I Want You to Cheat’ it became clearer that the Vanguard method provides answers to most of the above questions, and that its general principles have much in common with my work.

I contacted John explaining my interest in his work, and was soon welcomed by him in his office in Buckingham. It was a real pleasure talking to John, experiencing the clarity of thoughts with which he explains things that many people see as complex and hard to comprehend. I was happy to hear that John spent four years working for British Airways in mid-eighties and has had an opportunity to feel the feel of life inside the airline.

John is a change-maker who proved through practice that there is a better way to make the work work than through the system governed by command-and-control mentality instilled in top-down organisational hierarchies. He has a rare ability to inspire people to change the way they think about their work and apply systems thinking in daily practices.

John is an occupational psychologist, researcher, professor, management thinker and leading global authority on change, specialising in the service industry. He is the managing director of Vanguard Consulting Ltd based in UK, with franchisees in Scotland, Ireland, Denmark, Sweden, New Zealand, Australia, Croatia, and The Netherlands. 

The following are the highlights from our talk and John's writing focused on   
Vanguard approach to systems thinking seen from airlines’ perspective. (JR-Jasenka, JS-John)

JR: When we look at airline organisational charts, everything looks orderly. Functions are sorted and linked vertically and horizontally so that managing numbers, controlling people and their activities comes easy from hierarchical perspective. In the real world, however, the work is cross-functional and interacts with changes in the external environment. Inability to understand and control these flows comes at a high price: it is the underlying cause of rise in system inefficiencies, complexity, costs, and the decline in service quality.
JS: We think of our organisation as top-down hierarchies, we separate decision making from work. Top-down, hierarchical, functional organisation might help us navigate our way around to answer the question 'who-does-what and who-is-to-blame?’, but it does not help us discover anything about how and how well the organisation achieves its purpose. The typical consequences of failure are: failure to achieve them, increased variability, more waste (errors and rework), higher costs, demoralisation of the workforce and, ultimately, disrespect for management.
We need to reject classical conceptualisation of the organisation. Taking a system view always provides a compelling case for change and it leads managers to see the value of designing and managing work in a different way.

JR: How does Vanguard address this problem?

JS: The Vanguard approach to systems thinking is a completely different logic to command-and-control. While all systems thinkers agree that a system is a sum of its parts and the parts must be managed as one, the Vanguard approach is unique in that it starts and ends with the work. It makes thinkers and doers cooperate naturally. It is about changing management thinking which is the key to changing performance.
Vanguard is a methodology for change and improvement that engages the organisation. Any change is based on an understanding of demand from an ‘outside-in’ or customer perspective, identification of the value work, adoption of relevant measures and then designing out the waste within key process. People who do the work must be engaged in these activities. It also provides the means to develop a customer-driven adaptive organisation; an organisation that behaves and learns according to what matters to customers. If the system is to have viable economics, it could only be understood and developed from this point of view.

JR: The special thing about Vanguard approach is that it cuts costs as service improves and increases profit. This is quite opposite from what traditional management is about.

JS: Most managers equate improvement in service with increased cost. It is because they have been conditioned to do it that way. They cannot ‘see’ where their costs really are.  When managers learn to see their organisation as a system, they see the scope for improvement and the means to achieve it. They can see the waste caused by the current organisation design, the opportunities for improvement, and the means to realise them.

JR: Understanding what ‘system thinking’ is really about is too abstract for some people, which is why there are lots of different interpretations that fit in local contexts, especially when compared with command-and-control way of thinking.  I found the following comparison table from your book Freedom From Command-and-Control: A Better Way to Make the Work Work’ really useful for clarifying the differences:

JS: When command-and-control thinkers listen to system thinkers they hear the words, but don’t appreciate their meaning. If system thinkers point out the value of working outside-in, command-and-control thinkers just treat it as an example of what management should be doing in any event.  Should system thinkers point out that traditional, command-and-control measures were part of the problem and should not be reintroduced, the command-and-control thinkers will insist such measures to be the fundamental stuff of management.
JR: More and more often airlines expand their operations beyond airport capacity limitations and their own ability to handle the consequences. They invest in more aircraft, fly more kilometres and more passengers to more airports just to outnumber the competitors, and are later surprised by ‘unexplainable’ losses, rise in passenger complaints and compensation claims.
JS: The measures associated with command-and-control thinking tell managers nothing about the system because they are based on a resource-management logic.  This logic assumes that when capacity needs to be increased, it requires extra resources. In service organisation, especially the complex ones, waste is much harder to see. It is hard to see rework, it is hard to see work flow, and it is hard to see demand. They see the figures but are not in a position to reduce their costs and improve their service. The people-managers and workers alike are locked into dysfunctional system. But the better way to improve capacity is to remove waste: adding resource to wasteful system just compounds inefficiency.
Once the abundant waste inherent in the current design is removed, the capacity increases, lessening costs and providing scope for growth. Measures and roles need to make the system solution work. You have to be prepared to change the system, the way work is designed and managed; especially the way measures are used in management. 

JR: System decisions depend primarily upon information and measures surrounding decision makers. They often distort reality as managers don’t like bad news.

JS: Firstly, managers need to see for themselves the dysfunctional consequences of their current measures. Only then will they engage in devising measures that will be more beneficial. In the systems solution, measures are derived from purpose (not the budget) and are used by the people who do the work to understand and improve it. The benefits are significant.  People change what they do, something it is impossible to accomplish in a command-and-control design. Managers’ roles change from working in the hierarchy to acting on the system. It is important for managers to ensure they limited their actions to the things that would be important, and, at the same time, develop their understanding of their organisation as a system.
JR: Functional measures always cause suboptimisation because parts are optimised locally at the expense of the whole. What kind of measures should be used to ensure better system decisions?
JS: To measure work with functional measures might seem logical from a top-down perspective, but its weakness is that it tells you nothing about what is going on. It will only tell you what has happened, and then only from a functional point of view. Functional measurement is dysfunctional, creating fear, destroying teamwork, and encouraging rivalry. It drives short term performance of functions at the expense of the system.  Worst of all, it fosters politics. Political behaviour fills the void created by management detachment from the work. Controlling work through functional measures can only be harmful to flow. All work goes through some kind of flow, so we would be better having measures for it. Managers worry about this idea because they assume it may threaten costs. They cannot see the costs associated with the waste caused by functional management. Only by managing costs end-to-end, associating cost with flow, can you reduce costs in a sustainable manner.

JR: Every change in schedule incorporated in annual budget triggers changes in cost and revenue without managers being aware of it. Communication between operations and management responsible for monitoring causes of critical variations in operational performance doesn’t exist. 
JS: This is a typical example how we separate decision making from work. We expect managers to make decisions with measures like budgets, standards, targets, activity and so on. We teach managers that their job is to manage people and budgets. At the heart of this logic is separation of decision-making from work that come at higher costs and poor customer experience.

Read the full interview