Expect the Unexpected

There is a profound article in the April issue of Fortune Magazine (Wall Street Special Report) featuring an interview with Nassim Nicholas Taleb who previously authored Fooled by Randomness and is now releasing The Black Swan. While the interview focuses on economic black swans (unlikely but not impossible events like the bursting of the tech and sub-prime housing bubbles), his concepts are very applicable to workflow and business process fundamentals.

Expect Volatility

Taleb describes black swans as unexpected (seemingly unpredictable) events that have great consequences. He explains that some businesses are fairly insulated from these events while others (like banks) are constantly exposed to expansive and expensive risks. Some of these unexpected events are very positive and lead to breakthrough innovation or the opening of new markets while others are very negative (see Bear Sterns). He describes “gray swans” as those conditions that lead to fairly predictable outcomes and gives the example of a turkey having been fattened by the butcher for a year being surprised when the butcher shows up with an axe. Our organizations cannot afford to think that time-bombs aren’t volatile. Eventually, they blow up.

Models can be Part of the Problem

His approach is to think outside the model. We have to think in terms that escape logic where potentials exist beyond our own data. If we fail to consider far-flung possibilities, we are sitting ducks (or swans). Some people resist this kind of abstract thinking and want to rely entirely upon the data they have on-hand when considering risks. I happen to agree with Taleb that models predicated on what you know are inadequate where risk management is concerned. Sometimes, the catastrophe that hits us contradicts all of our best modeling.

Setting our Intentions

I believe some people fail to expect the unexpected because they don’t want to contradict their own motives. In the case of banks and the sub-prime market, greed was the motive that outweighed any consideration for the black swan that visited the housing market. In this case, frankly, everyone had all the data they needed to expect the outcome. We just preferred to avoid thinking about it and agreed to a model that selected for data that supported our hopes.

What to do?

I work with a client who failed to heed the possibility that their budget would disappear before they’d made decisions to act on a project. Subsequently, California discovered a $17 billion shortfall (hmmm) and they were forced to abandon their hopes. They have a hard time convincing me with “we never saw it coming.” Consequently, thousands of people won’t receive health care and their very valuable project will have to wait years.

You can mitigate the arrival of black swans in your business by thinking outside your data, outside your beliefs and outside your models. Let your imagination run a bit wild when you ask “what if…?” You can also conduct PEST analyses annually. Ask yourselves what Political, Economic, Societal and Technological influences are bearing on your work, customers, employees, partners and you stand a better chance being prepared rather paranoid.

Knowing Where to Tap

We’ve all heard the old fable about the consultant who charges $1000 to tap the machine. $1 for the tap of the hammer and $999 for knowing where to tap. I submit that most of us – not only the consultants – know where to tap. The conditions for knowing where to tap include taking the time to inventory the various sources of information that might be reasonable indicators of just what it is that needs tapping.

This week for me included a couple of days at a conference dedicated to expanding the use of automation and electronic records in the mental healthcare field. If anyone ought to know about conducting an inventory of conditions to discover the point of greatest leverage for change, you would think it would be the mental health experts. Sadly, they are so busy treating people and have so few resources – particularly where public mental health is concerned – that managing how they deliver care is not their highest priority or area of greatest domain expertise. What I observed (and have observed consistently for nearly twenty years) is a field of well-meaning professionals struggling to know where to tap.

The same can be said for nearly every field and the legions of business owners and managers who don’t have the time, resources, background or expertise to know where to tap. However, knowing where to tap can be be about more than time, education, expert experience or dedicated resources. I want to argue that knowing where to tap begins with adopting the right perspective.

Metric Perspective

You don’t need to know everything about your current state. You don’t have to have well-articulated workflow and business process models and diagrams. You don’t have to start with an inventory of business rules. Gaining the right perspective concerning your current state of business operations begins with looking at the data you have in-hand. Even the most rudimentary business has a few sources of meaningful data:

• a business plan
• business goals
• profit and loss statement
• sales figures
• market data
• customer satisfaction
• employee satisfaction
• number of complaints
• number of defective products
• data related to time (delivery, production, receipts, etc.)
• employee turn-over/retention
• customer retention
• any mandatory reporting
• audit results
• industry standards and benchmarks

Metric-Drive Process Improvement

Even a quick look through the data you have at your disposal will reveal the processes and workflow in greatest need of improvement. Since 85% of what your customers experience is process-driven, you will undoubtedly discover what your high-priority changes are. This doesn’t require a specialist and sophisticated training. It requires business discipline. Ignoring these facts and conducting business as usual starts to look a lot like benign neglect of the facts and your bottom-line.

Start Now

Have the courage and the discipline to gather this and other basic business data and dedicate the time and human resources to manage your own improvement. Workflow and business process improvement are not luxuries. They are practices you cannot afford not to indulge in.

Planning Your Workflow Initiative

I recently visited a doctor who asked me what I did for a living. Upon hearing that I consulted with organizations who wanted to improve their workflow and better manage business processes, she asked me where she should start. I don’t think she was kidding. She went on to say that she couldn’t afford to automate her small practice and I told her she didn’t have to. Re-engineering workflow and improving the throughput and quality of workflow don’t require automation. Finally, I told her “the best place to start is a plan.” Workflow initiatives should be strategic, have a vision, goals and objectives that are unique to the organization. As it happens, her goal was to figure out how to disengage from insurance companies and gear up for cash-paying clients only. Who’d a known?

Planning for Workflow Improvement

Planning your initiative is not only the most basic and common-sense thing to do, it establishes clear goals, lines of communication, buy-in and relieves stress. Time and again, through the grapevine, I hear that certain people fear workflow initiatives. For those of us who are gung-ho, we have to remember that efficiency gains can mean a reduction-in-force to some people. Workflow initiatives represent deliberate change (as opposed to opportunistic or accidental change). By virtue of deliberately setting out to manage change, you have the unique opportunity to accomplish the following:

1. establish a new mind-set and culture for change based on open communication, clear objectives and inclusivity
2. focus on the customer’s needs, preferences and experience
3. develop a well-rounded team of workflow change agents
4. align roles and responsibilities accordingly
5. develop structure and governance rules that control change (so people don’t go off half-cocked)
6. solicit the involvement of a strong executive sponsor who believes in what you’re doing
7. choose the most appropriate project. This one is key! If you start with a winner and demonstrate some real improvement in efficiency, output, quality and performance, all of your future efforts and initiatives will be embraced (as will the culture)
8. manage expectations. You’re not going to re-build Rome in a day so this is your chance to plan for modest progress and realistic outcomes. Project management fundamentals are crucial at this stage
9. select a desirable method. This can mean swimlane diagrams and a rapid Lean approach
10. provide training. In the spirit of project management basics, once you’ve identified a method, obtain some professional training before you begin tinkering with your workflow
11. set goals and profit from your initiative. With careful planning, you can establish clear goals and continue measuring your progress until your goals have been achieved. Having met your goals, you’ll be better positioned next time you look for an executive sponsor. It doesn’t hurt to show how your initiative improved the bottom/top line for the organization!

Plan to Win

When you take the time to develop a logical plan, a methodology, some tools, training and a strategic approach to workflow improvement, you beat the odds that you’ll abandon your effort half-way through. Don’t assume you know what your objectives are until you’ve been through a thoughtful planning process.