Too many tweaks spoil the model

Operating models degrade unless managed well – a case study

In most organizations today change is a constant. The change can be driven by things like new products, innovation, new systems, new regulation, changed strategy or new management with new and different ideas. As these changes come thick and fast, we have often observed that they can “degrade” the performance of operating models in different parts of the business. Each change may have been well intentioned or appeared necessary but often they can pull in different directions and create operations that don’t work that well. In this paper we’ll use one case study to illustrate what can happen, why and what you can do about it.

The scenario – one part of an operating model

This insurance company started out with good intentions. Where items of work “got stuck” or needed more information from clients, they passed them to a “contact” team who would call customers and attempt to get the missing information. They used some of the most experienced staff because they needed to build rapport quickly with clients and prevent issues developing. These staff also needed understanding of a range of processes. If contact attempts failed, the team member then messaged the customer to request “please call us.” So, on the surface, this looks like a proactive strategy and set of processes that follow some of the ideas in our previous white paper “Pre-emptive strikes.” The company is trying to get on the front foot and fix issues. That was the intention.

The problems

The management team knew something was wrong with this model. At times this “contact team” fell behind, because they were asked to help take inbound calls and the normal contact work could be deferred (in theory). At times this created a backlog of 4-5 days of outbound contact work. The inbound team also got lots of calls where customers chased work asking, “where is my X.” Customers were also confused when they got messages requesting them to call. They even asked, “what was this message about and was it was from you?” because they get lots of spam and junk texts. Another issue appeared to be that the offshored “back office” putting the more expensive “front office” to work to make these contacts. Management also didn’t know if the process was effective and there was a gap in measuring overall customer or process effectiveness.

How had this model evolved?

There are several examples of how the model had evolved:

1. The necessity for more outward contact had increased once some processes were moved to an offshore team in an effort to remove costly processes from on shore. This increased the dependency on the on-shore team to fix issues for the offshore team.

2. The offshore teams had less system access and were more specialised in particular processes so rejected more items.

3. The systems had also evolved with specialised systems for workflow separate to the CRM that managed contacts and contact history. The processing teams worked mostly from the workflow system and used the CRM less.

4. The risk function had restricted what information could be sent to customers through unsecured mediums such as texts.

5. Gradual measurement changes put more emphasis on productivity. Back-office staff were not penalised if they lodged a high volume of requests for contact.

Management knew of the volume of contact work and how quickly it was being serviced. However, they had no visibility of three critical things

1. The types of problems being fixed

2. The causes of these problems

3. The effectiveness of the contact team and process in sorting the problems

Getting to the Heart of the Issues

It turned out that all those little operating model tweaks had created a highly ineffective process. We did a deep dive on a sample of these requests for contact to get to the bottom of those three “visibility issues”. This analysis found that:

• As with most outbound, the team had a very low success rate in talking to the customer

• In some instances, the problem had already been resolved and the work “overtaken” by customers calling in and chasing the process. The slower the team was to get to their work, the greater likelihood that it was already fixed.

• The contact team resolved some issues without even contacting the customer because the data was already available albeit in the CRM not the workflow system.

• Customers were calling in about some of the work that was stuck in this process. Many of the “where is my” calls related to items in the backlog.

• This analysis showed that in less than 20% of contact requests was the contact process successful in obtaining new information.

• When customers did receive a “please call us” message (because they weren’t available), they called in very confused. It usually took the inbound agents 2-3 minutes to figure out what the call related to.

In a nutshell, the process was 20% successful and created additional work when it failed.

The Solution and How it Tackles “tweaking”

The solution proposed didn’t look narrowly at each sub problem but instead went back to fundamental questions such as:

• why was the work there?

• how could it be eliminated?

• if it couldn’t be eliminated, how could it be streamlined and made effective?

• what was the hierarchy of solutions from most impactful to least?

The range of solutions created included sending less work to the back-office teams, ensuring that requests were complete and finding better ways to get information directly from customers. The combination of solutions eliminated the whole “contact process” in its old form and made it easier for customers to provide information. The solutions were not a tweak, they were a complete revolution and redesign of this operating model. They made some of the work go away and simplified the remaining work in radical ways. Only when a team stood back and looked at the whole problem did these possibilities become clear.

Conclusions from this case study

This case demonstrates some of the dangers of incremental changes to models without having the complete picture and the data to understand the effectiveness of those changes. It shows how quickly operating models can deteriorate unless management has the information to understand what is going on within a model. It also demonstrates the value in periodic deeper analysis to understand the effectiveness of a model and the impacts of changes made. This paper also covered some techniques like root cause analysis and deep diving to understand work that are covered in “The Frictionless Organization” with far more detail than we could include here. If you would like to discuss this further, please feel free to get in touch at info@limebridge.com.au or call 03 9499 3550 or 0438 652 396.