An introduction to The Vanguard Method

Systems Thinking for Service Organisations

Jeremy Cox, Vanguard Consulting

Purpose

• Introduce you to the Vanguard Method– Wprowadzenie do Metody Vanguard

• Set you up to use the approach in a “live work” situation– Przygotowanie do stosowania tego podejscia w sytuacji

“rzeczywistej”

• Help you to make informed choices about applying the Vanguard Method to compliment your ‘results-based management’ approach

London 1854

ConsequencesConsequences

Action StrategiesAction Strategies

AssumptionsAssumptions

What is happening?

John SnowOn the Mode of Communication of Cholera, 1855

Or this?

Change this?

Galileo Galilei (1564 - 1642)

Double-Loop Learning

Thinking governs performance

The way we think about the design and management of work… Nasz sposb myslenia o projektowaniu i zarzadzaniu praca

…governs the system…rzadzi systemem

…and performance is affected as a consequenceI ma to wplyw w konsekwencji na wyniki

Performance

System

Thinking

Wyniki

System

Myslenie

Dr Steve Allder (Plymouth, England)

• Looking at ‘length of stay’ for four years with no insight (technology, clock-busting drugs…)

THEN

• Started designing care for patients according to their ‘shape’

• Studying Flow/Value from citizen’s perspective (demand, diagnosis, treatment, rehab…)

“The way you think actually determines the way you conceive the problem that you are facing... Because I think

‘systems’…that allows me to think about clinical problems in a completely different way”

Stroke Care (Plymouth, England)

Days in hospital 16 to 6

Number of beds 56 to 39

Cost per patient £6k to £3k

‘Profit’ per patient £2k loss to £1k surplus

Cost Reductions:

Hospital -14%

Neurology -23%

External beds -17%

Clinical indicators:

Time from A&E to stroke ward 1.6 days to 2 hours

Admitted as ‘outliers’ 40% to nil

HSMR Amongst worst to Best ten

A System has:– Parts

– Interactions

– a PURPOSE

This introductory programme is designed to give you a good orientation in the basic principles, and give you the opportunity to ‘have a go’ in a live system

Expertise develops through multiple theory & practice loops over time, with expert support where needed

Most people imagine that the

present style of management has

always existed, and is a fixture.

Actually, it is a modern invention:

a prison created by the way in

which people interactW Edwards

Deming

Henry FordFrederick Winslow Taylor

Adam Smith

Joseph Whitworth

Alfred Sloan

B. F. Skinner

Henry Gantt

Conventional management thinking

Alfie Kohn

Stafford Beer

Taiichi Ohno

Peter Checkland

W. Edwards Deming

Systems Thinking

Peter Senge

Chris ArgyrisRuss Ackoff

Johh Seddon

James Lovelock

Counter-intuitive ideas

Value demand

& Failure demand(demand that is caused by a failure to do things or do

things right for the customer)

All demand is ‘work’

Counter-intuitive ideas

Manage unit costs Cost is in flow

How do we reduce the cost per call /

kilo / visit / employee…?

How do we reduce the cost per call /

kilo / visit / employee…?

What does it cost to provide service end-to-end? How much capacity is wasted?

What does it cost to provide service end-to-end? How much capacity is wasted?

Three crucial insights

1. Managing costs often increases your costs

2. We need to understand the causes of cost

3. Reduce cost (and improve service) by learning to design for value

Counter-intuitive ideas

Standardise and specialise

Design against demand

In 1978, the conventional factory design arrives in service as a ‘front-office/back-office’ split…

“The less direct contact the customer has with the service system, the greater the potential of the system to operate at peak efficiency”

Where Does the Customer Fit in a Service Operation,

Richard B Chase, Harvard Business Review, Nov-Dec 1978

Counter-intuitive ideas

Performance = people

Motivation = extrinsic

Performance = 95% System

Motivation = intrinsic

Counter-intuitive ideas

Decision-making separated from work•Hold people accountable for the numbers•Specify measures & method•Reporting via hierarchy

Method

Measures

Purpose• Decision-making

integrated with work• Measures anchored in

Purpose

Creates a De Facto Purpose

1. Fiddle the numbers

2. Fiddle the system

3. Improve the system

• Leaders hold people accountable to PRINCIPLES

• “Can you demonstrate that you have measures that lead you to learn & improve?”

Counter-intuitive ideas

In complex systems, change is emergent & must be based on knowledge

Study / Understand

(Check)

Experiment with new principles

(Plan)

Make normal & sustainable

(Do)

What is the Purpose (in customer terms)?

1

Flow: Capacity = Value Work + Waste4

Measures of Purpose(Capability)

3Demand : • Type & Frequency• Value & Failure• What matters?

2

Thinking6

System Conditions5

cust

omer

sThe Vanguard Model for ‘Check’

Core Flows

Support Processes

Performance

System

Thinking

Understanding the

conventional approach

Understanding an alternative

systems approach

Change via Check-Plan-Do

• All demand is work

• Standardise, specialise & automate work

• Management role =– specify measures and control method– Manage individual performance

• Change can be planned

Examples in practice?

Problems / issues / challenges?Performance

System

Thinking

The conventional approach to ‘results-based management’

The Vanguard Method: a systems approach to ‘results-based management’

• Design against demand – Value and Failure demand– Demand – Value- Flow

• Lead action on the system:– Purpose-Measures-Method

– Check-Plan-Do

• Change emergent, based on knowledge– Thinking-System-Performance

– Check-Plan-Do

Performance

System

Thinking

Conventional Thinking

Top Down

Functional specialisation

Separated from work

Budget, activity, targets,output, standards

Manage budgets & people

Contractual

Extrinsic

Outside in

Demand value flow

Integrated with work

Related to purpose, variation, & capability

Intrinsic

Act on the system

What matters

The Vanguard Method

To put it another way…The Vanguard Method helps leaders move FROM ‘management by objectives’ TO ‘principle-based management’

Going out to see for yourself: brief for fieldwork

• Objective: use the Model for Check to study the relationship between Thinking–System–Performance

– How does the system work? – Where and how to intervene to make things work better?• Next steps:

1. Choose a shortlist of target systems to study: Jeremy will help you agree final list of two or three & select groups (selection criteria is that the system should be something ‘end-to-end’ and of practical interest)

2. Use Model for Check to study the two or three target systems, one per group

3. Bring back a ‘System Picture’, • Your System Picture should cover all six elements of the Model for Check – there is no standard

format• Be ready to make a short presentation of your learning• There is no ‘right answer’ – this is a learning exercise not a final diagnosis