Quality in Complex Medical Systems – the Limitations of Lean & Six Sigma

Posted on April 19, 2012 by aagabor
Preface: I am delighted to host a guest blogger, my friend Wes Chapman and an expert on clinical data systems. Wes has a keen interest in process and systems improvement in healthcare. This article is the first of a four-part series Wes has written about quality in the delivery of healthcare systems.  In addition to writing about healthcare and finance–before becoming a healthcare technology entrepreneur, Wes worked on Wall Street for over a decade–Wes is also an avid climber; his blog also features some of the most engaging accounts of what it is like to climb the highest peaks both in the U.S. and around the world that you are likely to read. I invite all readers to check out Wes’s blog at http://mwestonchapman.blogspot.com/ . Thanks, Wes!
The Elusive Goal of Quality in Complex Medical Systems
By Wes Chapman, Charles Hutchinson Ph.D., & Don Bialek MD • October, 2011
Preface
This is the first of four articles regarding quality issues in the delivery of clinical healthcare. This article looks at the popular methods for quality improvement in healthcare, and their applications and limitations. Specifically, it looks at those techniques that are founded in the concept of continuous improvement, including: 1) Lean, 2) Six Sigma, 3) Medical Checklists, and 4) ISO 9001. The second article will examine the alignment/quality issues and system design considerations regarding high volume and high RVU procedures. The third article will propose recommendations on system design for optimized protocol-based care in delivery systems involving small and large hospital systems. The fourth article looks at the development and utilization of process and outcome metrics, and how metrics can help in the development and continuous improvement of medical care protocols.
Summary
Quality means many different things in medical systems, and the superimposition of standard quality tools (Lean and Six Sigma) has only complicated the matter further. Medical systems are complex systems, not easily improved using Lean and Six Sigma tool sets, particularly at the macro level. With results that range from middling improvement to failure, healthcare managers are faced with a choice: maintain programs that have not met the majority of their goals, or start the long search for—and testing of—other options. The first question to ask, however, is whether any single system can, in of itself, provide the quality improvements everyone is seeking. Is the final solution a hybrid? If so, what are its parts?
Quality in Medical Delivery – A Story in Three Parts
Much has recently been made about the application of modern quality systems and tools into clinical care delivery environments. First, it is worth taking a minute to look at a fundamental question: What is Quality? There are three fundamental schools of thought on this question.
The first is “old school quality,” which is Quality is the degree to which a product or service meets the specifications for it. This is the basis of the definition used by the ASQ (American Society for Quality), and is quite limited and probably outdated, yet is the basis for most quality metrics in healthcare today. The Centers for Medicare & Medicaid Services (CMS) has further diluted this definition by fundamentally dodging altogether the question of defining specifications for the outcome of the service, relying instead on “process metrics” as a surrogate for real specifications.
Second is the modern Japanese concept of quality stated by Noriaki Kano et al, which is Quality is the degree to which a product or service meets or exceeds customer expectations. This is a real step forward, and accounts for the intellectual underpinnings of the supremacy of Japanese manufacturing in a variety of industries. The problem with this definition in modern healthcare is that patients have no idea what the rational expectations for service outcomes are. Nobody wants to get sick, old, or die, and we have developed the ethos that modern healthcare can fix all of that. It cannot – not at any price.
“…each of these pieces of ‘scrap’ is a failure to treat a patient properly…”

The third school of thought integrates the system that produces a product or service with the value to the customer: Quality is the ability to deliver, through a consistent and efficient system, a product or service that meets or exceeds a customer’s rational value expectations. This definition captures both the necessity of price considerations and the operational characteristics of the system that produces it. This is a critical concept for healthcare. In industrial systems, it is possible (although not desirable) to operate with a very high scrap rate and utilize only product that meets specifications. In healthcare, each of these pieces of “scrap” is a failure to treat a patient properly, resulting in waste, pain, injury, and even death. CMS’ aforementioned focus on process and system function makes a lot more sense in this light.

All modern quality systems share the common goals of waste reduction and continuous improvement. The traditional view of inspection-based quality is anathema to modern quality systems. In modern parlance, quality means doing the job right the first time, in the most efficient manner possible.
Healthcare as a Non-Linear,
 Complex System
In light of our preference for the third definition of quality in healthcare applications, it is worth taking a minute to consider the “consistent and efficient system” portion of the definition. Consider two large and technically advanced facilities: 1) A modern automobile factory and 2) A modern medical hospital. The engineers designing the process flow for the automobile factory can specify the exact production process for the factory, and the linearity of production is guaranteed. All inputs can be tightly controlled, and the output is virtually identical. Any failure in any part of the system is immediately felt in all other parts (the line stops), and process variation is immediately reflected in the product and can be easily traced back to the point of failure.
A modern hospital has very few of these characteristics. Incoming patients have a huge range of reasons for entering the system, ranging from routine checkups to organ transplants. Nevertheless, both the patient in for the checkup and in for the transplant use the same hospital delivery systems (e.g., radiology and laboratory services). Both also have the same expectations for quality, even though the near-term impact of any process failure is clearly greater for the transplant patient. Hospitals are very complex environments from a process perspective, and it is worth taking a look at such environments relative to their unique operational characteristics.
Characteristics of Complex Systems   
Stated simply, complexity can be defined as a situation where an “increasing number of independent variables are interacting in interdependent and unpredictable ways” (Ilachinski 2001). Traffic is a good example of complexity, as is the weather, the stock market, and the United Nations. So are healthcare organization and delivery.
Healthcare in the US is clearly a complex system – if you can call it a system at all. It is important to note that healthcare is complex at both the macro level (organization) and at the micro level (delivery). Macro system elements are the fundamental organizations and “agents” acting to control and organize activities at the micro/delivery level, including patients, physicians, hospitals (and other venues), vendors of products and services to the system, regulators, and payors.
We will focus on the issues of defining and implementing quality systems at the micro level of care delivery.
Improving systemic quality in healthcare delivery is not straightforward. This is primarily due to the fact that the system is composed of non-linear processes. Linear production systems (production lines of all types) are governed by rigidly defined operating rules and specification limits. In such tightly controlled environments, quality is reasonably easy to implement, measure, and monitor due to the inherent predictability of linear processes. Healthcare is not linear; it is a complex adaptive system in which the actions of the agents in the system are interconnected in such a way that the actions of one agent change the context for others. The characteristics of such complex systems make it impossible for a single quality concept to be capable of sustaining quality on its own. These are:
·         The number of agents in the system is very large.
·         Interactions between agents are rich; i.e., any agent in the system is affected by and affects several other systems.
·         The interactions are non-linear, which means that small causes can have large results.
·         Any interaction can feed back onto itself directly or after a number of intervening stages, and such feedback also varies in quality.
·         Such systems are open, and it may be difficult or impossible to define system boundaries.
·         Complex systems operate under conditions that are far from equilibrium; there has to be a constant flow of “energy” to maintain the organization of the system.
·         All complex systems have a history: they evolve and their past is co-responsible for their present behavior.
·         Elements in the system are ignorant of the behavior of the system as a whole, responding only to what is available to them locally.
These challenges make it absolutely imperative for quality-improvement measures to be supported by a formalized structure, so that the complexity of the system does not undermine the efforts being taken to sustain quality.
An Example – Opaque Feedback Loops
As an example, I was recently talking with a friend, who described a quality improvement effort at his hospital. They had determined that quality was to be defined as “meeting or exceeding customer expectations,” and further determined that the waiting time in the ED was “excessive,” in excess of 60 minutes.
Leaving aside the determination of the goal, they set about to fix the excess time in the ED by hiring more nurses and providing incentives and penalties around the sub-60-minute goal. Despite their best efforts, waiting times only improved slightly. Then they became stuck, and the staff became increasingly frustrated. Worse, other areas of hospital performance were deteriorating markedly, even as the ED improved only a little.
A more detailed “root cause analysis” showed that the problem was not really in the ED at all, but in radiology and diagnostic testing. The small gains that had been made in the ED came from personal appeals to radiology from the large crew of ED nurses, and this had lead to significant process flow disruption, which spilled into other areas of the facility – a classic complex, non-linear production problem with opaque feedback loops.
Quality vs. Accreditation – Not the Same
 Thing at All
For the purpose of this discussion, we will not address the role that the Joint Commission (TJC), Det Norske Veritas (DNV), and other accreditation bodies play in process quality in healthcare delivery. Accreditation is treated as an episodic event, distinct from the process improvement tools that are the basic application for modern quality improvement. While it is important to note that integrated quality and accreditation is coming closer to reality, the two are generally treated differently at the application level.
Quality Focused on “Never Events”   
Historically, healthcare providers have attempted to use quality-improvement techniques and tools to reduce medical errors and help ensure patient safety – with a particular focus on “never events,” such as surgically removing the wrong organ or administering the wrong medication. It is critical to note that these are absolutely desirable process improvement outcomes, but the problems being addressed are (hopefully) very infrequent and disproportionately guarded against by redundant systems. Again, while perfectly laudable goals, these are not the focus of our inquiry here.
Quality Focused on Process Control
Our discussion focuses on the application of modern quality concepts in clinical-care delivery systems, particularly how the techniques and tools derived from these concepts have been used to address process variation and eliminate waste. Eliminating waste and rework increases patient-handling capacity and flow, which decreases wait times and potentially harmful delays in care. The result is a safer, more efficient, and more cost-effective system that better satisfies patients and healthcare workers. Some of the techniques relevant to the healthcare field are:
·         Lean
·         Six Sigma
·         Checklists
·         ISO 9001 standards
These quality techniques act in their own characteristic ways to improve quality, and it is important to accept that in linear environments (systems they were designed for) they do a very good job of it. It is also important to note that the ways through which these techniques improve processes are completely dependent on the historical purpose for which they were devised in the first place. None of these techniques can independently succeed in improving the quality of healthcare delivery because, as we explained earlier, healthcare is a complex, non-linear system, fundamentally different from the linear processes from which the underlying quality concepts were derived. The implementation of quality techniques is necessary but not sufficient for sustaining customer satisfaction and eliminating waste in the healthcare system.
Quality Techniques – A Sampler
Lean
Lean operates on the principle of creating value for the customer by doing away with activities in the process that the customer would not be willing to pay for. The origins of this principle lie in quality improvement efforts that were taken in the Japanese manufacturing industry, exemplified by the Toyota Production System (TPS).
The complexity of healthcare delivery systems significantly blunts the benefits of Lean; focus on the sub-process level has actually shown the greatest value for Lean techniques.
Merits
Lean has gained great popularity in healthcare due to: 1) the concepts of value stream mapping (i.e., process mapping), 2) 5S applications (sort, straighten, scrub, standardize, sustain), and 3) waste identification and elimination. Lean tools are fairly easy to understand and implement, and are based on the intuitive identification and elimination of waste. Front-line employees, whose inputs are extremely valuable in Lean undertakings, do not need to invest time and energy to learn new skills and can be easily engaged. The focus is on creating value immediately, and the results are instantaneous. Through Kaizen, Lean also aims also institute continuous improvement of the optimized processes. Lean does a good job in identifying waste and co-dependencies at the individual process level.
Typical Applications
·         5S (sort, straighten, scrub, standardize, sustain) and visual management in stock rooms
·         Identify and map processes, with a focus on the identification and elimination of waste
·         Lean has proven very effective at waste elimination at the “micro-process” level
Issues
Lean emphasizes the identification and elimination of waste at the process level. It relies on visual cues, and is not a project-based system. It is short of particular tools for implementation, and needs to be a “bottom up” process with broad stakeholder involvement. Its effectiveness is diminished by the blurred lines of responsibility and occasionally hierarchical (even dictatorial) reporting structures in healthcare. Lean methods interface poorly with the idiosyncratic variability associated with “the art of medicine.” The impact of these practices is also difficult to quantify, since Lean does not specify any data gathering or measurement methodologies.
Six Sigma
The origins of Six Sigma processes began at Bell Labs in the 1920s, when Walter Shewhart invented the control chart, to measure and monitor the manufacture of electrical components. Post the pioneering work of Deming, Taguchi, et al, the idea of Six Sigma was born, wherein processes that operate at “Six Sigma quality” limit defect levels to below 3.4 defects per million opportunities. Six Sigma is entirely focused on the elimination of variation in outcomes and product. Six sigma uses very specific tools and techniques based on the DMAIC process (define, measure, analyze, improve, control). Lean provides a total system approach but is short on details, organizational structures, and analytic tools for diagnosis. Six Sigma, on the other hand, offers fewer standard solutions but provides an organizational infrastructure and a general analytic framework for problem solving.
Six Sigma and the DMAIC process have proven to be useful in healthcare in limited applications where system linearity can be assured and the impact of random exogenous variables can be minimized. As an example, Six Sigma has been used successfully in laboratory quality systems.
Merits
Six Sigma details a process-based approach to improving quality by reducing variation in output. It propagates an evidence-based decision making approach by specifying tools and techniques to measure and monitor processes for changes in variation, i.e. quality. Through quantifying financial return on quality improvement projects, Six Sigma helps realize the impact of such projects on an organization’s bottom line. Six Sigma utilizes an elegant mixture of data, control charts, and statistical analysis. It is the perfect tool for the identification and elimination of variation in controlled production environments.
Typical Applications
Six Sigma is most frequently used in manufacturing processes, both linear and non-adaptive; for example, the manufacture of ICs and medical devices. Six Sigma is also used in detailed, linear, controlled environments in healthcare such as labs. A number of care providers have reported significantly improved Lean process improvements by using Six Sigma tools for more complex problems. In any event, the smaller the inherent system complexity, the more useful Six Sigma tools become.
Issues
Six Sigma fundamentally depends on linear systems for its function. If variation can enter a complex system randomly and episodically, Six Sigma is a sub-optimal analytical tool. The DMAIC process begins with “define,” and complex systems are notoriously difficult to define. Six Sigma is inherently limited for applications in healthcare delivery systems.
Checklists
Checklists are tools that help reduce failure rates in non-linear or complex processes by specifying a list of activities that need to be performed for the effective execution of the process. Checklists have been used extensively for process control in the military and in the aviation industry, because human interaction, which is a major part of processes in these fields, introduces extensive non-linearity. The origins of the usage of checklists in the industrial sector lie in the failed flight of Boeing’s B-17 prototype. The ensuing investigation identified the cause to be “pilot error,” and its aftermath led to the conclusion that the B-17 was “too much airplane for one man to fly.”
Merits
Checklists are a universally understood method of process control. A streamlined checklist is a necessary part of process control in a non-linear process that can feedback onto itself; they can confirm that essential functions were carried out and also provide instructions to quickly respond to known variances in the process.
Typical Applications
Checklists are used typically in processes that require human initiation or intervention; for example, aviation, healthcare, and the military. The recent publication of The Checklist Manifesto, by Dr. Atul Gawande highlighted the extreme process control and the consistent and measurable outcome improvements that checklist use has accomplished in healthcare across a widely varied set of healthcare providers around the globe. It is important to note that checklists are really just process control documentation, which enforces best practice protocols. Documented process control is a fundamental element of ISO 9001, as discussed more fully below.
Issues
Using checklists necessitates defining roles and responsibilities, controlling versions of checklists, and ensuring that required personnel have been trained accordingly. Checklists are a fundamental element of simple process control, as well as system recovery in complex problems, but people resist checklists, as they seem to represent unnecessary bureaucratic oversight.
ISO 9001 Systems
ISO 9001 specifies the basic requirements for a quality management system (QMS) that an organization must fulfill to demonstrate its ability to consistently provide products (which include services) that enhance customer satisfaction and meet applicable statutory and regulatory requirements. The history of the ISO 9000 family of standards can be traced to 1959, when the Department of Defense published the MIL-Q-9858 standard, to control all supplies and services under contract in order to assure compliance to contractual obligations through an effective and economical quality program.
Merits
Adhering to ISO 9001 standards enables organizations to maintain a footprint of quality that demonstrates their commitment toward customer satisfaction and continuous improvement. This also leads to better marketability, increased employee morale, and increased productivity.
Typical Applications
Diverse organizations have successfully implemented ISO 9001 quality systems, since the standards only prescribe guidelines to maintain quality and do not dictate the way internal operations should be performed. ISO 9001 has been widely used to ensure uniform process and product output by multinational corporations in diverse geographical environments. It has recently been utilized by DNV as a credible accreditation alternative to TJC. It has been very widely adopted in rapidly expanding industrial societies, with notable success. China has grown into the world’s largest industrial exporter, and has over ten times the number of ISO certified entities as the US.
Issues
A standalone ISO 9001 system promotes only process control that uses a robust documentation structure; it is possible to have limited tools for process improvement while adhering to ISO 9001 standards. The standards are only a support for quality-improvement initiatives that should be of strategic importance to the organization. ISO can be cumbersome and bureaucratic in nature, and needs to be used with practical judgment, being implemented only in those organizations and operations that can benefit from documented process control.
The Role of Experts
“If all you have is a hammer, everything looks like a nail”
– Bernard Baruch
The last 15 years have seen an explosion of certified “Quality Experts,” largely through the widespread adoption of Lean and Six Sigma practices in corporate America, with Jack Welch’s pervasive use of Six Sigma in GE during his tenure being the best example. These are relatively short (one week to a few months) programs, designed to foster a common language and culture at the sponsoring firms. The result has been to flood the market with experts equipped with hammers, looking for nails.
Unfortunately, most modern quality tools were not designed for complex systems in general, and healthcare applications in particular. The operational silos, complex feedback loops, complex governance, need to respect never events, and related problems in healthcare limit the applicability of quality tools there compared to other operational environments.
Movement to a Hybrid – Healthcare
 Specific Model 
As we have seen, healthcare systems are complex in nature. The natures of the problems that arise in complex systems are also complex – there are no simple problems in complex systems. The solution could well be inherently simple, but a “naïve” interpretation of it will most definitely lead to an ineffective resolution. This is exactly why the simple application of the above-mentioned quality concepts leads to results that fall below expectations. In some cases, it could even be impossible to judge if the quality projects yielded any benefit at all. More on this below.
Lean provides a great baseline tool kit for identifying and defining targets for quality projects in healthcare applications. In particular, process and value stream mapping are valuable at the managerial level, and the 5Ss are great tools at the hands-on level. Lean has limited project management tools, and benefits can easily prove ephemeral without good process definition and control tools.
Six Sigma provides a rigorous analytical framework and a clear and consistent data management and analysis capability for implementation of quality projects. The reality is that any Lean or Six Sigma healthcare project must be evaluated to look for opaque/unanticipated changes to operations outside of the project scope itself. In any complex system, it is always possible to “improve” one process to the detriment of the function of the entire system. Any Six Sigma quality project in a healthcare organization that is set up without a flexible and robust data-gathering system is being set up to fail. Data is required to: 1) Determine need and establish a baseline, 2) Determine efficacy of the project as implemented, and 3) Determine the ongoing efficacy of the project. Key performance indicators (KPIs) that can gauge the success of the project appropriately must be identified, and data points must be gathered to continuously monitor these KPIs.
“In God we trust; all others must bring data.”
– W. Edwards Deming
ISO 9001 and robust Checklist Systems are designed to provide documented process control. ISO 9001 provides an integrated and time-proven method for the control of complex systems and processes. An ISO 9001 system will always include: 1) A definition and description of the processes being controlled; 2) Clear definition of standard operating procedures (SOPs) and work instructions; 3) Clear description of the process and operational pathways; 4) Clear definition and description of organizational structure, training requirements, and related HR matters; 5) Clear definition and description of relationships with suppliers, vendors, and customers; 6) Clear description and definition of how compliance will be measured, and clear corrective and preventative action plans for when they are not; and 7) The documents to control it all. It sounds like (and is) a lot of work, but it is the only comprehensive method for the control of complex systems.
Checklists can be their own tool set, or fit pretty handily into both Six Sigma and ISO applications. Checklists have been used in multiple environments to 1) Ensure compliance in routine operations and to help eliminate “never events”, and 2) To provide operational guidance in time-critical emergent situations.
CONCLUSION
Problems in complex systems do not have simple solutions. A single quality concept cannot act as the panacea for improving quality in a healthcare organization. The time consuming, but inherently simple, solution to this problem is an ISO 9001-based quality management system to control the operation and evaluate the success of quality efforts in healthcare. ISO is a perfect overall tool to evaluate the quality efforts of an institution, and has the added benefit of de-mystifying the evaluation of quality improvement efforts.
In any event, quality system design and implementation in healthcare requires practical hands-on judgment. No single system exists that can deal with the complexities of healthcare – there are a lot of great quality tools and systems, but using them effectively requires judgment and a fair amount of patience.
Process control plays a bigger part in sustaining quality in healthcare systems than the quality concepts themselves. This is simply due to the fact that the uniqueness of healthcare systems – their complex and recursive nature – can be contained only by process control. The execution of quality-improvement measures could well be rendered meaningless without robust process control.
As a final point, it is worth noting that if a quality system cannot provide real-time data and generate a quantifiable ROI, then it is not a quality system at all. Quality systems are expensive to design and implement, and difficult to maintain. Any effective effort in quality systems can demonstrate variances from plan and historical levels of activities. The effectiveness of every project should be traceable. All too often, quality groups operate as final arbiters, answering to nobody and held accountable for nothing. In these cases, operations drift into anecdotal evaluations, and nothing can progress.
Next
Quality of outcome – both surgical success and patient satisfaction – can be accurately predicted by a single factor: volume. Yet the RVU structure currently standard in U.S. healthcare drives low volume hospitals (such as critical access hospitals) to perform surgeries that are best referred to central high volume facilities. Furthermore, there is good evidence that patient satisfaction depends, in part, on care close to home, and that primary care provider (PCP) involvement is critical to protocol compliance and quality outcomes. How do we change the system to provide the best outcomes without crimping revenue flow at the critical access hospitals?
Sources
2.        WHO – World Health Statistics 2009
4.        The Centers for Medicare & Medicaid Services (CMS) also has developed a set of quality measures through a standardized framework that uses defined business processes and decision criteria.
5.        http://www.iso.org/
6.        http://en.wikipedia.org/
8.        http://www.ahcancal.org/
10.      The challenge of complexity in health care – Plsek and Greenhalgh (2001)
11.      Health Systems Financing: The path to universal coverage, WHO’s World Health Report 2000
13.      Brent C. James and Lucy A. Savitz – How Intermountain Trimmed Health Care Costs Through Robust Quality Improvement Efforts, 2011
14.      Primary Care — Will It Survive? Thomas Bodenheimer, M.D.; 2006
15.      Health, United States, 2010 – US Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Health Statistics
16.      1997 Population Profile of the United States – US Department of Commerce, Economics and Statistics Administration
Glossary
5S
A Lean process for controlling production output quality: sort, straighten, scrub standardize, sustain.
ACH
Acute Care Hospital; a medical center or surgical practice hospital capable of providing specialty procedures. Usually they are relatively large, high-volume facilities.
AMA
American Medical Association.
ASQ
American Society for Quality.
Bundled Payment Initiative
A program initiated by the CMS in August 2011 to allow groups of providers to share in the provision of services and fees related to specified medical procedures. Allows small primary care facilities (such as CAHs) to form shared service/payment arrangements with larger acute care hospitals, bypassing the self-referral and anti-kickback restrictions of the Stark Laws.
CAH
Critical Access Hospital; a small, regional hospital/clinic limited to 25 beds or less and designated as critical to care in a geographically isolated community.
CMS
The Centers for Medicare & Medicaid Services.
CPT Codes
Current Procedural Terminology Codes, maintained by the American Medical Association, describe medical, surgical, and diagnostic services. They are designed to communicate uniform information about medical services and procedures.
DMAIC
A process for improving production systems: define, measure, analyze, improve, control.
DNV
Det Norske Veritas, an independent foundation that classifies and certifies healthcare organizations internationally using ISO 9001.
ED
Emergency Department in a hospital or clinic.
IC
Integrated circuit.
ISO
International Organization for Standardization; creates standards that business must meet in order to satisfy customer and statutory requirements.
ISO 9001
Specifies basic quality requirements that a company must fulfill to consistently provide products and services that enhance customer satisfaction and meet statutory regulatory requirements. The ISO 9000 series specifically deals with quality management systems.
Kaizen
Japanese for “improvement”, or “change for the better”; refers to philosophy or practices that focus upon continuous improvement of processes. Applied to any business or workplace, it refers to activities that continually improve all functions, and involves all employees.
KPI
Key Performance Indicator; a performance measurement that provides data critical to evaluating the effectiveness or efficiency of a process. KPIs will vary from process to process and organization to organization.
Lean
A quality concept and system that creates value for the customer by doing away with activities in the process that the customer would not be willing to pay for. Lean emphasizes the identification and elimination of waste at the process level.
Macro Level (Processes or Quality)
Macro system elements are the fundamental organizations and “agents” acting to control and organize activities in a system.
Micro Level (Processes or Quality)
The detail level at which goods or services are actually produced; e.g., healthcare delivery.
Never Event
An event or outcome that should never occur in a properly controlled process; for example, administering the wrong medication.
QMS
Quality Management System; a generic term.
ROI
Return on Investment.
RUC
Specialty Society Relative Value Scale Update Committee of the AMA that defines and updates Relative Value Units
RVU
Relative Value Unit; a comparable service measure used by hospitals to permit comparison of the amounts of resources required to perform various services within a single department or between departments. It is determined by assigning weight to such factors as personnel time, level of skill, and sophistication of equipment required to render patient services.
Six Sigma
A quality concept and system focused on the elimination of variation in outcomes and product through the DMAIC process (define, measure, analyze, improve, control).
TJC
The Joint Commission, an independent, not-for-profit organization that accredits and certifies healthcare organizations and programs in the United States.
TPS
Toyota Production System; the exemplar of a Lean implementation.
Posted 7th November 2011 by
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Trauma in Telecom Land, Part 2

Posted on February 22, 2012 by aagabor

How Verizon Treats its Customers: 1 Month, a Dozen Calls and $310 to Get Service Restored

In a recent blog post, “Why I Tried…and Failed…to Fire Verizon”, I described the systemic screw-ups and service break-downs that led me to try to switch my phone and internet service from Verizon to Time Warner, and the systemic screw-ups and misleading sales tactics (thanks to boneheaded pay incentives) that convinced me to stick with Verizon, on the the-devil-you-know-is-better-than-the-one-you-don’t theory.

Having abandoned my efforts to fire Verizon and switch to Time Warner, I encountered yet another breathtaking breakdown in quality and service as I tried to reactivate my Verizon account. My fling with Time Warner lasted only three hours, in which an able and courteous Time-Warner technician tried, unsuccessfully, to switch my service to the competition. But that brief flirtation cost me phone and internet service for almost a month. Moreover reactivating the internet service proved so complicated that I couldn’t get it to work without hiring an independent computer consultant!

The hiatus in which I had to rely on my cell phone and broadband wireless device were marked by over a dozen calls to Verizon over a one-week period and a mind-boggling number of systemic snafus on the company’s part. It turned out that the earliest date Verizon could give me for reactivation was three weeks from the day I said my tearful goodbyes to Time Warner. I was, understandably, anxious to avoid any mishaps. So I phoned the company three days before the scheduled appointment, only to be told that it was a good thing I had called because my service order had “not been completed” and, had I not called, no one would have showed up.

Peter W. Thonis, Verizon’s communicator-in-chief, received a communicator-of-the-year award in 2010, but wouldn’t communicate with me

On January 23, the day of my appointment, a Verizon technician arrived at my home. After less than 10 minutes, in which he placed a few calls to Verizon’s central office, but seemed to perform no work inside my home, he explained that the service really needed to be switched on from Verizon’s central office. That might take as much as 24 hours.

Was there really nothing more for him to do, I asked, baffled as to why I had to wait for three weeks and stay home to await the technician if, in fact, all the work was done from a remote office.

No, he reassured me, there was nothing more to do but wait.

Sure enough, about 24 hours later, the phones were working again. Although, my answering service, which I had, in the past contracted from Verizon, had disappeared. Clearly this would involve more phone calls and more bureaucracy. Sigh.

A bigger problem was that my internet service wasn’t working either. When I checked back with the company, I was told that a mistake had been made (how many was this now?) and Verizon had not initiated the transfer process. After four phone calls (I was disconnected twice) and 1.5 hours on the phone with a technician, I still didn’t have internet service, but was told that someone else would phone me the following morning to resolve the problem. Instead, that same night, I received an email from Verizon, notifying me that they had received my CANCELLATION order, effective Jan. 30. CANCELLATION—I had just spent one month trying to RESTORE my service!!

The cruelest joke of all was that the cancellation notice came with the following reassurance: “We will hold your current verizon.net email address and your User ID for you for 30 days from the date of this message. That way, coming back is easy!”

It turned out that returning to Verizon’s fickle embrace would be anything but easy. The following morning, I called Verizon again and was told that I would have to wait several more days as this “new order” was processed.

Since I had already been without internet for a month, and since the error was clearly Verizon’s, could they not expedite my service, I asked the friendly service rep on the phone.

“Certainly, madam, I will make every effort to have your service expedited,” said the impeccably polite technician who I ascertained was located in Verizon’s Philippine service center. In the ensuing days, I made a grand tour of Verizon service centers—in the Philippines, in India, in Ireland, and eventually New York– speaking to easily a dozen technicians, all of them unfailingly polite and helpful. But, as the week wore on, no one seemed able to reactivate my internet service. Nor could any of them explain why; most seemed as baffled by the problem as I was. At around Day Four, I started tweeting about the problems again; when Verizon’s social media folks got involved, they enlisted the company’s New York-based service center. Now, perhaps, the company would take this issue seriously, I thought, mistakenly assuming that Verizon’s New York crew would succeed where their far-flung global colleagues had failed.

Technicians at Verizon's far-flung service centers were unfailingly polite... but were baffled by the company's faulty systems

But after a full week of fruitless efforts to get my internet service turned on, I completely lost whatever shred of faith I had left in the company. So, on Jan. 30, I recruited Vladimir Sokolov (aka Vlad), the trusted computer consultant who helps me with my most vexing tech issues. Vlad spent 3.5 hours on the phone with Verizon technicians. He finally got the system working, despite Verizon’s best efforts, it seemed…and without ever getting an explanation from Verizon as to why they had so much trouble “reactivating me.”

“Verizon is a big and disjointed company,” explained Vlad who has done work for me on-and-off over the course of several years. “It seems that the sales department doesn’t know what customer service department is doing, and both are clueless about what the technical department is doing.”

For example, Vlad figured out that Verizon doesn’t have a procedure for reinstating old customers. They treat every returning customer as a new customer. The fact that I already had a Verizon footprint—see aforementioned User ID and email address in the cancellation notice–seems to have made it harder, not easier, for me to get reinstated.

To make matters worse, Verizon seems to have a policy of not telling customers what’s going on. “For some puzzling reason Verizon feels that it should not tell the customer exactly what happened,” concluded Vlad. “It is frustrating that Verizon doesn’t have a policy of open and honest communication with its customers. This misguided need for secrecy is very often a cause for confused customers and delays in fulfilling orders.”

Of course, Verizon isn’t the only company that obfuscates and misleads its customers; that is, after all, why I ended my brief flirtation with Time Warner.

Oh, and in case you were wondering, I was not content to patiently troll Verizon service-centers around the world, charming as the technical-service people were. Even as I turned to Vlad for help, I decided to go straight to the top and sent an email to Peter W. Thonis, Verizon’s communicator-in-chief. His official title is Chief Communications Officer. However, Mr. Thonis chose not to communicate with me, and did not respond to several email messages pleading for help.

Thanks to Vlad, I am now reconnected to Verizon, at least until I can find an adequate alternative and recover from my latest telecom trauma. Vlad’s bill for reinstating my Verizon internet: $310. I guess the best you can say about Verizon technology and service is that it keeps competent guys like Vlad in business.

Next challenge: Get my voice mail back…

 

 

 

 
Posted in Business, Quality Management, telecommunications | Tagged , , | 1 Comment

Pittsburgh Tries a Collaborative Approach to School Reform

Posted on January 28, 2012 by aagabor

When I first began reading Sean D. Hamill’s account of the partnership between the Pittsburgh Public Schools and the local union, I was immediately skeptical; I sensed the heavy hand of corporate reformers. After all, the story features a $40 million Gates Foundation grant aimed at getting “effective teachers in every classroom”; a public school superintendent who had no education experience, but had graduated from the Broad Superintendents Academy; and a new performance-pay plan for teachers. (Only later did I notice that the piece was published in The American Educator, the house organ of the American Federation of Teachers.)

In brief, one of the big problems with corporate reformers is that they place most of the blame for the failures of the U.S. education system on teachers and teachers’ unions. If only you could get rid of the many bad apples, American education would be instantly transformed! The mantra is very similar to the rhetoric of a bankrupt auto industry, which blamed autoworkers and the UAW for its failure to compete against foreign producers. We now know that the U.S. industry’s long malaise was due to deep-rooted systemic problems and management failures; only when the car companies began focusing on long-term improvement—usually in collaboration with the unions—did they begin to recover.

Indeed, Hamill’s piece, “Pittsburgh’s Winning Partnership” describes what seems to be one of the rare examples of a  continuous improvement effort led by both administrators and teachers. What he describes sounds a lot like the early days of the remarkable teacher-led turnaround at Brockton High, Massachusetts’s once-failing, largest high school. Indeed, the Pittsburgh schools seem to have learned many of the same lessons as Brockton:

1)      Pittsburgh began with a common mistake—relying on outside consultants. But, after teachers rebelled against the curriculum that was being developed by Kaplan K12, then-superintendent Mark Roosevelt enlisted the help of an experienced team of teachers to both write the curriculum and to train the teachers in how to implement it. Training, of course, is a key to most continuous improvement efforts, including those in education, such such as Brockton’s. Also, enlisting the teachers in the process energized them and gave them a stake in the success of the reform effort.

“For Linda Lane, who was then the district’s deputy superintendent and is now Roosevelt’s successor, it was obvious that the district needed to go in a different direction. The district decided to let the teachers write the curriculum, but train them first, and develop a better feedback structure to evaluate what they produced. Engaging teachers in such a big way was the idea of Jerri Lippert, the district’s chief academic officer, who realized, ‘it’s kind of foolish not to listen to [teachers].’

“For the nearly 200 teachers directly involved in the training, writing, and feedback over two years, the process was transformational. ‘Before this, I was ready to quit. I was burned out and thinking of leaving teaching,’ said Adam Deutsch, who teaches math at Allderdice High School and was a lead writer for the district’s Algebra I curriculum. ‘But this really reenergized me.’ Many teachers appreciated the chance to contribute as professionals and became ‘advocates in our schools and outspoken about reform efforts,” when that wasn’t necessarily the case before,’ said Deutsch.”

2)      Using a collaborative approach, Pittsburgh developed a new teacher evaluation system. But instead of imposing a punitive plan aimed at weeding out “bad” teachers, as many corporate reformers advocate, the evaluation system became a professional development tool for improving long-term performance.

“’What I loved was that all the power players on this were in the room together—the union, the school district, teachers, principals—hammering out the details for the framework for RISE,’ said Cindy Haigh, a middle school health and physical education teacher for 13 years in the district who was part of the process.

“What they developed was a system where the teacher actively engages in his or her evaluation with an administrator. Both of them collect evidence across the school year of four teaching domains: planning and preparation, classroom environment, professional responsibilities, and teaching and learning. Class-room visits by an administrator are preceded and followed by discussions about the lessons being taught. The teacher provides a self-evaluation before the lesson using a rubric that breaks the four teaching domains into 24 components of practice, and the discussions between them focus on areas where they disagree. After each observation, the administrator and teacher meet again to review what was observed and agree on plans for improvement, which are revisited throughout the year and in a final evaluation.”

3)      Performance-pay in Pittsburgh is a misnomer. The union hated the idea, because, as the article, notes: “There simply was no proof anyone could find that performance-pay systems work well.” The fact that merit pay doesn’t work was well documented in a study by Vanderbilt Univ. John Tarka, head of the Pittsburgh Federation of Teachers, noted one school where the performance-pay system was regarded as “winning the lottery,” a common complaint in companies that use performance pay too!

Instead, Pittsburgh developed a career-ladder approach that would create a new career path, with higher pay, for the most experienced teachers. They also reserved some funds for schools and districts that achieved improvement. Indeed, group rewards not only foster teamwork and do not suffer from the stigma of arbitrariness that plagues individualized pay incentives.

“In contrast, ‘if you provide, as we did, a number of career ladder positions, for which people apply and have to show their eligibility, that’s a key way to get performance pay in place that might work,’ Tarka said. ‘We’ve also done work so that school-wide performance can be recognized, district-wide performance can be recognized. A couple of the plans do recognize student achievement, but rather than do some of the negative things that some traditional performance-pay plans have done in terms of divide and alienate, it’s more based on a school working together and a district working together to try to raise student achievement overall.’”

What’s most noteworthy about the Pittsburgh plan is that it relied on close collaboration between the school district and the union.

I came away from reading Hamill’s article wondering whether Pittsburgh seemingly non-punitive professional-development approach to teacher evaluations, as well as its career-ladder, might influence the thinking of the Gates Foundation. Reading the first sentence of the grant it isn’t clear whether the Gates Foundation understands what seems to be unique about the Pittsburgh (and Brockton) experiments; i.e. the point is less to change (or exchange) the teachers as to create collaborative approaches to systemic improvement. (The first sentence of the grant reads: “The Bill & Melinda Gates Foundation will invest $40 million to support Pittsburgh Public Schools in the implementation of groundbreaking approaches to ensure that all students have access to effective teachers in every classroom.”)

What the Pittsburgh experiment seems to show—and what the Gates Foundation and other corporate reformers still don’t seem to get—is that the problems in schools aren’t primarily due to “bad” teachers, but to bad systems and leadership.

The best evidence for this is at Brockton, where the very same teachers who worked at the school when it was failing, have, over the course of more than a decade, transformed the institution under the leadership of the school’s principal, Sue Szachowicz. A former history teacher, Szachowicz has worked with her faculty to hone a laser-like focus on improving literacy at the school, with remarkable results. See “How a Decade-Long Literacy Obsession Transformed Brockton High.”

Brockton High has gained national attention and praise from Massachusetts Gov. Deval Patrick; hundreds of educators have been to visit the school and to hear Szachowicz speak at conferences. Yet, Brockton has not caught the attention of key education reformers. Arne Duncan has never been to see the school. Neither have representatives from the Gates, Broad or Walton Foundations. “We don’t fit their idea of school reform,” says Szachowicz.

Now that Pittsburgh seems to have embraced many of the same homegrown, collaborative, teacher-driven improvement efforts that have worked at Brockton, maybe the Gates Foundation—and other corporate-minded education reformers–will reconsider what it takes to transform a school or a school district.

Posted in Business, Education, Quality Management | Leave a comment

Why I Tried…and Failed…to Fire Verizon–Trauma in Telecom Land

Posted on January 10, 2012 by aagabor

Late last year, after months of problems with my internet service, I decided to fire Verizon and switch to Time Warner, which promised me seamless connectivity, phone service and cable, all at a good price.

Instead, I’m back with Verizon—not very happily—and without phone service for nearly two weeks. This is a story about lousy management and technology, deceptive marketing, misguided compensation schemes and the power of oligopoly. The silver lining—great low-level employees at both companies who tried to fix my problems and sometimes seemed as frustrated by their companies’ rules and systems as I was. (This is in keeping with other experiences I’ve had in which individual employees were almost never the problem–see my post on rental car companies.)

The story begins with Verizon, my long-time phone and internet provider. About three years ago, I also purchased a wireless device from Verizon Wireless, which cost an additional $60-or-so per month so that I would be covered when I travel and for the frequent occasions when Verizon’s DSL service is down. The device worked flawlessly until Verizon persuaded me to upgrade to a 4G device; in December alone, the company’s 4G network was down at least four times. The company claims that its service was “available approximately 99% of the time” in 2011; my experience does not support that claim.

Indeed, my problems with Verizon point to at least six major flaws in the quality of the company’s management and technology systems.

First, Verizon telephone service in my Yorkville neighborhood of Manhattan is constantly having problems. I’ve lost phone service about half-a-dozen times in as many years; one of many Verizon repairmen to visit my house explains that the company’s underground wiring and networks need to be updated.

This December, even as I was trying to finish end-of-year assignments and do some holiday shopping online, I was hit with problems two and three– outages of my DSL service and problems with Verizon’s 4G wireless system.

It was during this perfect storm of internet failure that I discovered the fourth major problem with Verizon service. With both DSL and wireless on the blink, I tried calling Verizon’s technical service department only to learn that the company maintains two different teams of technicians—one for wireless and one for DSL. If you are unlucky enough to have problems with both systems, you need to call two different numbers, wait on hold (five to fifteen minutes each time) for two different sets of technicians. The technicians themselves, once I was able to get through, were without exception helpful, courteous and competent. In the weeks before Christmas, I spent about eight hours trying to resolve problems with two sets of Verizon technical support staff with two sets of service.

It was one of these wireless technicians who suggested to me that my problem might go beyond the failure of Verizon’s 4G system. The device itself—a small rectangular gizmo that sits on top of my computer and that was sent to me six months earlier with my 4G upgrade—might be flawed. And, he very kindly offered to send me another.

The only problem was that I was just days away from a working vacation and, for the first four days of my trip, there was no reliable place to send the new device. When I got to Sarasota, Fla, on the first leg of my trip, I drove by a Verizon store, thinking that I could just pick up a new 4G device. This is when I discovered the fifth major problem with Verizon customer and service quality. The manger at the Verizon store explained to me that he could not give me a device at the store because those devices are new and the replacement that Verizon would be sending me for my six-month old lemon was an old refurbished device. But, he suggested, not very helpfully, that I could always go to a Starbucks to use wireless until I am in a place long enough to get delivery of a new—or should I say used—4G device.

Meanwhile, my family was up in arms. For my daughter, who is about to apply to college, poor internet service was contributing to the stress of finishing her junior year at a very competitive high school. On the recommendation of my tech-savvy next-door neighbor, I decided to fire Verizon and switch to Time Warner, our cable provider.

The cable company promised—in what I have concluded was a case of deliberate deceptive marketing—to solve all my problems. In my initial phone call, a Time Warner salesman persuaded me to sign up for Time Warner’s Signature service, which promises cable, phone and internet plus premium 24-hour customer service for $199, more than double the company’s $99 promotion for the three services alone. But, given my limited technical skills and the problems that internet outages had caused me and my daughter, I decided to pay for the premium service. My salesman also promised that Time Warner would provide seamless wireless throughout my house—even after I explained how the thick walls in our building had proven a problem thus far. To ensure that the service was properly installed, he explained, a technician would phone me within 24 hours to get information about the configuration of our home and cable.

By the next day, I knew Time Warner wasn’t going to be the perfect solution to my connectivity problems. Twenty-four hours passed and the promised call from the technician never arrived. I placed a total of four calls to Time Warner during the week leading up to the day when Time Warner was supposed to install my service. I received just one message back—and that was left on my home phone even though during every conversation with Time Warner—including the one with the salesman who sold me the service—I told them to call my cell phone where I’m most easily reachable.

The day of my appointment, the technician had barely stepped over my threshold when I concluded that Time Warner might not be a solution at all. When I told him that I had been promised seamless wireless service throughout my house, the young man’s near-perfect poker face couldn’t disguise the fact that he’d heard this one before.

“No m’am,” said the young man, who told me his name was Ray and who was unfailingly polite during the entire three hours he would spend at my home trying to solve my connectivity problem. “We can’t give you seamless wireless service.” The walls are too thick and the configuration of the house will not allow it, he explained. I would need to buy repeaters and hope for the best.

Why did Time Warner promise they could do so? And why did the promised call from a technician not come through?

I was putting Ray on the spot, and he clearly did not want to impugn his employer. But during several hours I spent with Ray, his supervisor who phoned every 10 minutes or so–to make sure the sale went through–and other Time Warner representatives I spoke to on the phone in the week leading up to Ray’s visit, I pieced together the following: Time Warner technicians are NOT paid on commission; but, in my experience, they are thoroughly professional and do their level best to get the technology to work. The salesmen, and possibly the technicians’ supervisors, ARE paid on commission; and, they will say almost anything to make a sale, even if it costs customers and the company time and money.

Here’s what happened at my house: Not being avid TV watchers, we do not have cable in several rooms, including my home office. Roy figured out that he could set up a modem in my daughter’s room and it would cover my office as well. But, then, he explained that the phone service would also run via cable and I would have to rely on the modem in my daughter’s room, one floor down, to operate the phone in my office.

“Might I have problems with my phone service?” I asked Ray.

“It should work,” he said. But he would not promise that I might not occasionally have problems during periods of peak usage.

I had started this process with poor internet service. I was now facing the prospect of imperfect internet service plus possible problems with my phone. Moreover, when I asked Ray’s supervisor why I had been left on hold for 20 minutes during my last call to Time Warner, when I was trying to find out why I had never been called back by my set-up technician, he explained that my “Signature” service had not yet kicked in. So, even while Time Warner was trying to conclude a sale—and Ray and his supervisor spent nearly three-hours trying to figure out how to make the service work in my home—the company doesn’t allow new customers access to the “signature” service they have signed up for during the critical start-up phase.

At the end of the day, Ray and I shook hands. And I said goodbye to Time Warner. Oh, they will still provide my basic cable service. But for phone and internet, I am back with Verizon.

Or at least, I think I am. The night Ray left, I got an email from Verizon giving me seven days to restore my service. I called immediately and the Verizon technician I spoke to said that I could get my service back—but the earliest appointment he could give me was 10-days later. In the meantime, I would be without my home phone service.

Here’s what I learned. Both Verizon and Time Warner are doing a good job of hiring and training phone and technical personnel; during my technical travails, I spoke to over two dozen low-level employees at both companies. They were all terrific.

But, Verizon is either expanding too quickly or not investing sufficiently in its existing networks, or both. Moreover, the different parts of the company—Verizon wireless, phone and DSL service and its retail stores—don’t communicate; the company is not run as a seamless system.

As for Time Warner, it should probably stop paying those commissions. The best service I got from Time Warner was from low-level personnel and technicians who are NOT given incentive pay. Either the commission-system leads employees to promise what the company can’t deliver or the company encourages its sales personnel to make a sale at any cost.

The experience also left me with some questions: For example, is there really no wireless technology that would allow a cable company to run reliable virtual connections a few feet away from its physical cable—as a way to solve the connection problems in old buildings (without the costly expense of cutting into walls)?

My unhappy experience trying to switch providers reinforced my conviction, which I learned from W. Edwards Deming, that the answer to quality service is well-thought out systems and processes. Individual bonuses and incentives, as Deming pointed out, only cause problems. It also left me wondering about our telecommunications oligopoly. I was that rare consumer who was very upset when AT&T was broken up in 1982; whatever else you might have said about the old AT&T, it had a culture of customer service that dated back to Theodore Vale’s conviction that it could only protect its position as a telecommunications monopoly by providing first-rate customer service and infusing the company with a culture of professionalism and quality. Not surprisingly, one of the first and, to this day, most respected thinkers on leadership, Chester Barnard, was a life-long senior executive at AT&T.

Today’s telecommunications oligopoly offers neither real competition nor a culture of customer service and quality.

Posted in Business, Quality Management, telecommunications | Tagged , , | 3 Comments

Searching for Steve Jobs? Why the Quest for “Star” Talent is Often Misguided

Posted on October 21, 2011 by aagabor

The search for superstars—from the ball field to the boardroom—is a uniquely American obsession. Most recently, school reformers have been promoting the idea that filling every classroom with “great” teachers—and, of course, getting rid of all the “deadbeats”—will solve the problem of American education. Never mind that even those of us who were fortunate enough to attend great schools were lucky if we had a handful of great teachers in a lifetime!

Yet, now George Anders has published yet another management book about the quixotic search for superstar employees. The Rare Find: Spotting Exceptional Talent Before Anybody Else Does promises to “help you become much more effective at spotting talent,” with lessons from the U.S. Army, Teach for America etc.

The implication is, of course, that filling your company, sports team or school with superstars is the answer to getting ahead of the competition. Of course, real genius, like that of Steve Jobs, is really rare. The truth is that most organizations—the good, the bad and the mediocre—are filled with employees with a range of talent. Years ago, the statistician and management thinker W. Edwards Deming noted that the best organizations will probably have more high-performing employees because they are better at hiring and training—and at bringing out the best in their troops.

Another truth is that, most great organizations are full of people who have failed somewhere else. Brockton High, the largest high school in Massachusetts, which was on the brink of failure just a decade ago, achieved a remarkable turnaround by focusing on a winning literacy strategy that relied on retraining the very same teachers who had worked at the school during its most troubled years. Similarly, Toyota Motor Company— notwithstanding its most recent problems with quality and safety—became the world’s premier automaker by focusing, not on hiring stars, but on perfecting a systematic strategy that emphasized continuous improvement and learning at all levels of the company, including blue-color autoworkers, some of whom had once worked for the ever-shrinking Big Three. Even Billy Beane, the Oakland A’s’ legendary manager, built a winning team with players who had failed or aged out of the competition by focusing on their undervalued skills.

What Toyota, the Oakland As and the Brockton High have in common is strong management, a great strategy and teamwork. A search for stars has nothing to do with it.

Still, our mythic belief in the power of star talent has led the best companies to pursue strategies that aim to reward “star” performers and to punish laggards, sometimes with absurd consequences. Years ago, for example, IBM, even as it was marketing its employee-hiring and -training expertise, instituted a forced-ranking scheme that required all supervisors to identify and reward the “top” 10 percent of its employees and to give the “bottom” 10 percent a failing grade and just three months to improve their performance or be fired. It was no coincidence that the system was instituted during an economic downturn, and was widely seen as a way to get rid of employees without violating the company’s no-layoff pledge. (IBM’s bell curve violated—as it usually does—basic statistical rules: Bell curves only work when they are applied to large random samples—not to relatively small, carefully selected groups of employees.) Some IBM supervisors got around the problem by creating a “designated dummy” system, by which employees took turns getting a low ranking during performance reviews. Following an employee revolt, Big Blue eventually modified its forced-ranking system, but remained wedded to individualized pay and rankings.

Ironically, the rush to identify—and pay—star performers has now made it’s way from board rooms and ball fields to the education reform movement. Eric Hanushek, an economist at the Hoover Institution, has even suggested that schools rank teachers and fire the bottom 10 percent—either unaware, or indifferent to, IBM’s failure to institute a similar plan or the growing importance of teamwork in schools, which is undermined by ranking schemes.

How much better off would schools and companies be if managers and pundits focused as much attention on team building and strategy as they do on the quixotic quest for superstars?

Posted in Business, Education, Quality Management | 1 Comment