How to deliver faster, better, more consistent service by expanding your hidden brain trust

Why you need to get at least twice as much out of what you already have

---

The world of government has changed dramatically.  Decision cycles are more compressed, as both government knowledge workers, and the people they serve, become less tolerant of bureaucratic delays.  People both up and down the chain of command need and want instant information.  Distance is becoming irrelevant.  Government, like business, really is moving at the speed of thought.

But something else is happening, something even more alarming.  The growing demand for instant information, quick decisions, and improved service has stretched government to its limits.  The money to pay for more and better services has to come from somewhere, but the well is running dry.

Three alarming trends that every government agency is facing

It's like a one-two-three punch.  First, corporate profits are deteriorating.  And when corporate profits decline, so does tax revenue.  At the end of 2001, the year-to-year rate of change in pre-tax profits for U.S. non-financial corporations was minus 28% and accelerating downward.  In absolute terms, profits have dropped to their lowest level since 1992.  Adjusting for inflation, real growth in profit margins is at its lowest level since the end of World War II.

The second alarming trend is the growing cost of regulatory compliance.  Each year Congress passes thousands of pages of legislation, which federal agencies turn into many more thousands of pages of new regulations.  The economic burden of complying with federal, state and local government regulations now exceeds one trillion dollars annually.  This number is growing by over $50 billion a year.

The third trend is the sudden resumption in deficit spending.  The U.S. federal debt now exceeds six trillion dollars, and the yearly interest payments alone exceed the entire annual budget for the Department of Defense.  For many decades, the federal budget has increased, year after year, bought and paid for by either increased taxes, increased borrowing or both.  But the system is strained.  The public is growing intolerant of tax increases, and mounting interest payments and growing debt put the entire monetary system at risk.  Yet, at the same time, agencies are expected to continue to provide faster, better, and more consistent service, despite budgets that will only continue to get tighter.

In short, "The trend is not your friend"

 

    Corporate profits                                                     - 28.0%/yr

 

    Regulatory compliance costs                                    + 5.1%/yr

    National debt                                                     + 9.2%/yr

 

The problems aren't only external, there are internal pressures also

As the size of an organization increases, so do the inefficiencies.  It's a natural by-product of growth.  And growth in the size of the government is no exception.  We have learned to live with W. Edwards Deming's premise that there will always be error; that we will always regress to the mean.?

In the past, there was usually enough inertia in the system to take up the slack.  Decision cycles were longer.  Supply chains and prices were reasonably stable.  The global geo-political climate was relatively stable and predictable.

But today things are different.  Approximately 80% of our nation's economy is driven by brainpower.  Tangible assets are only a small part of the overall value of any enterprise, public or private.  Decision cycles are compressed.  Budget growth is minimal.  You have to fight and claw for every line item.  There is no longer any room for error.

 

 

 

 

These mistakes result in irate constituents, possible disciplinary action, or wasted time and money spent hiring and training replacements for talent that walks out the door.  It all adds up.

Just because these problems are an inevitable consequence of growth doesn't mean that we can't do anything about them.  If you look at small government offices, such as a newly formed Joint Project Office, you'll notice that they tend to be very entrepreneurial.  You'll also notice that they're usually built on a core brain trust, a small group of individuals hand-picked because of their knowledge and experience in a particular area.  Communication is fast and tight.  Problems are solved quickly by small groups of people working together.

But something happens along the way to becoming a multi-billion dollar agency.  The tightly knit group becomes several hundred people spread over thousands of miles.  A small technical team becomes a division with hundreds of engineers.

There isn't much you can do about the external pressures.  But if the biggest internal drain on your resources is human error, and the bulk of your assets is in brainpower, doesn't it make sense to use that brainpower more effectively to reduce mistakes and inconsistencies?

Reverse the trend and make best use of your limited budget by growing your most valuable resource - your intellectual capital

Going back to Deming, every large group has a performance distribution.  Usually there is a small segment, around 4% of the total staff (or 2-sigma, if you?re a statistician) that outperforms everyone else, sometimes everyone else combined.  They have the know-how, skills, talent and experience.

There is also the Pareto Principle, known as the 80-20 rule.  It says that roughly twenty percent of the group produces eighty percent of the result.  Another basic principle is that if the talent distribution is normal, then half the group will by definition exhibit below average performance.  Based on these widely accepted principles, the distribution of talent in a large organization looks something like this, with the brain trust, its most valuable asset, sitting at the top:

 

This makes it very difficult for organizations to achieve anything more than small, incremental improvements.  The members of a brain trust, a few individuals, could not possibly make themselves available to help the other 96% of the group.  As a result, even though the brain trust continues to learn, those valuable lessons are rarely shared.  The intelligence of individual members of the brain trust increases many times faster than the collective intelligence of the rest of the group.  Then one day, often without warning, one or more members of the brain trust leave, taking their valuable knowledge with them.

 

 

 

The answer is a definite yes.? In fact, several organizations in the private sector have already started making the transition, with remarkable results.? In each case, significant improvements in productivity were achieved in nine months or less.

For example, an insurance company doubled the amount of submissions that their senior underwriters could process.  This resulted in cost reductions of $875,000 per year (42% reduction in quote generation costs; 55% reduction in policy writing costs).  The firm now has the ability to double its revenue with little or no increase in staff.

There are more examples.  IT projects are notorious for running late and over budget.  Yet a Fortune 100 financial company reduced its IT project cycle time by 50%, and reduced its report writing time by 37.5%.  And a major pharmaceutical company reduced its drug testing protocol development costs by 63%.? This translated to a first-year ROI of 363%.

 

These benefits were all the direct result of:

• Faster decision making

• Better decisions

• More consistent decisions

• Clearer interpretations

• Fewer mistakes

• Greater accuracy

• Improved corporate memory retention

• Less time and effort wasted.

Faster, better, cheaper: achieve all three by following these four essential steps

Here's how you can create a cycle of continuous learning for your organization:

Step 1.  Identify the critical work.  Linking the overall goal of the organization to work processes is essential.? A work process is an activity that achieves a result.  Work-Centered Analysis (WCA) is an excellent tool for building a clear path from business process to product to customer to measurable result (see Steven Alter's "The Collaboration Triangle" in CIOInsight, January 2002, Ziff Davis Media).  You can pick out the most critical elements of the work process, then identify the constraints, gaps, opportunities, bottlenecks, and risks impacting them.  These become the areas you work on.

Result: Your limited resources remain focused on what's most important.

Step 2.  Identify the top performers.  Some are obvious, others are hidden in a corner somewhere.  If you do any kind of measurement, you'll find them.  They're the ones who outperform everyone else by a factor of 2 to 1 or more.  They're also the ones that you tend to notice only after it's too late, after they've gone out the door.

Result:  You have the opportunity to dramatically improve the performance of the entire group, approaching the level of the top 4%.

Step 3.  Capture the critical work processes.  Sure, top performers have natural ability.  But they always have a system - and that system can be made explicit.  This explicit structure usually has two main parts:  concepts and decision processes.  Tools exist to model both of these.  If you apply the tools properly, critical knowledge is not only captured and shared, but it becomes part of an ever-expanding brain trust - a platform for continuous learning and improvement.

Result:  Reduced financial losses from brain drain; faster learning curve; reduced rework; more work accomplished in less time; less time and money wasted from trial and error.

Step 4.  Make the process available 24/7.  Here is where the multiplier effect kicks in.  Through the power of the web, your group's decision processes are clearly communicated so they are applied consistently throughout.  People and technology perform together as an integrated system which acts as guide/mentor/advisor to the group, checks for and reduces bias and error in decision making, and keeps the whole process fresh and up-to-date.  Your corporate brain trust becomes greatly expanded and less dependent on the availability of a few experts. 

Result:  You get more out of your budget dollars as a direct result of improved timeliness, quality, and cost of decisions (faster, better, cheaper).

Here?s what your talent distribution looks like when your entire organization becomes the brain trust:

Although the basic steps are simple, there are pitfalls to avoid

Capturing and managing the knowledge of a brain trust is not the same as capturing and managing information.  The brain trust not only knows what information it needs, it also knows how best to act on that information.  This exposes a major shortfall with information systems and most knowledge management systems.  They are very good at capturing and communicating information, but almost always leave out assessing and interpreting the information, deciding on a course of action, and following through.  Any system that is aimed at significantly improving an organization's productivity must support all five steps:

• Information capture
• Interpretation and assessment
• Decision
• Communication
• Action

In order to successfully deploy a system for capturing and managing a corporate brain trust, the following three rules must be followed:

Rule #1:  There must be minimal impact on people's time, especially the members of the existing brain trust.  Don't believe claims that tools can automatically capture an organization's tacit knowledge.  There has to be interaction with the subject matter experts.  And contrary to what some might tell you, the knowledge capture process is extremely labor-intensive.  But your best experts can't and shouldn't have to contribute more than one or two hours per week to the knowledge capture process.  This is possible only if you have a highly qualified and experienced team of knowledge engineers to build the system.  Which brings up the next rule:

Rule #2:  Recognize that expertise comes in many different flavors.  Is the thought process highly analytical or intuitive?  Sequential or random?  Factual or judgmental?  There is no "one-size-fits-all" approach and you should work with someone who knows what methods and tools are appropriate for your situation.  And here's one way to tell:

Rule #3:  Ask any knowledge management or decision productivity tool vendor - "Do you use the tools that you are selling?  If so, how?"

Of course, there are many more factors to consider.  For a description of seven key steps to making your next IT or knowledge management project successful, ask for a copy of our white paper entitled: "ow to break the cycle of rising IT costs and declining return on investment once and for all."

Do you now have a better sense of how expanding your corporate brain trust can improve your organization's performance?  Are you wondering where to start?  If so, just drop us a line.  We'd be happy to meet with you and help you determine if there's a fit, and if so where.  And yes, you'll get to see us actually use the tools and techniques we talked about.