John Seddon

Systems thinking, lean production and action learning

Systems thinking underpins ‘lean’ management and is best understood through action-learning as the ideas are counter-intuitive. The Toyota Production System is just that—a system; the failure to appreciate that starting-place and the advocacy of ‘tools’ leads many to fail to grasp what is, without doubt, a significant opportunity for learning and improvement. Two case studies illustrate the application of the ideas behind the Toyota System for service organisations. In each case managers had to ‘un-learn’ in order to learn how to take the opportunity provided by a systems approach to the design and management of work.

Rethinking Lean Service

Ever since Levitt’s influential Harvard Business Review article ‘Production-Line Approach to Service’ was published in 1972, it has been common for services to be treated like production lines in both the academic literature and more widely in management practice. The belief that achieving economies of scale will reduce unit costs is a common feature of management decision-making. As technological advancement has produced ever more sophisticated IT and telephony, it has become increasingly easier for firms to standardise and off-shore services. The development of the ‘lean’ literature has only helped to emphasise the same underlying management assumptions: by managing cost and workers’ activity, organisational performance is expected to improve. This chapter argues that through misinterpretation of the core paradigm ‘lean’ has become subsumed into the ‘business as usual’ of conventional service management. As a result, ‘lean’ has become synonymous with ‘process efficiency’ and the opportunity for significant performance improvement – as exemplified by Toyota – has been missed.

Evaluating systems thinking in housing

This paper describes and evaluates work carried out in the social housing context in the United Kingdom using a systems thinking approach called ‘lean systems’ (LS). The work, sponsored by the Office of the Deputy Prime Minister, was designed to test whether LS could improve the efficiency of delivery of housing management and maintenance services. A pilot programme was developed in which three housing organizations used the approach in different service areas. The results indicate that LS can yield efficiency gains and improvements in service performance, customer satisfaction and staff morale—although securing and sustaining these results requires considerable organizational commitment. The LS approach is outlined, work in the pilots described and the results presented. A theoretical analysis seeks to locate LS in the spectrum of systems methodologies and to delimit its particular area of competence.

Debate: Systems Thinking and Public Sector Performance

© 2008 THE AUTHORS JOURNAL COMPILATION

A Systems Approach to Housing Repairs

This is the remarkable story of Portsmouth City Council’s housing management service, which has transformed the way it works by designing services against local demand. Along the way, their work has won an award from Professor Gary Hamel’s ‘Management Innovation eXchange’ (MIX) (Hamel and LaBarre, Dispatches from the front lines of innovation management, 2010). The council is a unitary authority on the English south coast and directly provides social housing to over 17,000 tenanted and leasehold dwellings, representing 18% of tenures in the city. The department has an operational budget of £80 million and comprises a staff of approximately 600. Whilst housing repair systems thinking interventions have been documented elsewhere (e.g. ODPM, A systematic approach to service improvement evaluating systems thinking in housing, 2005; Jackson et al., Evaluating systems thinking in housing, J Oper Res Soc 59:186–197, 2007; McQuade, Public Money and Manage 28(1):57–60, 2008), this intervention is especially noteworthy for the level of integration of systems principles throughout the whole supply chain. In Portsmouth, the council’s housing tenants now experience exemplary services. Property repairs are completed either on the day required by the tenant or within less than a week (compared with the official government target of 28 days). The council’s private-sector suppliers have more than halved their costs per repair whilst the city council’s housing department operates with 12% less resource. These are results that no one would dare to have predicted if writing a plan in advance, but which have been derived from careful study of their system, leading to a fundamental change in management thinking and subsequent experimentation with new, inventive methods. Portsmouth’s design has been developed in conjunction with its private-sector suppliers—a pocket of excellence in strategic partnerships that goes against the grain of guidance on partnerships coming from central government. Through working to stock their repair vans against what was predictably required in a certain area, the contractor firms now spend less than 25% of what they were spending on stock before. On top of this, there has been real innovation within the system, both in designing IT in-house to support their work (developed at a fraction of the cost of conventional off-the-shelf housing IT packages) and in starting a new logistics arm which supplies materials to tradesmen exactly when they are required. It is not exaggerating to say that this case study of collaboration demonstrates the potential to rewrite the guidance on strategic partnerships, and to serve as the benchmark for economic performance in the public sector.