Can you answer these four questions?

It made me laugh. Someone posed the question: what is the hiring process for fintech? After a short thought, my reply was to ask the candidate four questions:

1. What do you think about banks?
2. Define Python for me.
3. Why did Schrodinger have a cat?
4. Pork bellies or Orange juice?

They are probably too cryptic for most, so I felt the need to explain the questions ... but then I realised that if I have to explain the questions, I wouldn’t hire the person. Go Google them.

It makes me wonder, if you read my blog, can you answer these four questions? If not, you need to reflect. After all, they go with the two questions I ask Board members of banks. When I walk into the boardroom of a bank, my first two questions are:

• Can you tell me the difference between distributed ledger technologies (DLT) and blockchain?
• Can you tell me the difference between artificial intelligence (AI) and marchine learning (ML)?

At that point, I usually get thrown out of the boardroom but, for me, these are critical questions as these two technologies will determine the future of finance and banking. First, blockchain is the basis of htat thing called bitcoin launched in 2008, but it is not the technology that will reinvent banking. DLT will. Similarly with AI. AI will create intelligent money, where we no longer have to think about money because money thinks for us; but it can only do that if you then apply ML such that the machine can learn to think about money for us. It takes AI to a different level. Therefore, if these technologies are the most critical technologies to transform banking in finance over the next decade, if you cannot even tell me what they are, why are you here?

It’s a bit like our future world will be run by trainers, maintainers and explainers. Trainers teach machines to learn what to do; maintainers ensure the machine does the right things and fix any things it has not learned properly; and explainers explain what the machine is doing to people lilke you and me.

All of this may sound a bit pedantic or nerdy – isn’t that the same thing? – but there are critical things happening that require anyone with a position involved in finance and/or technology to show their colours. In fact, the questions I ask above are really about whether you understand finance and technology?

My tenet is that anyone in a leadership role, on the executive board of a bank or fintech, needs to show their ability to do both. In the 2020s, a bank CxO needs to know both banking and technology; the same with any fintech firm. Often, as I have said many times before, bankers only understand banking and many fintechs only undestand technology. You need to undrestand both.

It’s funny as I always remember a presentation from Ken Olisa – now Sir Kenneth Aphunezi Olisa OBE CStJ FRSA FBCS –  back in the 1990s, showing my age (and his!). He gave a speech about business called the fax of life (that shows how old it was, as we used facsimile machines back then). A big point for me was that his implication was that, if you did not have a technologist in the leaderhip team, your business would not survive. Forty years later, we are still saying the same thing.

 

Postscript:

Due to my idiotic nerdiness, I discovered that I still had Ken’s speech on my PC so, just for the record, here’s what he said in 1992:

Edited highlights of a speech by Ken Olisa, former CMO of Wang Computers, June 1992

Let me tell you what I am not going to talk to you about this morning, so you can relax and look forward to the next hour or so.

I am not going to give a product presentation.  If I do my job properly I shall not mention a single product.

I certainly will not be mentioning numbers about products.  So, for those of you who have come to get product details, I am going to disappoint you.  Instead I want to talk about this issue of “ Quality “

I came into the tail end of the major session this morning when a gentleman was talking about customer quality, or client quality, and the idea of phoning clients instead of sending them mail shot letters and so on.

I would like to pick up on that and start to talk about this whole concept of Quality and to give a modified “warts-and-all” perspective as a supplier.

I’m going to tell you some bad things about my company, and some of the things that we have done to try to deal with them because we, like everybody else in business around the world, face the challenge of improving our Quality to survive and to grow.

I have a couple of anecdotes I want to share with you about some of the challenges we’ve had in our company and what our responses have been.  I do this in the hope that you will find it moderately amusing, slightly informative, and that it will give you some pointers towards things that you can do within your own organisations.  I’ll also be interested in your perspective on any piece of advice you can give us on what we should be doing as a supplier.

That is because improving Quality clearly has to be the number one objective of any organisation who wants to survive in today’s market place.

I am pleased to say that I attended a university that gave me a way of dealing with complex rhetorical questions like “Must Scarcity Preclude Quality ? “

The way I was taught to deal with this was that you first of all define the terms, then redefine the terms, then you debunk the question, and then you go back to give whatever point you intended to give in the first place !

So, in the spirit of my alma mater, let me do just that.

Let us start with the definition first of all of ‘scarcity and quality’.  The definition of scarcity is something that is rare; and ‘quality’ is a standard of excellence.

Let’s turn ourselves away from the dictionary definitions of Quality and let us redefine it quickly into a more meaningful set of concepts.  If we were looking for analogues of Quality, what would we choose?  Well I would like to give a random list.

I would like to think that the Rolls Royce is still associated with the concept of quality.  If you are a caviar eater then you will agree that Beluga is the highest quality of caviar.  If you are a wine lover, you know that vintage champagne is, certainly in the white wine brigade, the epitome of high quality.  If you are a frequent traveller, you know that Concorde has a reputation of being “high quality”.  If you are a literate person, you will know that Lord Birkenhead F. E. Smith said that his definition of heaven was “eating Pate de Foie Gras to the sound of trumpets”.  The ultimate definition of quality.  And because it seems to be very important these days to be politically correct in all that one does, I’ve added one of Jersey’s top products.  Milk.  Again, if you ask any Jersey person, they will tell you that Gold Top is the epitome of high quality milk.

So those are loose redefinition’s of the concept of Quality and, of course, they all have one major thing in common.

They are scarce.

So it’s not so much that scarcity precludes Quality, but rather Quality seems to be scarce.

Perhaps the real question should be, “why is a genuine commitment to quality so scarce?”

Now there is not much to examine in that statement.  It’s clearly an obvious question, but there is a lot of lip service paid to quality, so I have put the word “genuine” in here because I want to make a point.

If you are a customer it’s only the genuine commitment to quality that makes the difference.  It does not matter how glossy, how glitzy, how smooth, or unctuous, the person on the telephone, the person at the front door, what ever it may be is.  If it is not genuine it is meaningless or at least its very short lived; maybe its meaningful but its very short lived.  And if one casts one’s mind around industry at large, a lot of people talk about quality, a lot of people go around with badges that say “I believe in quality, quality is for me, number one in quality”, all that sort of thing.  Actually it’s not genuine, it’s rather glitzy, and the genuine commitment to quality is still relatively rare.

We can all think of companies, perhaps our own company, where there is indeed a genuine commitment to quality, but it is rare.  So I would redefine the question of the morning, and this is the one I want to examine in the next few minutes which is, “why is that genuineness so rare?”.

Let me talk about some of the inhibitors to achieving a quality product or a quality organisation.  There are probably three: People, the Processes within an organisation that provides a product or service, and Equipment.  You could add in the company’s Politics, but it would be impolitic of me to do so, so I’ll stick with those three.

I also meant to blank out the word “ equipment “ because as I say I am not going to talk about products today because actually, systems, products, computers etc, is not the issue.

We have all heard, “oh I’m sorry I would have liked to have done that, but the computer won’t let me”.  We are used to equipment being used as an excuse, but it is usually an excuse!  And in my experience, and I suspect in yours, the major inhibitors to the achievement of quality in what we do, in the products we provide and the services we provide, is not the equipment we use.  One robot: one laser projector, one telephone exchange, is the same as another, it’s actually the people and the processes which we employ.

What I want to examine this morning are those two aspects, the people and the processes.

If one thinks about the product that you provide a lot of people get tied up with the difference between a product and a service.  There is a difference of course.  If you are in Marketing there is a big difference.  If you are a customer there is not!

It’s something that you are paying for and therefore you have an expectation.  If that expectation is met, and you have achieved what you expected, and if it has exceeded it, then you have got quality: perceived quality.

So for the purpose of this morning, products and service I will consider to be synonymous.

The thing about the products that you provide, or I think about the products that I provide, yes of course I provide boxes and services.  But the product that I provide is the satisfaction of customer expectation or the beating of a customer expectation.  That’s really what we are all in.  And that’s what brings us all together from both sides this morning.

If I think of my organisation or yours, and I look around, what physical entity within the organisation, within the company, within the firm, stands in the way of the provision of the quality as I have just defined?

It is the office.

The office is a strange 18th Century creation bedecked and filled with modern technology.  But it’s not where the quality of service and the quality of product comes from.  And that is despite the enormous investment we have made within the last 10, 15, 20 years in pepping up the office.

Lester Thurrow, who runs the Sloane school of Management in the States, summarised that distinction of the office from the rest of business in this statement : “The factory works, the office does not”.

He was talking about productivity.

In this context productivity means speed of satisfying a customer’s needs.  It’s certainly an element of the quality formula.

He said , “ what we have got is not a productivity problem. What we have is an office productivity problem: the factory works and the office does not”.

If you have observed factories in the last ten years, there have been some fundamental changes.  Those of you who remember walking around factories, will remember there was lots of labour and not very much process.  That was a characteristic factory.

The Japanese and the Germans changed that model in the world.  They began to drive Automation, Mechanisation and Systemisation of the factory.  But also they began to drive it from a process viewpoint, not just from a technology viewpoint, so they were less interested in equipment and more interested in the processes that were employed within the factory.

People within manufacturing that began that movement, introduced some very complicated concepts. They talked about, for example, “Just In Time inventory control”.  Now just cast your mind back to the first time that you every heard the expression “Just In Time” inventory control, the concept that you will hold zero inventory.

I made my first reasonable income as an IBM Computer Salesman, many years ago, selling to manufacturing companies.  I would do it by going to them saying, “if I could reduce your inventory by 5% how much will that save you”? Twenty years ago manufacturing managers didn’t know, and they would say “I don’t know”.  I would say “well if I could show you, would you be interested?” and they’d say “yes”.  And I would say “if it was a million or two or five million in a year, if I could save you that, would you be interested?”  And they would say “yes” .... and that was how we used to sell systems.

The concept of going to somebody and saying “if you got rid of all your inventory - how much will it save you?” was totally alien.  So my reaction upon hearing “Just In Time” as a concept, all those years ago, was “it was a trick.  It could not possibly be true.”  I did dismiss it as trick.

You know that story about the Japanese salesman who was told by his new US customer that the maximum number of faults they would tolerate from the Japanese supplier would be 5%.  He did not understand the question, so it was explained very slowly.  The interpreter explained to him and he went away.  When the goods were finally delivered in an enormous crate, stuck on the side was a little box.  The customer who bought the product said, “what’s the little box?”  “Those are the 5% of errors that you ordered!”

Now, if you talk to a manufacturing manager today, he would talk to you about Six Sigma product quality.  “Everything I make, except .04%, is right”.  And that’s of course how modern manufacturing happens.

Apply that to the office.  Imagine the concept of Six Sigma office quality.  That means 99.96% of the things you do in the office are right the first time!

I said that I would tell you the ‘warts and all’ stories.

We looked at a particular process in our office just the other day - the ordering of a PC.  A very simple transaction.  A good test of an order processing process. We’ve got an order process in our company that was designed to sell huge minicomputers in complex structures.  We were still, until this exercise, using that to sell PC’s. We did a simple flow chart of the PC ordering process.

The customer signs the order - that’s the hard bit - and then the other bits are our pieces inside the company.  There were 12 phases between customer signs order and customer is happy with the product.  So there are 12 steps in between.

As we went through this exercise, with a multifunctional group of people, we rated the chance that the order had of surviving each stage, as it went down the process without change, Six Sigma right, 99.96%.

Sometimes it was 100%, relatively easy - not just surviving, but meeting the criteria - it should happen within an hour or within a day or whatever.  Anyway, some were a 100% which is fortunate, because otherwise it would be a really depressing story.  Some were 90%.  Some were as low as 70%.

When you did the compound arithmetic to see what the chance of an order going through the twelve stages, and surviving each of the twelve stages, and meeting the performance criteria, it was a depressing one in three.  That was the maths.

Then we had a breakout group and we discussed real life experience.  The one in three was confirmed by people whose job it is to process orders or to place orders. That’s terrible.  Until we studied it, we did not even know that it was one in three.  That is about as far away from Six Sigma, statistically, as you can get.

It does not really matter if you are one in zero or whatever.  It does not matter after one in three.

So the concept of Six Sigma office quality is one I just want to plant in your mind.  99.96% of things we do in the office should be accurate, and right when we try to do them within our performance criteria.

First of all, am I cheating?  Is this a lie?  Is this “Just In Time” of twenty years ago?

‘No’.  It is possible to achieve that kind of office productivity/quality.  But you have to make a lot of changes in an organisation to achieve it.  Speaking from personal experience in our company, we have not achieved Six Sigma Office Productivity, I would say we have a long way to go, as that little story just told you.

I would say that they are four elements, in my experience, which are fundamentally important if you are to commence that revolution towards achieving 100% quality within the office environment, which then allows you to deal with your customers in far higher and, therefore, more quality ways.

First of all, we need a quality program .... yawns all round .... everybody has got one, so it is not very exciting. It’s a bit like saying “ have you cleaned your teeth?”  “Yes, and I have a quality program!” but I’ll come back to that in a second.

Secondly, you need empowered employees (pause for a second yawn) because we all think empowered employees are OK.  As my old boss used to say, everybody wants empowerment above, and totalitarian control below.  But empowered employees are important.

Third, re-engineered processes are very important - here is the plug for my company! Reengineered processes are a very important part of it because you have basically kept 18th Century processes running on modern technology.  We have automated pre-Victorian chaos in most office processes.

Finally, you need senior management commitment.

I am going to bring all these things together by telling a little story about our own company, with some statistics in it to prove a point.

First of all, a quality program, everybody has got that. I believe in quality!  I know of a company that has it printed on tee shirts : “ Yes, I am committed! “

A quality program is clearly much more than that.  The important thing about a quality program is a bit like a political slogan.  If you don’t get enough people believing in it, you don’t get a movement.  Without the movement, you can’t get to that next step of empowered employees.

A quality program is like a political movement. You have to get enough people in it and moving, to be able to make something happen.  And you have got to give enough space to people to be themselves, which requires some concentration and some control, but never the less begins to bring back the benefit of a highly educated workforce, which is what most of us enjoy.

The process is one of the biggest killers throughout for the way we actually do things.  I have told you the story about my PC order process.  We have got the wrong process. It was the right process for yesterday’s business - it is the wrong process today.

We figured out, in my little exercise, that the best way to quickly order PC’s, within the company, was to send the order directly to the plant so that it can then be fulfilled by the plant and ready for shipping, while we do all the back room stuff.  That was taking up all that time in the steps of the process.  We have yet to invent a different process to satisfy the needs.

If you think about your office processes, I can confidently state that the majority have never changed.  We have automated some, we have put some on mainframes and so on, we have done work clearly over the years - but most of the processes have not actually changed.  We are still processing everything as if it was fifty years ago, and we had clerks and typewriters, and we put it onto people.

Finally, the Senior Manager commitment.  I am going to come back to that because that is the main thrust of the internal example I am going to tell you about.  Senior Management commitment is just part of the political process.  If the employees join the political movement, and the senior management are not committed to it, things can happen. The movement collapses.  Or the senior management disappears. It can only go one way or the other because, once you have got the employees keen on something, they become unstoppable. We are talking about changing people and changing processes.

Let’s just spend a quick moment on something which will be familiar to you all, I’m sure.  Why is it so difficult to change people - why it is so hard to change people’s attitudes?

A lot of psychologists and industrial psychologists, have studied this and you have probably all seen some of the models of this particular point.  When you try and get someone to change there are essentially four stages that someone goes through.

If you have not set it up properly, the first thing they go through is denial.  Now this is true.  If you are firing somebody, or laying somebody off, or changing their job, or changing their process, it is change to someone’s environment.  The first thing is denial - that won’t work, that is not the way it should be done, that does not make any sense.

Instant reflex reaction.  And if you are not quick, that can set in and become stage two - active resistance.

You go to one of your managers and say “I have been thinking I would like to make this and this change”.  Back comes immediately some form of aggressive denial and then, if you are not careful, comes active resistance.  You say “why don’t you think about it”, and you mean by that “why don’t you come round to my way of thinking and I’ll be back in a day or two”.

That employee sits down, and writes the memo to justify the thousand reasons why whatever idea you just had, was not done.  And, if you are not careful, he would go and tell lots of other people, and you will get a movement against you and against the change.

I have been involved in many fundamental changes, in the history of our company.  If you check within the last five years, we have made a lot of fundamental change, and it has been desperate!

At times in our company, within the last five years, when survival has been the only objective that we had, you would think that everybody would get behind the movement.  That is, trying to take the company somewhere.  Not a bit of it.

Everybody goes through this process.  Very interesting and massively depressing from time to time.  Once one understands this model though, it begins to be a little bit easier.

Basically you have got to give people time to deny it, and try and catch it before it becomes active resistance.  And the way you do that is to move as quickly as you can to stage three, which is really back to this empowerment.  Giving the people enough facts and opportunity to explore the ideas.  Delivering the fait accompli is as irritating to someone that works for you as it is to you.  A lot of people would dismiss brain storming, for example, which are all these American concepts that are sort of ‘fluffy’.  Something that you just do to suspend judgement.  What a ridiculous management concept.

Except one of the great things about brain storming as a technique, is that it allows people to explore different ideas.  And that exploration of ideas is the opportunity to untap the potential of the people, which is really what we want them for anyway.  And so it is actually not a bad idea.

And if you can give the people the opportunity to explore, for a start, you may even change your opinion as well.  Maybe that decision gets modified, but then you can achieve commitment.  The concept of exploration, which is not quite the same thing as argument and dialectic, is very, very important in achieving fundamental change in a people centred organisation.

I will tell you a story about Keynes, the economist, who was a very disputatious man of which I’m sure that you are well aware.

Keynes got into a screaming argument with a fellow professor at Cambridge.  Keynes was arguing ‘A’, and the Professor was arguing ‘B’.  It ended with both of them storming off from each other.

They met again at a Cocktail Party about a month later, and Keynes had changed his mind completely.  He now agreed with ‘B’ which is even more irritating to the other person as if he had stuck with his view of ‘A’.

So the second Professor said “that is ridiculous!  When I saw you a month ago you were arguing this, and now you have taken the other side completely.”  Keynes said “well, you know, I have taught about it and I have a lot more evidence presented to me, and when I get new evidence I reconsider my opinion.  What do you do when you get new evidence?”.

The same thing is true with people.

If you don’t give them new evidence, you don’t give them a chance to think. Then they are going to have to stick to the views and, therefore, they are not going to get beyond the active resistance phase.

Now that is obvious in one sense but I could think about lots of changes I have tried to bring about in my company, and I have forgotten this model until I often get stuck at stage 2.

What we are really looking for is commitment.

Let us talk about Wang, and tell you an unembellished true story about how we have been trying to deal with some of this.

We have a quality program.  It is called QLP - the Quality Leadership Process.  It is different from other quality programs.  Everybody’s quality program is different from everybody else’s.  If you say that you would not have to discuss it with anybody. But ours is actually quite an onerous commitment.

You require the employees, everyone of us, to go through a half a day a week course for thirteen or fifteen weeks, depending on which sort of employee we are (either manufacturing or not).  In those half days we learn a technique, a mathematically based problem solving technique, problem analysis.  We learn things like Perato analysis, Scatter diagramming and so on.  Even I know what Six Sigma is for example, something I learnt from my QLP course.

We learn these techniques in multi-functional, multi-level groups.  So we can have secretaries and van drivers and Vice Presidents and sales people all together in a group, usually 25 people, moderated by an employee.  Not lectured by a professional, but moderated by an employee, who very easily becomes the enemy within the organisation.  And each week you come in and do that.  Somewhere towards the end of the week you then take a project that is supposed to be capable of being completed in three weeks, and you apply what you have learned to the project.

Now, what is the point of all this?

The first point is we have developed a language to discuss problems.  When I look at problem analysis in my experience in business, it is not that a few people trying to discuss and solve a problem don’t understand each other - in the sense of the English or the French or the German - but they use completely different terms, and have a different perspective on something, and there is no common ground.

What QLP has done for us, is teach us a common language.

For example, we always start with a problem statement.  All the senior staff, about thirteen of us, went off on a one day QLP course a couple of months ago. Anyway some chap took us through this case study.  He told us how something got from A to Z, and all the things that had gone wrong in the company in this particular incident.  Then we broke into three groups.

So this is the senior staff committed to quality.   We are the leaders of QLP and all that kind of stuff.  We’ve all been on the class, we’ve all got the badges, the lapel pins, the tee-shirts, and we mean it!  We genuinely are committed.

We break into three groups to brain-storm what the problems were that came out of this case study.  And we all came back and presented our recommendations and how we should change the process within the company, to fix this and make sure it would not happen again.

True story.

When we all came back in again we all knew what we were talking about (and these are the functional heads in the organisation) and we got up one after the other and presented.  I presented for our group.  The Chairman presented for his group.  I thought, as he got up, that there was something wrong.  I had that uncomfortable feeling we had missed the point.  And the third speaker got up, who was in Personnel - I’m sorry, she’s the Vice President of Human Resources - stood up and she presented their group’s feedback.

First of all, each of the three groups had a different perspective on the problem.  She said things like, “the bit when we screwed up the credit rating, for the customer - because it was a Charity and they weren’t in Dunn and Bradstreet - that probably would not have mattered if the engineer had not dropped the spanner down the back of the machine”.  There was not a problem statement, so here were three groups of high powered executives all trying to solve a problem .... and none of us had defined the problem. Instead we were all trying to solve different pieces of something that had gone wrong.

What became clear was that you should always start at the problem statement.  It’s pretty obvious, isn’t it, when I say it?  But how many times, when you sit in the office and people come and say “if you don’t do the following things we are all dead!”, go leaping to the solution without ever defining the problem. If you trust them, and you like them, you will probably leap upon that and start trying to solve all those things, without ever having figured out about what the disease was we were trying to cure.  I stood up and said “Gentlemen, Ladies, I think the problem here is that we haven’t got a problem statement; do you want to discuss what marginalisation and isolation amongst your peers is?”

That was a great moment for me!

Whatever.  We hadn’t got a problem statement, and I became it!

So QLP teaches us this common language to say here is the problem, I’ve done some analysis, here is the solution.  To be honest, it also helps managers to defend themselves, because when people come steaming in and banging the desk, you can say “why don’t you go away and write the problem statement down and then come back, we will see if we can solve it”.  It then gives us the necessary time to disappear! Or whatever else is necessary - play golf, all these things that senior management has to do!

So I want to talk about our reengineering case study that picks on this point of QLP, our own quality program, that talks about the people and, if I do my job properly, make the point about re-engineering process and the benefits, which goes toward providing true quality to our customers.

Picture the scene.  It was the Winter eighteen months ago.  Every Monday morning at nine o’clock in my office in Brussels, I would turn up to a very, very cold room where there had been no heating all over the weekend.  And North facing!  It was a really cold room.  I had to sit with another 24 people to do my QLP class.  Week one is problem solving, problem statement definition; week two is brain storming; and it goes on week after week.

I had to say I found the statistics quite difficult. I was always AC/DC about stats at University and, because I found I just could not get my mind around the statistics, it was terribly embarrassing.  A Senior Vice President, everybody there works for me, I was supposed to be the man who could answer all of the questions and I am struggling to get the numbers to add up.  I could not even clear the memory on the calculator for the first five weeks, until someone had to show me how to do it.  Classic multi-function, multi-level problems for the people at the top of the organisation.

Anyway, it is freezing cold.  There are 24 other people who want to be there about as much as I do.  And the moderator comes in and writes up on the board, today, (just like school) we are going to do ‘flow charting’.

A groan went around the room!

Statistics was difficult and I thought I’d put it behind me.  I had a zero interest in flow charting.

By 11.00 that morning we had warmed up to about three degrees. There I was with my perfect Flowchart on this piece of paper.  I was busy colouring it in, yellow, red in the bad places and green for the good places.  If my nine year old daughter could have seen me she would have been quite envious to think that is what I do at work all day and I became an expert, along with my peers, on flow charting.

It was then our job to go off and work on the problem for the next week’s class, and to present it back.  So we got a problem on flow charting.

We went into my office, and in my particular team we had a salesman, a computer analyst, the man who was responsible for the installation of all of our software applications, and a man who was responsible for logistics.

They, like I, had thought we had all given up flow charting years ago.  So, spending all afternoon drawing flow charts was of zero interest to all of us.  They came into my office and I said “look boys I don’t want to be rude, and I don’t want to give the wrong impression, but I’ve had flowcharting up to here!  I really want to be out of here in two hours.  OK?”, and they said “AHHH, thank you, thank you, yes that will be great”.

So I said “let’s find a really simple example of flowcharting, get it done and get the heck out of here.”  They said “yes we’re all for that, Ken this is good news”.

“What are we going to do then, what shall we flow chart?” and one said, “why don’t we do parking a car?”  I said “parking a car?”  He said “yes, it’s a process we know - you have to park the car, back, reverse...” and I said “No, No!  You can’t get up next week and have a Senior Vice President stand up and say ‘we decided to waste two hours of valuable time doing a flow chart on parking a car’!” I said “come on lets have something to do with business”. This irritated them, and I can see their backs stiffen.  One of them said “what about parking a car in our car park?”

We were getting nowhere!

I said, “I’ll define the problem: we will do sending and receiving a fax from this building” and they said “yes, that sounds about as easy as parking a car”.  So, I wrote up on the board, not the problem statement in this case but the objective of sending and receiving a fax.  I defined the fax quality charter:

• all faxes are created equal (we are an American company, so I had to say that);
• all faxes should be delivered to the desk of the addressees within one hour of receipt (this seemed a reasonable objective for a fax - it travels around the world at the ‘speed of light’ so it should not be more than an hour from the point it arrives in the building to being on somebody’s desk).

Everybody wrote it in their note books.  This is going quite well so far, Ken is going to do all the work!  So I erased that and said “right let’s get on with the flow chart of the process then!”

You know what body language is all about.  You have all probably studied body language and I have got these men sulking about this car in the car park with all their arms folded.

So I put up my first square on the board: Fax Received.

I put up the second one, Fax Picked Up.

This was not rocket science.

I got this far and one of them said, “no you have forgotten something, what if there is no paper in the machine?” I rubbed off my second rectangle and put in a decision triangle and said “Is There Any Paper?  Yes or no?”

Now, you see the “No” goes off into the Hinterland! One hour later, my white board is completely covered!  I had no idea that faxes turning up in my building were so dammed complicated between coming off the machine (if there was paper) and getting to my desk, or somebody else’s desk - even the addressee’s desk!

An hour had gone by and we realised that there was no way we could do sending and receiving a fax in the time.  So we redefined the problem statement to just receiving the fax.  And we became quite passionate about it.  We did a great flow chart and it became our project - you remember I said we had a three week project we had to do?  This became our project.

Two weeks later we did a survey.  We had somebody stand by a fax machine.  We clipped survey forms to the fax machines.  We issued stop watches and asked people questions, and so on.

And I found out some amazing things about faxes received.  First of all, 18% of the faxes in the building were collected by the addressee.  That is a euphemism for a lot more activity.  What does that really mean?  It means that first of all someone has told you there is a fax coming; secondly you get up from your desk and you leave it and you go off, probably stopping at all the open offices on the way to waste everybody else’s time en route, to the mail room.  At the mail room, you hang around waiting for your fax to come through.  18% of the faxes were picked up in that way. 40% arrive via internal mail.  This means there is a chap, probably named Speedy Gomez, with a trolley and lots of envelopes.  He takes the fax, puts it in an envelope, puts it on the trolley and, at some point later, it will appear on your desk.

42% were passed by a colleague, which brings us back to the 18%.  What “pass by a colleague” means is that while you are hanging around waiting for your fax to come, you are busy going through the out basket to see who all the other ones are for.  That does not say much for security and a few other things.  “Oh, here’s one for Ken I’ll take that back for him”.  So, walking all the way back through the building and dropping it off in somebody else’s office means further disruption.

Faxes move at the speed of light around the world - it is supposed to get there within an hour.  We’d found that the mean time for the delivery was 5.5 hours.  Now that has blown several basic purposes of the fax.

For example, if it had arrived in the afternoon it was not going to get to the addressee until the next day.  If Speedy Gomez gets his hands on it, we may lose another twelve hours because his cart may not take the right route.  This means we lose the entire point of faxing something.

More depressingly, we lost 9% of them.  This means that 9% of faxes have to be resent when people didn’t get them.  And somebody says “well, did you get my fax?  You have not answered yet,” and you’d ring back and say “I’m really sorry, I’ve looked everywhere could you send it again”.

Then you become one of the 18%.

We also found that 30% of the faxes were orders.  That meant that round about 3% of orders were being lost.  Now I’d say that if you really, really want to irritate a customer, asking him to send the order to you twice has got to be high on the list of being annoyed.

And we measured how much time was spent walking around the building etc., etc. photocopying and so on.  We found that it was three man years!

Now, here’s the real issue.  I know that we have all spent lots and lots of money in the last decade on office technology and yet we have not seen the gains of productivity - and productivity leads to quality.

There is a graph that illustrates this which shows exponential growth in technology with one line, and this other little line that snakes around about zero which indicates growth in productivity.  Now there are some reasons for that.  Very simply I think we spent a lot of time building the infrastructure so we are actually far better off than that graph implies.  But we haven’t got the  productivity improvements, and therefore the quality benefits, that we thought we were going to get, or that the money would have implied we should have got, from the technology.

Well, I used to lecture customers on that.  I used to say that we have discovered some amazing facts and let me just tell you where you have gone wrong!

Well, let me explain where we went wrong.

We’ve got email.  You can send mail to anybody in the company at the touch of a button.  And this equipment is in the building.  So why don’t we send faxes through a Fax Gateway?  The front sheet can be read by somebody and forwarded to your screen.

So we spec out the system.  First of all the flowchart. The fax comes in at the Gateway, which is a CPU in our Network.  This all existed.  It comes to the workstation on the desk of the Receptionist.  It bleeps.  She or he turns away from the telephone or whatever he or she is doing, sees a cover sheet there on the screen, reads who it is for, types it in and forwards it to them.  It turns up on their workstation, they can read it on the screen or print it at the local printer.  Now, we were really excited.

I described this to the team.  “We’ve done this work, we’ve done the stuff with the stop watches and the surveys and all that, we’ve done some O&M work here”.

We were really excited by then, so we put together the proposal, how much it would cost to buy the Gateway, the technology, the software and so on.  To my amazement, the payback period was about seven months from buying the equipment.  So this is one of those projects you’ve always wanted.

In your life you have always wanted to put together a project that was this easy.  It simplifies everything and no one else has thought about it, and it’s going to pay for itself within a year!  So I wanted to give the presentation.  It’s the one that’s going to be a winner!

Then there was one man in the audience who sat there, with totally the wrong body language - arms folded, shaking his head. It is very irritating when people do that when you are presenting. I was rattled by this and, halfway through my presentation, I said “who are you?” and he told me his name. I said “Why are you shaking your head all the time, I mean what have I said that is so crazy?”.  He said “well all that equipment that you are talking about installing we have already got installed!”

Remember that graph which showed all that money you spent on technology and the change in the productivity being zero?  And here we are with a productivity solution, and the equipment to make it happen apparently already installed! This payback period theoretically should be zero!

So I asked “Why aren’t we using it then?” and he said “I don’t know - why aren’t you using it!”  This was a fair point.  I didn’t know why.

Remember when I talked about change and everything?  Well, when we went to people and said we have got this new fax system, they would say “Oh no, I much prefer the sense of touching paper”.  Immediate denial, and then active resistance.

When we started our survey, which took about ten days, there were six fax machines in my building.  By the time we had finished there were seven machines - like the PC, people just go out and buy them - totally out of control.  We were not using this big investment we had made in the infrastructure.

So we decided to adopt this new system and do the job properly.  Train people and so on.  Train the receptionist.  We irritated people like Speedy Gomez but the receptionist was delighted because it enhanced her job.  She is exactly the right person for this because she knows everyone in the building, and all the visitors, and knows all the spellings, which is a problem when working in an international building.  It was the perfect place for this to happen.

We have saved three man years in this process, which is significant and the investment was minimal, because we had already made the investment in the infrastructure. We have built the railway.  We have got the trains.  Yet we have not figured out how to ship finished goods, instead of raw materials, on the railway.  We just have not made that next step.

I know that you have studied ‘Social Change’ and know the theory that says that every ‘X’ years, fundamental changes occur which are something to do with technology.  Aeroplanes and the Jet Engine have made a fundamental change in everybody’s business and social life style.  The railways, canals, shipping, the steam engine, and the computer, have made fundamental changes.

What we have done in the last decade is build an infrastructure, but we are not yet maximising it.  This means that the money spent is basically a latent asset which could be turned into a massive asset.  Minimal extra investment is needed, because the infrastructure is there.

In summary I believe we are all now poised to make the productivity gains in the office that have eluded us for so long.  With quality teams and quality circles empowered to make change, with a closer scrutiny and refinement of our business processes, we can now set about dropping the last blocks into our infrastructure investment.

My example of this was fax, I urge you to look for you own “fax like” opportunities  I can assure you, they are there!