Paying to have your exercise taken

Going Nowhere

Paying to have your exercise taken

Turning Service Management into a Cargo Cult

The case for Service Governance & VeriSM

I enjoyed a most excellent lunch this past weekend, during which I was chatting to a senior manager in a retail organisation. I was struck by her comments on the 'Service Management people'. I thought her words summed the problem up well. To paraphrase them:

"

I'm not sure what the point of the service management people is. When they come to see us, they either want to tell us what to do, or they want us to take lots of measurements of metrics that don't seem to make much sense. The app development people seem to understand things much better, they talk to the business, and understand what they want.

" 

I have known this organisation, on an off, for a couple of decades, so this wasn't a surprise to me.  I even taught a tailored ITIL foundations course to a team from the organisation a few years back, to help out a friend who was consulting to them, but didn't have ITIL qualification. I was, then, disappointed that they wanted to do everything on the cheap, and those attending were mainly very junior, and inexperienced employees, all in IT.

As far as I can see, the organisation should call it a day, and close down their service management section. It is a tribute to the people in that organisation that they have survived so long, as the organisation has a habit of carrying out Stalinist purges, reorganisations, every two, or three, years, carrying these out with sadistic secrecy and slowness, so the whole organisation is paralysed, for months, with everybody gossiping about the cuts and hoping the axe will fall on another person or department.

More than that, nobody should try using service management there for a long time. The whole idea has been poisoned, so it seem that, rather than poor execution, it is the thing itself that is no good.

To have worked so hard, for so long, surviving these purges, should count for something, at least for the people themselves. However, the result of the decade (or more) of effort is nothing. They are a cargo cult, going through the motions, as if the organisation had adopted service management, when, in fact, as my conversation demonstrates, the organisation may, as with many, use service management techniques, but has no understanding of service management at all.

They are like a person who pays somebody else to do their exercise for them. No matter how good the exerciser, and no matter how hard he works, the benefit is not going to accrue to the person who pays for it, but does no exercise himself.

The reason for the failure is simple: Trying to do Service Management bottom up does not work. It is deeply frustrating, difficult, and futile.

Service management is not a useful end in itself. It is only useful as a tool to help organisations produce value, it might be useful to have a group looking after some of the specifics, but service management is not carried out by one little team, it is carried out by the whole organisation, or not at all.

Unless the governing body of an organisation recognises what service management brings to the business, and decides to adopt it across the organisation, it is usually better not to try introducing it. Yes, you pilot a part of service management to make a business case to the board, but not more than that.

Service Governance, and VeriSM, recognise this, and are aimed at governing organisations through the service metaphor. They gain traction by using governance to set the policy for management restructuring of the positive sort, aimed specifically at those things required to produce organisational value.

Good corporate citizenship - and 'The Myth of Maximizing Shareholder Value' - and Service Governance

Here's an important article, on governance, The Myth of Maximizing Shareholder Value  - unfortunately the page doesn't allow replies, so I've put the points in this short blog entry.

Governance thinking, even in the US, is moving. When we are providing consultancy to organisations, we need to be aware of this shift, and, as discussed in 'Collaborative Consultancy' able to make judgements about our ethical accountability to the organisation, its stakeholders, and to ourselves.

Some of the ideas, being based on US law, are not directly applicable everywhere, but the overall argument is, and it's crucial to the future.

The article stops short of a full description of the solution - which is fair enough, as it's seeking to illustrate the problem.

Outside the US, governance thinking has understood this for some time. The law in the UK, South Africa, and other places that have accepted the thinking found in the Cadbury Report, and the King Commission, is that Corporations are required to be good corporate citizens. Their duty is indeed not to maximise profit for shareholders, rather, their duty is to deliver value to all their stakeholders (and, of course, shareholders are a stakeholder, and returns are important to them).

Corporate governance, requiring that corporations deliver value to their stakeholders is a powerful principle, particularly when enforced through a 'comply or explain' method (not ticking boxes on a pro-forma 'have you complied with X' sheet).

What it means is that corporations have to understand who their stakeholders are - the inhabitants of Bhopal were stakeholders in Union Carbide, as they found out, most horribly. If Union Carbide had known that they were stakeholders, and known that it had a corporate duty, to make sure that there was no negligence at that site that could lead to such a disaster, then history would have been very different.

They then have to understand how their vision, mission and charter can deliver value appropriately to all their stakeholders.

Part of the difficulty, particularly for those who have only been aware of profit as a value, is understanding what stakeholder value is, and how to govern it.

A method, Service Governance, using existing best practice frameworks as a basis, exists to help identify stakeholder value, and govern that value, using the paradigm of a 'service' and governing the organisation through a service portfolio, optimising the value / cost ratio, for stakeholder value.

There's more on Service Governance here:

Adopting Service Governance - Governing Portfolio Value for Sound Corporate Citizenship

There is an example of Service Governance working, a short video, on the web-site www.service-governance.org

Adopting Service Governance - a short introduction (Video)

There are also blogs, discussing service governance here:

AXELOS Blog: Making Service Governance Work - The ITIL Advantagetil-advantage

Corporate Governance issues & Service Governance

Organisational value through Service Governance

Dishonesty, sharp practice and good Corporate Citizenship

One important part of service governance, and most modern thinking about governance under 'comply or explain' is that a company should work to be a good 'corporate citizen'.

Is sharp practice against good corporate citizenship?

Clearly much 'sharp practice' is not illegal, but legality is not the only test of being a good corporate citizen.

Think of this example. You've probably encountered it. A supplier of a fairly intangible thing such as air time or data download sells it in bundles.

So far so good. There's nothing wrong with bundling things up and selling them in bundles for convenience. It'd be really painful if spaghetti wasn't sold in bundles.

But you pay for spaghetti in arrears - you get the bundle of spaghetti, then you pay for it.

With one of these intangibles you have to pay in advance.

Also, spaghetti takes a long time, several years, to go off, so, if you buy too much, it just takes longer to use it.

Bundles of things like air time, though, never have to 'go off'. In fact, they can't 'go off'. If you bought a minute of air time in 1995 it would have been a lot more expensive than now, but, there's no reason why the company you bought it from, if it still existed, shouldn't honour your purchase and give you the minute today.

But these bundles are given an artificial 'expiry date' after which they won't be honoured - often as short a time as a month.

If you run out of a bundle, then you can buy another one.

This is where the problem starts. Not all bundles are equal. Sometimes there's a minimum bundle size and small bundles cost more than big ones. Sometimes there's a much more expensive flat rate that you have to pay if your bundle runs out.

What is going on here is the basis of the sharp practice. Companies who sell like this are not wanting to sell the commodity fairly. They actually want to cheat their customers out of either money or the commodity (which is money). It works like this:

1. If you're a small user, you buy the smallest bundle - but you don't use all of it. So it 'expires'. That is the company steals the remainder from you. That's theft in the common law sense - because you signed a contract agreeing that they could 'expire' it on you, it isn't counted as theft because you signed up to be robbed.

2. If you are a large user, you buy a big bundle to get the discount, but, if you go over that usage, because you have to buy in advance, you have to pay the flat rate - which is often many times higher than the lower rate.

The selling company is actually gambling with you. It is hoping that either you won't consume all of what you've bought, so they can steal it, or that you will consume more than you estimate, so they can charge you a punitive rate.

The companies would say that this is not dishonest, as the lawyer would say, because the contract allows for exactly this form of cheating.

It is, though, sharp practice. Instead of selling the commodity to make money, the company is making money on our inability to predict our consumption accurately.

Is it fair to penalise people for having uneven patterns of consumption?

Should a company that's a good corporate citizen be ripping off its customers because they have difficulty predicting their usage?

The argument that companies bring to continue the practice is that 'everybody else does it'. Is that a good argument against acting responsibly towards your customers?

Let's say that one company broke ranks and said, you can by the commodity from us for one single price, let's say X per unit. It doesn't matter if you consume 10 units or 1000 units, it's the same price.

That price would be easy for it to work out. It would simply take the total income today and divide it by the total units.

Would that company do better or worse?

It would attract more small users - they'd have less to pay.

Would it attract more big users? I think it would. As a big user, you'd prefer to pay a known rate, perhaps a bit bigger than the apparently tempting bundle price, but less than the far too expensive flat rate.

If you, as a customer, had a choice between an honest flat-rate company, and one that used sharp practice against its customers, wouldn't you choose the good corporate citizen yourself?

Is there any big company out there prepared to try this and make the results known?

If so, please try it. Maybe it could usher in a new era of good corporate citizenship.

If not - wouldn't that let us know just how much is made from the penalising of customers for not predicting the future? Might that not then be a good reason to press for legislation to make this rip-off illegal?