This is Value & Failure demand analysis

A systemic approach to understand the customer, strip out waste, and re-design a customer centred operations service

The essence of the Value & Failure demand method

What is Value & Failure demand analysis? Is it a not method of data collection. It is actually a method to understand how a service works.
Demands into a service are the starting point of interactions with customers, and they actually form the foundation basis of any business and the value that they provide. Not only is a demand the beginning of the contact with customers, but how we interact with them informs us how well the service is designed.
When we study demands using the concept of value and failure, it can shift what we know about the delivery of key services. It will inform a new customer centred workflow design, improving the customer interactions, and stripping out waste. It will form the basis of the digital approach that the organisation might then take.

Applying the method helps us to do two things:
1. Understand our service from an outside-in perspective - the customers perspective.
2. It then points us where to go to redesign our service to create an effective and efficient service.
3. Challenges our current approach, and begins to change our thinking about the design and management of what we do

With a team undertaking a Value & Failure demand exercise, they will:
- Create an outside-in perspective of everyone in the team, that can then be shared with the whole organisation.
- Illuminates the systemic dynamics that which was previously hidden.
- Designed to demonstrate one of the potentials benefits of redesign.
- See their customers in a new light, understanding their true needs.
- Have the ability to enrich and shift the thinking of the leadership of the organisation.
- Link learning from front line staff, directly to the uppermost within the organisation.
- Be used as a placeholder to understand performance of the organisation over time.
- To embed a way of learning within the organisation.

Listening to demand, is a powerful way to engage with front line staff, and begin a shift towards relational service design. It is about changing the way we understand how an organisation can be designed and managed.

Purpose of demand analysis

1. To understand the demands that our service should respond to, so that we can design an optimum service.
2. Understand why customers are contacting us, and what is important to them. So that we develop knowledge of customers.
3. To identify in what way we should best respond to customers demands, so that customers experience as seamless a journey with us as possible. This maximises satisfaction with our service.
4. That we design our services so that we minimise waste and maximise value activities. This provides us with the most cost effective way of designing the service and support services.
5. to design our operations and management structures to support customer focused design and working. So the organisation is customer focused.
6. Empower employees with the flexibility to make local decisions that allow for variation in demand to be absorbed. This develops employee engagement and motivates. So employees connect with the purpose of the service and therefore motivated by achievement with the customer.

How to do a value and failure demand analysis

This method is derived from John Seddon, who develop the concept of value and failure demands, and how they can be used to design services. If you are looking at doing this in complex health services, then this page is too basic for that multi-layered implications of failure demand in the NHS.

I also have this method described in a video, if you find that easier to follow.

Good questions to ask

Almost all public sector and private sector services start with demands: banks, insurance, bookings, transactional services, online sales, etc. These may be a mixture of online, calls, written and face to face.

The questions that the designer and manager may have at the point of the demand arriving is;

What are we doing with that demand when it arrives at our interface with our service?
How does that interaction affect our engagement with our customer, and how much value does it provide?
How well are we enabling our customers to deal with us.
What waste is contained in these transaction, so that we can improve efficiency?

value & failure demand into a service

We also find that demand goes up or down over time. Increasing demands are an indication that more customers are interested in our service. The number of demands is an important measure for any organisation.

If we examine calls demands coming in, and we ask the question;

Is every call coming in, a demand that the customer actually wants to make?

We find out that in fact, some of the calls they make are because we, the organisation, has caused those customers to call again. An example is a call where someone says; You sent me something that I do not understand. or When will I get my product?

This is not good for customer satisfaction because they are forced to call, and therefore not good for business. It is also a waste of time and resources for the service.
By focusing on customers and the value we provide, we categorise demands into two main types;

Definition of value and failure demand

Value demand - the demand the service is designed for, to provide a good service.

Failure demand - The demand placed on the system, not as a result of delivering value to the 'customer', but due to the way we have designed the system

We may also find that demands have been rising, but what we have not realised is that it is often failure or preventable demand that is rising, and not the value demands that we actually want.
In health services for example, we find that referrals, activities, ownership, and case closures are all endemic and an expected characteristic of health services. They are failure demands, caused by the current system design.
Therefore simply being aware of the two type of demands gives us important knowledge about our services that not only did we not know before, but we have been assuming that all demands are good. We may have been making important decisions with the wrong information. Organisations pride themselves on being responsive to customers, but all too often they are measuring their response to the failure demand, so they aren’t actually providing a good customer service!
To demonstrate the potential of this concept, in the organisations that I have been involved in, failure demands are between 30% - 70% of total demands! If we know this figure, then the actions we take to improve, will focus on the service flow that can then reduce those failure demands.
we can actually eliminate these failure demands, thats why people call them preventable!

We can remove the waste that they cause, we can recover from the poor customer experience that we are inadvertently providing, and the demands coming in to the service can reduce. Therefore, as a manager, designer of change consultant, what we must avoid, is designing services that have failure demand locked in.

The steps to understand demand, and redesign the service

This is the overall method to develop knowledge of the customer using demand analysis, and then use that knowledge to strip out waste and redesign the service from the users perspective.

1. Listen to demand. Collate prioritised value and failure demands taken over a period of time. Often only a random sample is obtainable, but thats fine. They are then collated in the way that we have described in this article.

2. Review random cases in the records to understand the true end to end journey of the customer.
In some cases we might choose to randomly select some demands that we have looked at, and go into our records to further understand the complete interactions and journey of that particular customer. The end to end journey may have taken weeks or months in total, recording down the demand and what occurred at each interaction. If this exercise is time consuming, you might only take a select few customers to do with with. With this selected cohort, we might be interested in the total end to end time, the number and types of demands, and what we did when they engaged with us.

3. Understand what matters to the customer in various contexts. At this point, we should be in a good position to understand what matters to customers of different types. In particular it will give us insights in why the customer is contacting us and in what way we should respond. Often, a typical customer can be selected an they are used to create a story that represents how the service works

4. Summary and buy-in of the demand analysis. From this analysis, synthesise all the learning we have understood from a customers perspective, or the design our our service. The demands, and what matters to them as a summary one page. Including a picture of the overall journey that we put them through. If we are able to develop customer focused measure results at this point in the process, then that can be used to further assist in developing a picture of the customer and their interactions with us. This is the primary point where managers can realise the benefits of this approach.

If a redesign is needed this is the start of the Experiment phase of redesign.

5. If we just did what the customer asked us to do, in the way that customers needed it, what would that look like? We develop a series of value steps that can achieve this, and if we have the time, we experiment with ways of doing this outside of the current organisation constraints.

6. What are the barriers in the system that prevent us from designing our service this way? As we create this list for activities we will come across various organisation 'barriers' that will force us to add in further activities. We can then ask ourselves, what are these barriers that prevent us from making this the way that our service actually works?

An example of systemic demand analysis from the public sector

Below is an account into my work as a service consultant using a real example. From the first days with a public sector client in England, using a systemic design methodology to help a local council solve its problems using 'the liberated method'.
The journey starts with having had some discussions with the senior leaders, about their issues and their desire to move into new directions for their leadership outlook, behaviours, service workflows, and staff. The problem to solve is

“We don’t think that all of what we are doing is very good, and we can do it with less resource, and use our staff in better ways”

Where do we start? The answer has to be at the beginning, where the demand comes in. When we look at the point of entry of these demands, we find that they are different ways that the demands can enter; phone calls, digital forms, walk-ins, emails are the most common.

Stage 1. Starting at the Beginning — The Demand

The agreement in this iterative design is to first help Customer Services to examine their demands into the council, and to then decide what to do next. I have a maximum of 15 days assigned to this initial work.

Demand Analysis — Day 1-3
Day 1, I listen to demands, using a headset, for a few hours at a time for a particular service. I sit next to a call handler, to listen to the dialogue from the customer, and listen to what the customer is expecting to get out of the interaction. I also listen to what matters to the customer.
Is it a query, or an instruction for further actions? Is it expected to be resolved now? And I track what happens to those demands during the call. (It is also a great opportunity to understand the nature of the demand itself and what matters to that customer, for when I need to look at the customer journey)

Results so far — I have listened to 18 calls today.

That Council Tax demands are very transactional, and in most cases result in resolution by the call handler; ‘Resolution at the point of Transaction’. We are not passing the work from the demand to someone else. This type of immediate resolution is an important activity, as it points to effective flow. This might mean I will recommend to the client that we don’t focus so much effort in Council Tax as we’re not going to change much there.
We have a big problem with Repairs. The demands are all about the tradesperson not turning up when promised. And, from the contact centre, it is very difficult to get hold of Repairs. Why? because we have outsourced Repairs and they are located a long distance from where we are. I have done some digging and found that the scheduler with 20 years experience has just left (fed up of contractors changing). She held the key to the vast local knowledge of who is doing what and how. The contractor now wants to use a scheduler who is located miles away in head office. WARNING BELL.

I only spent a day, but that was enough time to get some initial learning about how well different services work, are where I might best focus my efforts.

Demands recorded from live listening

The detail and what matters to customers

Initially, I write down each demand as a sentence or two, using the language the customer would use. As the day goes on, and I become more familiar with the types of demands coming in, I write each demand as a single phrase.
What I also do, is to note what actually matters to that customer. How quickly do they want this, have they contacted us before, are they angry or not, are they expecting anything to happen? This is more than simply categories, I am really listening to the tone of voice, the frustration or delight, their manner, and the complicatedness of the demand. I am thinking about if this demand is suitable to be online, and if it already is, why are they calling?

Questions to ask customer-facing colleagues when we are performing demand analysis. This is a list of questions written up by Sam Spencer...

The following questions have worked really well for me, from a service improvement perspective. When I ask these questions, people tend to really engage, and their answers give lots of information and clues about how and where the service could improve.

Where does your work come from, and how fit for purpose is it when it arrives? This one is good to ask people who receive work from someone else. Referrals, for example. It gives you some clues about the quality of work they receive, and how much rework they have to do to get it right.

Can you show me what you do with the work when it arrives? As a general principle, it's best to aim for 'show' rather than 'tell'. This gets you closer to work as done, instead of work as disclosed (see above).

Why do you do it this way? This may demonstrate the rules, policies, and procedures that staff are expected to follow. Or they may reveal workarounds they have to do to get around constraints.

What gets in the way of you doing a good job? If you're only going to ask one question, ask this one. I find people really open up to this one, pointing out many areas where they are hindered in doing what matters to the customer. Keep asking "what else?" to learn even more.

What wastes your time? Similar to the last one. I often find I start to learn more about the type and frequency of failure demand in the answers to this one.

How much, and how often? A supplementary question for any of the above. This helps you to start to quantify the waste in the service. For example, I once found that around 60% of referrals received by one team needed to be reworked.

What numbers does your manager pay attention to? This one may reveal the impact of targets or other arbitrary measures.

How do you know if you are doing a good job? You'll often find out here if people are clear about purpose, or (linked to the previous question) if the focus is instead on trying to make the numbers look good.

How does change happen around here? This will tell you how people feel, in terms of being involved and engaged with change.

I recommend trying to ask these questions naturally in conversation – rather than looking like you are coming around with a clipboard and a survey. It may be worth committing a few of them to memory first.

After day 1, the client agreed with me to focus on those areas that we wish to put some attention to. So, we are going to focus on Repairs calls, and any calls that have a high failure demand rate. But, were not finished with the demands, I am looking at walk-ins, and in the community. We have housing officers out there talking to tenants in their communities — they get demands and resolve them. That is a group that is not going to be easy to record their demands, so I am having individual conversations with some of them about the work they are doing, and the demands they get when they are our and about. I will be also be going out with them in the near future.

The other obvious place, before you ask, is online. Well I am going to study emails soon, as we get some for us to read through. Also the council has an online account that anyone can set up and register . From there they can do a few key transactions. But, this is interesting, it is a version that is now quite outdated. It is little more than a website where the person completes documents, and that document then goes to the back office, where it is manually keyed in! They are going to replace this with a completely new version, so there is little point in me looking at a system that will be replaced soon.

Feedback to Senior decision-Makers

Demands for Housing grouped into high level summary demands

After 2 days of listening and recording demands.
Reports are a terrible way to record and transmit information and knowledge up the hierarchy. So I dont use reports to feed back to decision-makers. I have asked the Directors and the Chief Executive that there will be a feedback session at 12am where they can come and engage with the team, and learn what they have found. If they cannot make that time, they can come another time but they will miss that interaction with fellow managers.

I prepared Emma, the manager, on how to take people through what we have been doing in 10 — 15 minutes. Simply using the flip charts we have been using, and following an outline;

What we decided to do.
What we have done.
What we have learned and what it means. The key thing is to tell a story and make it real and relevant.

12am arrived and passed. I was disappointed, and told Emma that this new approach sometimes takes times to work. 15 mintues later the two directors turned up, and we got into our feedback mode. The key messages were:

this is what we have been collating with value and failure demands.
this is what it means, that we need to focus on repairs and planning. Council tax has got high resolution on the phones, but there seems to be a problem with people who dont pay their tax on time.
we want to ask the front line staff to continue to record the demands for a month, so that we have a baseline to measure and improvements from.

The Directors were impressed and the whole session lasted 25 minutes. They realised that the informal session allowed for direct understanding that was simply not possible by writing it down They realised that we could have dialogue and answer their questions. They understood and could make decisions there and then.

an advanced detail of demand analysis into the flow

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