But the importance of service quality is not limited to service industries like banking, insurance, or package delivery. As the global environment grows fiercer every day, manufacturing companies are realizing the importance of focusing on the quality of their services, not just their products.

“You can’t touch or feel a service, nor can you inspect it after the service is completed. At the point of ‘delivery,’ everything that is needed to provide the service must converge in order to provide the customer with high quality.”

“Moments of Truth”

Improving service quality promises a myriad of benefits. It costs far less to keep a customer than to win a new one, for example, and perceived high-quality service firms can often charge up to 10% more for their products than competitors. The question is how to do it.

In the rush to reap the benefits of improving service quality, companies may be too quick to borrow from past experience in manufacturing. But there are important differences that make improving service quality much more elusive.

One obvious difference between products and services is that one is tangible while the other is not. You can’t touch or feel a service, nor can you inspect it after the service is completed. At the point of “delivery,” everything that is needed to provide the service must converge in order to provide the customer with high quality. Each of those interactions are the “moments of truth” which determine whether you are seen as a high-quality service operation or not, according to Jan Carlzon in his highly-acclaimed book, Moments of Truth.

Quality, as seen by the customer, is determined by each moment-of-truth encounter with frontline personnel. The net benefit of millions of dollars worth of capital equipment, buildings, salaries, etc. that a company has assembled will be judged, in large measure, by the quality of those interactions. Those moments of truth are numerous, ephemeral and difficult, if not impossible, to measure. And yet, the long-term reputation and success of a service company is largely riding on them. This suggests that many companies are investing far too little in their front-line personnel. How many moments of truth are actually “moments of despair” for their customers?

Just-in-Time vs. Just-in-Case

For some companies, providing high quality service means creating a just-in-time (JIT) operation, where all the necessary ingredients converge at the point of delivery exactly when it is needed. In a JIT production system, inventories are kept to a minimum throughout the factory by making sure there is just enough inventory at each step of the process to supply the next batch. But it is dangerous to carry the JIT philosophy too far in the service arena.

In manufacturing, the product has already been designed; all that remains is to run the production line as smoothly as possible. Variances in the production line can then be control-charted and maintained. In a service setting, however, front-line personnel have to be ready to produce a service whose design is not fully complete until they interact with the customer. Unlike the manufacturing setting, customers often introduce variances that cannot be controlled in advance. Having adequate capacity online is critical to providing high quality service. In a JIT production system, if the production line goes down, the down-time does not affect the quality of the next product off the line. If there are enough buffer stocks of finished goods, the customer won’t even experience any difference in delivery. If you are under capacity in a service setting, however, there is no way to make it up in real time with “buffered” service time. In addition, it is virtually impossible to “recall” a poorly delivered service. A flight that arrives two hours late and causes people to miss a meeting cannot be changed. A package that is delivered too late for a speech is simply too late. The capacity has to be online and available precisely when the customer requests it. This suggests that, unlike JIT, one may need to plan in terms of Just-in-Case service capacity—that is, service capacity should be weighted more towards peak volume than average volume.

Complexity Line Model

Complexity Line Model

Work can be divided into simple and complex tasks. If the intrinsic needs of the customer is a 50-50 mix, there is a quality gap if any of the quality indicators differs from that mix. For example, Quality Goal assumes a 6040 mix, so a Gap 1 exists.

The Complexity Line Model offers a way of looking at service quality in terms of four different capacity requirements: voice of the customer, the quality goal, working quality standard, and actual quality. In the Complexity Line Model, all service work is viewed either as simple (processing) work or complex (technical) work. In reality, there are many gradations, but for ease of use we will work with the two categories. Simple work means things that can be handled by an entry-level person. Complex work, on the other hand, requires a lot more experience and skill. In general, complex work also requires more time.

Suppose we are managing a customer service call center. Ideally, we should be staffed to match the exact needs of the customer as shown on the Voice of the Customer line (see “Complexity Line Model” diagram). Suppose that the intrinsic needs of the customer calls coming into our center are split 50-50 between simple and complex. That is, on any given day, 50% of the calls are routine. The other 50% are complex and require more understanding about the business.

Gap 1: Understanding the Voice of the Customer. In reality, we never know exactly what the customer needs. The customers themselves may not fully know what they need. The quality goal line represents our current understanding of the customer’s needs. For example, we may be staffed and prepared to handle a call volume that we believe is 60% simple and 40% complex. Gap 1 represents the difference between what the customer actually needs and what we think the customer needs. In this case, 10% of the customers will not receive proper service. Reducing this gap requires an investment in understanding what the voice of the customer is.

Gap 2: Understanding the Voice of the Process. The Working Quality Standard line may be different from the quality goal if the service capacity in place is not sufficient to provide the stated quality goal. In this case, say the people doing the work are capable of handling a call volume where 70% of the work is simple, and 30% is complex. Gap 2 represents our lack of understanding of what our current system is capable of (voice of the process) relative to what we are asking it to do (quality goal). In this case, we fall short of our own goal by another 10%.

Gap 3: Managing Customer-Generated Variance. The Actual Quality line represents the day-to-day moments of truth in which the customer actually experiences our service quality. If we are staffed to meet a 70-30 complexity mix, and the volume of calls stays relatively constant, customers will experience quality at the working quality standard level. Suppose, however, that incoming call volume suddenly jumps by 20%. What will the pressure in the system do to actual quality? The only way to serve a larger number of customers with the same number of people and skill mix is to reassign complex work as simple. The work can then be given to less experienced staff (“I know Joe’s only 2 weeks on the job, but I think he can handle this one”) or we can treat it as simple and spend less time on it (“I don’t think they need to know about all the other options…”).

So now work is handled as if it is 80% simple, 20% complex, which represents the actual quality. Gap 3 represents the daily adjustments that have to be made when customer volume and special requests exceed the capacity established by the working quality standard. Although our working quality standard has not changed, actual quality has grown worse. If this becomes a frequent occurrence, the quality standard can be pulled downward toward actual quality. As the quality standard adjusts to a lower level, actual quality can get pulled down still further the next time the call volume exceeds the already lowered capacity (see “Quality Erosion over Time” diagram).

Drifting Goals Structure

The dynamics of service quality can be captured in a “Drifting Goals” archetype (B1 and B2 in “Managing All the Quality Gaps”). A gap between the quality goal and working quality standard can be closed in one of two ways—lowering the goal (B1) or raising the standard (B2). Lowering the goal is easy and quick; raising the standard takes time and investment (see “Drifting Goals: The Boiled Frog Syndrome,” Toolbox, October 1990).

Focusing on the needs of the customer can help balance the pressure to reduce the quality goal. The voice of the customer increases Gap 1 which increases the pressure to raise the quality goal (B3). In this model, we see that the art of setting quality goals requires balancing the voice of the customer with the voice of the process. In terms of TQM, this means continually trying to identify the intrinsic needs of the customer (voice of the customer) and understand the systems and processes enough (voice of the process) to design them to be in line with those needs.

Managing All the Quality Gaps

Achieving service quality excellence means managing all three gaps to set quality goals that are sensitive to the voice of the customer and the capabilities of the current system.

Maintaining the working quality standard without losing ground requires managing the gap between actual quality and working quality standard. A high-quality operation should have adequate capacity to handle the majority of the variance it encounters and should keep actual quality within a narrow band around the working quality standard. An operation that is out of control would have a wildly-fluctuating and persistent gap.

Managing All the Quality Gaps

Achieving service quality excellence means managing all three gaps simultaneously. Focusing exclusively on the customer and making your quality goals aligned with their needs will reduce Gap 1, but it will only make Gap 2 worse. If you raise the quality goal without investing in the requisite training, personnel and systems, employees will see it as nothing more than banner-waving and go on with business as usual.

If you focus exclusively on reducing Gap 2, however, you may encounter tremendous pressure in the system to close the gap by lowering the goal. The history of the quality standard can often provide compelling evidence that the quality goal is out of line with the “real” system, and lead to “Drifting Goals.” Focusing exclusively on eliminating Gap 3 will create an identical tendency for the standard to float with actual quality.

The customer’s experience of quality is determined by the sum of all three gaps. The challenge for service companies (as well as manufacturing firms with service operations) is to develop the ability to identify and eliminate all three gaps even as the voice of the customer continually changes. It requires investing in service capacity ahead of the current requirements in order to be able to treat each moment of truth with the quality that the customer intrinsically needs or wants. The Complexity Line Model is based on the work of Bob Bergin and Gerri Prusko at Hanover Insurance Co. (Worcester, MA). The author has developed and used a Service Quality Management computer simulator to provide practice fields for managers to understand the complexity line concepts. The software runs only on Macintosh computers. If you wish to acquire a copy, please write to Daniel II. Kim, MIT Organizational Learning Center, MO-294, 1 Amherst St., Cambridge, MA 02139.

Further reading: “Now Quality Means Service Too,” Fortune. Apri122, 1991; Jan Carlzon, Moments of Truth (New York: Harper & Row, 1987).

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But as you placed each card and the house grew taller, you began to worry more about the possibility of the house falling down than about building it. You worried about the air currents being stirred as people walked by; you were careful not to breathe while placing each card. Try as you might, it became harder and harder to concentrate on that perfect card house. The sweat beaded on your brow as your shaky hand placed one more card on top, and…CRASH!

Keeping Focused on What We Want

Many goals succumb to the same fate as the house of cards. Try as we might to keep focused on the goal, other pressures interfere and take our attention away from what we are really trying to achieve. Productivity standards, cost control measures, fire-fighting–all can undermine a project or effort and, over time, lead to a “Drifting Goals” scenario. We become focused on what we don’t want to have happen, rather than what we want to change.

The “Drifting Goals” archetype is helpful for trying to understand why an organization is not able to achieve its desired goals. “Drifting Goals” occurs when the gap between a goal and the actual performance is reduced by lowering the goal. Because this often happens over a long period of time, the gradual lowering of the goal is usually not apparent until the decreasing performance measure has drifted so low that it produces a crisis. The following seven-step process illustrates how to use the “Drifting Goals” archetype as a diagnostic tool to target drifting performance areas and help organizations attain their visions.

1. Identify a performance measure that has deteriorated or oscillated over time

Sometimes the actual performance measure that has deteriorated is not the same as the one you have identified. For example, when sales of Tater Tots fell from 1985 to 1987, managers at OreIda assumed that the decline reflected a change in consumer eating habits. But further exploration showed that the quality of the Tater Tots had gradually declined over the years: ‘Their once-chunky insides had turned to mashed potato. The outside had lost its light and crispy coating.”

(“Heinz Ain’t Broke, But It’s Doing a Lot of Fixing,” Business Week, December 11, 1989).

At Ore-Ida, the goal was in the form of a quality standard for Tater Tots (see “Drifting Quality Standards”). A gap between actual quality and that goal should have signaled the need for investments in new equipment and/or the quality of the ingredients (B1). But because the drift in the quality standard (B2) occurred over a long period of time, it was not perceived as a problem.

2. Are there implicit or explicit goals that were in conflict with the stated goal?

Sometimes there are implicit or explicit goals in an organization which are at odds with the stated goal. For example, Ore-Ida was committed to producing quality Tater Tots, but the company had also embarked on a series of cost control plans beginning in 1979. “Cost-cutting had led plant managers to step up line speeds and change storage and cooking methods. Over a decade, the moves had changed Tater Tots.” Identifying other related goals that may be affecting the particular performance measure could reveal conflicts which create sub-optimization.

Drifting Quality Standards

A gap between actual Tater Tot quality and the quality standard should have signaled the need to invest in production processes or ingredients (81). But because the drift in quality &alined over along periodof time, it was not perceived as a problem.

3. What are the standard operating procedures for correcting the gap?

Identifying the standard operating procedures (SOP’s) for correcting the gaps will give you a window into the kinds of corrective actions that are currently in place. You want to find SOP’s that may have inadvertently contributed to the slippage of goals. What are the things that have happened that may have caused the corrective actions themselves to erode over time?

4. Nave the goals themselves been lowered over time?

A key question is whether the setting of the goals has been linked to past performance. The idea is to have an asymmetric relationship between past performance and future goals. That is, when performance is continually improving, basing the next goal on the previous one can create cycles of continuous improvement. But this strategy can lead to disaster when performance begins to slip, creating a reinforcing cycle of declining quality.

At Ore-Ida, the actual Tater Tot quality and the quality standard were linked together in such a way that as the quality deteriorated, it affected the quality reference point (see ‘Slippery Slope’ of Quality”). So from year to year, the quality looked about the same even as it was decreasing (R3). One potential side-effect of sliding quality could be that as sales decrease (due to poor quality), the company might decide to cut back on investments in production process and materials. That would lead to lower quality, which would actually accelerate the deterioration of quality (R4). Breaking this cycle involves creating measures that will counterbalance such tendencies.

'Slippery Slope' of Quality

If actual quality and the quality standard are linked together, qualitymay appear toremain the same from year to year even as it decreases (R3). If deteriorating quality results in a decrease in sales, the company may cut back on investments, further accelerating the quality deterioration (R4).

5. Identify external frames of reference to anchor the goal

One way to keep goals from sliding is to anchor them to an external frame of reference. The reference point can’t be chosen arbitrarily, or it will be susceptible to change. Benchmarking provides an outside reference point. It won’t tell you how to achieve a goal, but it offers a frame of reference and shows what is possible in a given area.

The ultimate source, however, is the voice of the customer. At Ore-Ida, customer polls could have given a clear indication that sliding sales were a reflection of declining quality, not a change in consumer preferences.

6. Clarify the vision

Unless you establish a clear vision that is compelling for everyone involved, the improvement will be only temporary. You can motivate people and train them to use the tools that provide the corrective action, but if they really don’t understand what the vision is all about, at best they will only be complying. Over time, the system will slip back into making only the corrective actions that look good relative to what is being measured, regardless of the overall impact on the company.

7. Create a dear transition plan

After you achieve clarity around the vision, the next step is to explore what it will take to achieve that vision, and anticipate the expected time frame. Where are the goals in relation to that transition plan? If you’re currently operating at a level of 1 and you’re trying to get to 10, it is unrealistic to expect the change to occur overnight.

Unrealistic expectations about the time frame for achieving a goal can produce emotional tension and financial pressure which can undermine even the best improvement program. The question to consider at this point is how to make sure that the gap between current reality and the goal does not turn into a negative force. If we don’t carefully manage the effects of emotional tension, we lose the powerful potential of having a vision. In some ways, that’s the biggest challenge and potentially the greatest benefit of applying a “Drifting Goals” archetype.

Creative tension only works when somehow it taps into a level of motivation which is intrinsic. And that becomes a powerful leverage point for an organization whose creative forces have been tapped by the excitement of achieving the vision. The lesson of the “Drifting Goals” archetype is that in any attempt to achieve a goal or vision, you can’t bypass the emotional tension that results. But by channeling that tension into a creative force, you can transcend it and attain the vision.

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Using the Archetype Family Tree

The Systems Archetype Family Tree is based on two principles: that the systems archetypes are related strategically to each other, and that many situations can be described by progressing through several archetypes as they are linked on the tree (see “The Archetype Family Tree”). The tool is intended to help you use the relationships between archetypes to figure out how to begin looking at a new situation, and to gain increasing understanding of a problem as you work through the tree.

For example, suppose you were one of the proprietors of that lawn care company. You would start at the top of the chart, thinking about the nature of your situation. Is the phenomenon you want to understand something that used to be growing, whose growth you would like to reinstate, or something that is growing too quickly and you are worried about where it might lead? Then wind your way through the statements on the reinforcing (left-hand) trunk of the tree to see if they apply to your situation.

In this particular case, growth was not an issue; they had a debt problem to consider. If you, like the lawn care company owners, are trying to fix a chronic problem that persists despite your efforts to fix it, you want to work through the balancing (right-hand) trunk. Again, follow the chain of logical relationships, continuing to identify elements of your story.

For example, the lawn care proprietors’ fix” was to borrow whenever their cash flow was low (BI in “A Diagnostic Journey through the Archetype Family Tree”). As they serviced their mounting debt, however, the fix came back to haunt them in a “Fixes that Fail” structure (R2).

A Diganostic Journey Through The Archetype Family Tree

Working through the family tree reveals that what began as a simple balancing process(borrowing to meet cash needs) becoming a “Shifting the Burden” structure, in which the real leverage is to tighten financial control.

The lawn care proprietors sensed they were trapped in a “Shifting the Burden” process because they were not addressing the more fundamental issue of weak financial controls (B3). The borrowing fix was making matters worse by reinforcing a “loose” spending mentality (R4). Having diagnosed the situation, they could take effective action by focusing more attention on the root causes of their problems — low income and high spending — by tightening their budget and investing in better financial management tools.

Experimenting

Experimentation is key to using the archetypes most effectively. It is probably most useful to look at a particular situation or problem through the lens of several different archetypes, moving through the “tree” as needed. You may find yourself combining archetypes, adding loops and links to adapt them more completely to your story. By the time you have gleaned what you can from them, the loops may be five or six generations removed from the original archetype with which you began.

Michael Goodman is vice president of Innovation Associates (Framingham, MA). Art Kleiner has a long-standing background writing about business, environment, and systemic issues. This material will appear, in a different form, in the Fifth Discipline Fieldbook (Doubleday, forthcoming Spring 1994) .

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Apparently, plenty. The software found one what it called “major” problem and dozens of minor ones. My system was “moderately fragmented,” which meant that the computer had to search through the disk to find different parts of a single file, an inefficient process. No problem—that’s what maintenance programs are for. It fixed the errors, defragmented my hard disk, and I was back in business.

What I didn’t anticipate was the radical improvement in the computer’s performance after I had done this housekeeping. It blazed! Programs launched in the wink of an eye, graphic-heavy web sites loaded in an instant. As I witnessed these feats, I was reminded of my amazement at how speedy the processor was when I first plugged the computer in.

The question that puzzled me was, why didn’t I notice the computer’s performance had degraded so much? After thinking it through, I concluded that, little by little, I had shifted my expectations. The decline had been gradual, and performance was still within acceptable limits, so I easily adapted to the slower access and load times. However, if I had continued to put off the maintenance process, the computer would have eventually crashed, which certainly would have gotten my attention and caused untold difficulties.

In this case, the consequences were reversible—I was quickly able to fix the system so that it ran as efficiently as ever. But when this dynamic occurs in other situations, it can be more difficult to diagnose and the results can be more damaging.

Lowering Performance Goals

In systems thinking terms, I had experienced an example of the “Drifting Goals” systems archetype. Systems archetypes are common patterns of behavior that occur in all kinds of settings. “Drifting Goals” involves lowering our performance goals rather than

Check-ups or maintenance programs use objective measures of a system’s performance to periodically diagnose problems that might not be apparent to someone on the inside.

taking corrective actions. Sometimes we do so because these actions are undesirable, as in the case of cutting expenses in order to reach profit goals. Sometimes we’re focused on other factors that seem more important; for example, we may be so caught up with efforts to boost sales that we fail to notice that quality has slipped. And sometimes, as I experienced with my computer, because our senses aren’t attuned to gradual changes over time, we just don’t notice that performance has degraded.

The parable of the “boiled frog” is often cited as an example of the “Drifting Goals” dynamic. According to the story, if you toss a frog into a pot of boiling water, it will immediately try to jump out. On the other hand, if you put it in cold water and then gradually raise the temperature, the frog will happily swim around until it—there’s no delicate way to put this—cooks. The frog’s survival instincts are geared toward detecting sudden changes, not incremental ones. Although this fable has been questioned by scientists, it vividly illustrates what I experienced with my computer —I likely would have noticed an abrupt decline in functioning but was unable to detect a slowdown over several months. Just as the frog adapts to the water temperature, I unconsciously lowered my expectations of the computer’s performance.

Adjusting our expectations isn’t always bad, but if we’re going to change our goals, we should do so consciously. The key is to know what our objectives are and to track performance vis-à-vis these benchmarks. To that end, most manufacturing companies have mechanisms in place for monitoring adherence to quality standards. Organizations also tend to stay on top of financial and sales goals through routine reporting and analysis.

When it’s not practical to measure performance on a continual basis, as with my computer, then a regular check-up may be in order (see “Maintaining Performance Goals” on p. 8). Check-ups or maintenance programs use objective measures of a system’s performance to periodically diagnose problems that might not be apparent to someone on the inside. For instance, in a physical examination, a doctor checks blood pressure, weight, cholesterol, and other levels to ensure that they remain within healthy limits. Unless a person has a health problem that requires continual monitoring, such as diabetes or high blood pressure, checking these functions daily or weekly would be onerous—for most people, once a year is often enough. But if we put off seeing our physician for too long, changes that we’ve gradually adapted to—low-grade fatigue or a persistent cough— may compound to become health crises.

MAINTAINING PERFORMANCE GOALS

In certain systems, such as my computer, actual performance begins to fall short of desired performance over time (B1). We may not notice the shift, because our senses aren’t attuned to gradual changes, so we unconsciously lower our expectations of the systems’ performance. Rather than changing our standards, a more productive approach is to consciously be aware of this dynamic and to institute a regular check-up or maintenance process (B2). By doing so, we bring actual performance back up to speed and keep our goals on track.

Organizational Check-ups

How might we incorporate the idea of maintenance checks in an organizational setting? The goal is to cast light on changes that we may not perceive because they are so gradual while not becoming bogged down by burdensome reporting or monitoring tasks. This is especially true for areas that aren’t easy to measure, such as employee satisfaction, adherence to the corporate mission statement, or teamwork. In these cases, a maintenance process may be as simple as meeting with a partner every week to get an objective opinion of your progress on achieving a developmental goal or as complex as conducting quarterly employee surveys to evaluate morale.

Here are some ideas for making sure that performance stays steady over time:

• Identify variables that are important to organizational performance, especially those that aren’t usually on the radar scope, such as employee morale or use of productive conversation tools.
• Establish performance standards for these variables. Keep the standards visible.
• Track performance versus the standards.
• If it’s not possible or practical to track performance analytically, find a way to periodically collect input from an objective source—a learning partner, an outside coach or facilitator, a semi-annual employee survey. Experiment to find the right interval between “check-ups”—too often and you might find them more trouble than they are worth, too infrequent and problems might be on the verge of spinning out of control before you catch them.
• If you are tempted to shift a goal, be deliberate! Look into the causes and consequences of doing so before taking action.
• Learn from experience. If you’ve noticed unacceptable changes in a variable, design a maintenance program to keep it on track in the future.

If you follow these steps, you’re likely to keep your organization performing at high levels and avoid crashing the system or boiling the frog —things none of us want to do!

Janice Molloy is managing editor of The Systems Thinker and content director at Pegasus Communications, Inc.

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CLASHING GOALS

Quality and schedule sometimes conflict (B1 and B2 conflict with B4 and B5). The pressure to expedite a project increases the pressure to cut corners (B3) and lower the quality goal (B6). Over time, as the quality of our efforts declines, the quality goal declines, which reduces the gap. This leads to a further decrease in the quality of our efforts and a subsequent lowering of product quality (R7).

8:58, only to find that you are the first one there. You check your calendar to make sure that you have the right date, time, and place. Yep, you do. Around 9:05, some of your coworkers show up, and by 9:10, everyone has arrived for the “9 o’clock” meeting. So, what do you learn from this experience? Probably the same thing the others have already learned—that the, “real” starting time for meetings is never the stated time. This is a common example of the “Drifting Goals” archetypal structure.

Down the Slippery Slope

Many of us have had experiences similar to the one described above. As a group, we commit to a certain meeting time or project deadline with every intention of fulfilling that promise. Nevertheless, “life” intervenes in the form of traffic jams, more pressing deadlines, and urgent phone calls so we relax our standards around keeping the commitment. We think to ourselves, “The rest of the group is bound to be late, so I’ll spend one more minute polishing this presentation” or “Waiting an extra day for the new release won’t kill our customers!” We say 9:00 a.m., but, through our own tardiness or lack of reaction when others arrive late, we tacitly accept that it’s O. K. to begin the meeting no later than 9:05. Well, maybe 9:10, but we absolutely should start by 9:15. So, why don’t we just schedule the meeting for 9:15? Because then it’s likely to start at 9:30! This dynamic reminds us of the old adage “give him an inch, and he’ll take a mile.” It seems that once we compromise a little, we are headed down a slippery slope with no bottom in sight.

One obvious solution to drifting meeting times would be to establish accompany wide norm that meetings must begin as scheduled no matter what. Many groups have experimented with different incentives (or more accurately, disincentives) to encourage people to arrive on time ranging from monetary penalties to singing a song for being late with mixed results. For numerous organizations, though, delayed meetings are just a surface manifestation of a larger and potentially more serious pattern of drifting goals.

The Danger in Deadlines

Perhaps with things like meetings, it’s not such a big deal if everyone translates 9:00 to mean 9:15. The problem with such habits is that they have away of spreading to other areas, such as quality standards, new product launches, and marketing campaigns.

The danger lies in the tendency for all goals to drift, depending on the forces that are operating at the moment. In other words, we want a quality of 10, but when time is tight, we will settle for 9.5. If we are even more pressed,9.3 will do. And on it goes.

Some standards are more important to maintain than others. For example, new product launches generally need to stay on schedule so the company can fulfill advanced sales. But more often than not, deadlines beg into slip, often because people are juggling multiple demands. When this happens, the project manager has at least two choices about how to address the gap between the desired and actual deadline (see “Clashing Goals”). One way is to simply delay the launch date(B1), which is not an acceptable alter-native in most cases. Another way is to increase the amount of effort or resources devoted to the project so that progress can be made faster and the launch date can be met (B2). If management makes it clear that the deadline must be maintained at all costs, then this second scenario will likely occur. But if the organization doesn’t allocate the resources needed to expedite the project, people in the system must find other ways to reach the goal. One solution is to reduce the quality of efforts on the project; that is, to cut corners, which will lower the time required to produce the end-product (B3).

In some cases, taking such a shortcut makes sense in order to get acritical product out on time, even though the quality may not be up to our usual standards. The problem with this approach is that it rarely remains an isolated event, but rather becomes apart of the way we do things. The next time we get into a time bind, we may “cheat” a little on quality again because it worked the last time. So by setting rigid deadlines in isolation of other factors, we can actually create undesirable long-term outcomes, such as lower-quality products.

Competing Goals

The “Drifting Goals” phenomenon occurs more often when we are juggling competing objectives than when we are trying to meet a single target. Ideally, we would like to produce a high-quality product on schedule every time, but what happens when these two requirements seem to conflict (when B1and B2 conflict with B4 and B5)? In “Clashing Goals,” we see that the pressure to expedite a project does two things. It increases the pressure to lower the quality goal (B6)and it lessens the quality of the efforts that we can put forth. Over time, this decline in quality of efforts also has a negative effect on the quality goal itself, which creates a dangerous reinforcing dynamic. Specifically, as the quality of our efforts declines, the quality goal declines, which reduces the gap. This leads to a further decrease in the quality of our effort sand a subsequent lowering of product quality (R7).

The figure “Drifting Goals over Time” shows the long-term dynamics of this structure at work. The quality goal appears to stay stable for periods of time and drops slowly relative to the wider swings of the actual quality of efforts. This dynamic serves to mask the long-term downward trend, which is why this archetype is often referred to as the “Boiled Frog Syndrome.” The changes in the goal are slow enough that nobody detects the dangerous trend until the company is in serious, “hot water.

Identifying Interdependent Goals

DRIFTING GOALS OVER TIME

The quality goal appears to stay stable for periods of time and drops slowly relative to the wider swings of the actual quality of efforts. This dynamic serves to mask the long-term downward trend.

Returning to our original example, people in organizations constantly juggle the competing goals of getting to meetings on time and attending to a whole slew of tasks they need to accomplish. One leverage point would be to emphasize the importance of actually starting as scheduled and to ask what it would take for everyone to keep that commitment. We may discover that 9 a.m. is not the best time to accomplish this goal because there are too many other competing variables—traffic, urgent messages to return, and problems to troubleshoot. It may be that gathering at lunch time will make the goal more achievable, especially if lunch is provided! Lunch or no lunch, the principle is to establish the importance of meeting a specific goal in the context of multiple goals, and then to set up structures to minimize the conflicts between competing demands and priorities.

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“Unfortunately, auditors seem to have allowed more and more of their clients to undercut the trustworthiness of their reported numbers with aggressive…accounting for everything from restructuring or acquisition write-offs to the way sales are booked.”
– “Where Are the Accountants?” Business Week, October 5, 1998

These activities indicate a systemic structure at work that may be forcing accounting standards down. The change begins with a few companies letting their accounting standards slip and spreads as businesses look to each other to set accounting standards. This situation can be seen as a classic example ofthe “Drifting Goals” archetype, in which a gap between desired and actual performance often prompts people to lower the goal rather than take true corrective action. The catch is that, by lowering the goal, we set in motion a dynamic that keeps pushing the goal even lower—until we no longer remember what our original standards were.

DRIFTING STANDARDS

By lowering our standards, we set in motion a figure-8 dynamic that keeps prompting us to lower our standards even further each time the gap between desired and actual performance widens.

A Closer Look at Drifting Goals

To see how this happens, let’s walk through the figure “Drifting Standards.” The upper loop shows the dynamic chosen by executives and auditors looking for the easy way out when the company’s performance falters (B1). As the gap between desired and actual performance widens, the company engages in aggressive accounting practices to make the books look good. This reliance on “iffy” practices prompts executives to pressure auditors to “look the other way,” which lowers auditing standards if accountants give in to the pressure. The lowering of standards in turn gives the false perception that the disturbing gap in company performance has actually narrowed.

Setting this loop in motion is dangerous because it takes away our incentive to initiate true corrective action. As we can see in B2, when we close the gap by lowering our standards, we may see less of a need to make efforts to raise our company’s actual performance. When these efforts decline, actual performance eventually declines, which once more opens the gap—prompting us to lower standards even further.

Many people enjoy painting accountants as the unassuming “number crunchers” of the business world. In the auditing arena, however, the eroding vigilance by auditors—along with an ever-growing temptation on the part of executives to “cook the books”—has sobering implications for everyone.

The post “Cooking the Books”: The Downward Drift of Auditing Standards appeared first on The Systems Thinker.

A “Drifting Goals” situation starts when there is a gap between desired performance and actual performance. To close the gap, one choice is to take corrective action, which requires time, effort, funds, and attention. Taking corrective action, however, can pose several problems. First, there is often no guarantee that it will work. In addition, because its effects are realized only after a delay, there may be little organizational patience for it. Furthermore, taking corrective action may mean acknowledging that something is wrong, which can lead to the assumption that someone should be blamed and punished. This, in turn, may bring about conflict as different parties try to place blame elsewhere—something to be avoided in most organizations.

The other choice is to lower the desired performance, or the goal, toward the level of actual performance. The gap disappears, but so does the pressure to take corrective action to improve the actual state. Lowering one’s goals isn’t always a bad thing. Sometimes it’s wise to adjust initial goals, when they turn out to be misdirected or inappropriate, or when there are extenuating circumstances that require us to be flexible. However, new priorities, other implicit goals of the system, or daily survival pressures may lead us to rationalize that the goal needed correction or that our organization will resume the old standard once “everything settles down.” Distinguishing between legitimate adjustments and truly eroding goals is the key challenge in a “Drifting Goals” situation.

Trouble with Tato Bits

Here’s a slightly more appetizing example. Western Foods is committed to producing quality Tato Bits with chunky insides and a light, crispy coating. In order to increase efficiency, the company institutes a series of cost-cutting initiatives. Plant managers increase line speeds and change cooking and storage methods.

Over the next five years, sales of Tato Bits begin to slip. Managers assume there has been a change in people’s eating habits away from fried foods. Two more years go by, and sales continue to decline. Western Foods decides to conduct consumer research studies. Feedback reveals that the taste and consistency of Tato Bits has changed for the worse.

Further analysis suggests that the gap between the quality standard and actual Tato Bit quality had first appeared more than 10 years ago. The gap should have signaled management that Western’s processes, equipment, or ingredients needed attention and possible investment. However, the company was distracted by its cost-control campaign, and the quality standard was allowed to drift in favor of other changes and the need to keep production moving. Very slowly, almost imperceptibly, quality had slid below consumers’ level of tolerance.

, “Soaring” Goals

Fortunately, “Drifting Goals” doesn’t always have to lead to declining levels of performance. This archetype can also be reversed into a case where goals and standards continually improve. In this scenario, every time we meet a standard and close a performance gap, we raise our goal even higher. The gap between desired and actual performance opens once again, and we move into action to bring performance into line with the new goal. This version of “Drifting Goals” underlies quality-improvement and self-development programs. It can sometimes drive work group, academic, and family dynamics in which good performance is recognized in such a way that it stimulates even higher performance levels—what we might call “Soaring” Goals!

This article was adapted from Systems Archetype Basics: From Story to Structure by Daniel H. Kim and Virginia Anderson (Pegasus Communications, 1998).

Virginia (Prinny) Anderson is the founder and principal consultant at Design for Learning.

The post Introducing the Systems Archetypes: Drifting Goals appeared first on The Systems Thinker.