The General Manager (GM) of a municipal department was repeatedly getting bad press for the all-too apparent failings in maintaining city roads, drainage, sewage, and water. Continuous breakdowns in water supply, blockages in main drains and sewers were inconveniencing city residents and creating high costs in property damage. City Council was being taken to court for several cases of significant damage exacerbated by its insurer’s reluctance to settle claims promptly or on a reasonable basis.
Accused and abused by the press, residents, superiors, elected councillors and by his managers and staff who were taking much of the heat, the GM fell seriously ill. While on sick leave the Mayor called him to discuss what he was going to do to address the growing storm of protest that was negatively affecting his chances of re-election. What did he have to say?
Up until now, his decisions were based on his lengthy experience with how to fix issues. In this new dilemma he was expected to come up with a ‘silver bullet’. But how?
Shortly after returning to work the CEO asked him to make a list of the issues and to pick the top five most serious ones. If seriousness was measured by how much yelling he received they were all serious. How could he decide?
Fortunately his finance manager (a great one!) stepped forward offering invaluable data about the costs of the various types of breakdowns, the frequency along with a thick file of public letters of complaint. Using that data, he came up with ten, repeated and serious ones. Two groups of three issues each were handled by only two contracting firms. The quality of maintenance and the timeliness of the repairs were clearly underpinning six out of ten issues and involved only two firms. That narrowed it down.
Coincidently, in the Doctor’s waiting room, he met the owner of one of the two contracting companies. In that casual environment he asked the owner to honestly describe how he felt the business relationship with Council was going.
“Working with Council has been the worst business decision I ever made.” He went on to say that now he was so dependent on the revenue he felt unable to walk away from the work. Curious, the GM asked, “ What was bad?”
The owner explained that Council had ‘penny-pinched’ their contract rates so far that he could not recruit skilled managers or staff, his equipment was old and unreliable, he had to ignore costly safety requirements, buy cheaper products and hire cheaper subcontractors; all of which undermined his ability to deliver the standard of services the Council expected. Though the owner had complained frequently to the Head of Purchasing and Supply, the response was “You are stuck with the rates you quoted. Council won’t renegotiate because you are the cheapest and no one else will work at the same (cheap) rates.” The GM was stunned. Far from being able to blame the contractors for the problems he realized Council was getting exactly what it paid for; bad repairs, late. But they were cheap!
Next, he met with the CEO and the Mayor. He asked, “Do you want these troubles to continue or do you want them to stop?” He explained that the problems created by cheap labor had cost the council several million dollars in re-repairing bad repairs, delays, legal and other costs plus the collateral damage to their respective reputations. By diverting costs to paying the contractors better rates they could demand better service and quality in return. Subsequently, contract rates were renegotiated resulting in an almost immediate improvement in timely responses to breakdowns. Repairs were of a much higher standard and lasted. Local press responded favorably much to the relief of the Mayor, the CEO, the GM, the taxpayers, the contracting companies, and municipal staff.
So what happened here? What role did complexity play in this scenario?
- Unintended consequences.Complexity in the decision-making environment shows up as unintended consequences that appear to be unrelated but are interconnected by ripple effect. By stepping back, using data effectively and asking questions you gain the insight required to achieve better results and make better decisions.
- Perceiving the deeper interaction. Complexity demands ability to adjust existing strategies. In effect, this means employing empathy to see the world through another’s eyes as the general manager in the story did when he bumped into the contractor at the Doctor’s office. Through empathy, you gain insight into what lies at the heart of the matter rather than resorting to blame, which is easier but uninformed and destructive.
- Shifting point of view.Complexity demands leaps of trust to rise above the rut of what you’re familiar with and reach toward a higher level of solution where everyone gains. In this case, by intentionally paying the contractor more to reward quality the respect between relationships receives a boost, which ripples out to touch others impacted by the decision. Everyone gains.
Have you ever been faced with a decision which looked simple but turned out to have unintended consequences? Have you been able to step back, shift point of view and see the wider dynamic at play?
Complexity pushes decision-makers to ask questions you don’t already have the answer to, incorporating available data then applying courage to do things differently. If you’re right, confidence builds. If you are badly wrong, you can reflect and gain from errors made. In the end, organizational and personal competency grows.
And the GM in the story? He engaged his employees in coming up with solutions and was often heard ending his staff meetings with the words “Bring me more problems, for goodness sake.
This post was originally published on http://sparkthechange.co.uk/2015/impossible-scenarios-how-do-we-make-decisions-in-complexity/ Join me and other change agents at http://sparkthechange.co.uk/2015/events/crucial-questions/ July 1-2, 2015, London, UK.
[Credits: Thanks to Andy Hayden for the story. You’ll find other stories like this in Decision Making for Dummies.]