Join Mick Holly and Brian Smith on the latest episode of “Change and Sustain” as they share how England revolutionized its railway operations by connecting strategic goals with everyday tasks through their management operating system. This resulted in improved punctuality and increased employee engagement. Gain valuable insights into the transformative potential of well-designed systems, empowering organizations to drive positive change and foster a thriving organizational culture.
Welcome to Change and Sustain, where we discuss driving sustainable change in your organization through enabling people, process, systems and technology. Today we’re focusing on systems. Good businesses have goals. Great businesses build systems don’t they Brian? They absolutely do Mick, how are you today? Fantastic and what a great topic, it sounds a little dry, systems always sound a little dry but they’re so powerful in enabling organizations to execute at the highest level. We’ve talked about this before but we’ve had the benefit of looking at businesses over 30 years in many, many different industries and we see both the good and the bad and management operating systems are an essential component of business and the best systems drive the best results.
So management operating systems, what do we mean by that, Brian? Good question. Yeah, that word system is one of those words that gets kicked around and used for a great many things. As management consultants we tend to have a very specific use for that word system. What we mean in this case is systems that control processes. So if you ask somebody to map a process out that’s a fairly straightforward thing for people to do. Box A follows box B follows box C, etc. The system we refer to as a thing that controls that process. So the documents, the data, the metrics, the meetings, the things that you use to make sure that your process is functioning correctly. That’s a management operating system to us. One of the key principles of the management operating system is it’s a device to connect the strategy of the business with the execution layer.
The processes, you know, exist at the execution layer. We have great strategies, but if those strategies are not connected through all of your layers of management, those strategic messages, those initiatives, those goals can get miscommunicated and scrambled. And by the time they hit the execution machinery, the processes at ground level, you know, your business is a little ineffective. So management operating systems connect the top to the bottom to allow strategy and execution to be in congruence.
Absolutely. We would contend that the number of elements in a management operating system is way, way lower than the number of process steps that you’re having to manage. So if you want to run your business effectively, yeah you can focus on process that a lot of people do in fact focus on process. In fact a lot of management consultancies particularly the big ones focus on process too. Because there’s so many steps it takes so much time and effort and therefore billing to get those processes correct. But you can’t define processes to the nth degree and force people to work in those processes. It’s actually far more effective to make sure that your control mechanisms are in place and are correct.
Far fewer things to deal with, just the few meetings and the few documents and the few bits of data that you need to make sure everything’s in place and functioning. If you get that right, your processes will become right over time. It’s your ratchet mechanism, if you like, for improving your processes as you go. It’s such a shame you said that, because it’s such an alluring concept, isn’t it? That if we actually buy a piece of technology that maps our processes out and automates it and makes people, you know, have to enter data in a certain way. It mandates that people need to operate in a certain fashion. Of course, that turns people into robots.
You’re diminishing your employee engagement, creative capacity, and we just add a lot of complexity. So thinking that automating your processes and putting some technology in will make everybody consistent in your business better. Unfortunately, it’s a pipe dream. But you also said, Brian, that it’s a lot easier if you’ve got a management operating system to get the best out of people and have them focus on a few critical things. Absolutely. We don’t need to dictate to people exactly what to do is define the box that they operate in and give them the tools to go do whatever it is that they need to go do in their own way. As long as they’re doing that, people would find creative ways to make things simple.
You know that old quote about, you know, if I want to get a job done most efficiently, I’ll give it to somebody who’s lazy because they’ll find the best way to do it, right? They would find the way that gets it done most simply. So instead of you defining for them, here’s all the steps I want you to follow, give them the problem, give them the parameters, give them the metrics if you like and let them go. And then feel better about their job and you’ll get a better result. I think we’ve just come up with a new consulting study, Brian. When we go into any business, we can ask the CEO, who’s the laziest person in your company and we can learn from them.
I’m sure. I hope from you, sir, as I am. All right. So a management operating system, it’s got to be simple, it’s got to be practical, and I think one of the big benefits of it is if you’re using it correctly, it will only flag up issues that you need to intervene on by exception.
It’s an exception reporting mechanism. So it takes the tyranny of the urgent out and allows people to focus, as you said, on their true potential in being able to get things done easily, quickly and effectively, right first time. Absolutely. People should only be passing up to their managers the things that they can’t solve. Well, boss, you gave me six things to do. I know five of them. This one I’m not sure.
Let’s spend our time talking about that. I have an example of a management operating system. We’re going back a number of years to our home country. I know the audience can hear Brian and my accents being of English origin. And our railway system was nationalized, but Margaret Thatcher decided that she would denationalize some of the industries to make them efficient. And so she broke up British Rail into lots of different operating units and one of these operating units was serving the south east of England and instead of just getting money from the government they now had to make a profit and so the newly elected board of directors got together and said you know we need to make money so that we can keep upgrading our trains and our track etc. So how do we make more money? How do we make more profit? And they realized that you know 8 o’clock in the morning when the trains came into London whenever he was commuting to work they were packed full and 5 o’clock in the evening whenever he was going home similarly you know high levels of utilization but the rest of the day the trains were empty nobody’s using the trains why not? Well people have to come into London to see, but they weren’t getting on the trains, they would rather get in their car, drive for 30 minutes, 40 minutes, an hour, find a parking space and then travel around on, you know, cab or foot, rather than use the train.
Why not? Because the trains were always late. You remember this, Brian, you could never guarantee the trains were going to get in on time. You could guarantee because they were going to be late. Exactly. So you’d build that factor in. So the board who, they weren’t, you know, silly people. They said, okay, in order to drive more profit, we got to get people on the trains at off-peak time.
So we’re gonna drive off-peak revenue. And in order to do that, we got to make sure that the trains run on time. So they passed a mandate we said that 95% of all trains will arrive within five minutes of their published time. Problem solved. That’s the strategy level. If you think about the management operating system now we have a strategy we know how we’re going to make money, we’re going to get people on the trains by having the trains arrive on time. Well three months later, no increase in North Peak revenues, nobody getting on the trains and surprise, surprise, the trains are still late and the board are just absolutely crazy. And so they said that our people are idiots, we’ve told them exactly what to do.
So, well, do you actually have the control mechanisms placed to help them execute this mandate of yours?” Well, we’ve told them. So, we’ll go on down, let’s go down to the station and we’ll take a look. Oh no, they said, we don’t want to go down, lots of angry passengers don’t want to do that. No, come on, they won’t know who you are, everybody’s wearing a suit back in those days, everybody would wear a suit to go to work. So, they’ll not know that you’re part of the establishment. So, we’re standing on the platform and we sit there with the station manager and we say, look, there’s the 215 to Reading and it’s platform with lots passengers there’s no train there what was the discovery surprise all of the trains that arrived late left late. So he said well let’s get the station manager over and you know look at his you know management control points. So where’s the trace? I don’t know. It’s not my job. So we go into the we go to the platform We call it a shunter you call it a switchback person over here who moved the trains from the yards onto the platforms They put the engine on and two or three carriages, whatever the manifest say some so we get the shunter and say There’s supposed to be an engine in three carriages here. Where is it? Oh yeah we put that one on platform two. I said well there’s only three passages on platform two. Why did you do that? Oh well that’s Bert’s train. He’s the shop steward. If you want good overtime you’ve got to keep on the right side of Bert. So without having the appropriate controls people you know ad hoc based on you know personal needs. So now the trains are in the wrong position So why do you go to the yard and get another you know train set?
Oh, well, there wasn’t enough in the yard. So you go to the yard and you find that there’s no Carriages ready. Why not because there are no Wheel sets they’re being maintained. So at the end of the day we go down to this dirty old siding we do one of our favorite studies, we call it a day in the life of study of the wheel lathe operator and this guy is getting on for about fifty eight he’s worked in British Rail all his life and we do a study and we say to him at the end of the day you know your lathe was down sixty percent of the time today he says tell me about it, I need a new part why can’t you have a new part?
I said, well, we’ve got cost reduction because we’re not making enough money. I said, well, do you realize that if we halved the amount of downtime on your lathe, we could get more wheel sets out, which would mean more stock in the yard, which means the shunter could get them to the platform, more passengers would leave on time, trains would leave on time, arrive on time, and the profitability of the enterprise goes up.
Wow! So, one of the most important things was he said, you know, you’re the first person to come talk to me in three years and there are only two bulbs in his overhead light, the place is dusty. He didn’t feel that excited about work. Now we told him that he was singularly responsible for the profitability of the railway. He went home, chuffed, and we got him a spare part for his lathe. But having the control element of here’s our strategy linked to what the station manager needs to do on an hour to hour basis to what the shunter does, connecting that to the yard and to the uptime on the lathe, you’ve now got a management operating system that connects your strategic mandate with execution at process level. and very, very quickly, you know, the trains became much more punctual and the engagement of employees, because they felt important and had good metrics, you know, really, really enjoyed their work.
So the management operating system has so many benefits to operational culture as well as execution. Absolutely. I really like the way you’ve characterized that, translating the strategy all the way down to, what does Fred do today? That’s what a management operating system will do for you. One of the things is translate everything down to what does Fred do today, or Frederica. And the second component there that you hinted at, but didn’t say it explicitly, is that once we understand what the bottleneck is, once we understand how important something is to the overall operation, we can then start doing what we would call short interval controlling. In other words, saying, okay, Fred, I need you to do six of these train sets every week. What’s getting in your way and how do we help you stay on that schedule so the rest of the railway stays on schedule? Because if that guy, that person there isn’t on time, nobody’s on time. Let’s find it and keep it on course.
That’s the beautiful thing about metrics. I mean, often people fear metrics. They fear they’re going to be pilloried for non-performance. But you said it beautifully there, Brian. What it really does is it exposes what resources we need to gift, to provide to our talent, our organization, in order for them to fulfill their potential. Absolutely. People don’t tend to want to focus on this stuff so much. They don’t then tend to want to engage that workforce in this manner, if you like, by expressing to them what you’re important to us and this is what we’re asking you to do and it’s so important to us that we’re gonna check, we’re gonna ask, not because we don’t trust you, but because we’re trying to see what gets in your way. That’s the important message, I think. One of the important messages is making sure that everybody understands how important they are and that way you can release some discretionary effort from those folks.
I think it’s also important that it provides a forum for information to flow from the execution layer back up the organization. Absolutely. We think about our wheel laid operator, he didn’t feel very important. He could tell you it wasn’t important because, hey, they’re not even giving me enough light to work by and I need a part and it’s only £50 and they won’t let me have it. You think that he felt valued at that point. But now we’ve identified what a critical player he is and his function is in the organisation. we’re able to do the right thing for him to have a forum, for his team to communicate, and it changes the nature of work, it becomes meaningful. We solved a problem today that I’ve dealt with for months and months and years, you know, we fixed it.
It creates a huge degree of elation and satisfaction. Absolutely. Bottom line for me is you don’t need your processes to be designed correctly. You need your control mechanism, your management operating system to be functional and that acts as a ratchet for you over time as we said before. That allows you to understand how your process is performing and it allows you to take intervention action to do something, release discretionary effort and make your business profitable. Fabulous, we got to tweet that. Let’s talk to our marketing department. You don’t need your processes to be perfect. You need your control mechanisms to be functional. Genius. You’re a genius, Brian.
Don’t tell everybody. All right. We shared a little bit of management operating systems. What are the takeaways that you’d like to leave our audience with, Brian? So key takeaways from today. One of the things that I would recommend that anybody in a management position does at some point in time is to stand back from their key processes. Take some time and stand back from those processes and understand how they control those processes. Not how the process functions, how it is controlled.
What data, metrics, reports, schedules, meetings, plans, all that other stuff. Map it out and make sure that you understand how it works. It’s one of those things that most people just don’t do and they have a picture in their mind about how things are controlled but they never take the time to actually write it down and see how it functions. It’s not designed holistically, it’s designed in pieces and that’s part of the problem. Once you’ve mapped it out you can critique it. Are you doing proper forecasting and proper planning? Are you making sure that people are executing those plans on a daily, weekly, monthly basis? In other words, if you’ve got an annual goal, you’re not going to hit that goal unless you hit your monthly goals. You won’t hit those unless you hit your weekly goals. You won’t hit those unless you hit your hourly goals. So if you don’t control that sort of frequency, you’re You’re not going to get the annual goal met.
Once you’ve done that, you can capture all of those things that you find to be important to you in those control mechanisms with metrics. Let’s put some metrics in place, make sure that we understand what it is that’s important to us and start measuring it so that we can see instant output and also long-term trends. If you do nothing else, make sure that you’re asking from your key processes on a daily basis, what you’re asking from your key processes on a daily basis is enough to meet your weekly, monthly and annual targets. If you do all of that, you will have made some significant progress. Management operating system, well implemented, will engage your employees, will enable them to perform at a higher level and your organization will achieve a much higher potential.
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