My former colleague, Tom Davenport, is working on a new book on decision making. My friend Andrew Snider of Athenium recently spent some time with him to talk about the leverage that an organization can get by improving micro-decisions using systematic behavior measurement. Tom reflected on this conversation as part of his blog post, Microdecisions for Macro Impact.
Tom starts with the premise that “what many companies don't realize is that microdecisions — small decisions made many times by many workers at the customer interface — can have a major impact on the business.” I have seen this over and over again, both the “don’t realize” part and the major impact part. One insurance company in the early 90s laid off many of their supervisors to cut costs and effectively removed their company’s intelligence for making microdecisions. The subsequently began losing over 600 million a year. Sound familiar?
One of the solutions for this firm was to build a knowledge management system to capture the wisdom of the few remaining supervisors and place in at the right points in the business process to affect microdecisions. It was my introduction to knowledge management and this help lead to the company becoming profitable again.
Tom adds in his post that until we “start to measure micro-decision makers at the individual level, we aren't likely to improve their performance much. This is the approach of a company called Athenium, which applies it regularly to insurance, health care, and legal processes.” Athenium's offers its teamthink® web-based performance measurement solutions to address this issue. Their Continuous Quality Improvement (CQI) measures the workforce behaviors that directly impact the alignment of operations with strategic goals and best practices.
Tom concludes with the idea that one of the simplest approaches to improving micro-decisions is to give those who make them a checklist to make sure they didn't forget any key steps or issues. He mentions a recent New England Journal of Medicine article concluding that a 19-item checklist reduced deaths during surgeries by almost half.
I can believe this also. In the mid 80s, I was involved in developing a checklist for loan officers of a major US bank that recently got a lot of bailout money. In this case they were losing tons of money on loans to South America. The solution was a checklist. I still have my copy. I should offer it on eBay or perhaps to bank so they could reuse the concept to help get out of the mess that they created.
Here is a link from Paula Thronton - A classic example of the medical checklist in action, via a recent episode of ER: http://twurl.nl/sd5ez6 (click on 4th dot). Thank Paula @rotkapchen on Twitter Bill
Posted by: Bill Ives | March 27, 2009 at 03:42 PM