Quality Throughput over Operational Expenses as the Primary Way to measure improvement and calculate ROI in Government.
|Alfred Mycue - Director of Business Transformation and Rapid Process Improvement at Texas Workforce Commission|
|Step 1: |
What to Change? We must change the way government measures its ability to provide ever-improving service and increasing value per dollar. The change must provide government the general ability to tie value to cost. There is a need for change because inability to link cost and value causes government to have difficulty reflecting improvement over time. This is the core problem in government: there is no "bottom line” to drive meaningful change (but QT/OE can substitute for this bottom line). Often it is difficult to know if our operations are improving if costs are going up, employee counts are up, and throughput production is up (or any other variation). We must create a system that enables every manager to answer these questions everyday: What did my team produce of value today? How much did it cost me to produce it? And why, for example, did it cost me less to produce it last year than this year?
What to Change to? We need to change to a system where, on every manager’s "balanced score card” there is a synthesis measure of quality throughput over operational expenses (QT/OE), tracked over time. With the exception of current high-level efforts in Utah, use of QT/OE is an entirely new discipline in government. (Whereas Kristen Cox has taken this concept to new heights in state government, we in Texas have continued to develop these concepts at the financial and managerial "rubber meets the road” level.) It invites a new POOGI culture, accountability, customer voice, transparency, and puts agency and wherewithal in the hands of the government worker.
How to Cause the Change? Educating every manager on QT/OE in a 3500 person agency has established the foundation for this change. The CFO provides every manager their OE every month. We stress the importance of knowing what and how many things or services their team produces (throughput). Our managers’ report their QT/OE on a visual graph; it is the centerpiece for every dashboard. This monthly visual report holds the attention of every manager and director. How do you measure, refocus, sustain and grow the change? In Texas Workforce Commission (TWC), the answer to this question lies within the cultural transformation we have undertaken. As my presentation will reveal, a frequently heard expression at TWC is "what is your Q?” Every organization is challenged to create quality metrics and evaluate themselves against quality goals. We use the 5-step TOC analysis to determine constraint(s) in each of our processes. After constraints are determined, every improvement is focused on those defining constraints, thus ensuring every improvement will positively and immediately impact our results. The US spends 34% of our gross domestic product on some form of government. Imagine the impact of improving government operations (even if only one percent!) by utilizing continuous improvement and tracking that improvement via QT/OE. Clearly not a choopchick.
This research paper and development of new knowledge related to how TOC principles can be incorporated into the fabric of government. Standing on the shoulders of giants, we in Texas have further developed the QT/OE concepts of Eli Goldratt and Robert Fox, outlined on page 29 of The Race (Croton on the Hudson, NY: North River Press, 1986). Goldratt and Fox developed this ratio for measuring productivity in response to the cost-cutting craze of the late 70’s and early 80’s which they saw as counterproductive to a growing, productive business. This has great utility in government. GOMB in Utah is currently using this system of measurement to determine agency productivity against Governor Herbert’s challenge to state government to improve their organizations by 25% in four years or less (improvements in quality, throughput, and/or efficiency all count toward this objective.)
The presentation will conclude with the technique we have developed to use QT/OE data collection to calculate the ROI of improvement projects in government. Government often takes capacity (gained via improvements) and immediately applies them to quality deficiencies of other distressed areas. This technique enables government organizations to demonstrate how improvements result in additional "people power” and how this can be included this in their ROI analysis. Look at the bottom-line dollar gains stemming from TOC-based improvement projects and specifically discussed in the paper and PowerPoint!
Just as significantly, this new knowledge has created an ecosystem where fraud, waste, abuse cannot exist. Corruption or slack are immediately visible to all. The fact that operating managers in government are now, on a daily basis, firmly tied to their financial responsibilities is revolutionary. A challenged, emerging-market country, for example, which may be plagued with endemic and culture-based corruption, could use these techniques to directly and profoundly rectify these problems.
Please note that I am attaching both my paper and my PowerPoint presentation so that you can obtain a full appreciation of this new knowledge in the relatively new TOC field of government. I expect both the paper and the PowerPoint will be revised and improved prior to 15 August 2016.
Alfredo Mycueis the Director of Business Transformation and Rapid Process Improvement at Texas Workforce Commission. He is a retired Army Lieutenant Colonel and Airborne Ranger. He served in Germany, Egypt, Korea, Iraq, and in 8 States. During his tour of duty he served in a variety of positions including, Stryker Infantry Battalion Commander in Baghdad, Iraq, US Embassy’s Advisor to Korean Army, and Assistant Professor at United States Military Academy at West Point where he educated Cadets in history, ethics, and the military profession.
Alfredo is a graduate of West Point, the Command and General Staff College, and holds a Masters in Diplomatic History from Tulane University. He has the Project Management Professional (PMP) credential, is certified as a Theory of Constraint’s Jonah, and is a Certified Six Sigma Black-Belt (CSSBB) in efficiency and quality.
Alfredo recently worked at the Department of Housing from 2009 to 2012 where he was the Manager of Community Affairs. He helped administer over $400M in grant funds across 8 major Federal and State programs. He also developed and implemented a strategy for continuous improvement for 5 major programs at TDHCA. For example, as a direct result of these team improvement efforts, HUD-backed loans dropped from an average of 138 days to 59 days. This has included providing project management and lean six sigma expertise to the American Reinvestment and Recovery Act stakeholders, empowering them to achieve quality weatherization while meeting their production goals set by Department of Energy.
As the Director of Business Transformation, Alfredo leads and coordinates government improvement efforts at Texas Workforce Commission. He has trained 65 practitioners in the theory of constraints, lean tools, and six sigma methodologies. Those practitioners, under the mentorship of Alfredo, lead rapid process improvement projects to attain government services production goals, while improving quality and customer experience. Results, such as reducing application processing time from 194 days to 31 days, repeatedly demonstrate the power these improvement techniques can have on government systems and processes. Alfredo is proud to be a process improvement practitioner in Texas and at the forefront of TWC’s government improvement efforts.