10: Case Study: Duke Power

Duke Power Company was doing very well, and it would seem they had little reason to undertake a dramatic change, having been recognized in 1999 as the most admired gas and electric company, In general, it can be said that a leading company cannot rest on its laurels and must be mindful of opportunities to change. In specific, Duke was concerned that deregulation could make it difficult to remain competitive, and mindful of the need to step up its customer service to stay ahead.

(EN: The remainder of the chapter is an interview-type article, featuring quotes from the executives in charge of customer service and operations. I'll preserve some key points.)

• Duke had a "customer operations" department that managed all employees who had contact with the customer: meter readers, billing clerks, collectors, and anyone who might touch the customer reported to a central operation.
• In addition to uncovering messy processes, the task of reengineering also identified instances in which there were no formal processes at all certain things just seemed to happen extemporaneously, rather than deliberately or predictably.
• One opportunity for improvement was in the workflow: work orders were printed out in operations centers, such that a crew would leave the center with a lot of physical tickets for their day's work. This took a lot of processing, and was inflexible, such that if a crew ran into a snarl, they would not complete their orders for the day, whereas another crew might finish early. Getting terminals into their vehicles to eliminate paper altogether remains on their to-do list.
• It's also mentioned that the firm was using a computer system that dated back to 1971, and recognized that it initially made the mistake of looking merely to replace old technology with newer, rather than rethinking their processes - there were many things being done inefficiently to accommodate the old system, and this was an excellent opportunity to rethink them.
• The company had also been through a series of layoffs, and was reluctant to do more. The layoffs had been picked up on by the media and had a negative impact on consumer confidence and employee morale. As such they recognized the need to move with caution and deliberation.
• The company had set a goal of expanding the level of service on the front lines - enabling service personnel to do a broader range of things rather than having different specialized crews for different services - and in general adopting the principle that as few people as possible should be involved in all its processes.
• One exception to this was the separation of strategic work from tactical work. The people who operate the day-to-day business should not be the same as those planning for tomorrow's issues.
• Existing metrics were out of order. A faster service call did not result in higher customer satisfaction or lower overall cost and was very often at odds with it: customers are not impressed with rush jobs, and having to dispatch a second crew to clean up hasty work was inefficient.
• One serious issue: the firm did not have a system in place to enable it to predict how long a given job would take. It was guesswork, such that one crew might be sent out with four hours' worth of work and another with twelve. A better predictive model, and schedulers tasked with packaging a day's work, enabled them to set and meet the expectation that tickets sent out would be completed that day.
• With metrics to guide them, they found "hidden capacity" to increase productivity without making people work harder. When processes are redesigned, work is easier to do, and people can accomplish much more with the same amount of effort.
• Another issue was that there was no way to predict the workforce on any given day - people would call supervisors to call in sick or schedule time off, and the central office had no idea how many people would be on the job on any given day.
• The supervisors' roles have been transformed. Central scheduling freed them from the tasks of parceling out work and tracking their people - instead, they could act as facilitators to ensure workers have all they need to accomplish tasks and step in to troubleshoot when needed. It took a lot of selling, though to convince people to accept direction from headquarters rather than their direct supervisor.
• The same series of changes eliminated a middle layer of management. Eliminating 140 out of 4500 positions is a small percentage, but a significant amount. They guided some of these people to work in other parts of the corporation.
• One corny but effective way to "sell" the change was developing a board game that enabled employees to manage a power company and see the results of decisions such as centralizing and standardizing, to recognize the impact of the changes on "winning." It was time-consuming and expensive to develop the game and get employees to pay, but "we could not have succeeded without it."
• Reengineering is difficult and time-consuming. Much is made of the amount of time it took to get things right, and some of the setbacks they had (such as homebuilders who were used to working with the same crews and supervisors) -and there was a lot of doubt. It takes a lot of patience, persistence, and the willingness to make mistakes to get to a better place.
• An immediate change shakes things up a lot, but it also provides a sense of urgency. If changes are made gradually, it's easier for people to backslide to older ways, and it's easier to quit before you're done. Jumping in with both feet and burning your ships behind you gives a stodgy organization no recourse but to move forward. Duke was able to roll out its changes in different regions at different times, but each region got a radical change all at once.
• Standardization of trucks was a hot topic. It would save significant cost, and there were even benefits to being able to load a truck based on the work assigned on a given day - but workmen felt a personal attachment to "my truck," and their own ability to gauge what it needed to be stocked with (some were like rolling warehouses). They got good feedback to help improve the standard platform, but had a great deal of resentment and angry feelings to quell.
• The company saw resistance to change as "positive tension." If the company insisted it would take ten people to do something and someone else insisted it would take sixteen, this was not an impasse, but a reason to have a discussion to arrive at a proper number.
• Getting out of the office and into the field was a major factor in leading people through changes. "I spent two days a week (it probably should have been four) out in the field providing leadership." Being visible gave employees a chance to be heard directly and to have meaningful conversations with a manager who seemed more like a real person rather than a distant autocrat.
• Most importantly is that their success in reengineering thus far has shifted the culture to be open to change - because they have made major changes in the past, employees are less reluctant to listen to proposals for additional changes. Essentially, it has changed the culture of the organization to be more tolerant of change, which itself may be a significant competitive advantage in a shifting industry.