Reinventing leadership – John Seddon at Beyond Budgeting 2015

I've been looking at some of the arguments about, you know, what's wrong with budget management. Here's a few. It reinforces a command and control mentality. It creates a management factory of questionable value. It creates an illusion of control. The link to any strategy is quite weak.

Validity is short lived, it's time consuming, it discourages cooperation, it creates risk aversion, managers cheat, they go in low, they game the system, they spend money they needn't have spent they focus on their bonuses, and it increases the risk of fraud. It's got a lot going for it, hasn't it? This, here comes a question.

If you knew That budget management sub optimized performance. If you knew that budget management guaranteed you will make performance worse, would you carry on doing it? Okay, now, what I want is your gut reaction. Okay, at your tables. So, you know, you've got a short time for this, because each of you has to say yes or no.

Okay, if you knew that it makes your performance worse. Would you carry on doing it? And then you have a minute on top of that just to say a gut reaction. Why did you say yes? Or why did you say no? Are you clear? Off you go.

Okay. Okay. No, no, no, no, no, no, no, no, no, no, no, no, no, no. Not, not now. Okay. Hold on to that, hold on to that. We'll have the flying microphone a little later. Okay now, so now you understand the case I'm going to make, okay? To do this, I work in service organisations, so I want to talk about something we could all be familiar with, something, you know, makes sense to you.

I want to talk about basic architecture for a conventional command and control service design, which they don't have in Handelsbanken. I work with all the others, trying to help them, you know. So, Back in the 1980s it all started. In the 1980s along came a technology called ACD, Automated Call Distribution, and people went, Oh wow, look.

What we can do is we can take the telephone work out of branches, and stick it in a call centre, and locate that call centre in the armpit of Britain, where the wages are low. And it'll just reduce our costs. And we'll sell it to the customer as better service. Ha ha. And that's, kind of, that's what they did.

So if that's the world you live in you work according to what I describe as a core paradigm, which is how many calls are coming in, how many people have I got, and how long do they take to do stuff. Okay? And you soon learn it's quite a good idea to specialize the work because then it reduces your training costs, too.

If you specialize the work, you put an IVR on the front of your call center. This is press one for that and two for this. Because then you've got the customer paying for some of the costs of transaction. It's cool, isn't it? You know, it's all about cost. It's not about service, it's about cost. And then, you know, in these, in these days, and it still happens now, you go and get people managers.

Because all you want to do is, Is motivate these bastards to work hard all day. And you measure their activity. And you set them targets for the number of calls they're going to do in a day. How long are they going to do in a call. You inspect them to make sure they follow their protocols. You call it quality.

It's nothing to do with quality. And that's, yes, you recognize all that? Okay, it's everywhere. Okay, and now, the next kind of major innovation that occurred then about 15 years later, was the arrival of a concept called the back office. Okay, now when I was a boy, no one had a back office. We didn't talk about back office.

Now we all talk about it as though it's normal. Okay, where does this idea come from? Well, this is an American called Chase, and he said, look, you know, here we are, we're running service organisations, we're working to that core paradigm, how much work coming in, how many people have got, how long does it take you to do stuff?

And the bloody customer keeps coming in and interrupting you! So we're not having that. So what we'll do is we'll decouple the customer from the service. Okay, so we use the call centre, the front office to find out what they want. And then we say, bugger off, decouple the customer. And we'll move it to the back office where now we can sweat the labour.

Do You recognise that? And we measure the same things, we measure the activity. And we give them service level agreements so they do things in a certain time. We give them standard times. Because we worked out in our planning and budgeting, you know, how long these things are going to take. This is all connected up to the financial plan and the budget, and between those things and the operations, we have RAG status measures.

You know what they are? Red, amber, green. Yeah. Aren't they cool? Who invented that? We've got a, we've got a journal coming out very shortly in which we talk about where it came from. Right. very much. So you got the idea. Now here's the question. If you work in that kind of service organisation and demand goes up, what do you do?

Clear? Yeah. You've built that kind of service organisation. Demand goes up. What do you do? Off you go.

Okay, okay, okay. Now, now, we're not gonna, we're not gonna throw this box around because we need to go fast, okay? So if you don't hear, I'll repeat, don't worry. So, what do you do? Just give me one thing. What do you do? Build more back office, build more call centers. Excellent. What do you do? Increase the utilization rate.

Make the buggers work faster. Yeah, exactly, well done.

Sorry?

Audience Member 1: Outsource.

John Outsource. To?

Audience Member 1: India.

John: India. Correct. Yes. And if you're in Australia, they outsource to the Philippines. It's really interesting. And here, what do you do?

Audience Member 2: Keep people on hold longer and make money off the phone calls.

John: Ah. That's brilliant. That's brilliant innovation. It's one of the government innovations.

It is illegal for private sector companies to use phone lines that charge you a lot of money while you're waiting there, but it's not illegal for government departments to do it. How cool is that? Brilliant idea. We get all these, piss them off and make them pay. What do you do?

Audience Member 3: I think we have it all covered.

John: You have it all covered? Okay, any other ideas? Any other thing?

Audience Member 4: I throttle the demand, in particular in internal service organisations. Throttle the demand, stop people bringing up Make it more difficult to us.

John: Yeah, yeah, yeah, I mean, in the early days I found the DVLA doing this the way they throttle demand is you go to the computers that are dealing with all the phone calls coming in and you only allow the number of phone calls that you can pick up to ring and the rest is just getting engaged tone.

Yeah. It's good that, isn't it? Customer service, rock and roll. But it means you meet your service levels. Any other ideas? Okay, that'll do. You know, it's all about managing cost. And one of the things I've learned is if you manage costs, your costs go up. There's a problem with budget management that's not on that list.

I teach people that if you want to improve your organisation, you need to start by studying it. And when you study something as simple as I've just described, one of the first things you learn is that demand has gone up because you've created. What I call failure demand. This is demand caused by a failure to do something or do something right for a customer.

I asked for a green one, you sent me a blue one. I don't know how to fill in your form. What's happened to the tradesman? It don't work. All that sort of stuff. Would it surprise you to know that in telecoms in local government, you can have failure demand running as high as 80%, and on police forces?

In financial services, typically 40 to 60%. You know, I was reminded of a story, some people in financial services went out and studied demand and found that they had 45 percent failure demand. And they went to their bosses and they said, Hey, we've got 45 percent failure demand. This is, you know, it's costing us a lot of money.

And the bosses went, Oh, well, you know, that's quite normal for this industry. We do benchmarking.

You couldn't make it up, really, could you? Ah, quite amazing. Now, the trouble with failure demand is it's a very easy concept to understand and it's a very easy concept to misunderstand. You know, so, you talk about failure demand, to somebody with a cost management head on, and they go, Crikey, yeah, this is costing a lot of money.

Who's to blame? And so what we'll do is we'll have a, let's blame which department didn't do something right, or which person, the people, it's bloody people, you know, they bloody serve the customers right, there wouldn't be any failure demand. Well, you know, so that's misunderstood it, because actually it's systemic.

It's systemic. If you place a limit on the amount of time your people can spend serving a customer, you will create failure demand. If you make your people work to standardise procedures, protocols, that kind of thing, it won't absorb the variety of customer demand and it will create failure demand. If you manage their activity, full stop.

If you inspect them, they worry about passing inspections, which is not the same as serving customers. More failure demand. If you have a back office, the people in the back office take a different view of the customer from the people in the front office. Because they work to rules and procedures. People in the front office talk to customers.

And so that creates failure demand. You know, if you're in financial services, for example, one of the things that we get leaders to do is study what happens to a customer demand all the way through the system. So you take something like, you know, someone's bought a new product, And it starts in the call center because of the way they've designed it.

It goes to nine separate back office units to do their own little bits. See, it's the power of the back office. You can train people and do their little bits. And we get the leaders, and we're not talking here about the improvement people, we're talking about the leaders of this organisation, otherwise they won't learn.

We get them to follow a piece of work all the way through, and the only question that we want them to address. Is when this all goes back to the customer. Is it clean? In other words, no further action required by customer. No failed demand. And they follow the first one through. And guess what? It's not clean.

And they go, oh yeah, well yeah, well yeah, well yeah. That was unusual, John. Okay, do another. Do another. And you know what they learn? Nothing comes out clean. Now, why do we put them through this torture work? Because it's the heads you've got to fix. They honestly believe that if everybody did as they should, in this industrial design, which companies like McKinsey Co.

encourage us to do, that things will be cheaper. And what they learn when they study their system is that things are not cheaper. The service is poor quality, and the costs are high. Now, it's really important that they do that, because you can't bring that mentality forward to support the design you're going to build when you redesign it.

And it's also important that in the redesign, what we're going to do is we're going to take a lot of the knowledge that we gained in studying to help us build the redesign. And the most crucial part of knowledge, first of all, is demand. Demand. You know, in the old paradigm of how much work is coming in, how many people they treat, all demand, there's work to be done, and we've just established it's really important to understand both the value demands of what we're here for.

Can I buy a product, have a service, et cetera, and failure demand, it didn't work for me, Ian, you know, I don't like you and all that stuff.

It's the value demand that's really important to understand when you get a design service that works. Because here's a simple proposition, you see. If you can design a service organisation, where a customer comes along and says, I want a blue one, and then all you do in response is give them a blue one, your costs will be low, and their happiness will be high.

That's difficult, isn't it? See, it's got to be simple for me, because I wear a necktie. There's a lot of blood that goes up here. So, what we're going to do, because we've understood the value demands, and we've understood the predictability of the value demands, what we're going to do is we're going to design the front end of the service for the people to have the expertise and wherewithal to deal with the high frequency predictable value demands.

And all that means is stuff we now know we're going to get a lot of. And then because we've studied all of the demands, we know what ones they're not trained in. We're going to place around them experts with the lower frequency demands that are going to occur. So when they get one of those, they recognize it, and they put their hand up, and they pull help.

Help comes. Help does not take it away. They don't refer it on. Help comes. It's kind of interesting, you see, because now these people who are in the front line have a job. Their, their training time is much shorter than it used to be. They're active straight away, they're confident because they know what's coming and they know how to do it, and then every day they learn to do something more.

How cool is that? They're happy. Because they work in a better system. Now, the thing that you measure, and these are a lot of the measures you establish when you're studying, you measure the actual time it takes. No conformance to arbitrary times from the plan. The actual time it takes. This is important.

Because as you're learning, it takes a little longer. As you get smarter, it takes a little less. When you start moving more things into the front end, it might take longer. It doesn't matter. You're learning. And you can only learn with actual measures, not adherence to arbitrary measures. Is this making sense to you?

It's not difficult, is it? Now, in service organisations, you can't deal with everything at the first point in a transaction. You know, you think about fixing computers, or computers. They call them help desks. You know, they're not help desks, are they? They don't help. We ought to call them, give me a number desks, because that's what they do.

Anyway, so, you can't fix everything over the phone or in the first transaction. So what you've got to do then is worry about For anything where you're going to send an engineer out or get somewhere, or doctors, or whatever it is, you have to worry about what does clean look like to the recipient. And you've got to work with the people in the front end to understand what they need for them to have a clean flow going on from there.

And then the measures that you use are measures that you establish when you're studying. And all of these measures relate to the purpose of your service from the customer's point of view. So, you know, if you're running a simple service center, what worries the customers is when I ring I get an answer.

So one of the key measures of capability as we describe it is what percentage of calls can we actually handle from the customer's point of view on that first transaction. If we got something that needs to go out like a repair. We might measure what the end to end time is, so therefore we'd understand how quickly we can repair things.

Or we might measure on time as required. This is, you know, these are organisations, would you believe, that do repairs, that will say to you when you call and say, I've got a problem, they'll say to you, which day would you like us to come and at what time? That's cool, isn't it? You know, if BT, sure it's the same with your telephone provider in your country, if the telephone provider could do that, we'd all be happy, wouldn't we?

Yeah? You know, in England we have this terrible joke, they say getting your telephone repaired by BT is like tantric sex. You're in all day and no one comes. Laughter. I'm sorry, this is a disgusting joke. I don't even understand what it means.

But you get the logic. Understand demand. Design the front end to absorb that variety. Anything they can't do, pull. Anything that has to go elsewhere has to be cleaned. So, now this gives management a different job. You can't put hierarchy over that. That'd be silly. But you've got to worry about things.

You've got to worry about how good are we at training against demand. Is demand changing? Could we do more to enable people to get started at the start? What's happening? When people pull, does it come? Are they pulling so often we should design it in the front and not have it over there? When we're working on things that have to go beyond the front into a flow.

Do they understand what clean looks like to these people down here? And we're not going to give them a standard, and we're not going to inspect them. What we're going to do is get them to talk to each other. What do you need from me to make it clean for you? That's a dialogue that goes on between these people.

And these measures that are around them are the measures that they use to understand and improve performance. Okay, now in financial services, you know, you employ these ideas. This is all on my website. You're going to see some of these things. You know, typically, your service improves. You know, do you know NPS, Net Promoter Score?

It's all over the world. It's a piece of junk. But it's a piece of junk, we leave it alone. It's a lagging measure, you can't improve with it. But we leave it alone because we know the first thing that's going to happen when we work with a company is NPS is going to jump like that. You know, NPS typically, in a conventional industrial design, is about minus 40.

That's we hate you. It's a measure of custom. We hate you. And when we redesign it, it goes to about plus 40, which is we love you. So why do we leave it in place? Well, because it goes, sends a signal straight to the boardroom. And people go, what on earth happened there? When they changed the systems, what happened there?

You know, the managers, previously the managers would spend hours agonizing over whether their target for this year is to go from minus 40 to minus 38, or be really stretch and go to minus 35, which is from we hate you to we don't like you very much, and they think that's the result. You know, this is true, all this is true, I'm not making this up.

In terms of operating efficiency, anything 20 to 40 percent more efficient. The failure demand drops radically, which increases your capacity, you can do more things. One of the things that I get a buzz out of is insurance claims. Because not only do you get an improvement in efficiency, much happier customers, but you also, most amazingly, we didn't know this would happen, but now we know it happens everywhere, you get a lower indemnity spend, this is the money you have to shell out to customers on their claim.

And you can see the logic of it, because the old design was adversarial, prove it nasty, la la. And we're going to send around people who are going to try and prove you're not covered. And the new design is, hello, oh, that's terrible. Okay, let's look at your contract. These things are covered. This is what we're going to do, and then we do it.

That's hard work, isn't it? And, you know, sometimes the customer's got a problem that's not covered. And so what, what the companies now do is they say, okay, you've got this problem as well. It's not covered. But we can get someone to sort it for you, and you can pay for it. How about that? And the customer goes, oh, thank God.

You know, rock and roll. That's customer service, and now you've got a revenue stream. Wow. So, here's a question. I have just described what I call the Vanguard Method. It's a method where you start change by studying, learning, getting knowledge, and then using that to redesign. I want you to compare and contrast that to the methodology behind any recent change initiative in your company.

Might be investors in people, or Lean, or Six Sigma, or, I don't know, any other junk. Okay? What's the difference in the method? The intervention method of change. Off you go.

Okay, okay, okay, alrighty, alrighty, alrighty, I we can talk about some of those things at the end, is that okay? I've just got a couple of other things I want to say to you and then we'll talk about anything you want, before we go to lunch. Right, one of the things I want, I just thought it would be worth saying, you know, you can do this in sales as well.

Okay. You know, it's kind of really interesting, if you, you go into most companies, and if you were to ask the question, what are you going to do to increase sales, they generally say, you know increase the targets on the front end, and provide incentives to customers. That's what we do. And I know, I know that's a silly idea.

But I don't, you know, it's a very difficult world I live in, you see, because if you say to them, that's a silly idea, They go, we don't like you, John. So, you know, and you hear, you hear leaders say, have you heard this? They say, you know, half of my marketing budget works, Tom. The trouble is, I don't know which half.

Oh!

And then I say to them, how do you know it's half? You can see them going, fuck him.

I know. I've had fun doing this. I know, they don't know. And then I say to them, how many customer acquisition processes do you have? And they go, what? Well your customers come to you by some kind of process. This is a process by which you acquire a customer. So how many customer acquisition processes do you have?

And of course I know the answer is I haven't got a bloody clue. Not like, yeah, we do marketing, we do sales. Okay, well let's go study. I first learned to do this Andy was talking about invoice discounting, sometimes called factoring. I first learned to do this in a factoring business on the South Coast.

Because we were helping them study, this is in the very early days of Vanguard. And one of the things that we noticed when we were studying the company is that the budgets for marketing activities stayed about the same year on year. And to me, that says we ain't learning. So we started studying and we, one of the things we learned is that they, they would put an advert in the Sunday Times and that would drive thousands of people to ring up and say, tell me more about this.

When you look at what's happening there are very, very few customers in there and an awful lot of work, because they weren't the right people.

But the most important thing is we discovered a customer acquisition process they didn't know they had. And it was called bank managers, because they were a little company that belonged to a parent bank. And some of the managers, it's just like Handelsbanken, some of the managers had customers for whom invoice discounting would be an advantage.

And they didn't, they weren't even aware this was going on. And this is a big proportion of their customers, high quality customers, no cost. So that leads them to ask kind of sensible questions like, oh crikey how many managers in the parent bank refer? How many managers do they have? Where should we spend our money?

It's kind of interesting, isn't it? You know, marketing people get a bit upset about this. I don't know if you know this, you know, one of the things I know about marketing people is they kind of, they evaluate themselves according to their campaign. And they want to win an award. There's not much relationship between the campaign and customer acquisition processes.

So this can get a bit tricky. This is why you need leaders on the case. But I'll give you another example of sales, you know, if you go back to financial services or utilities, they think the way to sell is to incentivize the front line. So we get them to study, and you know they've got, you know they've got these stupid call recording systems, you know, this call is recorded for training purposes.

It's not, actually. Well, you can't do anything with it in that regard. But you know, great, they've got the technology. So we get the leaders to take the last 200 customers who bought a product, go to the phone call and listen. And the only thing I want you to worry about is did that customer pull? Or did your agent push?

Do you understand? And guess what you learn? Well, the 95 percent of the customers pulled. Well, what have we got? All these people doing incentive programs and managing the activity and all the, you know, in those days, well, it still happens now. You know, you go into a call centre and there's, you know, there's a Vespa in the middle of the floor.

This month's prize! And what you learn when you study what's going on is because the people want the prize. They're getting the system, so if they're talking to a customer who ain't going to buy anything, they get rid of them. They get and pass them to somewhere else. Anything! I'm going to hunt until I find enough bloody customers who are buying things and I'll get the VESPA.

That's normal, isn't it? You know, in the days of PPI selling That's payment protection insurance, which they're not allowed to sell anymore, for which they're now paying billions back in fines. In those days, managers would set a target that of all the sales you make at least 40% need to have PPI with the sale.

And so it's the end of the month. You've made your 40% customer on the line. Nice product sale, doesn't want PPI. What do you do? Don't fulfill it.

So basically what you learn when you study is the incentives and the targets mean you're going to get less sales and unhappy customers. And when you get rid of all that stuff and focus your front end on being nice to, listening to, understanding, and then serving customers, which is what Handelsbanken does, guess what?

Sales go up. You can see videos on my site that talk about all this. You know, one of the UK insurance companies, when they did this, sales went up by 40 percent. So what's the fastest way to improve your sales? Change your system. And there are people here from Denmark recently I was talking to my colleagues in Denmark.

They've done the same with the field sales force in Denmark. It had all the normal activity measures and targets and all the paraphernalia. Now all of that is gone and sales are up 35 percent. So.

Now, why am I here? I'll tell you why I'm here. Because in every company that we go in and help them study and redesign, and get those kinds of results, as soon as we start operating in the new design, a horde, a swathe, a veritable swarm of people come out of the management factory, unhappy and angry.

Because according to the things they're looking at, everything's gone red. It's a reg status. Everything's gone red. And I kind of go, don't worry guys, because red is really green. And actually, when we studied it, or when your leader studied it, they learned that green was actually red.

And then you explain to them, you know, there's a fundamental difference here. That what you're doing with your budget and your plan and your KPIs status is you're forcing arbitrary measures down into a system. And what we're doing is we're using actual measures that relate to the purpose of this system from a customer's point of view to understand and improve the system.

Moreover, when we take their data over time, we're in a position that we can predict how this system is going to perform going forward. Isn't that what forecasting's supposed to do?

And then they kind of go, You see, because it's their job, isn't it? So why am I here? Well, because I'm a service design guy, and I'm in this space where I think it's absolutely incredible that whatever is going on in the finance department and the planning and the forecasting and all that stuff up there cannot actually accommodate radical improvement.

So I need to learn more from the experts in the BBRT about what actually happens up there and how can we change what's happening up there so it can accommodate innovation. That would be a good start, wouldn't it? And as we go on this journey, I'm intending to make it available. But what we're doing, we're going to talk about what we're doing and what we're learning and how it's working with the BBRT membership.

That's why I'm here. Do you have any questions or observations or do you want to talk about did you say yes or no? Thank you. Oh, God. So heavy. Okay. Audience Member 5: Okay. Observation or comment is that I'm trying to introduce lean work or lean management in my own organisation. Controlling procurement and what I find extremely difficult is to identify the work items to be measured.

First of all, what would be the work items to be measured in a internal finance organisation? And secondly, if you knew that how to measure them, how to track them.

John: And you work in procurement, did you say?

Audience Member 5: Procurement and controlling. Yeah.

John: Hmm. Okay. Well, no, no. The first thing I need to say to you and indeed to everybody is that, I hate lean.

If you want the long version of why, you'll find a paper on my website called The Reasons for the Failure of Lean. You know, all the companies we go into have spent millions on lean, and it ain't made them any better. Okay? Why is that? Well, because they basically, it's an American thing, you know, they pitch to the current philosophy.

So they tell you, well, you need to standardize work. People go, oh yeah, that's cool, we need to standardize work. No, you don't. and so on. And so the paper test does that in spades. Okay, so if you're interested in why I don't like it, go read that. And it's not, it's also not what Ono did in the Toyota system.

He didn't train his managers to use tools to go and solve the problems they thought they had. He made them study to find out what the problems really are. Because he knows it changes their thinking. We're in that space. So, I hate lean. So, I would encourage you, the first thing you need to do is get studying.

Now, I don't know what kind of procurement you do, but for example, when we do any work where people buy materials, are you buying materials to, you know, you've got to buy stuff to use in your, in whatever you do? Yes? Yes. Then the thing that I would study is time. Okay, a lot of people think that when you're studying procurement, you've got to worry about unit cost.

You know, we have this problem in the public sector here. Ministers in Whitehall, wherever Whitehall is, it's close to here, they say, oh look, you all buy the same things. Buy them together and make them cheaper. And I go, no, stupid. Stupid. You have to worry about time, not cost. Because if you can buy things at the rate you use them, you'll minimise inventory, you'll minimise cost, and you might pay higher unit prices.

So I would study that first, because it's that flow that you need to get right for procurement. Does that help? We can talk more later if you like. Other, others. Thank you.

Audience Member 6: I work a lot with charities and not for profit organisations that in turn with the commissioning processes of government, which is causing a huge problem. And, the commissioning has all the aspects that you've described, which is that they've usually decided in advance. How long somebody should spend, say, with an old person who's housebound and, you know, all of those kind of targets and things are.

And so you're invited to bid to do what they've decided is the right way to do it. Yes. Do you have any suggestions for how they could overturn this system?

John: Yes, I mean, first of all, let me say that that's an area of our work that we've been doing a lot in too. We've been doing a lot of pro bono work in that area. You'll find on the website a report we call the locality report that talks about all these things. And within that we identify the same issues. That, you know, the government have got this idea that it's a market. And so if we're going to buy in the market, we need to specify what people are going to do.

And as soon as you specify what people are going to do, it doesn't meet the needs of the people that we're supposed to serve and it creates more demand. You know, and then you find things like, you know, the demand is still there, the problem is still there because the thing didn't meet the need. And then they, then we say well, you know, we're going to send this person on the same thing that we did to them last time, and they go, no, don't be stupid, that didn't work, and then we label them as un, uncooperative, you know.

This is a serious problem. The way we are tackling the problem, well, we're doing two things. First thing we're doing is we made, I put our methodology for this locality working into Buckingham University so we can spread it fast. And very, very low cost. The second thing we're doing is part of the study work is you've got to involve your commissioner.

And so you've got to build a relationship with the commissioner so they understand that if you can actually serve, I mean, it's really simple, isn't it? If you can actually give people what they need, the cost will fall. It's like the Burt's Org, work. It fits that model. That's all, that's all you can do.

There is no magic bullet. Unfortunately, a lot of commissioners think they're too important to do that, but we've had some success in doing that in different parts. Whereabouts are you in the country?

Audience Member 6: We work all over the country, it's a firm that helps social care organisations.

John: Okay. Well, if you're interested in some of the places where it's going on David may know, Patrick may know, and I'd know who to ring to find out. Okay. Others. Yes. Right over here. Oh, it's, it's Klaus.

Audience Member 7 - Klaus: We talked earlier about how to approach this if you want to apply systems thinking to also to the budget process. How would you implement it? Because you see Pieter Boksnes case of Statoil, they, made it top down. They said we have a budget department and we have new principles and a new philosophy that we adopted. And every department who wants to join in, they can do so voluntarily. And I see the, the Vanguard method is more like a bottom up approach.

I mean, you have the leaders on board from the start. You have to do that. But the insights are made in the work. And in that way, it's, it's bottom up. So I was thinking, what, what are you your views on should you do both? Or just, where should you start?

John: Well, I mean, the honest answer is I don't know, but we're going to work it out. I would, I would think outside in, not bottom up. And also, I think about the way we work with IT. You know, IT comes third, not first. You know, if, so basically, it's, I think budgeting will be similar. You know, step one is study it and understand it. Step two is improve it without changing the IT.

And step three is now pull IT into this new stable design. You spend a lot less and you get a lot more radical. And I think it'll be that kind of thing, but that's only my bet. You know, stick around for the next year or two and we'll work it out.