Our good friend Karen Wilhelm at the Lean Reflections blog recently posted a first-hand account of an encounter with welfare waste. She hit one of my long-standing hot buttons, especially as I prepare to fork over even more of my hard-earned dough with our new political environment. I have absolutely no problem helping the less fortunate; in fact I am very much aware that helping people create better lives helps all of us. But I am disgusted and disheartened when money I worked hard to create, and then donated either directly or indirectly through taxes, is wasted.
Output is not purely a function of input, and is not a simple zero sum game. There is the middle conversion process, where incoming funds, materials, and labor are converted into outgoing goods and services. The efficiency of that conversion is a function of the wasteful activities within the process. Lean manufacturing has helped many manufacturers realize this, and they are focusing on improving their internal processes instead of artificially reducing their costs by chasing cheap labor around the world.
Other non-manufacturing business enterprises are beginning to realize how these same principles can reduce waste and thereby improve output with the same or even reduced inputs. The military has many very strong initiatives in this area, healthcare organizations are making great strides, and even the government is getting into the act, primarily at the local level. “Lean education” is emerging on the horizon.
But what about welfare and charitable organizations, both private and publicly-funded? This is an area where the incoming funds are the most scarce while the outgoing services are the most important. With very little thought I can identify five general types of waste that affect welfare organizations:
1. Fraudulent waste. This includes the propensity of some charities to “invest” in expensive artwork for their offices, but could also include mis-focused priorities such as religious organizations that build elaborate cathedrals instead of investing in missions to create and support new “customers.” Some may dispute whether this is truly “fraudulent,” but think about value from the perception of the customer and the true mission of these organizations.
2. The middleman. I have never quite understood why organizations like the United Way must exist. I know they help, but must they? To my knowledge they don’t truly touch the final customer… they just accumulate incoming donations and then dole them out to smaller true charities after subtracting their administrative and fundraising costs. My big peeve at a previous company was how all employees were cajoled and coerced into accepting United Way payroll deductions… when I wanted to give even more directly to specific charities without having my donation effectively reduced by United Way administrative expenses. Yes UW creates more net dollars, but is there a better way? One major impact of the internet has been the reduction of middleman activities in business-to-business (B2B) and business-to-customer (B2C) transactions. Why can’t we do more with “D2C” – donor-to-charity?
3. Duplication of services. My wife works for a large private charitable organization that provides support to low income pregnant teens. There are a multitude of other smaller and larger organizations that also impact this particular demographic, directly, indirectly, or peripherally. The overlapping spheres of support and services create conflict, duplication, and confusion. All wastes.
4. Loss of volunteers. Karen mentioned this in her post… the frustration of dealing with the unnecessary complexity can turn off volunteers, thereby reducing the amount of incoming “labor” to the process. How many volunteers and donors are lost simply because they are turned off with the presumption that their services or donations will be wasted or ineffectively utilized? That reduction, combined with the waste in the process itself, becomes a double whammy.
5. Pure conversion waste. This is the actual process to convert incoming funds, labor, and materials into an outgoing service. This is probably where 80% of the waste lies. Karen described some of the wastes involved, and she just experienced the ones on the fringes of the administrative activity.
Lean enterprise methods can affect all of those areas, but probably most directly the latter. Lean office techniques would be especially well-suited, and there are many lean manufacturing experts that have transitioned to that niche. Can you imagine the impact of a value stream map and kaizen of the process Karen described? With so many bushels of low-hanging apples, where would you start? Triage and activity segregation systems, forms analysis and consolidation, a focus on the process from the customer’s perspective… it’s almost mindboggling what could be accomplished. I would guess that more than 50% of that process alone was waste. Imagine what could be saved… and thereby converted into increased output services… if the internal administrative processes were analyzed.
Of course this type of activity would encounter the same barrier that traditional manufacturing organizations put up, and perhaps at an even greater level. “It can’t work here.” “We can’t streamline any further.” “Regulations require it.” Those of us in the lean transformation world have heard it all before… and most of us can point to successes in transforming the most regulated and supposedly “thin” organization to remove 30% to 80% of internal cost. It’s just very, very hard to see waste when you’re embedded in the middle of the process and haven’t been trained on how to recognize it, let alone on how to use the lean tools to remove it.
Most of us in the lean manufacturing world make a very comfortable living, especially compared those who work in welfare and charitable organizations, and let alone their customers. Lawyers, despised by many of us and especially NAM, do a lot of pro bono work. It is almost expected in their field. Perhaps lean manufacturing experts and consultants should do something similar, and provide pro bono lean services to charitable organizations. We’re better than lawyers aren’t we? This would help the people at the lower income levels who need it the most, while reducing the desire of politicians to dig even deeper into our wallets.