Why Exception Handling Should be the Rule
In the world of work, we encounter three primary tasks:
- First, there are many processes that are, in fact, repeatable in the enterprise. Some examples: how we process orders, how we assemble products, how we deliver products to end customers.
- Second, project work where the overall steps are repeatable but the ingredients are not. Examples: product development, managing marketing campaigns, executing a sale and the like.
- Then there are those that aren’t exactly predictable: A question a prospect or customer may have before making a purchase decisions, a complex product that has customizable/subjective uses or accessories that work better with certain models. These come in both transactive/process as well as project flavors and almost always show up unannounced.
The Exception Misconception
We generally have a good handle on the first, when things go by the playbook. The second depends on our management ability to set direction and then hire, coach, lead and foster collaboration to execute well.
But as to the third, the sheer impracticality of channeling exceptions in any scalable way to get the right answers has plagued organizations for ever. Each exception requires a different set of experts or problem owners, some known but most unknown, and often spread across a global footprint at large organizations. Historically, it seemed far more practical and scalable to just stick to the book and assume the risk that once in a while, things will go horribly wrong.
In fact, if you think about it, when you used the phrase “Honey I had a crappy day at the office today” it was unequivocally a result of an exception that occurred and your inability to handle it in any painless way.
The thing is, completing business activities efficiently and to the customers’ (internal or external) satisfaction, is not just a volume game. Exceptions maybe just that – stuff that happens less frequently. But the mistake we often inadvertently make is equating lesser frequency to relatively lesser criticality in terms of loss or risk.
What’s worse, in the age of the social web, those very ‘once in a while’ instances cannot be shoved under the carpet. The social web has a way of exposing and then amplifying our ineffective handling of exceptions. And no, this isn’t just about failed social media campaigns or online service. Its when the social web gets wind of something seemingly dopey we did in the offline world as well. And whilst there’s no trending data suggesting that negative press on the social web instills long term financial damage, find me one executive who wants to own or be a victim of the PR disaster that resulted in lower revenue or operating margins this quarter.
Its about Flow, not Values
So why is it then, that we pay more attention to facilitating repeatable process, over exception handling. It’s because machines can emulate the intended flow of a repeatable process (you’re welcome ERP, SCM, CRM vendors). In comparison, exception handling looks like the wild west. Yet the risk profile of screwing up either one can be exactly the same.
Adrian C. Ott at Harvard Business Review has a nice article stating that rigid scorecards and metrics are the problem. She cites a Delta Airlines case, where (contrary to a deal worked out), front line staff insisted on charging Staff Sgts. Fred Hilliker and Robert O’Hair of the Military, $200 each for carry-on luggage when returning from the battlefield. This resulted in terrible PR, including this YouTube video:
Adrian takes on the issue of rigid top down management practices saying:
It would be wrong to place all the blame on workers for their failure to take discretionary steps. The blame lies with management that sets rigid rules and metrics that disable employee judgment and create so many approval hurdles for mundane decisions.
She suggests that the root cause is a values issue.
The blame for poor employee action should be placed on the managers who set rigid metrics, and fail to invest in employees. Yet customers need more judgment, not less, from the employees they come in contact with. When customers contact a call center, it’s because there is an exception within the existing process and they need judgment that only employees can provide. Corporations need to build guidelines and values — not absolute rules and measures. "Doing what’s right for the customer" is a value that can drive appropriate action. Judgment requires coaching, practice and training.
Fair point. No doubt that loosening up things will help. But I’m just not so sure that we’ll manage exceptions well with values and guidelines alone.
Customers certainly need more judgment from us. But the answer won’t come from values alone. That’s just dreamy stuff and an expensive change management bill if the pipes don’t exist to channel those values. And I’d like to believe that as individuals we, for the most part want do right by colleagues and customers. The reality is that we’ve spent decades blaming middle and senior managers who get sandwiched everyday between strategy and delivery. Our process centric world no doubt solves 90% of issues by volume, but provides neither line employees nor middle managers with the facility to reach across disparate organization (expertise finding), loop in the best people (wrapping around problem virtually), use data and content needed (in context), to address exceptions.
Consider the Connected Enterprise
It’s, in fact, the lack of internal wiring of people (as opposed to systems) across our organizations that’s the core problem. Even if you have a mechanism to spot exceptions early (which most of us don’t), folks on the front line at large organizations often don’t have a clue as to who to approach or collaborate with to handle exceptions, other than their direct chain of command.
Thanks to newer fluid, social and collaborative approaches and a vast array of relatively simpler technology, finally solutions exist to reduce the likelihood of getting Delta-ized via a decisively built but loosely coupled collaborative fabric.
We’re seeing organizations from Financial Services to Institutional Banking to Healthcare and Hi-Tech starting to connect silo’d employee, customer and partner ecosystems, so that questions, knowledge, insight and action can find the right minds and generate the best answers to exceptions. And yes, all of that with an audit trail so we know who said what.
Having worked with large organizations on such problems for over a decade I can tell you that this was extremely difficult and expensive to get right in the past. Back then we twisted and stretched technology to do unnatural things. Today, innovations in enterprise social and collaboration technology, along with seasoned, purpose driven strategy, planning and leadership allow us to deal with potentially expensive or embarrassing exceptions almost as effectively as plain vanilla process. And compared to those prices you’ve paid for ERP, CRM and SCM technology with 3X implementation multiples to streamline repeatable process, the technology that helps take care of non repeatable processes (including exception handling) comes at a tiny tiny fraction of the cost.
Look, collaboration is not the answer to every problem. But by the same token, I’m more convinced everyday that the unwavering belief in the notion that there is 100% repeatability in most processes is grossly overestimated and even downright dangerous. Even those process considered most straight forward often beg for a discussion when a fork in the road presents itself. I’ve long said that what rigid process systems are missing is a giant Discuss button that sits right between Submit and Cancel buttons that govern what in reality is not a very black and white day in the office. Same applies for face to face customer interaction that’s otherwise governed by rigid protocol, as in the case of Delta Airlines..
And so, the question is, as executives, will you wait to act in the aftermath of a very prickly situation or will you preemptively ensure that on your ship and on your watch, exception handling is the rule.
7/31/11: One thing I should have added to this post: The conversation around exceptions can’t be complete without calling attention to the work of Sig Rinde who have done intensive thinking on the subject of what he called Barely Repeatable Process. Lots on this topic on Sig’s blog.
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SVP, Enterprise Social and Collaborative Software, SAP