Systems Thinking: Demand by Andy Lipok

Most of us believe we know the problems we have within ourselves, at home, with our football teams and of course at work. But all too often the problems we identify are not the root cause and the actions (if we take them at all) do not lead to sustainable improvement.

Most people, when they want to make a change, tend to start at the wrong place. They start to change things without actually knowing what’s wrong. It’s a bit like a doctor treating you without knowing the real problem – a painful and expensive business, as my knee will testify.


If we don’t correctly identify the cause of the problem it will resurface and usually cause more damage along the way. As a result the cost of the problem becomes more expensive and time consuming to fix, but also the increased cost of service to administer the appointments, more time with doctors to see the patient, more phone calls as the patient comes back with the same complaint, not to mention the cost and time incurred by the patient themselves in sick days, transport, phone calls and alternative therapies.
Back to our organisations, we first need to get knowledge of the WHAT and WHY of current performance of the organisation. The only place to start in checking to SEE what the real problems are is with our interactions with customers. We simply need to go to where the work is done and spend time collecting and collating the different types and frequency of demand, i.e. taking every email, letter, phone call, internet enquiry and face to face interaction, noting in the customer’s exact words what they wanted. This is only a temporary endeavour, we certainly don’t need a cottage industry of reporting – you just need to write down the demand types over a sufficient time period to establish frequency and variation.

In studying demand we make several key discoveries:

  • Not all demand is work to be done or necessarily what our customers want us to do
  • All demand is varied but predictable over time
  • There are two main types of demand – value and failure
  • Value demand is what the customer wants and what we’re here to do
  • Failure demand is where we fail to do, or do something right for the customer
  • The majority of demand is often failure demand (which is preventable)
  • Failure demand can be anything between 40% and 80% of total demand. Yes, up to 80% of all customer demand in branches and call centres!


Here is a list of typical demands into a call centre or branch – value or failure demand?

  1. What is the balance of my account?
  2. Why have I got these charges, they are not right?
  3. Can I have an overdraft?
  4. I’ve had my cards stolen
  5. What is happening to my mortgage application?
  6. I’d like to order some currency
  7. My PIN still hasn’t arrived
  8. I’d like to talk to someone about savings
  9. I cannot seem to access my account on the internet
  10. Has my cheque cleared?

Even with this short list and our own experiences we can conclude that there is a huge opportunity to increase capacity in our services by removing failure demand if we can identify and eradicate it. Meanwhile, if value demand can be predicted and our aim is to meet the purpose from the customer perspective first time and fast then by designing our work processes and training against this predictable value demand a more efficient service might be achieved.

So how do we act on the failure and value demand to increase capacity?

If we understand value and purpose from the customer perspective alongside failure demand then we can analyse the best way to meet the customers’ purpose as quickly and efficiently as possible, we can also better focus staff training on this predictable value demand. We want customers to ‘pull value’ from the organisation, and if we design the system to do ‘value work’ (i.e. what matters) and only the value work, costs fall as service improves. Clearly you cannot get rid of all failure demand, but we can certainly aim to continually rid ourselves of the bulk of the causes of the failures.
To design a service that works you need to learn how to design against demand, to understand the nature and extent of the variety in demand and optimise the way the system responds to it. The value demand tells you exactly what customers want and the failure demand how they want the service. The beauty of this approach is that it can be done so easily and swiftly by the staff doing the work. Acting on demand gives you the greatest leverage to improve performance against purpose for the customer. By removing failure demand and designing the flow of work through the organisation to meet value demand first time and fast service will improve, costs will plummet and staff morale will go up!