Business managers have a strong bias toward action. This is true of managers in small and large corporations, non-profits, and the government. Being decisive, after all, is one of the hallmarks of leadership. Yet acting precipitately without first gathering some facts can lead to unintended consequences. Rather than fixing a problem, these actions risk exacerbating it. Consider the following cases:
Field of dreams. The prevailing culture at a mortgage bank is "if you bring 'em in we'll close 'em". Anecdotal evidence suggests that underwriters are spending a lot of time on the phone dealing with applicants so they're not closing loans fast enough. The manager creates and staffs a customer service department to deal with customer calls. Customer calls are now answered promptly and courteously by trained CSRs. The problem is that the CSRs have limited information about the callers' status and therefore have to revert to the underwriters and call applicants back. The unintended consequence is that underwriters are now constantly in communication with the CSRs either by email or phone to respond to their queries. These responses are then relayed to the customer. The underlying problem is salespeople who are bringing in unqualified borrowers (of which we now know all too well the consequences). Underwriters, under pressure to achieve high close rates, spend time on the phone with dicey borrowers. Rather than take the time to gather facts and address deficiencies in the sales process, the manager sprung into action and created a bigger problem. The action did reduce the calls being handled by underwriters, but did not improve the effectiveness or speed of underwriting.
Let's go paperless! An organization that relies on paper originals to process applicant files decides that it's time to streamline and reduce paper. The manager decides to put the initial application form online. Now, rather than requesting a form online, waiting to receive it, filling it out and mailing it back, the entire process is completed by the applicant online. The applicant's initial perception of increased efficiency, however, is quickly shattered by the lengthy delays in the back-end processing of the applications. The unanticipated flood of applications creates a huge (and equally unanticipated) backlog which takes months to work down. Customer fury builds as the expectation of a streamlined process goes unmet and the "improved" process proves to be worse than the old paper-based process.
What these cases demonstrate is that a manager's bias for action can often have unintended consequences. Rather than resolving a problem, the action creates new problems. The pressure - real or perceived - to "do something" obscures the benefits of action based on well-reasoned analysis. In both cases, some fairly quick gathering of the facts would have led to better decision-making. A quick analysis of the types of calls being handled by the underwriters would have revealed that many calls were from applicants with spotty credit histories and low FICO scores. A more thorough qualification of applicants upfront would have weeded out unqualified borrowers that were consuming underwriters' time. A simple checklist and stricter guidelines for salespeople would have improved underwriter productivity. Instead, the action taken - creation of a customer service department - did not solve the problem, was costly to unravel, and created dissatisfied customers.
In the second case, doing nothing would have been preferable to the action taken. In the rush to automate one piece of a bigger process that remained dysfunctional, manual and paper-intensive, the company created an expectation that it could not fulfill. An analysis of historic application volumes, processing capacity, and peak volume processing times would have raised red flags. The manager could have then taken steps to free up processing capacity before initiating the change.
When operating managers identify problems, the urge to react can be strong. As these cases show, the managers would be well advised to stop, gather facts, and act based on a reasoned analysis of the facts. This delays action by a few weeks but will mitigate downstream pain.