Monday, 6 December 2010

Minicabs and Software development

So let me tell you a little story about a local company called Hackney Minicabs... and for those not living in London please feel free to substitute any names, cab company, locations and airports near you.

Now Hackney minicabs was a modest local cab company owned by an East london born 'n bred geeza named Colin.  Times were tough for old Colin! Increased development from the Olympics meant more competition and of course he was still recovering from the global financial crisis melt down a few years earlier.  Colin's business thrived on Airport runs, "Speediest trip to the plane innit" was their proud tried and trusted slogan which backed each and every business card of Hackney Minicabs.

But with the increased competition the bread and butter airport run was under attack and Colin knew he had to make serious moves to secure the future of the business.  Hackney Cabs quoted a time of 50 minutes which was the average time to the nearest airport, Stanstead, but Colin knew this could be improved upon to at least 30, surely, and began to put his mind to work to reach this goal.

Now first off Colin knew that minicab driving was not the most rewarding or fulfilling job and his drivers were mostly uneducated or lacked necessary visas to work unhindered in the UK.  Colin thought that clearly they lacked the motivation to do outstanding work.  So, to launch the the new "30 minute airport run" campaign, came an advanced driver compensation incentive scheme (ADCIS), which would pay a bonus to any driver who hit the 30 minute target with diminishing returns to the current average of 50 minutes.

After a week of the new improvement program it was clear that it had been effective on only half the drivers who had improved on the average, some considerably, but none had hit the the new target.  Clearly there were drivers who could not be motivated and Colin did not want these type of people involved in his company and promptly dismissed them!  The remaining better workers were given extra shifts to cover the gaps until new and more motivated drivers could be found.

Another week passed and Colin let the improvement program continue, with mixed results, times were disappointingly average at best.  Since these were the best drivers, Colin thought he would pull one of the better drivers aside and ask what could be done to help him improve.  "My minicab is SO old and gutless" the driver replied. "A-ha", Colin thought, clearly the problem was with the tired old cars they used.  This was an important revelation and so obvious, better cars meant faster airport runs and most importantly better customer satisfaction.

With immediate effect, hard earned saved funds and a loan from a local shark, Colin shelled out for 5 new cars from a local dealership at a price that couldn't be refused.  Fortunately he had a mate, who knew a mate, who knew a mate, who got brill deals on the new high performance MPV he saw on Top Gear last month.  Within a couple of weeks the new fleet was operational and Colin's confidence was riding high.

The times began to roll in 55 minutes, 60 minutes, 65 minutes... this was crazy, despite the faster engine, stiffer suspension, racing tyres and turbo the times were slower than ever? What was wrong? Colin pulled the same driver aside in a performance review and asked why? "The car is so new and shiny, I'm driving more carefully so as not to damage it". This was certainly an unseen side effect.  After some coaching and pleading with drivers to ignore the state of the cars, times began to drop, although only enough to bring the average down to 48 minutes.  However to Colin's dismay, this was no way near the target of 30 minutes.

Through the chaos there was one driver who was consistently better than most. Young 22 year old Zubair, another local Hackney lad who had charisma and obviously the skills and drive to achieve the goal and who regularly achieved 35 minute airport runs.  Colin appreciated his talents and sent him forth to train the other drivers in the passion skills needed to turn the business around.

Amazingly times began to tumble, the following week airport runs hit 45 minutes, 42, 40 and then 38 minutes, things were looking good.  Colin cracked the bubbly, finally he was on the road to success and the local market would belong to Hackney cabs once more.

Unfortunately, the following months ended in misery, two of his best drivers were arrested speeding and lost their licenses and several long time customers complained of rushed and uncomfortable journeys with bags being hurled into and out of the cab.  Business was suffering and customers were defecting to the competition in droves.  Crippling loans had to be repaid and cars had to be sold, word had got around that Hackney Cars was not a good place to work.

The rest of this story is a sad tale of loan sharks and broken limbs and not one that needs to be told.  But what can we learn from this?


  1. The first bit of the story sounds a lot like Deming's Red Bead Experiment:

  2. @Dave You are right thanks, in fact I am running a red bead experiment today at a client. I was attempting to find another system that we can all relate to and understand variation very well... London (city) traffic :)

  3. @Jason The story and explanation shall be in a new blog post soon. but I appreciate your enthusiasm!

  4. Soon? I've been chomping at the bit hitting refresh on the same tab every lunch break for a-year-and-a-half! Please Christian, where's the explanation, it's killing me :)

  5. Too true, suppose I have left you all hanging long enough..

    I chose the act of driving to the Airport as a deliberate metaphor as many of us can relate to such an activity. The drive to the Airport usually means driving on busy roads and for some distance, essentially a task that is full of unexpected delays. Most of us would balk at thinking we could nearly half the drive time to the airport or even attempt to accurately predict our arrival time. Though this happens every day in business, in situations with even more variability.

    There are several unfortunate things going on here for Collin.

    1. First and foremost Collin shows no understanding of variation. A goal was set based on beating the competition, not actually based on reality of what is possible within the system of roads driving to the Airport.
    2. Performance in a system such as this is a lottery due to natural variation. All drivers will have both good and bad days due to events outside their control. Setting goals in this environment will yield winners and losers naturally, and will mostly be orthoganal to driver talent. Collin, by selecting the fastest drivers again ignored variation and for most part selected lucky lottery winners.
    3. Unintended consequences of goals and bonuses. When Collin offered a bonus for 30 minutes to the airport, he created a pseudo goal and focus for the drivers, which forced them to break the rules to achieve it to the detriment of the customer. In fact all other goals such as pleasent journey, passenger safety, road rules and courtesy were abandoned, because the new goal with reward took precedence.

    Have you experienced similar situations in your job?