[The following article appears in the September 1994 edition of
_Public_Sector_Quality_Report_, pages 1, 2, and 3.]

                  SAN JOSE PUBLIC WORKS SHUNS "SILOS," 
                    SHIFTS PROCESS TOWARD HORIZONTAL

     In the 1970s and for the much of the '80s, it seemed high
tech companies couldn't wait to locate or expand in and around
the city of San Jose, in the heart of California's Silicon
Valley. With the region's economy booming, it almost didn't
matter that city zoning, permitting, and inspection processes had
grown cumbersome and time-wasting for business customers.

     Then, as the electronics industry grew more competitive,
firms became more discerning about the development hurdles posed
by certain cities. In a series of stormy "business climate" focus
groups conducted by the city, chief executives, developers, and
small business owners alike pointed a critical finger at San
Jose's development review process.

     With its thicket of zoning regs, transportation impact
studies, geologic hazard evaluations, and architectural reviews,
San Jose had become "a tough place to do business" in the eyes of
customers, according to Ron Conn, senior engineer in the Public
Works department's Development Division.

     Although Public Works had taken some steps in recent years
to streamline its internal processes, Conn says it amounted to
little more than "polishing the Chevy that was already in place."
The focus group findings indicated it was time for a radical
change--a reengineering change--in the way the 50-person
Development Division went about its work.

     Working with consultants George Sipel and Dan Madison
earlier this year, Conn and other division employees quickly
pinpointed the biggest obstacle to improving and streamlining
development review-the division's "functional silo"
organizational structure.

     "Typically in a silo something comes in the top and it stays
in there for a long time before it comes out the bottom, and
that's what was happening," explains Conn. "When I sent a
development plan out for hydraulics review, it was routed to a
person that had that technical expertise. It would queue at that
workstation, competing with other projects that needed attention,
and sometimes it would sit there for a considerable length of
time. When he finally got around to taking a look at it, it maybe
took only five minutes and it was on its way, but that part of
the process alone might have taken two weeks."

     With as many as 15 different technical specialties in the
division, a customer's plan might spend weeks, even months,
moving slowly from station to station. As a result, even the
simplest grading permit took an average of 21 days to move
through multiple "silos" of review.

     Enroute, it was difficult for staff, much less the customer,
to gauge the exact status and timetable of a plan's review. "This
is overstating it a bit," says Conn, "but it was a classic
example of attaching a routing slip to a plan, with a half a
dozen stations it had to pass through, then sending that plan off
and hoping it would return some day."

     Since May, division employees have focused on dismantling
their vertical organization and replacing it with more
horizontal, customer-focused "process teams." Elements of their
reengineering effort include:

          -- Appointment of six project engineers (four from
     within the division, two from other areas of Public Works)
     to lead three- and four-person cross-functional process
     teams. Each engineer "drafted" division employees to serve
     on the teams, spreading the staff's varied technical
     expertise as well as possible among them. The teams have
     been charged with what Conn describes as "cradle-to-coffin"
     handling and review of incoming development plans, from the
     initial planning permit and environmental review stages to
     construction permitting and final inspection.
     
          -- The anticipated redesign of more than a dozen major
     "sub-processes" (i.e. grading permit, traffic report, flood
     plain management, etc.) within the overall review process,
     with extensive input from division customers.
          Each redesign effort begins with flowcharting the "as
     is" process, followed by telephone interviews with a few
     dozen customers to determine what works and what doesn't
     work in the current process. That customer feedback is
     shared with a team of division staffers, who gather in an
     off-site "war room" to meld the customer feedback and the
     "as is" flowchart into a new, more customer-focused process.
          Once that improved process is devised, a handful of
     customers is once again invited into the war room to
     critique the new process before it is implemented.
     
          -- A major shift in both the physical location and the
     job duties of division employees. Now it's the project
     engineers and their team members (not clerical staff) who
     staff the service counter and handle intake when a customer
     submits a plan for review.
          A customer service workroom has been established near
     the counter, so a project engineer and a customer can easily
     go there to review plans, discuss changes, even approve a
     simple plan within minutes of the customer's arrival. The
     division also installed blueprint reproduction equipment, so
     simple plan changes can be made at the division offices.
          In response to the division's new service approach,
     Conn notes that more and more customers are having
     experienced engineers (rather than couriers) deliver plans.
     This creates an initial, high-value, engineer-to-engineer
     interaction that has become an important first step in
     helping plans move more quickly through the division's
     review process.
     
          -- In its first major sub-process redesign (this one
     for grading permits) the division took a close look at
     historical data and noted that as many as 38 percent of past
     applicants actually did not require a permit, and a
     substantial amount required only minimal review before a
     permit was granted.
          As a result, permit applicants now are "triaged" into
     three classes: exempt (no review required), express (minimal
     review), and regular (extensive review). Project engineers
     have the authority to handle exempt and express reviews
     quickly. Now the average express permit is approved within
     two hours, while regular permits are approved in as few as
     five days-a dramatic gain over the previous 21-day average.
     
     Though it's early in the reengineering effort, Conn says his
division is seeing anecdotal signs of increased customer
satisfaction. "Obviously when you get a customer who comes to the
counter thinking it's going to take them a matter of weeks to get
approval, and they get it in a couple of hours, there's going to
be some customer delight," he says.

     Conn concedes that many organizational issues remain to be
addressed. There's the question of compensation for project
engineers, who came from several different pay classifications
before taking their current jobs. There's also the challenge of
how to adequately cross-train teams, so they possess the
technical knowledge needed to guide a plan through the entire
review process.

     Then there's the sticky issue of middle and upper managers
--what to do with the four or more layers of management that now
exist between the division director and the division's new
leadership focal point, the project engineers. "We want our
project engineers to do the bulk of the decision making,"
explains Conn, "but then you have to really stop and ask
yourself: 'What the hell are all the rest of these people doing
in the organization?'"

     Although he's technically among that "rest" group, Conn
insists he's more excited about leading the strategic overhaul of
an organization he cares deeply about than he is worried about
protecting his own turf.

     "I think there's a lot to say about having good people stuck
in a bad process," says Conn. "I sometimes have to pinch myself
at having gotten this opportunity to work on things that have
been frustrating us for a long time. I've spent a career
'polishing the Chevy,' and it looked pretty good from the
outside. But reengineering, what we're doing in San Jose right
now, we're going to take that Chevy apart--the brakes, the
engine--and make sure that how it looks on the outside is not
only skin deep."

CONTACT: Ron Conn, senior civil engineer,
City of San Jose, Public Works Department,
Development Engineering Division, (408)
277-5161.

Organizational Snapshot
San Jose, CA
Population: 800,000
Public Works Department: 370 employees
Development Division: 50 employees

[For further information about PSQR or to subscribe, contact:
Public Sector Quality Report
17733 Kingsway Path
Lakeville, MN 55044-5209
Phone: (612) 898-5058
Fax:   (612) 892-7710
e-mail: 74363.3644@compuserve.com]