Original Statement

“We are struggling with our dunning collection phone calls because of the increased volume of customers going delinquent. Our recovery rates have dropped from 75% to 45% over the past year as the number of delinquent accounts have tripled, even though we have increased staff accordingly.”


  • Can the IFR equal zero while still maintaining supersystem ideality and value?

Test One Narrative:

A typical local management response may be to consider adding more even dunning collections roles to the collections team, however TSoT forces the analysis of understanding why delinquency is increasing in the first place because it starts with an examination of the entire supersystem.

  • What would be required to eliminate the need for dunning altogether, or to reduce it to a nominal component of operations?

This example is further intended to highlight the concept of value conflict as previously defined. The supersystem here needs to provide input to the approach. Do we want the solution to be market facing or organization facing?

A non-TSoT management solution might focus on increasing the capabilities of the dunning team, asking for even more roles or new technology.

A TSoT market facing solution to IFR equals zero for dunning might be to only sell to customers that will not go delinquent, or who demonstrate the least likely characteristics of going delinquent.

A TSoT organization facing solution to IFR equals zero might be to outsource the dunning process to a different organization.

A true solution might be multifaceted within the supersystem making this a ‘level three’, or multiple contradiction problem:

  • Level Three: System-Wide Contradiction, Multiple Contradictions––difficult design, process, and team contradictions.

It is also reasonable to assume for illustrative purposed that there is no IFR equals zero solution at this stage, meaning there is nothing that can be removed from the system (other than customers) to achieve the desired IFR.

So, IFR is “While working to reach zero percent customer payment delinquency we will consistently improve payment collections, so they are faster and easier.”

IFR as an evaluative question is “Does this action make it faster or easier to bring customers current?”

Please notice the simple language used.

Test Two Narrative:

  • Are the current benefits B greater than or equal to the cost C of the benefits?

In this example we do not know anything about the actual product, only that it is something that is bought and likely has some type of recurring payment structure. There were however a few metrics we were given, and we can derive that:

  • Within the past year the number of customers going into the dunning process have tripled
  • The recovery rate has declined from 75% to 45%
  • It can be implied that 75% recovery was acceptable, but that 45% recovery is not (or else why not address a year ago)
  • We have some understanding of cost such that at 75% dunning costs can scale with sales volume, but 45% recovery cannot
  • Therefore:
    • A year ago, B => C when dunning recovery was 75%
    • Today, B < C when dunning recovery is 45%

So at this point one possible delta Δ would be to change either the cost C such that  ΔC is lower and fewer people default requiring dunning processes; or ΔC is higher such that is can include some type of check to screen potential default customers prior to sale.

Test Three Narrative:

  • Are the current outputs A greater than or equal to the required output R as well as any problems P or harms H of achieving the required output?

Independent from our analysis in test number two the data here is presented very straight forward:

  • Required output is a dunning recovery rate equal to or greater than 75% so R =>75%
  • Currently the dunning recovery rate is 45% so A = 45%
  • Additionally, there exists a problem P that the volume of customers entering the dunning processes have increased threefold.

At this point one possible delta Δ would be to reestablish the actual output A back to 75% recovery by returning P back to its lower volume (Δ P) or by some other means.