Making Your Case to Senior Executives

Posted on November 24, 2015  Comments (0)

This month Dr. Suresh Gettala writes about the Talking To the C-Suite About Quality in the monthly ASQ Influential Voices post.

My take is a bit different than Dr. Gettala (and most others) in that I believe CEOs are so wedded to short term financial measures that if you are speaking to them you need to both appeal to this bias while also fighting to move the organization away from being led by such a bias. That task isn’t easy, the financial bounty heaped on CEOs makes it very difficult for them to think of the long term and about the normal customer experience.

In order to “make the sale” the advice is pretty simple, short term financial measures are what will work (most of the time). Clear data that shows cost savings or increased sales are what they want to see. Of course, we have all seen how easy it is to manipulate data to make a case for whatever you are arguing for. If you are making the case that other powerful people (in the room) want to be made and the CEO wants to hear those claims will be easily accepted most of the time.

If you are challenging the Highest Paid Person’s Opinion (HiPPO) (and/or their supporters) you will have great difficulty getting your data listened to no matter how compelling it is. Knowing this going into your meeting is critically important.

If you can’t find a very clear case to be made for your position, strongly supported by difficult to refute data you may well want to just go along with the desires of those with power. I tend to fight for what I think is right, no matter if my chances of success are low, but this isn’t really a wise strategy.

The Starry Night at the MET with a teacher standing and students sitting

The Starry Night at the Metropolitan Museum of Art in NYC. Photo by John Hunter; see more NYC photos.

I do try to focus on building the organization into one that will support my belief in a customer focused organization build on a foundation of respect for people striving to continually improve results through experimentation but this is a challenge. And trying to talk to the c-suite about quality when they are not ready to adopt that model of management doesn’t do much good.

Though admittedly I am not a good salesperson, I succeed by making things work better not by spinning good stories about how things could be better. Good salespeople will have more success with the challenge of getting a skeptical crowd to accept change, but senior executives normally are not easy to sell on new ideas. My strategy is to build my reputation by achieving results using good management practices. That builds the case for using the management ideas I believe in and listening to what I say (based on past results instead of my charisma or communication skill).

My advice is to grow your circle of influence and build the capability of the organization to adopt a customer focused continual improvement management system. Once that is done, speaking to the c-suite is easy. Before that is done, speaking to them is still easy, unless you want them to change their short term financial focus.

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Change Management: Create a Culture Seeking Continual Improvement or Use Band-Aids?

Posted on November 17, 2015  Comments (0)

Successfully shepherding change within an organization is often a challenge. Often change management strategies are mainly about how to cope with a toxic culture but exclude the option of fixing the toxic culture. Why not address the root causes instead of trying band-aids?

The most effective strategy is to build an organizational culture into one that promotes continual improvement. A continual improvement culture is one that is constantly changing to improve (grounded in long term principles: respect for people, experiment, iterate quickly, etc.).

You can try to push change in an ad hoc basis by adopting some strategies to create a similar feeling about the individual change effort. But that isn’t as effective as establishing them in the culture are. Strategies such as: going the gemba, pdsa, build trust via respect for people…

These tools and concepts build trust within the organization. The do that by showing people are respected and that the change effort isn’t just another in the long line of wasted effort for ineffectual change. The first part can be addressed, normally the second part can’t be addressed effectively. Often that is at the core of the issue with why the change effort isn’t working. It is a bad solutions. It hasn’t been tested on a small scale. It hasn’t been iterated numerous times to take a seed of an idea and grow it into a proven and effective change that will be successful. If it had been, many people would be clamoring for the improvement (not everyone, true, but enough people).

But still you can use strategies to cope with lack of trust in your intentions with the change and lack of trust in the effectiveness and fear of change. Some of those are included in the links below. But mainly my strategy is based on focusing on building the proper culture for long term excellence and the change management strategies are just short term coping mechanisms to help deal with the initial challenges. Using those strategies as a long term solution for dealing with change in a toxic culture isn’t a very sensible way to manage.

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Getting Retweeted by Marc Andreessen Generated a Flood of Retweets

Posted on November 9, 2015  Comments (0)

On Twitter today I was getting more than 30 times the notifications I normally get. So I took a look to see what is going on. One of my tweets was getting retweeted and liked quite a lot (nearly 100 times each, so far). I figure most likely someone with many more followers than I must have retweeted it.

A bit more investigation and sure enough that is what happened. Marc Andreessen had retweeted it. He has 432,000 followers (a bit more than my 1,600).

image of Marc Andresseen's retweet

This minor internet enabled connection with fame is one of the fun aspects of the internet (to me anyway, I might be a bit odd). I emailed Tim Berners Lee (the creator of the world wide web) a long time ago (probably about 15 years – and I still remember) and received a nice reply. I have written a few posts on my science and engineering blog about his work over the years including a short post on the first web server (Tim’s NeXT computer).

For those that don’t know NeXT is the computer company Steve Jobs headed in between his stints at Apple. In 1999, I was giving a presentation at a conference on Using Quality to Develop an Internet Resource (link to my paper for the talk was based on). I was working for the Office of Secretary of Defense, Quality Management Office at the time. In cutting the time down I eliminated saying that the internet was created by the Department of Defense and giving a few sentences on that history as I figured everyone knew that history. After my presentation, one of the people that came up to talk and somehow I mentioned that history and the 3 people standing there didn’t know it and were surprised. Anyway that NeXT comment reminded me of that story…

The tweet Marc Andreessen retweeted was about research by scientists in London that developed pain-free filling that allows teeth to repair themselves without drilling or injections.

Several people responded that we will never see this in use (based on the idea that announcements of research breakthroughs often fail to deliver). Quite a few people we looking forward to the day when it would be available though. Including some that were sitting in the dentist office while they were reading about it.

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Teaching Students How to Use Better Management Practices

Posted on October 27, 2015  Comments (0)

This month Edwin Garro writes about the Quality and Productivity Technical Program for high school students that has been adopted in Costa Rica. 5 high schools joined in the first year and 7 more will join in the next 2 years. The ASQ Influential Voices are commenting on this idea this month.

I was glad to see the point Edwin makes about the teaching critical thinking. I wrote a blog post about critical thinking perhaps being the most important catalyst to successful adoption of continually improvement management practices.

A system that promotes critical thinking and puts continual improvement first is one that is well on the way to better management practices. With that mindset the value of quality tools and concepts is clear (and can be tested). Without it, often making the boss happy and letting things stay the way they have always been are the main things that drive behavior in the organization.

Teaching the quality tools in combination with critical thinking is a powerful approach. Students that learn to use quality tools to experiment to achieve quality results from system will be well suited to the modern workplace.

I wish the effort in Costa Rica well. They would be wise to keep these words from Dr. Deming in mind as they go forward:

I read the papers that my students turn in. A whole stack of them. That’s 435 students at Columbia University last semester and 150 at NYU. A lot of papers to read. But I read them. Not to grade them. No, I read them to see how I am doing. Where am I failing? What don’t they understand? Why do they give wrong answers? Why do they have some point of view that I don’t think is right? Where am I failing?

Don’t just teach quality practices to the students. Use quality practices to improve education. The First Annual W. Edwards Deming Institute Education Conference is being held next month in Seattle. I would encourage the Costa Rica effort to learn from Dr. Deming and Alfie Kohn and David Langford (the latter 2 are keynote speakers at the conference).

I sat in on my first formal education on quality management practices when I was in high school (a seminar my father was giving to the City of Madison).

Related: The Importance of the Education SystemK-12 Educational Reform (2007)Future Engineers and Scientists

Human Proof Design

Posted on October 6, 2015  Comments (0)

Human proof design is design that prevents people from successful using the item.

cover of book, Design of Everyday Things

It is similar to mistake proofing except instead of prevent mistakes it prevents people from using it.

When you see human proof design you will often see signs to tell people how to use the device that has been human proofed. Common instances of this are hotels that have shower designs so opaque they need instructions on how to use a device most people have no problem using if they are not human proofed.

Human proof design is often created by a subset of designers that care about how something looks more than how it is used.

Most people prefer designs that are beautiful without being human proofed. The Design of Everyday Things is a great book on designing beautifully with customer focus.

A sign your design is human proofed is that a sign or manual is needed for people to use it.

Most human proof design can be identified very simply by having regular people try to use the item. Watch what they do and when they struggle to use it, many problems will be very obvious. You can’t use people in this effort that are significantly different from the normal users.

In several areas I see these failures quite often. Hotel rooms are a common source of problems. The light switches are often very odd and I have to search all over to find out how to turn on or off different lights.

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The Mission Statement Must Guide Action In Order To Matter

Posted on September 30, 2015  Comments (1)

Does Mission Matter? That is the question raised this month by Pat La Londe for the ASQ Influential Voices.

I have discussed a similar topic in a previous post: Vision can be a Powerful Driver but Most Often It is Just a Few Pretty Words. I believe that post captures exactly how I feel about the question “does mission matter?”

It doesn’t matter if it is just words on paper that has no impact on how business is done. And sadly that is more common than having a mission that actually matters because it actually guides how decisions are made and how the business delivers products and services.

A phrase in your mission statement that your company values employees matters only to the extent the company manifests a respect for people. A phrase about the importance of customers matters only to the extent the company delivers customer delight.

From a post I wrote on The W. Edwards Deming Institute blog, Hallmark Building Supplies: Applying Deming as a Business Strategy:

[Hallmark Building Supplies] uses the purpose statement to make decisions on a regular basis. This is one of the keys to a good purpose statement. If the purpose statement doesn’t guide what is happening it is not providing much value.

The video above gives a good illustration about how companies operate when aim/purpose/mission etc. drive business decisions. When this happens mission matters a great deal. It provides focus to everyone as they do their work and prioritize how to continually improve the organization every day. The video also provides an illustration about how leaders behave when they understand the organization as a system.

Related: Aligning Marketing Vision and ManagementAckoff: Corporations Are Led By Those Seeking to Maximize Their Welfare not Shareholder ValueTrust Your Staff to Make Decisions (you can’t do this well unless there is a shared understanding of what the priorities are)

All Data is Wrong, Some is Useful

Posted on September 22, 2015  Comments (0)

From my first blog post on this blog – Dangers of Forgetting the Proxy Nature of Data

we often fail to explore whether changes in the numbers (which we call results) are representative of the “true results” of the system or if the data is misleading.

Data is meant to provide us insight into a more complex reality. We need to understand the limitations when we look at “results” and understand data isn’t really the results but a representation we hope is close to reality so we can successfully use the data to make decisions.

But we need to apply thought to how we use data. Lab results are not the same are what happens in the field. It is cheaper and faster to examine results in a lab. But relying on lab results involves risk. That doesn’t mean relying on lab results is bad, we have to balance the costs and benefits of getting more accurate data.

But relying on lab results and not understanding the risk is dangerous. This is the same idea of going to the gemba to get an accurate understanding instead of relying on your ability to imagine reality based upon some data and ideas of what it is probably like.

photo of a Modified Yellow VW Beetle

VW Beetle (in Bangkok, Thailand) has some sort of modification along the back bumper but I don’t know what it is meant to do. Any ideas? More of my photos from Bangkok.

Volkswagen Drops 23% After Admitting Diesel Emissions Cheat

Volkswagen AG lost almost a quarter of its market value after it admitted to cheating on U.S. air pollution tests for years

During normal driving, the cars with the software — known as a “defeat device” — would pollute 10 times to 40 times the legal limits, the EPA estimated. The discrepancy emerged after the International Council on Clean Transportation commissioned real-world emissions tests of diesel vehicles including a Jetta and Passat, then compared them to lab results.

Obviously VW was managing-to-test-result instead of real world value. It seems they were doing so intentionally to provide misleading data. Obviously one of the risks with lab test results (medical trials etc.) is that those with an interest in showing better results could manipulate the data and lab procedures (or systems) to have the data show their product in the most favorable light.

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What to Do To Create a Continual Improvement Culture

Posted on September 8, 2015  Comments (3)

This month the ASQ Influential Voices discussion explores what to do and avoid in order to create a performance culture? James Lawther shared his ideas on what not to do to get things started.

I have discussed steps to take in order to build a culture of continual improvement in numerous posts over the years (see related links below). What it boils down to is building a system that supports that culture. Your culture is the result not your aim.

David Heinemeier Hansson put it well recently in his essay, CEO’s are the last to know:

But the bottom line is that culture is what culture does. Culture isn’t what you intend it to be. It’s not what you hope or aspire for it to be. It’s what you do.

In order to create a culture that enhances your effort to continually improve you must crate systems that move things in that direction. Part of that system will be the continual assessment of how your organization is falling short of your desired culture. This requires honest assessment of the current state. And it requires those in leadership to design systems to get a clear picture on what is really happening in their organization.

As I said on Twitter in relation to that article leaders need to understand danger of “losing touch” and take steps to counter that risk. Often the explanation for why something happened (a process producing a failure, a leader not being aware of the real culture…) is an explanation of what the system needs to be designed to address.

wall mosaic with tree, animals and people

Mosaic on an outside wall of a temple at Wat Xieng Thong in Luang Prabang, Laos. By John Hunter.

In many organization CEOs are not aware of what is going on. This is a weakness that must be addressed systemically. Many of the better management methods proposed by W. Edwards Deming address this issue. CEOs are given a false picture when they focus on results instead of the management system. CEOs are given a false picture when they crate a climate of fear. CEOs are given a false picture in organizations focused on achieving bonuses instead of continual improvement.

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The Road Not Taken

Posted on September 2, 2015  Comments (0)

Two roads diverged in a wood, and I–
I took the one less traveled by,
And that has made all the difference.

Wonderful advice and so poignant. But actually, if you read the whole poem, what we take from the quote isn’t what the poem was saying. Earlier in the poem it says

Though as for that the passing there
Had worn them really about the same

view out windows of a temple

photo from a temple in Siem Reap, Cambodia by John Hunter

Robert Frost was poking fun at his friend who would obsess over what fork to take in the path as they walked when in reality the choice made no difference.

And “that has made all the difference” is poking fun at self justifications of our actions; congratulating ourselves for doing something not really worthy of accolades.

Still the top three lines do seem like insightful advice. Of course what is really needed is insight into when choosing the road less traveled is wise (or at least a sensible gamble) and when it is less traveled for very good reasons.

I do believe we far too easily slip into habits encouraged by the well worn path most people take. And therefore think balancing that tendency with at least considering the road less traveled more often is wise. But I actually like that when you read the full poem it really isn’t saying that.

Related: Chomphet Hike, Luang Prabang, LaosOlympic National Park PhotosThe Aim Should be the Best Life – Not Work v. Life BalanceMaking Better DecisionsRhinoceros Hornbills on Mount Santubong

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Using Technology to Improve The Sharing of Knowledge

Posted on August 4, 2015  Comments (3)

This month the ASQ is asking Influential Voices to discuss methods to aid in sharing knowledge. Manu Vora kicked the discussion off with his post on The Gift of Knowledge Transfer Through Technology.

My career has been largely shaped by the pursuit of better ways to communicate. I grew up surrounded by those seeking to improve management (Bill Hunter, George Box, Brian Joiner, Peter Scholtes…). When I was in grade school that focus was largely on statistics and the value of multi-factor experiments (Dad was a statistician who wrote the “bible” on design of experiments, with George Box and Stu Hunter: Statistics for Experimenters). As I moved into high school Dad was doing much more direct management consulting (it was also a combination of statistics, engineering and management but the emphasis shifted over time) based on Deming’s ideas.

The knowledge of how to properly experiment on system with multiple important factors to experiment with (nearly all experiments) has been around for almost 100 years. Yet, even so, still many college level courses talk about the need to adjust one factor at a time (OFAT) and many businesses still experiment this way. The rate at which we incorporate new knowledge is still very poor.

Technology can help improve our adoption of better understanding. Creating a climate and expectation of continued learning is also important, but I won’t talk about that in this post.

I published and presented (I think at an ASQ conference though I can’t recall which one right now) a paper on Using Quality to Develop an Internet Resource in 1999. The purpose of that internet resource was to share knowledge about quality management and the article provides insight into both those ways of looking at what was done (using quality ideas to create a resource and using the internet to spread quality ideas).

A few years later I started this blog to help people find knowledge that would make them more likely to succeed with efforts to improve management. I believe deeply in the value of Deming’s ideas on management but see so many companies make poor attempts to improve management. There are many things needed to improve the success of organizations improvement efforts but I believe the right knowledge (the ideas talked about by Deming, Ackoff, Ohno, Scholtes, etc.) will help a great deal.

Intranets are great tools to share knowledge within your organization. They can also be powerful tools to connect people to internal resources within your organization.

Wikis are a great tool to share a knowledge base (and to maintain things like standardized work, visual job instructions etc.). Wikis are a wonderful technology because of how easy they make the management of shared knowledge. It may well be you print out various things to post and make more visible (depending on what makes sense for the work environment).

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Look at All the Data and Be Wary of Unjustified Confidence

Posted on July 20, 2015  Comments (0)

Interesting interview with Richard Feynman about the NASA’s space shuttle Challenge disaster. He discusses very well the problem of not thinking of all of the data and how systems produce results with variation.

“Results” are not enough to judge whether the current process is wise. He describes a child running into the street without looking that is warned by his parent and counters with the evidence that nothing happened. A child repeating this several times can think they have evidence it is not unsafe but that isn’t so.

With the Challenger disaster a simple view of the data analysis problem was a failure to look at all the data – failure to look systemically. Instead they looked at just the data points where problems were seen and those problems all were not catastrophic. If, you looked at all the data, it was pretty obvious cold weather greatly increased problems and if you listened to the engineers those problems were very serious and risked catastrophic results.

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Applying Improvement Concepts and Tools to Your Daily Life

Posted on July 7, 2015  Comments (2)

This month the ASQ Influential Voices is taking a bit different approach. This month we are looking at applying quality tools in our personal life based on the post from other influential voice, Sunil Kaushik: How Lean Helped Me Travel To Egypt With Just $500.

Sunil is on a nomadic trip around the world to learn and enjoy the experience while also helping others applying lean thinking.

I just returned from my own nomadic adventure.

John Hunter at Marble Mountain - Buddha  statue in background

John Hunter, in a cave at Marble Mountain, Da nang, Vietnam. This is one of my last stops before returning home. See more of my travel photos

I have experience applying quality tools since I was a kid being guided by my father. Another influential voices author, that I met in Hong Kong when I presented a a Deming seminar, included a mention of that connection in his post: Quality Life and Succession.

In this blog I write about using management improvement thinking in my personal life. That extends from management concepts such as optimizing the entire system and not getting trapped by habit or convention, for example in: The Aim Should be the Best Life – Not Work v. Life Balance.

My father applied these ideas in our family life and so naturally they formed my way of thinking. At the core was a focus on experimentation and focusing on what was important. It is easy to spend a lot of time on things that really are not that important and questioning if the actions we are taking is really what we should be doing based on the most important aims was a natural part of how we thought growing up. In order to experiment effectively you need to be able to understand data and draw appropriate conclusions (post on an experience with my father as a child: Playing Dice and Children’s Numeracy).

Also we would look at what wasn’t giving the results we desired and experiment on how to improve. I include in “results” the happiness or frustration the process causes (so as a kid this was often the frustration my brother and I had in doing some task we didn’t want to do – cleaning our room, doing homework etc. and the frustration our parents felt at having to continually bring us back onto task). Much of this effort amount to setting the understanding and incentives and process to get better results (both the end results and increasing happiness and reducing frustration of all of us in the family).

A concept I use a good deal in my personal thinking on a more concrete level is mistake proofing (or at least mistake making less easy). Many people do this, without really thinking that is what they are doing. But by thinking of it consciously I find it helps you design processes to be most effective.

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Interview of John Hunter by Jimena Calfa On Quality

Posted on June 16, 2015  Comments (0)

Jimena Calfa interviewed me for her blog OnQuality as part of her Quality Interview Chain.

John Hunter with river and cloudy hills in the background

John Hunter, Yangshuo, China. See photos from my trip to China

What are you doing to ensure you continue to grow and improve as a professional and/or as a person?

John: I don’t do anything consciously to achieve that. I think if we retain a thirst for knowledge and curiosity and have a desire to do a good job we will do what is necessary. I follow my passion to learn largely through the internet (blogs, webcasts, articles and podcasts). And I constantly question and experiment and adapt based on what I learn.

Which is your favorite quality quote?

John: There are so many – I don’t have a favorite, more like 50 favorites. But here are four:

“The old-fashioned idea of a good manager is one who is supposed to know all the answers, can solve every problem himself, and can give appropriate orders to his subordinates to carry out his plans… A good modern manager is like a good coach who leads and encourages his team in never-ending quality improvement” by George Box – When Murphy Speaks, Listen

Read the whole interview on OnQuality.

Related: Leadership While Viewing the Organization as a System (interview with Bill Fox)Software Process and Measurement Podcast With John Hunter (interview by Tom Cagley) – Management Improvement Leader John Hunter (interview by Tim McMahon)Lean Blog interview with Mark Graban: Podcast #174 – John Hunter, Management Matters

Publish Articles Promoting Better Management Using Open Journals

Posted on June 9, 2015  Comments (0)

William Woodall shared this wonderful article he wrote with George E. P. Box with me, Innovation, Quality Engineering, and Statistics. My thoughts on being able to read it online:

Thanks Bill, it is a great article. And thanks for having it openly available. I really wish professors would stop allowing their work to be published by those seeking to close access to the ideas we are trying to promote. I realize there are pressures to publish in historically prestigious journals.

For professors that have “made it” you will do a great service to others (and help promote the ideas in your field that you have devoted your life to) by refusing to submit to closed science journals (or closed professional society journals etc.). For those trying to secure full professorships I wish they would too, but I realize the hard choices they face.

The maximum closed-ness we should tolerate, in my opinion, is closed access for 1 year after which it becomes open. Require this in writing in the agreement, don’t just accept that the current practice is to promote the sharing of ideas; if it isn’t in writing some person may have the publisher adopt closed science later and block access to the content you wanted to share.

It is especially distressing, to me, when government dollars fund the time the professor spends and then the end result is closed to the public. Thankfully some universities and some government agencies paying for the writing of these articles are demanding that the articles be published in an open access fashion.

On the other hand if you want to publish on rate and rank, the value of annual performance appraisals, bonuses for hitting targets etc. feel free to use closed science publishers.

Related: The Future of Scholarly Publication (2005)Fields Medalist Tim Gowers Takes Action To Stop Cooperating with Anti-Open Science CartelHarvard Steps Up Defense Against Abusive Journal Publishers25 provosts from top universities jointly released a letter supporting current legislation to require open publication of scientific research (2005)Problems with Management and Business Books

The Future of Quality is to Actually Do What People Talked About Decades Ago

Posted on June 3, 2015  Comments (3)

In the current ASQ Influential Voices post, Laurel Nelson-Rowe, ASQ managing director, asks: What’s the Future of Quality?

The report they link to is hidden behind a register-wall. Hopefully in the future ASQ will have better User Experience (Ux) practices in place on the web site.

But it is a good example of the failures to adopt well known, decades old recommended practices. This failure to just do what the best experts have suggested for a long time is an example of the kind of thing we should hope to see eliminated in the future.

We don’t need fancy new ideas or breakthroughs. We just need to adopt what many people have been saying for decades. Read Russell Ackoff, W. Edwards Deming, Peter Scholtes, George Box, James Womack and Brian Joiner you will be well on your way to knowing what you need to know to help us to reach a good future for quality.

There are quite a few people that have provided very good material on lean thinking and the other ideas on management improvement. This list isn’t meant to say you should limit yourself to these people. I just feel you don’t need to go in search of new things, we have much better ideas than any new things being sold now from management experts that have been decades of material we would benefit greatly from applying today.

If you want a bit on user experience (given the importance of the internet and software applications today ) you can read: Signal to Noise, Boxes and Arrows and A List Apart.

If you want to appeal to those that think you must read something new you can read a bit of Eric Reis, Elon Musk, Jeff Bezos and Dan Pink. They offer good ideas, Eric Reis offers the most concrete suggestions in this group (Dan Pink is next). And those that like shiny new things will be happy with your new names (for a while). The Ux people also will provide concrete ideas to use. I personally find many excellent management bloggers are valuable resources to managers.

We haven’t done nearly as much with all the great management concepts explained decades ago. Not much of what is said to be new in the last 20 years provides more value than the stuff we haven’t gotten around to doing yet that was laid out long ago. If we want better managed organization to provide better results to customers, employees, stockholders and other stakeholders would be wise to make the future of quality actually applying what Deming, Ackoff, Scholtes and the other provided us.

I think we will be able to make this the future of quality. We take a long time to adopt better ideas for management but we do adopt them (with lots of backsliding in many organizations, but over the decades the movement is in the right direction in most ways).

Related: We really need to change how we improve the practice of managementNew or Different? Just Choose BetterGood management is good management: it doesn’t matter if someone figured out the good idea 100 years ago or last week.New Rules for Management? No!

Top 21 Executives at Toyota Getting a Raise to a Combined US$14.9 Million

Posted on May 20, 2015  Comments (2)

The difference between Toyota and so many other companies is obvious in many ways. One of the stark differences is how executives are paid. Toyota’s belief in a strong management system contrasts with the self worship many USA executives practice. How the executives pay themselves illustrates this very well.

Even with a proposed 19% pay boost the top 21 executives at Toyota would get a combined US$14.9 million in the proposal for this year.

Toyota Plans 19% Boost in Director Pay After Record Profit

Toyota proposed 1.52 billion yen ($14.9 million) in combined compensation and bonuses to 21 directors, including President Akio Toyoda, in a notice to shareholders today. The Toyota City, Japan-based company paid 1.28 billion yen the previous fiscal year.

After recording an unprecedented 1.82 trillion yen profit last fiscal year, Toyota forecast this month that net income will slip 2.4 percent in the year ending March 31. The company predicts deliveries to increase in every major region except Japan, where the nation’s first sales-tax increase in 17 years is expected to temper demand.

Toyota has proposed raising its year-end dividend to 100 yen a share, or 165 yen for the full year.

The deadly disease of extremely excessive executive pay has been doing more and more damage every year in the USA. Toyota has avoided the pitfall shared by so many self-centered USA CEOs. The 19% raise does possibly indicate that Toyota is slipping (they also received a 19% increase last year). But they have a long way to go before executive pay becomes a serious problem at Toyota.

The 21 Toyota executives together don’t get paid what CEOs at companies in the USA that make as much as Toyota does (few companies are as successful as Toyota). Many senior executives that are not CEOs in companies in the USA make much more that all 21 Toyota executives together. Europe has largely adopted the massively overpaid practices for senior executives from the USA. Most European companies lag behind the abuse of USA executives, but the European companies use the excuse of the USA to grab ever increasing amounts from corporate treasuries. In do so they adopt similar reckless management practices in order to justify taking so much.

For now, executive pay (and with it all the management distortions caused by massively unjust pay packages for executives cause within companies) is a big competitive advantage for Toyota. Not all USA companies allow executives to loot the company, for example, Costco continues to pay executives and staff fairly and does very well. But many USA companies are being torn apart by executives seeking and taking hugely unjust pay packages.

Total pay for union workers at Toyota will increase 8.2% on average from last year (I think this is pay for Japanese union workers, though I am not sure about that). This was also the same amount as the increase was in 2014. This seems an unlikely coincidence, it seems intentional. If you see data like this from a process it often indicated an artificial cap exists (or there are restraining forces on the process that make data points beyond certain limits very unlikely).

If you have seen lower figures for pay increases for Toyota workers, that was for the regular pay level which did not go up much. Toyota has a very large profit sharing plan. Profit sharing payments to union workers were over 6 months of regular pay. The main increase in pay for employees was in profit sharing. The “profit sharing” payments are negotiated so it isn’t exactly like what you may think of as profit sharing but it is essentially what those payments are it seems to me.

Related: Toyota Post Record Profit and Splits $15 million in Pay and Bonus for top 21 Executives (2014)CEOs Plundering Corporate CoffersToo often, executive compensation in the U.S. is ridiculously out of line with performance – Warren Buffett (2006 – it is even worse today)No Excessive Senior Executive Pay at Toyota (2007)Honda’s 36 board members, included the CEO, were paid $13 million in 2008

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The Aim Should be the Best Life – Not Work v. Life Balance

Posted on May 13, 2015  Comments (9)

My father had the most job satisfaction of anyone I have known. He had no separation between work and life. We toured factories on vacation. I visited Davidson College in North Carolina because he was consulting with a client in Charlotte before we went up to Duke and North Carolina for visits and asked the CEO what school I should visit. His grad students would call the house frequently.

Many of his best friends were colleagues. That is how I grew to know people like George Box, Brian Joiner, Soren Bisgaard and Peter Scholtes as I grew up. Various permutations of our family lived overseas based on his jobs in London (before kids), Singapore, Nigeria and China. Those experiences dramatically impacted all our lives and they were not about separating work from life.

The desire for a life embedded in other cultures and for travel drove decisions about work. He lived in Japan (because of his Dad’s job) for 2 years as a kid and that sparked his desire to do more of that as an adult.

My little brother, Justin, pushing me on a scooter at our house in Singapore.

My little brother, Justin, pushing me on a scooter at our house in Singapore.

The sensible aim is to optimize your life. Work is a big part of life. As with any system the results depend on the overall system not the performance of individual parts taken separately. Dad also died young. He was happy to have lived such a good life, even if he wished he could have lived longer he wasn’t bitter about missing anything.

When he learned he would die (of cancer) he mainly continued what he had always been doing living life and working on what he thought was worthwhile. One project he did take on, along with George Box, was creating the Center of Quality and Productivity Improvement at the University of Wisconsin-Madison. George’s speech about Dad’s work provides a nice look at how work and life – William G. Hunter: An Innovator and Catalyst for Quality Improvement.

He honestly looked back on his life and felt he had a life that few could have topped, even though it was cut short. He was certainly optimistic and positive. But my sense was this was his honest assessment, it wasn’t just some fake front he put on for others. He had been living his life as well as he could his whole life. And continuing to live it as long as he could was all he wanted to do.

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Visual Management and Mistake-Proofing for Prescription Pills

Posted on May 5, 2015  Comments (3)

Good ideas often just require some sensible thought to think of an improved approach. Management concepts can help guide such thinking, such as mistake-proofing and visual management.

To apply visual management requires giving a bit of thought to how to make visually obvious what is important for people to know. Mistake proofing is often really mistake-making-more-difficult (for some reason this term of mine hasn’t caught on).

prescription pills packaged together

Image from PillPack, they provide a service to deliver packages based on your prescriptions.

I believe mistake-proofing should put barriers in the process that make a mistake hard. Often what is called mistake-proofing doesn’t really fit that definition. The pill package shown above for example, doesn’t prevent you from continuing past the time on the package (Monday at 8AM) without taking the pills.

To call it mistake-proofing I would like to see something that makes it harder to make the mistake of failing to take the pills: something that blocks progress beyond that time without taking the pills.

Even something as simple as an alert to your smart phone that gets your attention and doesn’t allow the smart phone to be used without indicating you have taken the pills would reach the “mistake-proofing” level in my opinion (for someone that has their phone with them at all times). The Apple Watch could be a good tool to use in this case. Even so those wouldn’t make mistakes impossible (you can say you took the pills even if you didn’t, the phone/watch may lose power…). It would depend on the situation; this smart phone/watch solution is not going to be good for some people.

Another idea is that these pill packages should be tied to the room (in a hospital) and at home if a home care nurse (or even family or others) are responsible for assuring the pills are taken with a big display that perhaps 30 minutes before the pill is due posts a message that says “pills to be taken at 8 AM” and once that time is past it could become more obvious, perhaps after 15 minutes it produces an audio alert. The actual solutions are going to be better from those that know the actual situation than someone like me just thinking up stuff as I type.

But the idea is pretty simple: when you have processes that are important and at risk of failure, design processes with elements to make mistakes hard (and ideas such as mistake-proofing and visual management can help you guide your mind to ways to create better processes).

The entire process needs to be considered. The pill packages are nice, because even in failure modes they provide good feedback: you may still fail to take them at the right time, but you can look at the location where the pill packages are kept and see
if any have a time before right now (in which case you can follow the medical guidance – take the pills right now, contact the doctor, or whatever that advice is). Of course even that isn’t foolproof, you could have put the package into your purse and it is still sitting in their but you forgot.

Still the pill packages seem like a good mistake-making-more-difficult solution. And it seems to me that process has room to make mistakes even more difficult (using a smartphone addition, for example).

Continual improvement requires a continual focus on the process and the end user for ways to increase reliability and value. Each process in question should have engaged people with the proper skills and freedom to act using their knowledge to address weakness in the current process that are most critical.

Failure to take prescriptions as directed in a common problem in health care. Knowing this should make those involved in the process think of how they can use concepts, such as mistake-proofing, to improve the results of the system.

Too often to much focus is on making better pills compared to the effort is put into how to improve results with simple concepts such as visual management and mistake-proofing.

Each small improvement contributes to creating a more robust and effective process. And engaged people should continually access how the containing systems, new processes and new capabilities may allow more small steps to provide value to those relying on your products and services.

Related: Great Visual Instruction Example for Taking PillsVisual Management with Brown M&MsQuick Mistake Proofing Ideas for Preventing Date Entry Error

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The Value of Professional Conferences. Also Why Has There Been So Little Innovation?

Posted on April 28, 2015  Comments (3)

In the most recent ASQ Influential Voices post, Julia McIntosh takes a look at the costs and benefits of professionals attending conferences.

I still remember being in high school and George Box talking about the primary value of conferences was talking to colleagues in the hallway. This seemed very odd to me, as it seemed that the reason for going to a conference was to learn from the talks.

I also didn’t really understand the value in catching up with people in person. I could see it would be somewhat useful but I didn’t really understand the benefits of personal communication. Pretty much all of my communication at that point was person to person. So I didn’t really see the huge loss of fidelity of any other communication (phone, email…).

At early conferences that I attended my main benefit was still in sitting in sessions and learning what people had to say. I did also benefit from discussions with other attendees. And I started to form relationships with others which grew over the years. And over time the networking benefits did exceed the learning from sessions benefits.

Part of this also occurs as your knowledge increases and you have less to learn from the average speaker. George was obviously well past this stage when I was talking to him. For me I still learned a lot from some of the speakers but also found I was learning much less and skipping sessions to talk to people I could learn more from was an increasing benefit. Still I have difficulty doing that and would focus more on networking at lunch, between sessions and in the evening.

The costs of attending conferences are easy for companies to calculate. The benefits they bring are very hard to calculate. I can see why companies often are very tight with budgets for conferences.

Egyptian carving of figures into a stone sarcophagus

A stone sarcophagus from ancient Egypt. I took this photo after presenting a Deming 2 1/2 day seminar in Boston (at the Boston Fine Arts Museum – see more photos).

I think the benefits of getting people outside the building and letting them interact with others to learn and think about new ideas is very valuable. I do think it is much less valuable in most companies than is should be because they have bad management systems that are atrophied with poor practices that are going to be extremely difficult to improve even if people have good ideas to try.

The organization really should focus on improving the management system so it isn’t such a barrier to improvement. But I think most organizations instead find it easy to just estimate a poor return on investments in conferences because those returning don’t actually make any improvements. Again, I think the cause of the failure to improve is more about the bad management system than the benefit of the conferences.

Of course, to some extent, the conferences should be focusing on how to improve given so many attendees organizations are crippled with a poor management system. But often people seem reluctant to acknowledge or discuss that. And those that point out problems often are seen as the problem (based on their actions – I can only conclude blaming the messenger makes sense to some people). And these factors are often even more pronounced in those the organization is willing to invest in (they are often more focused on making the bosses happy rather than something like improvement and change which often rubs people the wrong way).

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Lessons for Managers from Wisconsin and Duke Basketball

Posted on April 6, 2015  Comments (1)

What can managers learn from Duke and Wisconsin’s basketball teams? Duke and Wisconsin are in the college basketball championship game tonight. They reached this stage through a great deal of hard work, skill, training and coaching.

Raw talent matters to mangers and even more to college basketball coaches. But raw talent alone won’t succeed (for college basketball teams a great system starved of raw talent would also fail).

The lesson many people miss is that college teams are mostly about developing a team that wins. Developing individual players is a part of that, but it is subordinate to developing a team. I think college coaches understand this reality much more than most managers do. But a management system that develops a team that succeeds is also critical to the success of business.

Managers can learn from successful college basketball programs the importance of creating a successful team. Part of doing that is developing individual skills of players. A huge part of it is developing an understanding of the system within which those players must operate.

Recruiting is an important part of developing an elite college basketball team. And it is critical to developing a world class business organization (though recruiting is less important to business, in my opinion). Recruiting is important in business, but it is easier to be very successful with good people, the skills needed in business are not often so rare as those needed in high level basketball.

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