Marketers Are Embracing Statistical Design of Experiments

Posted on May 27, 2005  Comments (2)

Marketers Are Embracing Statistical Design of Experiments (site broke link so I removed it) by Richard Burnham.

Crayola® conducts an e-mail marketing DOE to attract parents and teachers to their new Internet site. The company discovers a combination of factors that makes their new e-mail pitch three-and-a-half times more effective than the control. (Harvard Business Review, October 2001, “Boost Your Marketing ROI with Experimental Design,” Almquist, Wyner.)
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Marketers can’t always be certain what triggers buyers to respond. In the past, we were always admonished to test-test-test, but only one factor at a time – relying on our gut feelings and uncertain hopes. With DOE, marketers have replaced voodoo with the science of statistics.

For more on Design of Experiments see:

A Lean Walk Through History

Posted on May 27, 2005  Comments (0)

A Lean Walk Through History by Jim Womack
author of Lean Thinking Banish Waste and Create Wealth in Your Corporation by James P. Womack and Daniel T. Jones, 2003 and The Machine That Changed the World The Story of Lean Production by James P. Womack, Daniel T. Jones and Daniel Roos, 1991.

Once you are sensitized to the depth of lean history, along with its many advances and setbacks, it’s easy to begin filling in some of the other milestones:

By 1765, French general Jean-Baptiste de Gribeauval had grasped the significance of standardized designs and interchangeable parts to facilitate battlefield repairs. (Actually doing this cost-effectively in practice was another matter and required another 125 years.)

By 1807 Marc Brunel in England had devised equipment for making simple wooden items like rope blocks for the Royal Navy using 22 kinds of machines that produced identical items in process sequence one at a time.

By 1822 Thomas Blanchard at the Springfield Armory in the U.S. had devised a set of 14 machines and laid them out in a cellular arrangement that made it possible to make more complex shapes like gunstocks for rifles. A block of wood was placed in the first machine, the lever was thrown, and the water-powered machine automatically removed some of the wood using a profile tracer on a reference piece.

Six Sigma and the Evolution of Statistical Management Methods

Posted on May 23, 2005  Comments (0)

Six-Sigma: the Evolution of 100 Years of Business Improvement Methodology (pointy haired bosses broke the link so I removed it) by Ronald D. Snee.

The article includes a nice very quick summary of the development of statistical methods to aid management improvement in the last 100 years. Then the article gives a good overview of Six Sigma.

There are four aspects of the Six-Sigma method…

First, Six-Sigma places a clear focus on getting bottomline results…

Next, Six-Sigma builds on improvement methods that have been shown to be effective and integrates the human and process elements of improvement…

The third key characteristic of Six-Sigma is that it sequences and links the improvement tools into an overall approach…

The fourth key characteristic is that Six-Sigma creates an infrastructure of
Champions, Master Black Belts (MBB), Black Belts (BB) and Green Belts (GB) that
lead, deploy and implement the approach…

Six-Sigma is based on the scientific method, utilising statistical thinking and methods (Hoerl and Snee, 2002). Statistical thinking, therefore, is fundamental to the methodology because Six-Sigma is action-oriented, focuses on processes used to serve customers, and defect reduction through variation reduction and improvement goals.

And the article closes with a case study.

Open Source Management Terms

Posted on May 23, 2005  Comments (4)

Statistical Method Helps Boost Bottom Lines, Batting Averages by Jon Van, Chicago Tribune:

Using statistical techniques embraced by quality guru W. Edwards Deming, Holland has worked for a generation guiding enterprises large and small to boost efficiency.
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Yet getting management support for an MVT project is vital, Holland said, because experience shows that only 25 percent of ideas intended to improve a process will have a positive effect. The others will either have no effect or will hurt. Managers hate to see experimental results shoot down ideas they were certain would help, he said.

The article also mentions:

While Holland claims MVT as his own, others say it is really just a variation of strategies widely used in business.

“Multifactor experiments have been around for a long time,” said Ajit Tamhane, Northwestern University professor of statistics and industrial engineering and management sciences.
…
David Coit, a Rutgers University professor of industrial systems engineering, said that Holland’s MVT is very much like a quality-enhancing scheme called design of experiments.

So often we seem to focus on proprietary solutions. Instead it seems to me, most often what is needed is to do a good job of applying the ideas that have been known for decades. Deming ideas, design of experiments, lean thinking, experimentation, etc. are not secrets. There is a long history of how to apply these ideas to improve organizational performance.

QualPro obviously does well marketing itself (see press clippings from their web site) selling the concept of proprietary solutions to press organizations. Raising the question of whether the proprietary solutions really offers unique ideas, as the The Tribune article did was uncommon in my experience.

I like those encouraging the adoption of statistical tools to improvement management but I find the practice of trademarking terms like Six Sigma and MVT a bad way to encourage innovation in the practice of management. While it is nice to see Six Sigma efforts and others use statistical tools (such as design of experiments) I would encourage people to stay with “open source” management terms and remain part of a community looking to improve the practice of management.

Update: Also see – Management Advice Failures

Six Sigma at the Kennedy Space Center

Posted on May 23, 2005  Comments (0)

The Lessons of Six Sigma: Management tool helped refocus priorities, by Napoleon Carroll and Christa Casleton :

Process ownership is not a recognizable role in the CFO organization; it doesn’t fit anywhere in the standard position descriptions, and there’s no spot for it on the organization chart. After rigorous analysis, it was clear to us that unclear process ownership was one of our major problems.

Lean Manufacturing is Better Business for Ariens

Posted on May 22, 2005  Comments (0)

Lean Manufacturing is Better Business for Ariens:

Gone are the long assembly lines, the hallmark of the Henry Ford method of mass production, and gone are warehouses and semitrailer trucks loaded with inventory.

Iran Society for Quality – Blog

Posted on May 22, 2005  Comments (0)

Iran Society for Quality – Blog. I can’t read most of the site, but they seem to have a blog.

Six Sigma Software

Posted on May 22, 2005  Comments (0)

Six Sigma Software:

In the future, the best business software companies will distinguish themselves by producing industrial-strength, bulletproof code – code that approaches Six Sigma standards.

China and the Sugar Industry Tax Consumers

Posted on May 22, 2005  Comments (1)

Topic:

China to Raise Tariffs On Clothing Exports, from the Washington Post:

The Chinese action would raise export duties on 74 categories of Chinese clothing from token amounts announced late last year to a range of 12 to 48 cents per garment, starting June 1.

If the Chinese government must reduce the amount of the world textile trade that their country is taking, or face retaliation from other countries, this is a very smart move. Essentially China gets to tax the United States, Europe, etc. and be thanked for doing so by the governments of those countries. Such is the odd nature of international trade these days.

The Chinese government is going to tax textiles being exported by China. Therefore when an American picks up a shirt at the mall it will include a new tax to the Chinese government and this is seen as a good thing by the American government. An alternative would be for the American government to tax imports. Then the tax paid by the American consumer would go to the United States government instead. It seems odd that the American government thinks it is better to pay a tax to the Chinese government than to the American government but that seems to be what their policy and statements support.
Read more

Roger Hoerl’s Perspective on the Future of Six-Sigma

Posted on May 19, 2005  Comments (0)

One Perspective on the Future of Six-Sigma by Roger Hoerl. Originally published in the International Journal of Six Sigma and Competitive Advantage 2004 – Vol. 1, No.1 pp. 112 – 119.

Six-Sigma has maintained momentum for over ten years now, longer than many pundits expected. However, the key question remains: how long will Six-Sigma remain front-page news? The answer is that it will remain front-page news as long as it delivers front-page results. A second, and related question is: how might the initiative morph and evolve in order to remain relevant going forward? This paper suggests that several emerging trends will continue, such as migration to financial services and healthcare, standardisation of Design for Six-Sigma (DFSS), and further globalisation. Longer term, a key challenge appears to be integration into normal operations, rather than managing Six-Sigma as a separate initiative.

Roger Hoerl, leader of the Applied Statistics Lab at GE Global Research, is one of the leading lights in the Six Sigma movement – in my opinion. He has also co-authored several excellent books:

You can also view more articles by Roger Hoerl via the Curious Cat Management Improvement Library.

Curious Cat Blogs

Posted on May 19, 2005  Comments (0)

Topic: Management Improvement

We have started a new blog, Curious Cat Management Articles, specifically to highlight management improvement articles on topics like: Lean Manufacturing, Deming, Six Sigma, Continuous Improvement, Innovation, Customer Focus, SPC and System Thinking.

We are still working out the best way we can use blogs effectively. Our current plan has several blogs targeted for slightly different audiences (so you may be interested in one, or several or all). The current Curious Cat Blogs:

  • curiouscat.com Blog (this blog) – focused on management improvement, economics, investment, travel, the internet and the curiouscat.com web site. These posts will have much more of our own commentary. Right now (this may change of course), we plan on including short posts on several selected management improvement articles that are added to the Curious Cat Management Improvement Library. So if you are pressed for time you can just try the articles and posts we mention here.
  • Curious Cat Management Articles – focused on short posts mainly linking to articles on systems thinking, continuous improvement, lean thinking, Deming’s ideas, customer focus, six sigma, design of experiments, quality management and related topics. We will continue to collect the best online management improvement resources at the Curious Cat Management Improvement Library. We plan on including many short posts here that might be of interest. We hope this will serve as a good source for articles and blog posts on the management improvement topics we focus on. We see this now as a quick way for those focused on management improvement to keep up with what is being said online about the topic.
  • Curious Cat Science Blog – focused on innovation, research and education in science and engineering.
  • Curious Cat Articles and Links Blog – posts about blog posts, online articles and web resources of general interest (largely focused on the internet, economics and business).

Why Go Through the Painful Performance Process

Posted on May 19, 2005  Comments (0)

Why Go Through the Painful Performance Process:

The performance management blog points to an interesting study by PeopleIQ that says that Only 13 percent of employees and managers and 6 percent of CEOs think their organization’s performance appraisal is useful. And 88 percent say their current performance appraisal negatively impacts their opinion of HR.

See also the previous Curious Cat posts on Performance Appraisals.

The Pitfalls of Six Sigma

Posted on May 19, 2005  Comments (0)

The Pitfalls of Six Sigma:

Six sigma has strong advocates in the manufacturing world for its ability to help factories get lean, but many companies are feeling that their time and financial investment in six sigma has been wasted. Problems with implementation have caused financial and organizational setbacks. Some companies are strongly suggesting, and at times actually demanding their suppliers to adopt six sigma in their operations or run the risk of losing business. Many organizations have combined their lean initiatives with six sigma and are progressing well, while others with poor implementations and abandoned programs risk being left in the dust.

Google: Good Service not Arbitrage

Posted on May 16, 2005  Comments (0)

RE: Seth on Arbitrage from John Battelle’s Searchblog

Thanks for the great blog. I have to disagree with this post however. First, I think Google chooses not to disclose more to investors mainly because the founders don’t go along with conventional wisdom. They would rather examine whether something is a wise use of management resources, and if not, don’t just do something just because most everyone else does. I don’t think the keeping trade secrets has much to do with their reason for not feeding the wall street analysts.

Google’s IPO is another example of their decision to take a different path than other companies. Also the stories I have read about how the founder’s reacted to venture capital requests (demands is probably what the venture capitalists thought they were until they capitulated) showed the founders tendencies to go their own way. They could get the money they needed without having to go along with the rules others wanted to impose on them. It is a great benefit to Google that management can focus on more important things, but it will likely become an issue again when the incredible growth of profits Google has been achieving eventually slow.

Second I disagree that what Google does is arbitrage. They do have a great money making machine. But what they did was provide a service that people liked. Then they found a way to get those who wanted access to their users (to advertise) to pay Google well for the privledge. And Google did a good job of finding a solution that those paying the bills liked. That it has worked for those paying the bills shows the advantage of designing a system that benefits you and your customer. Many internet companies got their customers (other companies) to pay them lots of money but when their customers failed to make money (and many then went out of business) then you had fewer (or no) customers left. Just like teaching someone to fish provides a greater benefit than giving them one fish, a customer that is able benefit from your service and prosper and continue to be your customer is better than a customer you lose (because they don’t benefit from the relationship with you).

Then Google expanded the market by modifying their technology to provide other web sites a way to be paid by advertisers. The system Google had developed did a great job of getting advertisers to bid against each other to increase Google’s revenues. And Google then modified their display of ads to reflect their analysis of the page content to again take great advantage of their existing technology. In this case, Google took some of the money the advertiser pays for the service that Google provides.

For Google to be using arbitrage they would have to, for example, pay your site some amount each month to run ads and then sell that right to someone else. Since they don’t, in fact, pay you to run ads on your site with the hope they can charge others more for the right to use the ad space they bought from you. Google takes a percentage what the advertisers pay, that is not arbitrage.

Google, to use a internet bubble phrase, is doing a good job monetizing eyeballs. However, that is not arbitrage it is just doing a good job of maximizing revenue and profits. Yes Google is able to make money because they are paid more by advertisers than it costs them to deliver what the advertisers want. But I don’t see how that is more like arbitrage than Toyota selling a car for more than it costs them to make the car.

Thinking Lean

Posted on May 16, 2005  Comments (0)

Thinking Lean by Doug Rich and Dave Bassett, from the May 2005 edition of Manufacturing Engineering.

The first thing the kaizen initiative did was to simulate the process layout. This was accomplished through a series of steps ranging from AutoCAD and paper dolls to an actual scale model set up on a portion of the shop floor. By going through this exercise, we were able to review the logical flow of all process steps, which helped ensure that we reduced the distance traveled by each spindle during the manufacturing process. At one point we even had a person walk the entire production cycle of the spindle manufacturing process so we could track the actual distance that each part traveled from start to finish.

Competing on the Basis of Time

Posted on May 16, 2005  Comments (0)

Competing on the Basis of Time:

The way to get rid of the big delay at verification is to move testing closer to coding – much closer. In fact, testing should happen immediately upon coding; if possible the test should have been written before the code. New code should be integrated into the overall system several times a day, with a suite of automated unit tests run each time. Acceptance tests for a feature should pass as soon as the feature is complete, and regression testing should be run on the integrated code daily or perhaps weekly.

From the Poppendieck web site, authors of Lean Software Development: An Agile Toolkit for Software Development Managers.

SEC chief quotes Deming

Posted on May 16, 2005  Comments (1)

Security and Exchange Chairman William H. Donaldson Speaks At Chartered Financial Analysts Institute Annual Conference:

This approach will, ultimately, better serve investors, and it will also gradually temper the pressures on some corporate executives to fudge the numbers. It would behoove us all to remember the words of W. Edwards Deming: “People with targets, and jobs dependent on meeting them, will probably meet the targets – even if they have to destroy the enterprise to do it.”

Search for Improvement With Complex Six Sigma

Posted on May 15, 2005  Comments (0)

Search for Improvement With Complex Six Sigma by Helen D’Antoni:

To understand what companies are doing to curtail costs while improving performance, InformationWeek’s sister publication, Optimize magazine, conducted a survey of 156 business-technology executives, asking them about their company’s business-process frameworks, quality models, and technology standards.
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of the 156 business-technology executives surveyed by Optimize Research, fewer than 40% report their company even employs Six Sigma.

Six Sigma Propelling HSBC

Posted on May 15, 2005  Comments (0)

Six Sigma Propelling HSBC:

HSBC Bank Malaysia Bhd, one of the leading lenders in Malaysia, aims to further propel its consumer banking business by intensifying the usage of the Six Sigma methodology.

Hands on Lean Process Improvement

Posted on May 15, 2005  Comments (0)

Shingo’s ‘Know Why’ Hands-On Lean by Bill Waddell. From Superfactory:

The essential element here is to be sure to identify every move the part makes from receipt to finish. How you represent it on the flow chart is not important, as long as each step is clearly identified and denoted whether it is value adding or not. It is also important that you develop the chart by personally walking the flow. Do not rely on a router or someone’s idea about how the process is supposed to flow.
…
The primary message I am trying to send is that cycle time reduction efforts will generate almost immediate results if you use Shingo’s Why logic to deploy the right tool to the biggest problem first. The method and logic are simple. Every plant can have multiple improvement efforts in multiple processes going on simultaneously that all make sense.
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