Purpose of an Organization
Posted on August 16, 2005 Comments (19)
W. Edwards Deming described the purpose of an organization in New Economics, on page 51, as:
Like so much of what Deming said that makes sense to me. It is my sense the “conventional wisdom” would state something more along the lines of the purpose of a company is to make money. I do not agree. Rewarding the owners is important, but other stakeholders should be included in the purpose.
Even with a strictly legal argument it is not true that a company exists only to make money. The company enters into legal obligations to employees, suppliers, customers and communities.
Conventional wisdom agrees that a company must comply with the law. Many of those laws are requirements society has put in place to ensure that companies focus on obligations to their customers, community, suppliers and the environment (over the long term).
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Indian Firms Learning From Toyota
Posted on August 15, 2005 Comments (2)
Topic: Management Improvement
Taking A Page From Toyota’s Playbook, Business Week:
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Wipro also adopted Toyota’s kaizen system of soliciting employee suggestions for incremental improvements, and made The Toyota Way required reading.
Science and Engineering Macroeconomic Investment
Posted on August 10, 2005 Comments (0)
I posted to the Curious Cat Science Blog on the Science and Engineering Doctoral Degrees being granted around the world. Why do I post this here as a Economic post? I believe, as do some countries that have made significant commitments to investing in science and technology education that such investments can have a large impact on long term economic success. A couple points from that post:
From The Brain Drain by Debra W. Stewart, The Boston Globe
Design of Experiments in Advertising
Posted on August 9, 2005 Comments (1)
How Two Guys From the Gold Country Are Changing Advertising Forever by Robert X. Cringely
Their secret is the Taguchi Method, which is a technique for designing experiments that converge on an ideal product solution.
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“I taught over 300 courses for industry where we designed cars and electronic devices, but it wasn’t until one day I took over my wife’s kitchen and used Taguchi to perfect my recipe for vanilla wafer cookies that I realized how broadly it could be applied,” Kowalick recalls. “It took 16 batches, but by the end of the afternoon I had those wafers dialed in.”
It is great to see the application of Designed Experiments increasing. I am reminded of an article by my father, William G. Hunter, from 1975: 101 Ways to Design an Experiment, or Some Ideas About Teaching Design of Experiments. Examples of the topics of the designed experiments his students performed:
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What Business Can Learn from Open Source
Posted on August 9, 2005 Comments (5)
What Business Can Learn from Open Source by Paul Graham
As usual Paul Graham’s new article is a great read.
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When I’m writing or hacking I spend as much time just thinking as I do actually typing. Half the time I’m sitting drinking a cup of tea, or walking around the neighborhood. This is a critical phase– this is where ideas come from– and yet I’d feel guilty doing this in most offices, with everyone else looking busy.
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How many of us have heard stories of employees going to management and saying, please let us build this thing to make money for you– and the company saying no? The most famous example is probably Steve Wozniak, who originally wanted to build microcomputers for his then-employer, HP. And they turned him down. On the blunderometer, this episode ranks with IBM accepting a non-exclusive license for DOS.
On the point of the first bit of text above, W. Edwards Deming stressed the importance of Joy in Work. How many buisnesses focus on this. Very few. So often, it is easier to keep doing what has been done in the past.
Deming’s Seven Deadly Diseases
Posted on August 7, 2005 Comments (1)
Topic: Management Improvement
Dr. Deming noted seven deadly diseases in chapter 3 of Out of the Crisis, 1986. Below his words from pages 97-98 are bolded. As with Deming’s other thoughts, his list of deadly diseases was continually modified as he learned more (to adjust the focus, the basic concept of the diseases were not changed). It is amazing how true all of these points still are.
Seven Deadly Diseases
- Lack of constancy of purpose
- Emphasis on short term profits (Overreaction to short term variation is harmful to long term success. With such focus on relatively unimportant short term results focus on constancy of purpose is next to impossible.)
- Evaluation of performance, merit rating or annual review (see: Performance Without Appraisal: What to do Instead of Performance Appraisals by Peter Scholtes).
- Mobility of top management (too much turnover causes numerous problems)
- Managing by use of visible figures, with little of no consideration of figures that are unknown or unknowable. Many important factors are “unknown and unknowable.” This is an obvious statement that runs counter to what some incorrectly claim Deming taught – that you can only manage what you measure. Deming did not believe this and if fact saw it as a deadly disease of management
- Excessive medical costs
- Excessive costs of liability, swelled by lawyers that work on contingency fees.
I posted earlier this year on this topic:USA Health Care Costs reaching 15.3% of GDP – the highest percentage ever. The Centers for Medicare & Medicaid Services release focused on it a different way saying: “HEALTH CARE SPENDING IN THE UNITED STATES SLOWS FOR THE FIRST TIME IN SEVEN YEARS” (I am repeating their use of ALL CAPS). Of all the deadly diseases, excessive medical costs seems to be doing the most critical damage to the country and I see little hope that it won’t keep getting worse.
Thankfully, it does seem more people understand some of the problems of focusing on short term profits; but the disease is still rampant. And we can take hope that more people are willing to say that performance evaluations are causing significant problems (Abolishing Performance Appraisals is a good book for those battling this disease). Yet while some organization have eliminated them, most still go through the motions of this annual ritual, that it seems to me few believe in.
While we are making some progress we have quite a bit of work to make significant progress against these deadly diseases. Thankfully the improvement in management over the last two decades has been significant, though nowhere near enough. We have strengthened our ability to cope with the effects of the deadly diseases. Building on those successes, and the steps being made against some deadly diseases, it would be nice to see more progress to directly address the deadly diseases themselves in the future.
Six Sigma at Jaguar
Posted on August 3, 2005 Comments (0)
Six Sigma at Jaguar interview with David Brunson, Powertrain Quality & Reliability, Jaguar Cars Limited by onesixsigma.com.
Yes, it’s very important to focus on the tools you are getting the most value from, and try to apply them to as many areas as possible. There are tools that we want to be using more in the future:
- Gage Repeatability and Reproducibility (R&R)
- Modeling using design of experiments (DOE), including design selection & Analysis
- Design FMEA with robustness linkages
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It is very dangerous to think of six sigma as a set of tools, as if a company does not understand their processes properly, then they can not expect six sigma to save them money through the application of tools.
Definition of what is going on at each stage of the process is much more important than the tools being used.
Find more Six Sigma articles from the Curious Cat Management Improvement library.
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