Drucker Opinion Essays from the WSJ

Posted on December 10, 2005  Comments (2)

The Wall Street Journal has posted selected opinion essays by Peter Drucker along with several tributes to Drucker.

The Five Deadly Business Sins (article removed so link removed), 1993:

  • the worship of high profit margins and of “premium pricing”
  • mispricing a new product by charging “what the market will bear
  • cost-driven pricing
  • slaughtering tomorrow’s opportunity on the altar of yesterday
  • feeding problems and starving opportunities

Is Executive Pay Excessive?, 1977. In 1977, his answer was, no. As pay did become excessive, Drucker became a prominent voice against the unjust pay of CEO’s.
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Six Sigma Hospitality

Posted on December 10, 2005  Comments (0)

The Six Sigma Syndrome by Saurabh Jaggi

Starwood has run over 3000 projects worldwide to date in areas such as productivity, menu re-design, resort concierge, email marketing and launching a worldwide sales initiative. Another of its chain of hotels, The Westin Turnberry resort in Scotland won the IQPC’s 5th Annual European Six-Sigma summit in London in April 2004. It won the European award in the category ‘Design for Six Sigma’ for a reservation project.

Innovate or Avoid Risk

Posted on December 8, 2005  Comments (2)

The Xooglers blog has some really interesting posts. In one, “But, but, that’s just crazy talk!”, Doug Edwards discusses a great example of what true leadership is about.

In my defense, my background conspired against me. Past public relations debacles had taught me always to evaluate worst-case scenarios before considering the possible benefits of any new initiative. “First, do no harm” had become my mantra.

This is the reality of many people. There are many reasons why avoiding risks is smart and should be encouraged. But when avoiding risks stifles innovation the risks to the organization are huge.
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Data Based Decision Making

Posted on December 6, 2005  Comments (4)

Acumen visits Google:

As a first step, we hope to collaborate with interested Googlers to find better ways to learn what works around the world. Identifying powerful solutions to poverty that are useful to people in different settings, and that are market-driven, scalable, and sustainable, is our greatest challenge. Second, we’re hoping to strengthen how the world measures both social and financial returns to investments in delivering critical goods and services to the poor. Like Google, we hold a deep belief in the power of measuring everything we can.

Google has done a fantastic job of using data to make decisions. In fact so much so, that some think they may go overboard trying to find an algorithm for everything. My dinner with Sergey:
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Project Kaizen Co-Blogging Week

Posted on December 6, 2005  Comments (0)

The Project Kaizen Co-Blogging Week has started. The posts in the first day have been interesting. Including, Improving Workgroups:

The result is individuals doing individual work. People create their own training materials because the corporate materials “are proprietary” and there’s too much risk in sharing them (a ridiculous concept since the company in question hardly invented lean, the slides were all borrowed from outside lean knowledge, yet now this company doesn’t want to follow Toyota’s model by sharing).

There’s an enormous amount of waste that’s created because the company doesn’t use available technology (web-based or otherwise) to create a true TEAM of lean consultants. The consultants should be posting case studies, helping each other with problems, and coaching each other, all in the name of continuous improvement and kaizen.

I completely agree.

Related posts:

Performance of People and Appraisal

Posted on December 5, 2005  Comments (0)

The Statistical and Scientifc Thinking blog has several interesting posts on the Performance of People:

Why can’t performance be numerically rated and ranked? It can’t be defined operationally, it can’t be measured with any degree of precision, it can’t be separated from other effects, and it is destined to vary over time in any case. Any one of these factors present significant (if not insurmountable) problems itself. Combined the problems create an impossible barrier.

Performance of People III:
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Google: Ten Golden Rules

Posted on December 5, 2005  Comments (7)

Google: Ten Golden Rules by Eric Schmidt and Hal Varian:

At google, we think business guru Peter Drucker well understood how to manage the new breed of “knowledge workers.” After all, Drucker invented the term in 1959. He says knowledge workers believe they are paid to be effective, not to work 9 to 5, and that smart businesses will “strip away everything that gets in their knowledge workers’ way.” Those that succeed will attract the best performers, securing “the single biggest factor for competitive advantage in the next 25 years.”

Google really is doing things differently. One way you see it is that some of those used to being the most powerful players complain that they don’t get respect at Google, at Google the engineers rule. Um, maybe they shouldn’t complain too loud, maybe the reason Google is doing better is they focus on the Gemba (where value is added to the customer).
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Ford’s Wrong Turn

Posted on December 5, 2005  Comments (2)

Mr. Ford’s Wrong Turn, Why U.S. Automakers Can’t Blame Japan by James P. Womack:

What makes this claim so extraordinary is that Japanese companies, led by Toyota Motor Corp., are thrashing Ford by building vehicles in North American factories with North American-made parts and North American workers, who receive American-style wages and health benefits. And increasingly, these Japanese brand vehicles are engineered in America by Americans.

Consider a few facts about Toyota. About 65 percent of the vehicles the firm sells in North America it assembles in North America, and it would assemble a much higher proportion here if it could only keep up with its rapid sales growth. Toyota will open its seventh North American assembly line in Texas next summer… By the end of the decade, Toyota will be able to assemble about as many cars as Chrysler does in North America, and it is closing in on the capacity Ford will have after plant closings that are widely expected to be announced in January.

In fact, thanks to hiring by Japanese, Korean and German auto makers, total employment in the U.S. motor vehicle industry over the past decade has held steady at about 1.1 million.

The problem for American car companies is pretty clearly poor management. Toyota, and others, builds cars in America profitably.
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Gary Hamel’s Idea Hatchery

Posted on December 4, 2005  Comments (1)

Gary Hamel’s Idea Hatchery by Whitney Sparks:

Q: So how do you hope to change the standard approach to management?
A: Sometimes innovation is about creating a whole new class structure. Hierarchies are not very good at getting the best out of people. Communities are where people are most likely to give their gifts, bound not by economic dependency but [with] dreams.

I’d like to make business more humane. How do you create organizations where people can bring all of their humanity?

I advocate a system in which executives have to re-earn their power, [in which] their ideas have to compete with everybody else’s ideas. [Not based upon] outdated Henry Ford attitudes. Work life has not become more interesting or compelling over the past few decades.

I don’t think he is talking about lean manufacturing ideas of Henry Ford (I hope not).

I admire his desire to learn where management is headed and to improve management education. I do think our management education needs to improve.

Gary Hamel articles and books

Excessive Executive Pay

Posted on December 4, 2005  Comments (11)

Topic: Management Improvement

Via Christian Sarkar, Too Many Turkeys, The Economist:

Executive compensation in America – already far ahead of the rest of the world, despite the best efforts of overseas managers to catch up – is now rising inexorably again. In fiscal year 2004 the total compensation of the median American company boss rose in every industry… according to a new report by the Conference Board, a research organisation. In the big companies that comprise the S&P 500 index, median total chief-executive compensation increased by 30.2% last year, to $6m, compared with a 15% rise in 2003

Christian Sarkar asks, can we outsource the CEO to a low-cost country? That is exactly what will happen at the ludicrous levels pay has risen to. If the United States were to lock into a payscale that is unsustainable globally US companies will be no be able to compete. My guess is plenty of people in the USA will be glad to compete against the brooks brothers bureaucrats but if not, others will.
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Lanscaping Firm Following Deming

Posted on December 2, 2005  Comments (0)

Building a landscaping firm Brickman by Brickman by Steve Berberich

Each Brickman branch operates with a standard production model that the company developed in the late 1970s with consultant and renowned statistician W. Edwards Deming, who is best known for helping Japanese manufacturing recover from World War II and improving U.S. productivity during the war. Scott Brickman said the model emphasizes continuous improvements in communication with its nearly 10,000 commercial customers and education and cultivation of its employees to learn and advance within the company.

The article doesn’t talk much directly about the management practice at the company but might be of some interest.

IQ and Muda: Information Quality Eliminates Waste

Posted on December 1, 2005  Comments (0)

IQ and Muda: Information Quality Eliminates Waste by Larry English

The article provides an explanation of each of these 9 types of muda and relates them to information quality:

There are nine types of muda in information quality:
  • Muda of overproduction
  • Muda of inventory
  • Muda of repair/rejects
  • Muda of motion
  • Muda of processing
  • Muda of transport
  • Muda of waiting
  • Muda of process failure caused by defective information
  • Muda of wrong or suboptimized decisions caused by defective information

The first seven types are described by Masaaki Imai in his book Gemba Kaizen. We will examine each type of muda, why it is muda and how it wastes the other resources of the enterprise.

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