Monthly Archives: September 2006

Lean is Harmony

In Mike Wroblewski’s capstone, to his posts on his tour of lean manufacturing in Japan, he states:

My lean manufacturing epiphany is quite simple, LEAN IS HARMONY.

The lean principles are helping us develop and promote harmony by removing barriers, rocks, and conflicts that disrupt flow in our business.

Yes, lean is about eliminating waste and using great lean tools to improve our business but that is all we seem to focus on in the US. Lean principles are much more than that.

He captures the difficulty of truly operating in a lean manner. The tools are useful, but they are not the end. Just using the tools can help move an organization to the point where they are ready to truly examine how to improve. Most often the attempts (just like previous attempts with quality management, six sigma… did) stop short of more than superficial change where a few new tools are used in the same old system. Luckily more an more organization are moving in the right direction.
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Meeting Like Google

How to Run a Meeting Like Google, offers good advice like agendas distributed ahead of time, having a note taker…

Instead, she encourages such comments as “The experimentation on the site shows that his design performed 10% better.” This works for Google, because it builds a culture driven by customer feedback data, not the internal politics that pervade so many of today’s corporations.

Also definitely read: Most Meetings are Muda and meeting advice from 37 signals

Related: The Team HandbookGoogle Management MethodsHow Google WorksInnovation at Google

Leaving Quality Behind – Again No

Is PAT Leaving Quality Behind?

The intent of PAT was to advocate a more scientific and methodical approach to product development, scale-up and production. The impact of PAT will be felt in all sectors of the organization, and if applied correctly, will increase granularity in the quality and quantity of data being created throughout the product development lifecycle.

Ok, so in what way is that leaving quality behind? Does this add something to design of experiments, to PDSA, to control charts, to continuous improvement, to quality function deployment

The Improvement Handbook will help people learn what quality improvement is about today (and was about in 1990).

Related: Management Improvement History and Health CareQuality and InnovationManagement Improvement HistoryManagement Advice FailuresSPC: History and Understanding

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Excessive CEO Pay

Overpaid CEOs and Underpaid Managers: Fairness and Executive Compensation by James B. Wade, Charles A. O’Reilly, III and Timothy G. Pollock:

We also find evidence suggesting that CEOs serve as a key referent for employees in determining whether their own situation is “fair,” and this influences their reactions to their own compensation. More specifically, we find that when lower-level managers are underpaid relative to the CEO, that is, underpaid more than the CEO or overpaid less, they are more likely to leave the organization.

Essentially if the CEO is extremely overpaid, even if other executives and managers are overpaid (compared to those outside the company) the others feel they are not being treated fairly and turnover increases. Their data is from the 1980’s and they argue (sensibly to me) that the effects may be larger now. We have all seen CEO pay become much more excessive in the last few decades. That fact, convinced Drucker that the issue of unfair CEO pay demanded very strong denunciation from him over the last decade of his life.
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Health Insurance Premiums Soar Again

Health insurance premiums continue to soar (Lame Mercury news removed the page so I removed the link):

For the seventh straight year, premiums for employer-based health insurance rose more than twice as fast as overall inflation and wages, an annual survey of employers shows.

This health care crisis continues to dramatically harm the economy yet attempts to deal with the issue remain much too small. Good news is available, for example: Lean Health Care Works and Going Lean in Health Care. Read the full report. Also see more posts on health care management improvement.

Related: Healthcare Costs Spike AgainGladwell (and Drucker) on PensionsPBS Documentary: Improving HospitalsHealth Care: Saving LivesHealthcare improvement articles

Chaos Management (by design) at Google

Chaos by design by Adam Lashinsky:

Sandberg recently committed an error that cost Google several million dollars — “Bad decision, moved too quickly, no controls in place, wasted some money,” is all she’ll say about it — and when she realized the magnitude of her mistake, she walked across the street to inform Larry Page, Google’s co-founder and unofficial thought leader. “God, I feel really bad about this,” Sandberg told Page, who accepted her apology. But as she turned to leave, Page said something that surprised her. “I’m so glad you made this mistake,” he said. “Because I want to run a company where we are moving too quickly and doing too much, not being too cautious and doing too little. If we don’t have any of these mistakes, we’re just not taking enough risk.”

A bit unconventional: and not right for every business. But for Google this makes sense to me, and it has been working well for them. Google hired Shona Brown, as senior vice president for business operations in 2003. In 1998 she authored – Competing on the Edge: Strategy as Structured Chaos.

Related: posts on Google managementposts on innovation10 Stocks for 10 Years Update

Lean Outsourcing

Unfortunately many people think of outsourcing when they think of lean, because they don’t understand lean manufacturing. Lean Manufacturing and Outsourcing by Eric O. Olsen and Mark Zetter (via Lean Outsourcing) looks at outsourcing with an understanding of lean manufacturing.

Related: Toyota Manufactures More ItselfCommunication Failures Impact QualityExcessive Executive Pay – outsource the CEOIT Outsourcing Slowing

Manufacturing Jobs

The article, Manufacturing Lost 3.4 Million Jobs Since 1998, indicates “The increased output should lead to job recovery.” I doubt it. While it is true there is a correlation between output and jobs by far the most significant trend is more manufacturing output and fewer manufacturing jobs everywhere in the world. Like so many articles talking about manufacturing job losses in the USA this one could leave many readers thinking that the USA needs to gain back jobs lost to other countries (while in fact the USA has lost a lower percentage of manufacturing jobs than most all countries – including China – based on the latest data I have seen).

Focusing on manufacturing output and jobs and their importance to the economy makes sense. However, I think people need to update the model they use to set expectations of manufacturing job levels. And given a world in which no countries seem able to do gain manufacturing jobs, it seems more reasonable to expect a continuation of decreased jobs and increased output until that worldwide trend changes. If you want to focus on manufacturing jobs in the USA I think the realistic goals are decreasing the reduction in jobs (by supporting what is still by far the world’s dominant manufacturing economy).
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Systemic Thinking

Systemic Thinking by Gary Bartlett provides a nice introduction to systemic thinking compared to analysis. Analysis is very useful however, the strong tendency to focus on only breaking apart systems to analyze components does result in missing insight into improvement opportunities (that can be gained by looking at the system as a whole).

Conventional thinking techniques are fundamentally analytical. Systemic thinking is different – it combines analytical thinking with synthetical thinking.

That tool is synthesis – seeing how things work together. Synthesis is more than putting things back together again after you’ve taken them apart: It’s understanding how things work together.

Analytical thinking enables us to understand the parts of the situation. Synthetical thinking enables us to understand how they work together.

Related: articles by Russell Ackoffblog posts on systems thinking

Incentive Programs are Ineffective

Reward and Incentive Programs are Ineffective — Even Harmful by Peter Scholtes

The greatest management conceit is that we can “motivate” people. We can’t. Motivation is there, inside people. Our people were motivated when we hired them and everyday, when they come to work, they arrive with the intention of doing a good job. Managers cannot motivate. They can, however, de-motivate. Herzberg established this over 30 years ago (Herzberg, Frederick “One More Time: How Do You Motivate Employees?” Harvard Business Review, September-October 1987, pp. 109-120. This is a reprint with commentary, of an earlier classic paper.)

The greatest managerial cynicism is that workers are withholding a certain amount of effort that must be bribed from them by means of various incentives, rewards, contests, or merit pay programs.

Related: Stop Demotivating EmployeesPerformance Without Appraisalblog posts on respect for peopleEliminate SlogansThe Leader’s HandbookTheory X management

Management Improvement History and Health Care

Squeezing the fat from health care by Hanah Cho is another article on lean healthcare. This one provides a better view of the overall picture – especially compared to all those claiming to be one of the first lean thinking effort in healthcare. A good sign was that the author referenced, Going Lean in Health Care, a great report by IHI (James Womack and others).

It is nice to see a recognition of management history (so often missing):

Workers may remember theories such as Total Quality Management, Six Sigma, re-engineering and other business techniques that use flow charts, problem solving and role playing to help make their organizations more effective.

But some health care management experts say that some hospitals – like corporations – have gone through numerous quality improvement methods, only to abandon them for the latest management program.

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Lean Thinking at United

Mark Graban gives a nice review of some material on web site of a United labor union in: An Encouraging Lean Example at United Airlines. From the union web site, he quotes:

“Once fully implemented, the 5S+1 process can increase morale, create positive impressions on customers, and increase efficiency and organization. Not only will team members feel better about where they work, the effect on continuous improvement can lead to less waste, better quality and faster lead times.”

It is much easier to talk about these things than to actually do them. Still, that talk is the right talk. A really good sign will be when the labor union uses lean thinking for its own management. The same goes for the “executive suite.” This isn’t just stuff for the other people to do.

Flexibility in Lean Manufacturing

What is Flexibility for Lean Manufacturing? by Jon Miller:

True flexibility should be a measure not of a machining system or an assembly department but of an entire value stream from the end customer through the supply chain and back to the end customer (from request to fulfillment) and this system’s (value stream’s) ability to deliver Every Product Every X with X being months, weeks, days, hours, etc. Planning and building capacity based on forecasts results in false economy of scale thinking, which reinforces customer behavior that volume is cheaper and lead-times are long. Being able to make only what the customer is truly buying right now is a Lean measure of flexibility.

Deming in the New Economy

I just read an interesting paper (found via – Stating the Obvious): New Economy Concepts and the Application of Deming’s Theories on Management by Christian Buckley and Arthur Close

All measures should supply accurate information usable for making good decisions. To paraphrase Dr. Deming – if you don’t know how to use the answer to improve you process, the calculation(s) were a waste of time.

Great point, see: Measurement and Data Collection.

Innovation rarely comes as the result of an apple falling from a tree and hitting you in the head.
Innovation is more of a process – sometimes simple and buried deep within the psyche of the individual, and sometimes methodically sewn into the practices of a team – that is put in motion by the desire to improve the status quo.

Another good point, which you might think is obvious: Managing Innovation.

Related: Understanding DataInnovation in OrganizationsDeming on Management

Recalls at Toyota and Sony

Recalls by Toyota and Sony shock Japan’s pride: another article discussing the recent recalls at Toyota and Sony.

Some have also begun to blame the decline on recent American-style management changes, like performance-based pay, the end of traditional lifetime job guarantees and increased use of temporary workers in order to cut costs.

I don’t actually think this is right in Toyota’s case anyway; Toyota seems to have resisted adopting poor management practices form the west (an IT example – see the end of the post). They just need to keep trying to do better. It is very easy for management to lose its way, wherever the compnay is located.

For a time, American and European executives flocked here to learn Japanese quality-control concepts like “kaizen,” or improvement.

I like this quote, especially given our post yesterday on Mike Wroblewski’s current visit to Japan to learn about manufacturing management practices. I think there is a great deal for anyone to learn today from such visits. Yes, Toyota needs to do better but that doesn’t mean others don’t have a great deal to learn from them.
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Six Sigma in Sales

Can Six Sigma Work in a Sales and Marketing Environment? by Paul Selden:

The more systematic view demystifies sales….
As such, that system can be subjected to objective analysis using tools common to Six Sigma and other well-grounded disciplines.

Sales is often an area that is treated as though it were separate from the company. That leads to all sorts of problems. Sales needs to be seen as part of the system of the organization and managed in that way. Just remember systemic thinking (viewing the entire system) will be needed, not just analysis (viewing the components of a system).

Related: Marketers Are Embracing Statistical Design of ExperimentsAppeal for Marketers to Apply Deming’s IdeasMarketing in a Lean CompanyProblems with BonusesFree, Perfect, and Now (book by Robert Rodin)Design of Experiments explanation

Japan Kaikaku Experience

Mike Wroblewski is blogging a great series of posts on his Japan Kaikaku Experience, including Toyota Motor Kyushu:

An interesting point is that the assembly line had a goal of only 97% uptime. They did not want 100%. It was believed that a goal of 97% was better (more realistic) and prevented quality problems from being slipped through. If the goal is 100%, the employees would say that something was not really a problem and let it go to keep at a target of 100%. With a target of 97%, the employees would not be pressured to let things go and stop the line to correct the problem!

Interesting stuff. Toyota is much better at using targets than most organizations. Japan Day 2 – Matsumoto Kogyo:
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Lexus: Long Term Thinking

Lexus: A Retrospective

All this involved creating not only the best car ever but also something new, a psychological experience rooted in reality. Toyota wanted to create for the buyers of this new car the best overall ownership experience ever. To establish that ultimate experience, Toyota decided to sell Lexus in a completely separate setting from its main line of vehicles. Lexus was to have its own state-of-the-art dealerships and top-notch dealers who were committed to the philosophy of treating customers as they had never been treated before. This was called the Lexus Covenant, which reads, in part, “Lexus will do it right from the start. Lexus will have the finest dealer network in the industry.

Related: 2005 Baldrige Award (Park Place Lexus)Toyota Production System blog posts

Two more Lean Blog Podcasts

More excellent management podcasts from the Lean Blog: Part 2 of 2 with Dr. Liker, Lean Healthcare and Jamie Flinchbaugh on Muda. As Jamie explains the reason for talking about the seven wastes (muda) is the value added to waste elimination that the distinction provides (by helping people see the issues more clearly). The reason for learning about lean more thoroughly is to more effectively improve.

Related: articles by Jamie Flinchbaughmanagement blog posts on podcastsToyota Targets 50% Reduction in Maintenance Wasteblog posts on healthcare improvement