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The Deming Institute is sponsoring, How to Create Unethical, Ineffective Organizations That Go Out of Business, 12-14 May, 2008 in Colorado Springs, Colorado. Kelly Allan and John Hunter will be presenting the seminar. Please let me know if you sign up.
Learn how governance practice leads to the heaviest losses, how inconsistencies between policy and strategy create sub-optimal outcomes, how mismanagement of people leads to unethical and ineffective behavior, and how to overcome these problems. Study the theory and practice of management. Not quality management, not good management, not excellent management, not knowledge management, not risk management, not process management, not performance management, not supply or asset management, not technology management, not time management, not emergency management, just plain management.
Related: Deming on Management - Curious Cat Management Improvement Calendar - Deming Seminar and Conference - Deming Companies
This is the 1,000th post to the Curious Cat Management Improvement Blog. Here are some highlights:
Information Technology: Toyota IT Overview - “customizing the code, to its business processes, and not the other way around.”
The Baldrige National Quality Award winners for 2007 are:
President Bush met with winners for the first time since 2000, I believe (photo from Coral Springs web site). He did in private this year in the Oval Office. The Baldridge award had more prestige in the management community 10 years ago. In my opinion the award has failed to attract the best managed companies to apply.
When you purport to recognize the highest level of management excellence you should understand that leaving out those companies that are widely seen as excellent calls into question the credibility of the award. I can understand the challenge in convincing many potential applicants to apply. I would say that is the same challenge companies have that want to convince potential customers their solution is what the customer should purchase.
ARDEC provides a public version of their application (some details removed) that is interesting. ARDEC received the President’s Award Quality in 2000. From 1998 to 2002 the President’s Quality Award recognized management excellence in the federal government based on a Baldrige-style system (it was then switched from Baldrige-style to generic “excellence”).
Related: 2005 Baldrige Award - Vice President Presents Baldrige Awards (2004) - Problems with Lean Manufacturing Awards - 2007 Shingo Prize for Excellence in Manufacturing - Management excellence in government - Deming Prize 2007
What’s driving Toyota Canada’s success? - CIO reveals all
* Cutting down the customer problem resolution from weeks to an average of three days through this initiative alone;
* Early detection of customer dissatisfaction in services
* Reducing detection of product defects (from months to days).
The Toyota Canada CIO talks about the tremendous business benefits from this seamless freeflow of information. “When a defect is detected at the dealership, the next day it would up to our engineering department.” The speed at which information traverses is of immense value – especially when new vehicles are launched. Tien cited an example.
“We recently launched a new Toyota Corolla [model]. If there were a problem with a door knob of the vehicle, the plant would know about it and a fix would be put in place.”
An article well worth reading. Related: Toyota IT Overview - Lessons from Toyota’s IT Strategy - Good Customer Service Example at Toyota - Software Supporting Processes Not the Other Way Around
Guest post by Ron Kingen (originally posted to the Deming Electronic Network)
Several weeks ago someone in the DEN list ask what did Dr. Deming recommend about this issue, well I ask that very question of Dr. Deming back in the 80’s when I had the good fortune to work with him. I had expressed my concern to Dr. Deming about several of his fourteen points that I either didn’t understand completely or did not fit with my experience and/or education. Dr. Deming suggested we talk about it over dinner – during the subsequent dinner discussion Dr. Deming made several points relative to performance improvement (not appraisal):
The advice seemed valid, but I told him my company insisted we do performance appraisals. He laughed, he suggested I change the system; but Dr. Deming knew I worked for General Motors and that wouldn’t be easy. So he recommended I become a rebel and change my part of the system; which I did try. At the time I worked for one of the most progressive divisions within GM and was fortunate to work with many talented GM people and several well know and recognized experts, but I was convinced the best system change option was to leave GM.
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David Heinemeier Hansson Talk at Startup School 2008 (Paul Graham’s Y-combinator school). It is helpful to appreciate the importance of some simple ideas. Working on web focused businesses people often get carried away with the huge potential and sometimes lose touch with reality. While the ideas are more obvious when looking at web related business their is plenty here for many companies (the second half might be more helpful for many).
In this talk David does a great job of explaining how 37 signals has chosen to work. They are not concerned with becoming large. They focus on doing what they want to do - creating great software solutions (see: Systemic Workplace Experiments). And on making money to allow them to stay in business.
Some tidbits of advice: create great applications, charge people money, make a profit. Yes to those outside the web world this might seem obvious… He discusses a very similar idea to the idea of 1,000 true fans. He mentions to bring in a $1 million, all you need is 2,000 customers paying $40/month. 37 Signals has done well focusing on small business. Don’t be in such a hurry.
Related: Why is 37signals so arrogant? - Complicating Simplicity - Joy in Software Development - Great Marissa Mayer Webcast on Google Innovation
Well, this doesn’t sound very well thought out. Bonuses often distort behavior. Dr. Deming was not against such targets and bonuses because he thought they would not result in bugs being fixed: Dr. Deming on the problems with targets or goals. It is a question of how that will happen. The system being distorted is the most likely result of any such system.
Everyone worked even harder on the third day. On the fourth day, however, the well had started to dry up. The testers ran, re-ran, and re-ran again the test cases, but they could only find a handful of issues. The developers strained the issue-tracking system, constantly reloading the “unassigned bugs” page and rushing to self-assign anything that appeared.
And then something strange happened at lunch. Instead of going out to eat with his usual teammates, one of the developers went out with a tester. Soon after, another developer went out with another tester. Within a few minutes, almost all of the developers had paired up with testers.
As the developers returned from lunch, they immediately got to work. Instead of scavenging for newly found bugs, they worked on “code refactoring” and new functionality. And as soon as they deployed their changes, testers found bugs — minor, obscure bugs that a developer could easily overlook. And just as quickly as testers found bugs, the developers were able to fix them and re-deploy. By the end of the day, developers and testers had earned an average of $120.
Another former Toyota USA leader is talking a leading role at another company. Gary Convis from Toyota retired last year.
Related: articles by Gary Convis - Toyota Management Speech by Gary Convis - Toyota Management Develops the New Camry - Quality Conversation with Gary Convis - Jim Press, Toyota N. American President, Moves to Chrysler
Dana Holding Corporation Names Gary L. Convis Chief Executive Officer
Dana Holding Corporation (NYSE: DAN) emerged from bankruptcy recently and today announced that it has named Gary L. Convis, 65, to the post of Chief Executive Officer. Convis was appointed to Dana’s new Board of Directors in January 2008 after retiring from Toyota Motor Corporation, where he had spent more than 20 years culminating in his role as Chairman of Toyota Motor Manufacturing, Kentucky.
“We are delighted to welcome Gary as Chief Executive Officer,” said Dana Executive Chairman John Devine, who had served as the company’s acting CEO since January. “Gary is widely respected as one of the leading experts in lean manufacturing and management systems, including the Toyota Production System. Along with his strong leadership and global industry experience, we believe he is an ideal choice as our new Chief Executive.”
“I am honored by the Board’s confidence in me to lead Dana,” Convis said. “I’m also eager to join with our people in establishing world-class manufacturing systems and returning this great company to the leadership ranks of the global automotive supply industry.”
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PBS presents a very nice overview of the heath care systems in Japan, United Kingdom, Germany, Taiwan and Switzerland in: Sick Around the World. It is a just a surface view of the overall system but even so does a good job of providing more understanding of the options available to fix the failed system in the USA. The US system costs over 50% more than others and has worse outcome measures than the alternatives (and leaves many without any coverage). And while the alternatives are not perfect the defenders of the status quo make claims about the alternatives are not accurate.
Table combines data from my previous post, International Health Care System Performance, and the PBS website:
| Australia | Canada | Germany | Japan | Netherlands | New Zealand | Switzerland | Taiwan | UK | USA | |
| National health spending - Percent of GDP | 9.5% | 9.8% | 10.7% | 8.0% | 9.2% | 9.0% | 11.6% | 6.3% | 8.3% | 16.0% |
| Percent uninsured | 0 | 0 | <1 | <2 | 0 | 0 | 16 |
Switzerland, spending 11.6% of GDP on health care, is the 2nd most expensive in the world.
Related: USA Spent $2.1 Trillion on Health Care in 2006 - Measuring the Health of Nations (USA ranks 19th of 19 nations studied) - Drug Prices in the USA - USA Health Care Costs 16% of GDP (2006) - Deadly Diseases of Western Management - 5 Million Lives Campaign
Shaun Sayers is hosting Management Improvement Carnival #33 on the Capable blog, some of the highlights include
Kiva provides loans through partners (operating in the countries) to the entrepreneurs. Those partners do charge the entrepreneurs interest (to fund the operations of the lending partner). Kiva pays the principle back to you but does not pay interest. And if the entrepreneur defaults then you do not get your capital paid back (in other words you lose the money you loaned).
They do an excellent job of using the internet to allow people like me to feel connected to people we can help. And in so doing, they do an excellent job of implementing their strategy (providing funds for micro-loans) to achieve their goal (to alleviate poverty). “Kiva’s mission is to connect people through lending for the sake of alleviating poverty.”
Today I added $450 to my loan portfolio with Kiva and donated another $100 to Kiva. I added 5 loans in: Tanzania (2 loans), Uganda, Paraguay and Ecuador.
I am happy with the success of the Curious Cat blogs but I do have one item I wish would improve. I wish more Curious Cat readers would take advantage of Kiva. If you lend through Kiva, please add a comment with a link to your Kiva page and I will add you to our list of Curious Cat Kiva Contributors.
The Kiva web site includes all sorts of data on the partners making the loans (the capital at risk is provided by Kiva donors but a local organization services the loans…). For example, see the profile for Tujijenge Tanzania Ltd. This shows for example the Amount Repaid Vs Expected Rate (100% for this partner - no defaults or delinquency). The rates for all Kiva loans are 3.75% delinquent and .12% defaulted. They also show the Average Interest Rate Borrower Pays To Kiva Field Partner (which is 24% in this example) and the Average Local Money Lender Interest Rate (which is 60%).
One of things I really hope to see is some research on the results Kiva is producing. What kind of changes are these loans bringing about: specifically looking at Kiva. And also looking at various factors such as the interest rate and whether targeting my lending to those with lower average rates results in greater benefit. There is a great deal of unknown and unknowable numbers involved but some data would be interesting as well as analysis even without numbers of results.
Related: Using Capitalism to Make the World Better - Frontline Explores Kiva in Uganda - Providing a Helping Hand via Kiva - Expanding Credit Access: Using Randomized Supply Decisions to Estimate the Impacts - Microfinance research links
Toyota is investing $350 million in a second Indian manufacturing plant. The plant is focused on producing vehicles for the local market - as the Toyota Production System suggests that production be close to the market.
Toyota to invest Rs1,400 crore for “strategic” small car in India
The plant will make the Corolla sedans along with the small cars The company plans to have high level of localisation for the small car by procuring several components and sub-systems from Indian vendors. Primarily the car maker plans to sell the small car in the fast growing domestic market, though some will be exported as well, the company stated.
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The Japan-based automaker said last year that it plans to capture 10 per cent of India’s market. In 2007 Toyota sales accounted for a mere 0.6 per cent of the Indian car market
Related: Manufacturing Takes off in India - Toyota Chairman Comments on India and Thailand - Top 10 Manufacturing Countries 2006 - Indian companies have received as many awards as companies from all other countries combined since 2000 - Toyota to Build New Plant in India to Make Small Cars - TVS Group Director on India - Manufacturing, Economy
Misuse of the “Customer” Concept
“We are told that the airlines are our customers,” FAA inspector Charlambe “Bobby” Boutris said. “But we have a more important customer, the taxpayers” who want government to ensure a safe aviation system.
That’s crazy. The FAA is supposed to be serving and protecting the passengers, not the airlines. This is like a supervisor in a workplace treating their employee as a customer… even in a “servant leadership” environment, that’s not right.
“Customer focus” is good, but only if you properly define customer relationships. I’d prefer the FAA think of me and my fellow travelers as the “customer,” not the airlines.
I agree there are several different customers. This is actually not uncommon outside of government but for government agencies multiple “customers” that might have divergent desires are more frequent. But the “customer” frame of reference I still think has value.
I actually think the problem is the way people choose to interpret the idea. If I buy a car from a dealer they don’t sell it to me for $100. They don’t agree to not tell the government so I can avoid sales tax. They don’t agree to sell me a car that is not legal in the state. Customer service does not mean do what is in the interest of the customer irregardless of laws, regulations, good business practices, etc..
I would say doctors don’t give patients anti-biotics for viral infections (but actually they do). They shouldn’t. When doctors behave irresponsibly and give antibiotics in ways that harm the heath of society, some might try to claim it is because they are giving the patient/customer what they want. That is not a reasonable excuse.
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McDonald’s Branding Makes Food Tastier for Tots
The study had 63 children, aged 3 to 5 years old, tasting five pairs of identical foods and beverages — one in McDonald’s wrapping and the other in unbranded packaging. The researchers then asked them a simple question: “Which one tastes better?” An overwhelming number of the children said the food in the McDonald’s wrapping was tastier.
Oddly enough, this applied even to vegetables and milk. Sixty-one percent of the children in the study preferred the taste of carrots and 54 percent preferred the taste of milk if they were reminded by the packaging that it came from McDonald’s.
This is another reminder that tackling problems directly is not always the best strategy. The packaging doesn’t actually change the taste, but really it is not the taste that is likely a concern but rather the perception of taste. To me this is very similar to the studies on people preferring wine they are told costs more.
Ignore psychology at your peril: in marketing and in management. Deming’s management system include 4 interdependent areas: understanding variation, systems thinking, theory of knowledge and understanding psychology.
Effects of Fast Food Branding on Young Children’s Taste Preferences (I think this is the study referenced in the article though it was published in August 2007 - John).
Related: Indian researcher shows most people do judge a drink by its container - Marketing in a Lean Company - The Psychology of Too Much Choice - Be Careful What You Measure
The webcast shows Jeff Bezos, Amazon.com founder and CEO, speaking at TED on the internet boom. He compares the boom to the gold rush highlighting the similarities. But then he compares the internet to the development of industry around electricity. I think he is exactly right on the internet: “there’s more innovation ahead of us than behind us.”
Related: Bezos on Lean Thinking - Amazon Innovation - Amazon’s Amazing Achievement - Innovation Thinking with Christensen - management webcasts
The Deming Institute is sponsoring, How to Create Unethical, Ineffective Organizations That Go Out of Business, 12-14 May, 2008 in Colorado Springs, Colorado. Kelly Allan and I will be presenting the seminar. Please let me know if you sign up.
Learn how governance practice leads to the heaviest losses, how inconsistencies between policy and strategy create sub-optimal outcomes, how mismanagement of people leads to unethical and ineffective behavior, and how to overcome these problems. Study the theory and practice of management. Not quality management, not good management, not excellent management, not knowledge management, not risk management, not process management, not performance management, not supply or asset management, not technology management, not time management, not emergency management, just plain management.
Related: Deming on Management - Curious Cat Management Improvement Calendar - Deming Seminar and Conference - Deming Companies
A Case for Agile: Benefits for a Programmer’s Career by Theodore Nguyen-Cao
Most importantly, I still feel I’m growing as a developer. I honestly believe the best thing a developer can do in their career is to always be learning. Everything else will follow.
I am also a strong proponent of agile software development. Information Technology projects have a poor success rate. The best method, I have found, to provide better software solutions is agile development (and I find a grounding in management improvement techniques is useful - customer focus, process improvement, systems thinking, understanding variation, data driven management…). My experience is with custom application development (rather than developing Commercial Off The Shelf software - COTS) for which I think agile is a great fit.
Related: Joy in Work for Programmers - Agile Software Development Presentation - Metrics and Software Development - Management Science for Software Engineering - Programmers at Work - Joel Management
Utah scrambling to meet need for technical workers
The situation continues to worsen, with jobs being created and unemployment remaining low in the state. And as the current work force ages, the supply of skilled workers is diminishing, forcing employers to recruit outside of Utah and sometimes leave Utah altogether, the report said.
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The college’s Lean Manufacturing Center was built from an old warehouse with state funds and $30 million from rocket-booster manufacturer Williams International. Williams provides the college with equipment and mentors to train students with practical, real-world applications, said Lloyd McCaffrey, the Lean Center’s director.
Related: Engineering Innovation for Manufacturing and the Economy - Applied Quality Engineering Education - Wisconsin Manufacturing - Top 10 Manufacturing Countries - Help Wanted: Lean Manufacturing Experts - The Lean MBA - Curious Cat Management Improvement Job Board
I think these orders of magnitude are not present in between people in many jobs. And I think people’s ability to correctly access who are orders of magnitude better is often faulty. But my experience leads me to believe the difference between exceptional software developers and average (not even below average) is very high. High enough that large increases in pay (say tripling would be sensible). Also accommodating their desires is sensible: freedom from dealing with pointy haired bosses and eliminating other such de-motivators.
While salespeople seen as successful can often be rewarded very well, exceptional software developers rarely are. Most managers don’t seem to be able to grasp that software development is a rare field where such orders of magnitude differences are somewhat common (not one in a million, maybe one in a thousand for a random guess). There are other fields where this is true but most for most fields I do not think this is the case.
In many fields interruptions are costly (and multi-taking is wasteful). In software development those interruptions are often much more costly than in other fields. Peopleware: Productive Projects and Teams is an excellent book on managing software development.
Related: People are Our Most Important Asset - Joy in Software Development - Hiring the Right People - Performance without Appraisal - Measuring and Managing Performance in Organizations
Please submit your favorite management posts to the carnival. Read the previous management carnivals.
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