The updated data from the United Nations on manufacturing output by country clearly shows the USA remains by far the largest manufacturer in the world. UN Data, in billions of current US dollars:

See manufacturing data for more countries.

The USA’s share of the manufacturing output of the countries that manufactured over $200 billion in 2007 (the 12 countries on the top of the chart above) in 1990 was 28%, 1995 28%, 2000 33%, 2005 30%, 2006 28%, 2007 27%. China’s share has grown from 4% in 1990, 1995 7%, 2000 11%, 2005 13%, 2006 15%, 2007 16%.

Total manufacturing output in the USA was up 76% in 2007 from the 1990 level. Japan, the second largest manufacturer in 1990, and third today, has increased output 15% (the lowest of the top 12, France is next lowest at 32%) while China is up an amazing 673% (Korea is next at an increase of 271%).
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• Box on Quality - Read articles by George Box on quality management principles (SPC, Deming, process improvement, six sigma, etc.). An except from the book provides a table of contents and an introduction. The photos shows George Box and Bill Hunter.
• Manufacturing and the Economy - I would guess China #1 and USA #2 in manufacturing in the year 2025. It is hardly a failure to be the second largest manufacturing country in the world. And there is plenty that could go wrong in China and cause it to slip and not catch the United States.
• Marketing in a Lean Company - The company needs to be viewed as one interdependent system not independent departments. The system needs to be optimized as a whole. And that means optimizing the overall system not optimizing the individual departments independently.
• Deming’s Ideas at Markey’s Audio Visual - Doesn’t charge internally: Indianapolis looses money, they own the high end equipment used by the other offices. 215 employees $30 million in business (about $3 million before Deming). Commission pay - after 10 people attended Deming seminar they stopped using commission No performance reviews - they do have an annual conversation. No ranking or rating.
• Toyota Engineers a New Plant: the Living Kind - Many organizations talk a good game but one of the things that separates companies like Toyota is that they actually execute based on their expressed vision.
• Management Training Program - Reading “Because I know everything” brings to mind an arrogant blowhard to many in America (I think)… But when someone has worked (a Toyota executive or a baker) for 40+ years in the same area those words can have quite a different meaning than when a 31 year old MBA uses them.

Get Rid of the Performance Review! by Samuel Culbert

As I have said numerous times, I agree with Deming that management by performance appraisals doesn’t work. Most people seem to realize they are fake, cause harm, and do little if any good. But they continue to act as though it is impossible to stop activities that cause harm and provide no significant benefit.

Related: Righter Performance Appraisal - Performance without Appraisal - Deming and Performance Appraisal - Problems Caused by Performance Appraisal

Low-Tech, High Impact Innovation

Great post. My father, Dr. William Hunter, did a great deal of work with appropriate technology (he was a chemical engineering, industrial engineering and statistics professor) and in management improvement.

Often the failure to adopt appropriate technology solutions results from a combination of 3 things:

• Failing to understand the conditions where the solution will be applied. Failing to “go and see” in lean manufacturing terms.
• Short term thinking, the failure to see the challenges in maintenance, is how short term thinking manifests itself with the inappropriate technology solutions often applied by those siting in Washington DC or Paris. The failure to consider maintenance is also very related to the first point. Appropriate technology solutions are often very simple, less sensitive (less moving parts to break, able to deal with dust, rain…) and more easily repairable (with tools, expertise and spare parts available at the location of use).
• A desire to use the cool new gadget and ideas.

Thinking about why appropriate technology is so effective, but underutilized can help anyone improve the solutions they adopt. Thankfully the adoption of appropriate technology solutions has been increasing over the last few decades.

I would especially encourage people to stop looking for the newest management book and actually read and adopt and then re-read and… the excellent management books from the last 50 years. Stop chasing some new shiny thing and adopt solutions that are effective - even if they seem boring.
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The engineering manager’s lament by Eric Ries:

Excellent post, focused on software development but with usable information for anyone seeking to improve management practices.

Related: Amazon S3 Failure Analysis - IT Talent Shortage, or Management Failure? - Future Directions for Agile Management - Why Extrinsic Motivation Fails - If Tech Companies Made Sudoku

Dogbert: “I am stepping down as CEO so I can spend more time with the money I stole from this hellhole.” Unfortunately we still have far too few people that see the obscene behavior of CEOs and their brooks brother bureaucrats as unacceptable. The behavior of many of them has been similar to that of dictators looting the coffers of their country as the country sinks into despair. The CEOs have their actions supported by a flock of board members that are also spared the condemnation their despicable behavior deserves.

I must say I am amazed at how brazenly those participating in looting companies from within are; and how it is accepted. It is a shame such unethical behavior is tolerated. It seems once companies implode their are some minor complaints about the behavior, in the specific case in question, as though it was not the accepted current practice among the many of those in positions of power (Warren Buffett being one obvious counterexample).

At some point I sure hope those looting companies and voting to support such things are seen for what they are. And I hope we don’t make excuses about how those taking what they didn’t deserve were somehow excused because they paid large sums of money to others to say such behavior was acceptable. Undermining all those that rely on a companies long term success is despicable behavior. That we accept those doing so and those board members supporting it as honorable members of society is a sad commentary on our society. I understand they feel entitled to loot when they see their neighbors buying castles around the world and helicopters and jets and… But their behavior is despicable.
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How Business Pays for its View of Human Nature by Fred Kiel makes some good points. I think he is a bit off in why the points are good, but…

I believe people are self interested and somewhat rational. However, self interest, is complex. People want to be liked, people want to be part of something good, people want to feel they are appreciated, people like having money to buy what they want… Some people like to feel better than others, some are insecure…

Thinking that people are guided by self interest and somewhat rational decision making is helpful, I believe. But that understanding complex, too often people seek over-simplified models to base their decisions upon (I now have 92 posts in the psychology category of this blog). And fearful, ill-informed, un-trained (in ways that build the capacity to make rational decisions) workers pursuing their self interest is often much more harmful than workers that are more secure, trusting, knowledgeable, committed workers pursuing their self interest. If you design your organization with what Dr. Deming called an understanding of psychology then you can make these traits work for the organization instead of against the organization.
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Response to LinkedIn question: “Whether Six Sigma as a quality tool really delivers the benefits ? How does it makes difference from a common sense approach ? (Where the process wastes and the required solution is known / can be easily identified just by applying common sense)”

Six sigma (or another management improvement method) can help in several ways. First, lots of things that are sensible are not done. A method to assure that more sensible things are done is useful.

Second, many things are sensible, but are not sensible when looked at in isolation (sub-optimization). Six sigma can (not does, can - sometime this won’t happen) assist those in the organization to evaluate from a larger context than they normally do. So instead of say the IT department forcing everyone to use some poorly designed software because it is the cheapest thing for the IT department to support the added costs to the rest of the organization are more fully considered.

Third, many things that are sensible are not evaluated based on their sense but instead based on internal politics… A standard methodology can help focus people on the merits of a proposal instead of who said it (again six sigma can do this, often it fails as the organization continues to cling to old patterns of power over sense).

Fourth, many of the tools, go beyond what sensible people alone see (design of experiments, understanding variation, PDSA, systems thinking, root cause analysis). Using the tools can often lead to valuable discoveries that were not obvious without using the tools.

If the solutions were obvious why were they not done last year? It is true that there are often plenty of simple improvements waiting to be adopted because management has done such a poor job that obvious improvement are left undone. But once sensible management is in place, eventually those obvious improvement will be done and a more structured approach to finding improvement is valuable. Even simple concepts like letting those that work on the process improve the process are often ignored by organizations (even those saying they are doing six sigma, unfortunately). So I see a strong value in adopting management improvement principles and tools.

Related: Management Advice Failures - Improvement Tools and Improving Management - Six Sigma Pitfalls - Why Isn’t Work Standard? - European Blackout: Not “Human Error”

Armand V. Feigenbaum received the 2007 National Medal of and Technology and Innovation for his leadership in the development of the economic relationship of quality costs, productivity improvement, and profitability, and for his pioneering application of economics, general systems theory and technology, statistical methods, and management principles that define The Total Quality Management approach for achieving performance excellence and global competitiveness.

In 1987, Dr. W. Edwards Deming received the medal for his forceful promotion of statistical methodology, for his contributions to sampling theory and for his advocacy to corporations and nations of a general management philosophy that has resulted in improved product quality with consequent betterment of products available to users as well as more efficient corporate performance.

In 1992, Joseph M. Juran received the medal for his lifetime work of providing the key principles and methods by which enterprises manage the quality of their products and processes, enhancing their ability to compete in the global marketplace.

Related: 2007 National Medals of Science and Technology - 2007 Baldrige National Quality Award - 2007 William G. Hunter Award - 2005 and 2006 National Science and Technology Medals - ASQ Deming Medal to Peter Scholtes

Read the previous management carnivals. Also see the management Reddit for popular new blog posts to include in future carnivals.

• Hire them, fire them, do what you want with them by Jay Padinjaredath - “A quote from Deming: “In Japan when a company has to absorb a sudden economic hardship… First the corporate dividends are cut. Then the salaries and the bonuses of the top management are reduced…. Lastly, the rank and file are asked to accept pay cuts…”
• The Art of the A3 by Matthew May - “Every A3 tells a story. And like every story, each one is a little different, style-wise. But like any good story, there’s a clear structure.”
• Spirit of the Toyota Suggestion System by Mike Wroblewski - “Our job as lean leaders is to help create that environment and inspire everyone to act, to take action to make improvements.”
• To Motivate or Not to Demotivate by Jurgen Appelo - “Some people tell me that ‘you cannot motivate a person’. You can only “remove the impediments that prevent a person from being motivated”. Or, in other words, ‘you can only eliminate demotivation‘. Well, I don’t agree!”
• Managing To Learn by Tom Southworth - “PDCA, or continuous improvement, never has an end, does it? We’re not solving problems, we’re implementing countermeasures to make positive changes to an existing condition.”
• Demotivating a (Good) Programmer by Louis Brandy - “consider this your executive summary: he is motivated because he likes the actual work. That’s the Achilles heel. Now, before you think you’ve got this problem solved, let me explain to you the secret to the secret: what he thinks is cool is almost beyond your comprehension”
• Apologizing Does NOT Get to the Root Cause by Mark Graban - “if you’re just putting the fire out without looking for a root cause or for prevention, you’re going to have the same problem occur again.”

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Why Tip? by Paul Wachter

This is an interesting article discussing some of the psychological and systems thinking aspects of managing a system made up of people.

Related: Eliminating Commissions - Losses Covered Up to Protect Bonuses - Respect for People, Understanding Psychology - Losing Consumers’ Trust - Compensation at Whole Foods - I wasted the best years of my life

Idle Workers Busy at Toyota

Toyota continues to show intelligence, long term thinking, respect for people… in their management decisions. I worry they may capitulate and make explanations about how the economy forced them to abandon their principles. I hope they prove that cynical fear in me to be wrong, in their case.

Related: Bad Management Results in Layoffs - Toyota Management Not Close to Being Duplicated - Toyota’s Commitment to Customers - People are Our Most Important Asset - Jim Press, Toyota N. American President, Moves to Chrysler

The financial market meltdown has grown to the point where it has profound ramifications for everyone. The common wisdom for financial market variation, for most of us, is just to focus on the long term and don’t worry about short term fluctuations. That is good advice. This panic is threatening to override that wisdom however. There are at least 2 areas to consider: personal finance and business prospects (how managers need to take this crisis into account).

On personal finance I still believe the same smart personal financial decisions last year, or five years ago are wise today: avoid credit card debt, have an emergency fund of 6 months of expenses, save for retirement, have proper health insurance, don’t buy what you don’t need and can’t afford… The biggest change I see is that the risks of failing to do these things (and the risks of failing to have done them in the past) are increasing greatly.

One of the challenges with personal financial matters is they are by nature long term issues. What you did over the last 5 years cannot be fixed in a few weeks, most likely it takes years. For more details follow the links in the paragraph above (to posts on the Curious Cat Investing and Economics Blog). You can’t make much progress quickly on these matters if you failed to do so over the last 5 years. However, you can at the very least start doing so now and you can even go a bit further if you were doing well (I am seriously considering raising my retirement contributions to take advantage of low stock prices).

On the impact to management area, this crisis has reached the point at many companies that managers not involved in finance have already been dealing much more with the importance of cash flow. And all indications indicate the risks related to manage cash flow are increasing dramatically. The expected sources of cash to provide for long term investments, for medium term investments and even short term cash flow needs are disappearing in a way I don’t think anyone predicted was possible.

What will happen in the next 1-6 months is very hard to predict. Most likely the credit markets will recover some (it is hard to imagine they could stay this broken). But to what extent is hard to say. And the real business risks of almost unimaginable (anytime the last 70 years anyway) problems raising cash, require managers to evaluate how to react today based on these risks. Even a month ago, for most businesses (outside of the financial industry or those with extremely heavy financing needs) this was not likely a consideration.
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Tata Steel, India, has been awarded the 2008 Deming Prize. They were the only organization to receive the prize this year.

Mr. B. Muthuraman, Managing Director, Tata Steel, while expressing satisfaction over this accomplishment said, “No other activity made us think so deeply about our business and relationships than the process of applying for the Deming Prize. Total Quality Management (TQM) is a fundamental way of managing business and every organization can gain from institutionalizing the culture necessary to win this prize.” He dedicated this recognition to the employees of Tata Steel, its customers and business partners who have consistently embraced the culture of continuous improvement and demonstrated a great teamwork leading to several recognitions in the last 20 years since the TQM journey started at the Steel Company in 1988.

India continues to do very well, collecting more Deming Prizes than all other countries combined since 2000. Countries of organizations receiving the Deming Prize since 2000 (prior to that almost all winners were from Japan):

The 2007 Deming Prize for Individuals went to Mr. Masahiro Sakane, Chairman, Komatsu Limited, Japan. Previous recipients include: Kaoru Ishikawa, Genichi Taguchi, Shoichiro Toyoda, Hitoshi Kume and Noriaki Kano.

Related: 2008 the Deming Prize Winners Announced - Tata Steel India wins Deming Application Prize-2008 - Deming Prize 2007 - 2005 Deming Prize - Dr. Deming’s Thoughts on Management

To Motivate or Not to Demotivate

I still think eliminating de-motivation is the better way to look at it.

I still see far to many managers thinking in a theory x way - 50 years after McGregor’s The Human Side of Enterprise. If there was not such a systemic failure to apply effective management practices and such a desire to substitute motivation for management I wouldn’t see this as a big deal. The issue is important to me because their is a huge amount of poor management based on how people view the need to fix how people are motivated instead of fixing what management really needs to fix (see all the links in the related section at the bottom of this post).

“eliminating demotivation” is a too simplistic view

I would say a party doesn’t really motivate people. But it can (taking psychology into account) gain advantages by helping bond people to each other, letting people feel good as they form social relationships, build trust with others… They can be good things that can build a stronger work environment. And by building social ties we can create an environment where people are more interested in working toward common goals.
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More and more people are willing to state the frustration with the performance appraisal process. Some have been willing to take the logical step of eliminating that which causes problems but many still don’t think elimination of performance appraisals is acceptable. Performance Reviews: Many Need Improvement

I would go with the elimination of performance appraisals, myself (see related links below for details). I strongly suggest chapter 9 (Performance Without Appraisal) of The Leader’s Handbook, by Peter Scholtes, for those thinking about this topic.

Related: Don’t Use Performance Appraisals - Continuous, Constructive Feedback - Performance Appraisals - Is Good Execution the Solution? - Performance Without Appraisal

Data from World Wind Energy Association, for installed Mega Watts of global wind power capacity in 2007. 19,696 MW of capacity were added in 2007, bringing the total to 93,849 MW. Europe accounts for 61% of installed capacity, Germany accounts for 24% and the USA 18%.

Post from the Curious Cat Science and Engineering blog (more posts on energy and engineering). The graph shows the top 10 producers (with the exceptions of Denmark and Portugal) and includes Japan (which is 13th).

Related: USA Wind Power Installed Capacity 1981 to 2005 - Wind Power has the Potential to Produce 20% of Electricity by 2030 - Top 12 Manufacturing Countries in 2007

Kevin Meyer is hosting the Management Improvement Carnival #44 on the Evolving Excellence blog, highlights include:

• What would Taiichi Ohno do? at TimeBack Management. I do think there’s tremendous value in applying 5S to the information you manage. But. . . when Google desktop can find anything on your computer in .03 seconds, is there real value in spending time organizing, sorting, and deleting emails, spreadsheets, and PDFs?
• Unbundling Dell’s Business at Edge Perspectives. Companies increasingly face an unbundling decision that will force executives to confront the most basic question of all: “what business are we really in?”
• The Problem With Not Being Obsessive About Mistakes at Process Rants. I’m thinking if everyone was obsessed with getting it right, and embarrassed to be caught being wrong, a lot of the quality issue would take care of itself.
• “If you didn’t do it in six sigma, then it didn’t happen.” at the Lean Blog. There’s an expression that pretty much describes Six Sigma’s infiltration at GE: If your only tool is a hammer, every problem starts to look like a nail.