Posted on March 31, 2009  Comments (1)

I will be co-presenting an Out of the Crisis seminar for the W. Edwards Deming Institute next month, April 20-22, in Philadelphia.

Companies around the world are on the brink of destruction. When they get bailed out, or economies improve, they won’t survive if they continue to make products and provide services the same way as before, with the same style of management. They need to change.

It was the ideas of an American, W. Edwards Deming, that transformed Japanese industry after the devastation wrought by World War II. More than fifty years later, American businesses and much of the rest of the world find themselves in a somewhat similar position. Isn’t it time for American industry to wake up? Management practices need to change!

This seminar will help you work on transformation of management practices at your organization. It will show how current 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. You will learn how to overcome these problems and focus on creating a system of continual improvement, just as Toyota and other Japanese firms did some fifty years ago.

You may find more information and register online. I hope to see you there.

Related: Deming Institute Conference: Tom Nolan – Louisville Slugger – Deming Practices – Curious Cat Management Improvement Calendar – 6 Leadership Competencies – Deming Conference 2005

Posted on March 30, 2009  Comments (0)

• One of my long time campaigns is to raise awareness of the huge problems caused by massively excessive executive pay. As I said in my December 2005 post:

• Innovate or Avoid Risk – “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.”
• Quality, SPC and Your Career – “I believe far too often we look for the newest ideas and miss all the great ideas that have been known for decades but are not practiced widely. The key to success is applying good ideas well – not just applying new ideas.”
• America’s Manufacturing Future – “The best hope, as I see it, for retaining manufacturing leadership in the USA is through increasing the adoption of management improvement methods including lean manufacturing.”
• Ford’s Wrong Turn – “The biggest change needed is an improvement in management. Other things would also help greatly, such as improving the health care system.”

Posted on March 28, 2009  Comments (3)

Photo of Jeff Bezos during the 2005 O’Reilly Emerging Technology Conference by James Duncan.

Jeff Bezos, Amazon CEO, is working for a week in Amazon’s Kentucky distribution center. I hope, and based on his past, I believe, that he is going to the gemba (Genchi Genbutsu) to learn more about how Amazon operates. That would be great.

He worked on wall street and understands the fake constraints they attempt to put companies (you must focus on short term profits, you must focus on pleasing wall street analysts not customers…). He understood the importance of managing cash flow and the unimportance of short term profits. And he understands the importance of customer focus. He understands lean thinking. We need more CEO’s like him.

Amazon CEO comes to Lexington

Once again his actions indicate he is the type of CEO I want to invest in.

via: Jeff Bezos Works In Kentucky Distribution Center For A Week

Related: Jeff Bezos and Root Cause Analysis – Management by Walking Around – Amazon Innovation – Amazon’s Amazing Achievement – Louisville Slugger, Deming Practices – Management Excellence

Posted on March 26, 2009  Comments (8)

Combinatorial testing of software is very similar to the design of experiments work my father was involved in, and which I have a special interest in. Combinatorial testing looks at binary interaction effects (success or failure), since it is seeking to find bugs in software, while design of experiments captures the magnitude of interaction effects on performance. In the last several years my brother, Justin Hunter, has been working on using combinatorial testing to improve software development practices. He visited me this week and we discussed the potential value of increasing the adoption of combinatorial testing, which is similar to the value of increasing the adoption of the use of design of experiments: both offer great opportunities for large improvements in current practices.

Automated Combinatorial Testing for Software

Practical Combinatorial Testing: Beyond Pairwise by Rick Kuhn, US National Institute of Standards and Technology; Yu Lei, University of Texas, Arlington; and Raghu Kacker, US National Institute of Standards and Technology.

Related: Future Directions for Agile Management – The Defect Black Market – Metrics and Software Development – Full and Fractional Factorial Test Design – Google Website Optimizer

Posted on March 25, 2009  Comments (1)

Lynda Finn, President of Statistical Insight, has written an article on how to create a control chart for seasonal or trending data (where there is an underlying structural variation in the data). Essentially you need to account for the structural variation to create the control limits for the control chart. She also provides a Minitab project file. Both are available for download from the Curious Cat Management Improvement Library.

Related: Control Charts in Health Care – Common Cause Variation – Managing with Control Charts – Measurement and Data Collection – Fourth Generation Management

Posted on March 23, 2009  Comments (0)

W. Edwards Deming
Page 182, Out of the Crisis
More of Deming on Innovation

Related: Innovation Thinking with Clayton Christensen – Engineering Innovation – Managing Innovation – Gary Hamel on Management Innovation

Posted on March 20, 2009  Comments (0)

Submit suggestions for the management improvement carnival. Visit the Curious Cat Management Library for online management improvement articles.

• No Blame Thinking by Mike Wroblewski – “It’s not who’s wrong, it’s what’s wrong. It’s not who’s right, it’s what’s right. All other thinking leads to hiding the truth, distorting the information and covering up the problem”
• Three Sigma Bubble? Nonsense! by Marc Hersch – “Grantham’s argument is fallacious. The assumption underlying the use of three-sigma limits is that the system being characterized is in a state of control.” [investors and economic planners consistently fail to understand the volatility of markets - John, see Misuse of Statistics - Mania in Financial Markets]
• Lean Jobs: Current Salary Trends by Ralph Bernstein – “Salaries for people in dedicated lean positions in manufacturing haven’t changed much in the last couple of years, and salaries in manufacturing generally are down since last year”
• Management by Objectives – Why? by Gilad Langer – “You can set goals and metrics for a process, but that will eventually backfire with people.”
• How to Hold the Daily Scrum by Peter Stevens – “The Daily Scrum should be held at the same location and the same time every day, ideally in the team space in front of the team’s big visible task board.”
• Should Cross-trained Workers be Paid More? by Jon Miller – “In lean companies cross training is a prerequisite to advancement to supervisory and leadership positions, as the team leaders, group leaders and even area managers are responsible for training, filling in for absent workers and being intimately familiar with the processes they manage and possible problems within them.”
• What is your ideal organization? by Bob Sutton – “I give the students the final exam question on the first day of class, and it is due the last day. It is, ‘Design the ideal organization. Use course concepts to defend your answer.’”
• 5 Questions – Meet Kathleen Fasanella – “With lean, it’s employees who are truly investing in their employers and they feel it, the owners feel it. It becomes a genuine group effort.”

Read more

Posted on March 19, 2009  Comments (0)

The Aviary web site provides a very nice example of customer focus. They provide the legalese version of the terms of use and then explain what this actually mean in is simple terms. Good job. Legalese example

Readable example

Related: Making Life Difficult for Customers – Gobbledygook – Complicating Simplicity – User Happiness with Search Engines

Posted on March 17, 2009  Comments (0)

Once again I have created a group on the ESPN NCAA Basketball Tournament Challenge for curiouscat college basketball fans. To participate, go to the curiouscat ESPN group and make your picks.

I also created a second challenge, using Sportsline, that rewards picking upsets. The password for this one is cat.

Those readers that enjoy the tournament, please join the fun.

Go Badgers,

Posted on March 16, 2009  Comments (0)

Health spending in the United States grew 6.1 percent in 2007, to $2.2 trillion or $7,421 per person.
For comparison the total GDP per person in China is $6,100. This continues the trend of health care spending taking an every increasing portion of the economic output (the economy grew by 4.8 percent in 2007). This brings health care spending to 16.2% of GDP (which is yet another, in a string of record high percentages of GDP spent on health care). In 2003 the total health care spending was 15.3 of GDP.

With the exception of prescription drugs (which grew at 1.4% in 2007, compared to the 3.5% in 2006), spending for most other health care services grew at about the same rate or faster than in 2006. Hospital spending, which accounts for about 30 percent of total health care spending, grew 7.3 percent in 2007, compared to 6.9 percent in 2006.

Spending growth for both nursing home and home health services accelerated in 2007 (4.8% v. 4.0%). Spending growth for freestanding home health care services increased to 11.3 percent. Total health care spending by public programs, such as Medicare and Medicaid, grew 6.4% in 2007 v. 8.2% in 2006. In comparison, health care spending by private sources grew 5.8% compared to 5.4%.

Private health insurance premiums grew 6.0 percent in 2007, the same rate as in 2006. Out-of-pocket spending grew 5.3 percent in 2007, an acceleration from 3.3 percent growth in 2006. Out-of-pocket spending accounted for 12.0 percent of national health spending in 2007. This share has been steadily declining both recently and over the long-run; in 1998, it accounted for 14.7 percent of health spending and, in 1968, out-of-pocket spending accounted for 34.8 percent of all health spending.

The costs for health services and supplies for 2007 were distributed among businesses (25%), households (31%), other private sponsors (4%), and governments (40%).

Decades ago Dr. Deming included excessive health care costs as one of the seven deadly diseases of western management. We have only seen the problem get worse. Finally it seems that a significant number of people are in agreement that the system is broken. Still, admitting the system is broken is not the same as agreeing on how to fix it. The way forward to workable solutions still seems very difficult.

Full press release from the United States Department of Health and Human Services.

Related: Many Experts Say Health-Care System Inefficient, Wasteful – International Health Care System Performance – USA Paying More for Health Care – Health Insurance Premiums Soar Again – PBS Documentary on Improving Hospitals

Posted on March 13, 2009  Comments (1)

The popular ER TV show highlighted the importance of using checklists in surgery yesterday.

Such powerful quality tools, like the checklist, are just waiting to be used. But far too many fail to use these simple improvement tools. And in health care those failures are potentially critical.

Related: Checklists Save Lives – The Power of a Checklist – management improvement dictionary – Articles on Improving the Health Care System

Posted on March 11, 2009  Comments (2)

This article makes some good points, even if it is a bit sensationalist, and intentionally so: Harvard’s masters of the apocalypse by Philip Delves Broughton

Business schools unfortunately continue to take a heavily simplistic number (without an understanding of variation) and fad driven approach to management. W. Edwards Deming was against the damage they were causing decades ago, and I see little evidence they have learned from their failures.

Schools are good for making connections and getting a piece of paper. Some companies won’t consider you for some jobs unless you have an document saying you have an MBA. I strongly question the wisdom of only hiring an MBA to do some job. But many companies like to use simple criteria like – without a piece of paper saying you have an MBA we won’t consider you for this job. So if you want a job from them getting that piece of paper is important.

Related: What is Wrong with MBA’s – Management Training Program – Management Advice Failures – The Lean MBA

Posted on March 10, 2009  Comments (0)

Submit suggestions for the management improvement carnival. Also see the management Reddit (what is this Reddit thing?).

• 20 cynical project management tips by Michael Krigsman – “Projects with realistic budgets and timetables don’t get approved… If you don’t know where you’re going, just talk about specifics… A realist is one who’s presciently disappointed in the future.”
• Giving ERP Systems the Finger by Mike Wroblewski – “Anyone of us in business today that has to deal with ERP systems knows that while these systems are meant to make life simple for us, it more times than not works in the opposite direction.”
• If I just keep saying it, it will be true – “It looked as if cases were longer because of outages, but in reality, they would have been longer running regardless. The relationship is incidental.”
• Does Innovation Stem From Corporate Culture? by Dan Markovitz – “Kelly says that at Gore, ‘people are only leaders if someone wants to follow them.’ …adapting to a culture where influence, not title, is the key currency”
• Agile Architecture Method by J.D. Meier – “The Agile Architecture Method is a structured approach for helping you create your candidate architecture, identify relevant spikes and guide your inspections throughout your life cycle. During each iteration, you can use the frames to identify relevant intersections between your user stories and hot spots.”
• Idiot Inspector for Idiot Corporation? by Mark Graban – “So we have an inspector who didn’t have enough time and probably wasn’t trained well enough for his job. So he’s probably not an idiot. I’ll be fair to him, other than my headline. He’s just a bit player in the overall system.” [the system is broken - as I wrote earlier: Losing Consumers' Trust, John]
• Web Check-In: Lean or Not? by Ron Pereira – “I got to their website and in just a few clicks was booking my wife’s appointment… A few minutes later I was done… About 40 minutes after submitting the form they called for my wife to come in, meaning she got to ‘wait’ in the comfort of our home and not some germ filled waiting room.”
• “Modest Incompetence Simply Won’t Do; It’s Mindboggling Screw-Ups That Are Required” by Bill Waddell – “According to Buffett, if a CEO can really foul things up and impact a lot of other people, the government will bail him out, as opposed to local screw ups who just affect the CEOs own employees and investors.”
• Managing the unmanageable by Vincent Chin – “how on earth the hotel manages a process which are out of the hotel’s scope of processes… Well Andy related to me that his hotel works closely with the Tourism Board and cab company ensuring feedback is directed back to the cab company and to that particular cab driver.”
• Warren Buffett’s Letter to Shareholders 2009 by John Hunter – “Warren Buffett is a great investor. He is also a great executive. He hires honest and able people and lets them do their job. He ensures managers retain constancy of purpose…”

If you want to follow me on Twitter, now you can.

Posted on March 7, 2009  Comments (1)

Minnesota Bank Asks Why It Pays for Wall Street Greed

I am not very surprised that politicians provide big favors to those that give them huge amounts of money (former investment banks, farming interests, private plane owners, Fortune 100 companies, owners of oceanfront mansions, private equity speculators…). I am a bit surprised how much money is being lavished on those huge donors now, with the bailouts. Especially with how lacking in even minor consequences those huge gifts to their donors are (normally if the payoffs to supports get too huge there are at least some cover provided by putting in consequences for this “need” to send taxpayer money to their contributors).

The FDIC is a great government program. But allowing huge banks to take enormous risks and then passing on the much of the costs, of a small portion of those risks (FDIC insured deposit accounts), to banks that do not act as irresponsibly as the risk takers is a bad idea. Insurance should have increasing costs based on increasingly risky behavior.
Read more

Posted on March 6, 2009  Comments (0)

From the excellent xkcd comic.

Related: Correlation is Not Causation – Does the Data Deluge Make the Scientific Method Obsolete? – Understanding Data – Theory of Knowledge – What Makes Scientists Different – Dangers of Forgetting the Proxy Nature of Data – Seeing Patterns Where None Exists

Posted on March 2, 2009  Comments (0)

Submit suggestions for the management improvement carnival.

• Can you Buy a Silicon Valley? Maybe. by Paul Graham – “For the price of a football stadium, any town that was decent to live in could make itself one of the biggest startup hubs in the world. What’s more, it wouldn’t take very long. You could probably do it in five years.” [Excellent essay, I wrote about what makes Silicon Valley special on the Curious Cat Science and Engineering Blog.]
• Error Proofing Handwashing? by Mark Graban – “I made it out of Radio Shack and Home Depot parts,” said Frieswick, who wired the one-of-a-kind device together. “You’re not getting in this room without making a conscious effort to ignore this.”
• Counting hours doesn’t make sense by Daniel Tenner – “it soon becomes obvious that our actual output of things done is correlated far more to how we feel on the day than to how many hours we spend “working”. The real measure of work is not hours – it’s energy.”
• Beware of trade guilds maintaining the status quo by Seth Godin – “Why didn’t the RIAA help the record industry figure out how to transform into an industry that would embrace and leverage file sharing? You don’t have to like change to take advantage of it.”
• Genchi Genbutsu: Do You Really Understand It? by Ron Pereira – “Most seem to think it means to visit the gemba, or the place the work is done, when something needs addressed. And I suppose it does. But it’s much more than this.”
• Opportunity Awareness by Lee Fried – “So don’t try to solve world peace, pick the one thing you are going to work on today, make the improvement and then take the next. “
• Taiichi Ohno’s Three Lessons for the New Toyota President by Jon Miller – “Synchronize supply to demand! This means producing just in time – something that Toyota has gotten away from recently as they expand their global production capacity in an effort to capture greater market share”
• Reflections on NUMMI by John Hunter – The problem is that GM management fails to manage well, and has been failing to do so for decades. They have improved over the last few decades but not nearly fast or consistently enough.

Visit the Curious Cat Management Library for online management improvement articles.