Pixar Movie Management Magic

Posted on May 29, 2009  Comments (1)

image of Walle - PixarImage of Wall-e, from the Pixar film of the same name.

Pixar’s secrets on display in ‘Up’

“I think it comes down to two basic things: one is that we’re run by artists. … John Lasseter is a film director, as opposed to being from a business school or whatever. He has that side of him as well, but he’s always approaching these things as the same way we are.

“Second, we have some pretty great people that they’ve managed to collect here. This is our 10th film, and every film has just gotten better and better, whether that be in animation or special effects or lighting. And it just all comes together to make for some really fantastic stuff.”
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“One of the things that I really love about [Pixar] is that no matter what you do, if you’re a production assistant or a producer or a marketing executive or running the kitchen, everyone here thinks like filmmakers,”
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Like, I didn’t work on ‘WALL-E,’ but I feel like it’s mine, you know? And I want that to look great and be great. And then I want that bar to be higher and for us to be challenged.”

Pixar has done a great job of creating the right climate for the business they are in. They make movies and have been very consistently successful. Many of those strategies are useful concepts for everyone. Create a climate that promotes pride in work. Create a climate where everyone sees how they contribute to the end product. Hire people you trust and let them do their jobs. Seek continual improvement. Respect people. Customer Focus. Innovation (for example: Pixar Is Inventing New Math).

By the way, Steve Jobs, Apple co-founder, paid $5 million for Pixar and sold his share for $3,700 million of Disney stock (he is the largest shareholder of Disney – approximately 7%). Pixar Movies include: Toy Story, Monsters Inc. and The Incredibles.

Related: Tilting at Ludicrous CEO Pay 2008 – Better and Different – Innovation Examples

CEOs Want Health-Care Reform

Posted on May 28, 2009  Comments (5)

Decades ago Dr. Deming emphasized the deadly disease of excessive health care costs in the USA. Since then, year after year, the situation has become worse (reaching $2.2 trillion in spending in 2007 – 16.2% of GDP). During that time senior executives has put forth very little serious effort (in comparison to the huge cost) to fix this problem. Finally, in the last few years, more and more senior executives are actively moving to address the ever worsening crisis (including, Howard Schultz, CEO at Starbucks).

They seem to be realizing that hoping the problem will just fix itself is not a great strategy. Finally senior executives are realizing they need to have the government address the systemic failures. Those executives need to keep up their efforts because those seeking to retain the system that doesn’t work, because they personally benefit from it, have been doing a great job of preventing progress for decades. Until a critical mass of senior executives demand change from Washington the chance of improving the relative performance of the USA health system in comparison to other countries is very bleak (we have just been getting more expensive and less effective [relative to other countries] over time).

CEOs Secretly Want Health-Care Reform

Carl T. Camden, CEO of Kelly Services (KELYA). Managing insurance for his vast, geographically dispersed workforce of temporary workers is horrendously expensive, he complains: “My health-care costs total more than my profits.”
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But in private, “CEOs overwhelmingly want out of this business,” says Benjamin Sasse, an Assistant Secretary of Health & Human Services under President George W. Bush who’s now an assistant professor at the University of Texas at Austin. “They just do not want to be seen as more willing to dump [benefits] than their competitors are.” Sasse says many CEOs he has talked with would even pay a new tax if it got them out of the insurance business.

Related: Many Experts Say Health-Care System Inefficient, Wasteful – Articles on Improving the Healthcare system – Applying Disruptive Thinking to the Healthcare Crisis – Our Failed Health-care System
Read more

In-N-Out Burger’s Six Secrets for Success

Posted on May 26, 2009  Comments (1)

image of In-N-Out Burger book cover

In-N-Out Burger’s six secrets for out-and-out success

Listen to Your Customers — One of the company’s mottos is “Our customer is everything.” Applying that belief led to the company policy of preparing burgers just the way customers asked for them. Some of the customer favorites became popular and were eventually adopted as the restaurant chain’s “secret menu.” By listening to their customers, In-N-Out created menu choices other stores couldn’t duplicate.
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Treat Employees Well — The Snyders always held their employees in high esteem, paying them higher wages than competitors and calling them associates to make them feel more connected to the franchise.

“They believed in sharing their success with their employees,” says Perman, noting that In-N-Out associates make $10 an hour working part-time and starting store managers make $100,000, plus bonuses tied to store performance. The company benefits package is also generous. Such treatment engenders loyalty from workers.

“They have the lowest turnover rate in the fast food industry, which is notorious for turnover,” says Perman. “They say that the average manager’s tenure is 14 years, but they have managers who have been there 30 or 40 years.”

Keep Things Simple and Consistent…

The fundamental idea of respecting people is something most executives seem to have no interest in. Treating employees as the critical partners in organizational success is just something that doesn’t leap out at you based on the actions of most managers, unfortunately. And that poor management damages the performance of the organization.

Read more about In-N-Out Burger management practices in Stacy Perman’s new book In-N-Out Burger: A Behind-the-Counter Look at the Fast-Food Chain That Breaks All the Rules.

Related: Respect for Workers at In-N-Out Burger (Nov 2006) – Building a Great Workforce – Another Year of CEO’s Taking Hugely Excessive Pay – Respect for People, Understanding Psychology – People are Our Most Important Asset

Google’s Innovative Use of Economics

Posted on May 24, 2009  Comments (0)

Secret of Googlenomics: Data-Fueled Recipe Brews Profitability

Google depends on economic principles to hone what has become the search engine of choice for more than 60 percent of all Internet surfers, and the company uses auction theory to grease the skids of its own operations. All these calculations require an army of math geeks, algorithms of Ramanujanian complexity, and a sales force more comfortable with whiteboard markers than fairway irons.
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Varian tried to understand the process better by applying game theory. “I think I was the first person to do that,” he says. After just a few weeks at Google, he went back to Schmidt. “It’s amazing!” Varian said. “You’ve managed to design an auction perfectly.” To Schmidt, who had been at Google barely a year, this was an incredible relief. “Remember, this was when the company had 200 employees and no cash,” he says. “All of a sudden we realized we were in the auction business.”
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Google even uses auctions for internal operations, like allocating servers among its various business units. Since moving a product’s storage and computation to a new data center is disruptive, engineers often put it off. “I suggested we run an auction similar to what the airlines do when they oversell a flight. They keep offering bigger vouchers until enough customers give up their seats,” Varian says. “In our case, we offer more machines in exchange for moving to new servers. One group might do it for 50 new ones, another for 100, and another won’t move unless we give them 300. So we give them to the lowest bidder—they get their extra capacity, and we get computation shifted to the new data center.”

Google continues to make bold moves putting faith in their ability to find innovative solutions that others reject as impossible. It is a challenging but interesting path to success, for them, at least.

Related: Google Should Stay True to Their Management Practices – Google’s Answer to Filling Jobs Is an Algorithm – The Google Way: Give Engineers Room – Google Website Optimizer – Google: Experiment Quickly and Often – posts on innovation in management

Management Improvement Carnival #64

Posted on May 21, 2009  Comments (1)

Mike Wroblewski is hosting the Management Improvement Carnival #64 on the Got Boondoggle? blog, highlights include:

  • Daily Scrum against the Board by Xavier Quesada Allue-”A good way to know if your team is using their taskboard to really manage their work is to look at their daily standup meeting.”
  • Japanese CEOs and Leadership by Mark Graban-”When do you ever hear a Western CEO say ‘sorry’ or ‘we were lacking’?”
  • Total Company Involvement by Pete Abilla-”When the hearts and minds of everybody in the organization is moving toward the same end then you know the companies’ mission has became a living and breathing inspirational catalyst for good.”
  • How Interruptions Drain Productivity by George Ambler-”Time is a leaders most valuable resource. The way a leader uses their time demonstrates to the people around them what’s really important.”

Overview of the management improvement carnival.

Warren Buffett Answers Shareholder’s Questions – 2009

Posted on May 19, 2009  Comments (0)

Each year Warren Buffett and Charlie Munger answer questions in front of crowds of tens of thousands of Berkshire Hathaway shareholders in Omaha, Nebraska. The question and answer sessions provide great wisdom on economics, investing and management. Here are some of the highlights I have found from the meeting (see more on the Curious Cat Investing and Economic Blog review of the answers)

Buffett, Munger praise Google’s moat

“Google has a huge new moat,” Munger said. “In fact I’ve probably never seen such a wide moat.” Google’s main business of charging companies when people click on their ads after running an Internet search is “incredible,” the Berkshire chairman said. “I don’t know how to take it away from them,” he added. “Their moat is filled with sharks,” Munger said.

Google hopes the anti-trust regulators don’t see it the same way. And I believe Google sees their moat as easy to loose (and I think they are right). At the same time Buffett and Munger are right. The moat is huge but if Google looses focus they can drain the moat in no time.

Warren Buffett’s Q&A With Shareholders (Afternoon Session)

2:58 pm: Buffett says his hope for Berkshire Hathaway 20 years from now is that its culture will be maintained, that it will be seen as a place where good managers want to work for the rest of their lives. That and to have the world’s “oldest living managers.” The audience rises for a standing ovation. That concludes the Q&A session.

3:10 pm: After taking a break, Buffett is now conducting the formal business session of the annual meeting. It is totally routine.

3:15: Buffett, Munger and the other directors have been re-elected to the Board and the meeting has been adjourned.

Related: Warren Buffett’s Letter to Shareholders 2009 – Management Advice from Warren Buffet – Warren Buffett Webcast on the Credit Crisis – Sleep Well Fund Investing Results

Revealed Preference

Posted on May 16, 2009  Comments (1)

Revealed Preference: the preference consumers display by their action, in contrast to what they may say they prefer. While surveys may be useful people often say they will do one thing and actually when given the choice to do so, don’t.

Normally what matters is not what people say they want but what they actually will choose. For that reason revealed preference is a better measure than stated preference. Stated preference is often used as a proxy for actual preference (which may be fine) but it is important to understand that it is just a proxy for actual preference.

See more explanations from the Curious Cat Management Dictionary.

Related: Packaging Improvement – All Models Are Wrong But Some Are Useful – Dangers of Forgetting the Proxy Nature of Data – Confirmation Bias – Be Careful What You Measure

Dr. Russell Ackoff Webcast on Systems Thinking

Posted on May 13, 2009  Comments (2)

Dr. Ackoff is one of two management thinkers that any manager, that is serious about improving management results in their organization, should study (the other is Dr. Deming). There are plenty of others that are also great resources. From part 2 of his talk: “Why-questions, about objects called systems, cannot be answered by the use of analysis… The product of explanation is understanding… The product of analysis is how things work, never why they work the way they do. Explanations always lie outside the system, never inside it.”

Synthesis (thinking about systems) involves 3 steps: 1) what is this system of which this is a part of; 2) understanding the behavior of the containing whole; 3) identify the role of function of the system in question within the containing system. Every system is defined by its role in the larger system.

Related: posts on Russ Ackoff’s ideas – Ackoff’s New Book: Management f-Laws – Write Down Predictions – Knowledge Management – Management is Prediction

Management Improvement Carnival #63

Posted on May 11, 2009  Comments (0)

Also visit the Curious Cat Management Library for online management improvement articles.

  • What You Can Learn Zappos by Robert Scoble – “6. Train, train and train some more. Zappos has a whole department that puts together classes. Your pay goes up the more classes you complete. 18. Remember most policies are to take care of edge cases. They resist writing new policies at Zappos. When they do write a policy, they make sure it really is needed across the company. Usually policies get killed.
  • Unknown and unknowable by Michael Neiss – “The concept I see most overlooked and therefore, least implemented, is nemawashi, or the foundational work that needs to be done so that those that do the work on a daily basis integrate the knowledge into their everyday mindset.”
  • Simplicity by Ron Pereira – “If I was only able to use one word to describe what lean and authentic continuous improvement meant to me I’d choose, without hesitation, simplicity.”
  • How to Quit Your Job and Start a Company by Pamela Slim – “Know the kinds of problems you are trying to solve, and what value solving them would bring to your customers. Get clear on resources needed to bring your business to life… So move quickly, test often, fail fast, and discuss and document your assumptions.”
  • In-the-Flow with Acumen Fund by Michael Idinopulos – “…already had all sorts of processes and mechanisms for capturing knowledge and ideas. The question was how to tap into those resources in a way that would create transparency, access, and reuse across the organization’s four locations in Hyderabad, Karachi, Nairobi, and New York.”
  • Job Breakdown Sheet vs. Work Instruction by Bryan Lund – “Purpose of a Job Breakdown Sheet is distinctly different and clear. The primary purpose of a JBS is to serve as a trainer’s aid. It is not meant to be read by the trainee. It can be, but that isn’t the primary purpose”
  • The difference between truly standing for something and a mission statement – “a tattered piece of paper with some clip art at the top of it pinned to a bulletin board. And it;s a mission statement that says this… And you’re sitting there reading this crap and wondering, ‘What kind of idiot do they take me for?’ It’’ just words on paper that are clearly disconnected from the reality of the experience.”

    • Read more

Toyota Posts Loss of $6.9 Billion in Last Quarter

Posted on May 8, 2009  Comments (1)

Toyota Posts Loss of $6.9 Billion in Last Quarter

For January-March, Toyota booked a $6.9 billion loss, in line with consensus estimates, and cut its annual dividend nearly 30 percent — the first cut since at least 1994, when it changed its reporting period.
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Toyota President Katsuaki Watanabe was more downbeat, stopping short of predicting when sales would pick up in major markets, or when the company would return to profitability as it remains saddled with excess capacity. “Of course the external environment doesn’t help, but we were lacking in the scope and speed of dealing with various problems and issues, and for that I am sorry,” he told a news conference.

For the year to next March, the maker of the Prius hybrid forecast an operating loss of 850 billion yen, more than double the average forecast in a survey of 20 analysts by Thomson Reuters. It sees an annual net loss of 550 billion yen based on the dollar and euro averaging 95 yen and 125 yen.

The bleak forecasts prompted ratings agency Standard & Poor’s to downgrade Toyota’s long-term debt ratings to AA from AA+, with a negative outlook.
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To return to profit, Toyota must sell more cars or cut costs further, Watanabe said. But he predicted the U.S. market would be around 10 million vehicles industrywide at best this year, down from more than 13 million in 2008.
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Toyota is bleeding overhead costs, with about a third of its global assembly lines working on single shifts. It will slash capital spending by more than a third this year to 830 billion yen as it puts expansion projects on hold, but it said it was not thinking of closing any production lines for good.

In my opinion these negative results are a sign of Toyota’s strength not weakness. The credit crisis and economic downturn has resulted in a poor economic environment. Toyota has managed to sustain the blow and hold firm to their principles and likely will come out of this downturn stronger as a company (mainly re-enforcing the importance of planning for bad economic conditions and not getting too excited about growth potential versus risks of growing too fast) and in a better position compared to their competitors. I continue to be an owner of Toyota stock and happily so.

Related: Idle Workers Busy at Toyota – Financial Market Meltdown (Oct 2008) – “2007 has been a difficult year for Toyota” – New Toyota CEO’s Views (2005) – Jim Press, Toyota N. American President, Moves to Chrysler

Management Blog Posts From February 2006

Posted on May 7, 2009  Comments (0)

John Hunter -Simpson-

The image shows me, as a Simpson’s character by the Simpson’s Maker.

Joel Spolsky Webcast on Creating Social Web Resources

Posted on May 4, 2009  Comments (1)

Joel Spolsky webcast on creating Stack Overflow (with the goal of providing answers to professional programmers) using ideas from anthropology. Once again he provides great information. This is particularly interesting for software development but also just a good presentation for understanding the importance of customer focus and systems thinking.

What they focused on and did:

  • Voting – Reddit… (see our management Reddit)
  • Tags – lets you see what you want and to block tags you don’t want to see.
  • Editing – letting users edit the questions and responses. For a technical question and answer system this is very useful (based on my experience).
  • Badges – people like to earn “credit” (psychology)
  • Karma – “people are willing to do for free what people are not willing to do for small amounts of money” (psychology)
  • Pre-search – provide quick view of previously answered questions
  • Google is UI – Assumption: “the front page is Google search” – build based on the idea people will search via Google
  • Performance – 16 million pages a month with 2 web servers. They are using the Microsoft stack, not open source.
  • Critical mass – they focused on getting a large user base on day one of the beta site

Related: posts related to Joel Spolsky – Dell, Reddit and Customer Focus – Information Technology and Management – What Motivates Programmers?

Management Improvement Carnival #62

Posted on May 2, 2009  Comments (0)

Mark Graban is hosting the Management Improvement Carnival #62 on the Lean blog, highlights include:

  • Why Quality is Dangerous (Dr. John Toussaint – ThedaCare Center Blog): “If we are going to have carrots and sticks it should be centered on what improvements healthcare organizations and providers are making every day, month, and year. Measuring and improving is how we are going to create better performance in healthcare not dictating and punishing.”
  • Beth Israel Deaconess: Systems, safety, and (avoided) severance… (Steven J. Spear – Chasing the Rabbit): “… BIDMC’s efforts to achieve perfect safety by being transparent when systems fail, using that transparency to see problems so they can be solved.
  • Going to Gemba (Paul Levy – Running a Hospital): “By witnessing problems and work-arounds in real time, the team can have a better idea of how to solve problems to root cause and make incremental improvements in work flows.”
  • Managing the Burning Platform (Mark Rosenthal – Lean Thinker Blog): “It is really easy to say that, in these emergencies, long term thinking doesn’t matter. But I contend that it is even more important right now. This is a time for action. It is not a time for panic.”
  • LeanBlog Video Podcast #2 – Kevin Frieswick, Error Proofing Handwashing (Mark Graban – Lean Blog): “I’m still experimenting with video podcasting, after my first attempt with Jamie Finchbaugh. LeanBlog Video Podcast #2 is… the video from Kevin Frieswick and MetroWest Medical Center with the device for error proofing hand washing on the way into patient rooms”

Overview of the management improvement carnival.

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