No More Executive Bonuses!
Posted on November 30, 2009 Comments (5)
Henry Mintzberg, wrote an excellent article for the Wall Street Journal today, No More Executive Bonuses!
This may sound extreme. But when you look at the way the compensation game is played – and the assumptions that are made by those who want to reform it – you can come to no other conclusion. The system simply can’t be fixed. Executive bonuses – especially in the form of stock and option grants—represent the most prominent form of legal corruption that has been undermining our large corporations and bringing down the global economy. Get rid of them and we will all be better off for it.
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So, again, there is but one solution: Eliminate bonuses. Period. Pay people, including the CEO, fairly. As an executive, if you want a bonus, buy the stock, like everyone else. Bet on your company for real, personally.
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All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit.
Too many large corporations today are starved for leadership – true leadership, meaning engaged leadership embedded in concerned management. And the global economy desperately needs renewed enterprise, embedded in the belief that companies are communities. Getting rid of executive bonuses, and the gambling games that accompany them, is the place to start.
It is an great article on bad pay systems that let a few top executives (and their hand picked board members) in many companies to loot the treasury of the company. I have written about this problem many times, including: CEOs Plundering Corporate Coffers – Excessive Executive Pay (2005) – Narcissistic Cadre of Senior Executives – The Best Leadership Is Good Management – Another Year of CEO’s Taking Hugely Excessive Pay – More on Obscene CEO Pay – More on Failed Executives
There are executives that don’t act like corrupt dictators looting their country, unfortunately they are less common than those that act like looters. And they all seem to have built cultures that taking respect for people is more important that feeding a few bloated egos. Akio Toyoda’s Message Shows Real Leadership, Tony Hsieh, the Zappo’s CEO – Warren Buffett – Honda has Never had Layoffs and has been Profitable Every Year
The obscene pay is not just a matter of people taking a tens of millions of dollars they don’t deserve. Companies whole management systems are distorted in ways that lead the company to risk all the other stakeholders future for the potential gain of a few senior executives.
Management Blog Posts From March 2006
Posted on November 27, 2009 Comments (0)
Photo of sunset in Mount Rainier National Park by John Hunter- Cease Mass Inspection for Quality – “Deming point 3 is ‘Cease dependence on inspection to achieve quality.’ Eliminate the need for inspection on a mass basis by building quality into the product in the first place.”
- Lean Management – most organizations will not seriously consider changing the current management thought process without drastic threat (bankruptcy) or numerous successful improvements that give credibility to the new management ideas…
- Using Design of Experiments – While the adoption of DoE is still growing slowly, an increasing number of organizations are using DoE to improve. In the past most companies (in most industries anyway) did not have to compete with others that were using DoE to improve…
- Saving for Retirement – Savings for retirement is difficult mainly because of our trouble planning for the long term, it is not at all a complex problem. The fable of the ant and the grasshopper illustrates this point very simply and it is really that simple…
- Six Sigma and Bad Management, is not Really Six Sigma – if you read the work of Roger Hoerl, Soren Bisgaard, Forrest Breyfogle III… and learn and apply what they talk about as Six Sigma you will definitely have to address bad management practices…
- Deming and Toyota – I believe Toyota applied Deming’s ideas to create a management system and continued to develop that system to create the Toyota Production System)…
- No More Lean Excuses – Within a couple minutes the service person had picked up a Canon A700 and explained how to open the door for batteries. I happen to think the instructions, and design, could be much better but..
Related: Curious Cat Investment Blog – Retirement posts – Deming Companies
Making Better Decisions
Posted on November 24, 2009 Comments (3)
I think the most important thing you can do to make better decisions is to learn from the decisions you make. It sounds easy, but very few people do so effectively.
The best strategy to learn from decisions is to:
- predict the results of your decisions
- write down those predictions
- Then analyze the results
- Then adjust future predictions and decisions based on what you learn
- A Problems First Culture by Mark Rosenthal “‘Problems first’ is one of the mantras used by Phil Jenkinson, the CEO character in The Lean Manager by Michael and Freddy Ballé. Now that I have had a few weeks to let it sink in and synthesize with my mental models, I am seeing a concept that is so fundamental I would think it would be hammered into students in every management and leadership course taught in the world.’”
- Keeping Lean Japanese by Brian Buck “There is a trend towards removing the Japanese language or jargon from Lean transformations in the U.S. I understand why organizations would want to make lean thinking and the corresponding tools easier to digest, but I think we should seriously consider keeping it Japanese.”
- Lean is about More than the Myths by Tim McMahon “It’s important when you are starting out your lean journey to understand what lean is really about.”
- 17 Lessons I learned from Japanese Consultants by Jeff Hajek “Over the years I have worked with some premiere lean consultants from Japan. Here are some of the many lessons I learned from them.”
- The Kipling Method vs. the Ohno Method by Jon Miller “Are you a Kipling person, taking the accepted tool or situation as given, or are you an Ohno person, constantly challenging the norms and looking for better ways?”
- Kanban Results by David Joyce – “Through various means; working on the system… actively assigning, escalating and removing blockers, recognising and reducing bottlenecks, retrospectives, improving our process by separating common cause problems from special cause problems… implementing Kaizen… we have seen improved results which are depicted below in Statistical Process Control charts…”
- Liars, Blowhards, Con Artists, and Management Consultants by Marc Hersch – “Many years ago I had a conversation with Dr. Deming in which I asked him about what my role as a consultant, should be. He explained that my role was to provide my client with an outside perspective and a set of a methods for figuring out how to optimize their system of enterprise.”
- Distributed Software Teams by John J. Peebles – “it forced us extremely early on to invest in systems, processes, and a way of working that brought everything we did online. Project management, change control, bug tracking, issue tracking, source control, testing, collaboration, documentation, document management, communication, all of these things needed to be ubiquitous and consistently used by the entire staff.”
- The 5 Universal Laws of Gemba Management by Jon Miller – “The frequency of leadership going to the gemba is inversely proportional to the number of walls separating them from the gemba.”
- Intuition vs. Data-Driven Decision-Making: Some Rough Ideas by Bob Sutton – “The trouble with intuition is that we now have a HUGE pile of research on cognitive biases and related flaws in decision-making that show ‘gut feelings’ are highly suspect. Look-up confirmation bias — people have a very hard time believing and remember evidence that contradicts their beliefs.”
- A New Strategy for the Kaizen Blitz from Lean Homebuilding – on PDCA, kaizen, with lots of good comments
- To Err is Human…To Error Proof is Divine from Ankit Patel – fundamentals of error proofing from a new lean blogger
- Difference Between Inspect and Adapt and PDCA from Al Shalloway – yes, PDCA works even in non-deterministic systems
- Is the Answer Right There in Front of You? from Lean Laboratory – a great example and reminder on digging deeper into a problem
- Eliminating Tunnel Vision from Lean Builder – on using voice of the customer to eliminate missing the big picture
Failing to do this leads most people to fail to learn from there decisions. It is hard to improve when you don’t learn. The similarity to the PDSA improvement cycle is not a surprise. Both are about learning so you can adopt more effective strategies.
Related: Predicting Improves Learning – Management is Prediction – Making Decisions, Taking Risks – Knowledge Management: Management is Prediction – confirmation bias
Management Improvement Carnival #82
Posted on November 22, 2009 Comments (1)
Mike Wroblewski is hosting the Management Improvement Carnival #82 on the Got Boondoggle? blog, highlights include:
Related: Management Improvement Carnival #64 – Be Careful What You Measure – Do you Read Instructions Carefully Before Assembly?
Lean Inventories Do Not Excuse Failing to Deliver
Posted on November 20, 2009 Comments (2)
Low inventory levels do not mean failing to have products available for customers. Now, if you manufacturing in huge batches and can’t respond to customer feedback then it might mean failure to predict customer demand does mean failure to deliver. But lean thinking has shown how to avoid this problem. People need to adopt lean manufacturing practices and gain the benefits of low inventory levels without the costs of failing to deliver what customers want.
Sorry Santa, We’re Out of Stock
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Retailers themselves are battle-scarred by last year’s fourth-quarter fiasco. Following the financial meltdown of September 2008 and amid the most severe economic crisis since The Great Depression, consumers retrenched.
That’s when stores hit the markdown panic button, slashing prices upwards of 75 percent. The result was the worst holiday selling season since 1970, according to The International Council of Shopping Centers.
But although leaner inventory levels should drive profit margin gains this holiday, “retailers might not have enough inventory to fully satisfy demand,” said Citigroup retail analyst Deborah Weinswig, in a research note. It is a risk they are willing to take.
“They would rather lose a sale than take the markdowns they had last year,” said Goldman Sachs analyst Adrianne Shapira.
The retailers need to design their systems with lean thinking in mind (not lean – as in cut expenses without thought). And they need to work with suppliers using lean manufacturing principles.
Related: Be Thankful for Lean Thinking – Guess What? Manufacturing in the USA is a Good Idea – Tesco: Lean Provision – Zara Thrives by Ignoring Conventional Wisdom – Operational Excellence – lean manufacturing articles
Highlights from Recent George Box Speech
Posted on November 16, 2009 Comments (4)
The JMP blog has posted some highlights from George Box’s presentation at Discovery 2009
Having worked and studied with many other famous statisticians and analytic thinkers, Box did not hesitate to share his characterizations of them. He told a story about Dr. Bill Hunter and how he required his students to run an experiment. Apparently a variety of subjects was studied [see 101 Ways to Design an Experiment, or Some Ideas About Teaching Design of Experiments]
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According to Box, the difficulty of getting DOE to take root lies in the fact that these mathematicians “can’t really get the fact that it’s not about proving a theorem, it’s about being curious about things. There aren’t enough people who will apply [DOE] as a way of finding things out. But maybe with JMP, things will change that way.”
George Box is a great mind and great person who I have had the privilege of knowing my whole life. My father took his class at Princeton, then followed George to the University of Wisconsin-Madison (where Dr. Box founded the statistics department and Dad received the first PhD). They worked together building the UW statistics department, writing Statistics for Experimenters and founding the Center for Quality and Productivity Improvement among many other things.
Statistics for Experimenters: Design, Innovation, and Discovery shows that the goal of design of experiments is to learn and refine your experiment based on the knowledge you gain and experiment again. It is a process of discovery. If done properly it is very similar to the PDSA cycle with the application of statistical tools to aid in determining the impact of various factors under study.
Related: Box on Quality – George Box Quotations – posts on design of experiments – Using Design of Experiments
Tags: Bill Hunter,Data,Design of Experiments,Fun,George Box,John Hunter,Madison,Six sigma,Statistics
Learn Lean by Doing Lean
Posted on November 13, 2009 Comments (6)
In response to: Developing Your Lean Education Plan
If you actually let the lean leaders practice lean management you are probably doing more to help them learn than anything else. Reading is great, but 10 times better when reading to find solutions you need to deal with issues you have in place. Same for going to conferences. Consultants can be a huge help, but if you just bring in consultants without allowing the changes needed to improve they are not much use.
Far more damaging than not approving training, or giving the lean leaders any time to learn, is not giving them freedom to adopt lean practices and actually make improvements in your organization. That is what kills learning, and the desire to learn.
A great lean education plan: give them opportunities to apply what they know. As they gain knowledge and have success give them more opportunities. I think often lean leaders (and management improvement leaders) have to spend so much effort fighting the resistance in the organization they don’t have the energy to seek out much new knowledge. If you can reduce the effort they have to spend on fighting the bureaucracy most lean leaders will naturally focus on learning what they need for the current and future challenges.
Related: Building Organizational Capacity – Helping Employees Improve – People are Our Most Important Asset – Respect People by Understanding Psychology
Management Improvement Carnival #81
Posted on November 10, 2009 Comments (0)
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Womack & Jones at the Gemba: “Spread” and Innovation by Mark Graban – “Jim says, basically, that you’re always going to be innovating and if the next area thinks they can just copy, then they’re missing the point.” |
The Curious Cat Management Improvement Carnival provides links to recent management improvement blog posts.
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Management Webcast: Introduction to Lean Manufacturing
Posted on November 9, 2009 Comments (0)
Webcast introduction to lean manufacturing by Ron Pereira. This is a great 9 minute introduction to the topic, for those not familiar with lean thinking. It sets the context for lean thinking and provides some history on how lean manufacturing has developed. Get videos on learning about lean from the Gemba Academy.
Related: Oranges, Pebbles, and Sand – Dr. Russell Ackoff Webcast on Systems Thinking – An Introduction to Deming’s Management Ideas by Peter Scholtes – Eric Schmidt on Management at Google – Management Webcasts – Workplace Management by Taiichi Ohno
Deming: There is No True Value
Posted on November 5, 2009 Comments (8)
There is no true value of anything: data has meaning based on the operational definition used to calculate the data.
Walter Shewhart’s Statistical Method from the Viewpoint of Quality Control, forward by W. Edwards Deming:
Dr. Deming’s ideas on the theory of knowledge are the least understood and least seen in other management systems. The importance of understanding what data does, and does not tell you, is at least somewhat acknowledged in other management system but is often not found much in the actual practice of management. The execution often glosses over the importance of actually understanding statistics versus using formulas. Just using formulas is dangerous. It may be inconvenient but learning about the traps we can fall into in using data is important.
How often do you see the operational definition used to calculate the data you see with the data you are provided?
via: Shewhart, Deming and Data by Malcolm Chisholm
Related: How We Know What We Know – Pragmatism and Management Knowledge – Measuring and Managing Performance in Organizations – Dangers of Forgetting the Proxy Nature of Data
Statistical Learning as the Ultimate Agile Development Tool by Peter Norvig
Posted on November 5, 2009 Comments (1)
Interesting lecture on Statistical Learning as the Ultimate Agile Development Tool by Peter Norvig. The webcast is likely to be of interest to a fairly small segment of readers of this blog. But for geeks it may be interesting. He looks at the advantages of machine learning versus hand programming every case (for example spelling correction).
Google translate does a very good job (for computer based translation) based on machine learning. You can translate any of the pages on this blog into over 30 languages using Google translate (using the widget in the right column).
Via: @seanstickle
Related: Mistakes in Experimental Design and Interpretation – Does the Data Deluge Make the Scientific Method Obsolete? – Website Data – An Introduction to Deming’s Management Ideas by Peter Scholtes (webcast)
Tags: complexity,Google,IT,lecture,Software Development,Statistics,webcast
Management Improvement Carnival #80
Posted on November 3, 2009 Comments (0)
Jamie Flinchbaugh is hosting Management Improvement Carnival #80 on his new blog, highlights include:
Nominate your favorite management improvement posts.
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