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Dr. W. Edwards Deming's ideas are at the core of this blog. In, Deming on management, we take various ideas Dr. Deming presented and explore them. Deming's 14 Points - Deming's 7 Deadly Diseases
Recommended posts: The Purpose of an Organization - Management is Prediction - Distorting the System - Managing Fear - Performance Without Appraisal - Deming Companies - Eliminate Slogans - Improve the System Instead of Blaming the Person - Deming and Six Sigma - Dangers with Data - Management: Geeks and Deming
At the core of the company’s success is the Toyota Production System, which took shape in the years after the Second World War, when Japan was literally rebuilding itself, and capital and equipment were hard to come by. A Toyota engineer named Taiichi Ohno turned necessity into virtue, coming up with a system to get as much as possible out of every part, every machine, and every worker. The principles were simple, even obvious - do away with waste, have parts arrive precisely when workers need them, fix problems as soon as they arise. And they weren’t even entirely new - Ohno himself cited Henry Ford and American supermarkets as inspirations. But what Toyota has done, better than any other manufacturing company, is turn principle into practice. In some cases, it has done so with inventions, like the andon cord, which any worker can pull to stop the assembly line if he notices a problem, or kanban, a card system that allows workers to signal when new parts are needed.
Very true, except one thing. Toyota’s innovation is not limited to process and execution. Toyota’s long term vision results in very dramatic innovation (that granted is not getting the press today - check back in 20 years, I think you will be reading about it then). For some examples see: Toyota’s Partner Robot, Toyota as Homebuilder, Toyota Engineers a New Plant: the Living Kind and The Birth of Prius.
A company truly driven by a focus on continual improvement, respect for all employees and reasonable executive compensation might be a company serious about adopting Deming and Toyota management principles. It is hard for me to imagine such a situation that doesn’t truly seek, as the primary aim of the organization, to benefit many stakeholders (workers, owners, suppliers, customers…) not just executives (or just executives, board and owners…).
Related: Toyota Management Develops the New Camry - Better and Different - Deming and Toyota - Toyota Keeps Improving - More Positive Press for Toyota Management - Good Execution is Important
Guest post by David Kerridge (originally posted to the Deming Electronic Network):
This is part of a series in which I recall striking or thought-provoking things that W. Edwards Deming said, but did not put into his books.
I remember taking a manager to his first Deming 4-day seminar. Afterwards my friend said to me “I was very impressed with that man. He said ‘I don’t know.’”
Something in our culture makes us ashamed to admit ignorance. We expect quick, slick answers, whether from politicians, managers, or consultants.
Deming said “I don’t know” more often than anyone I have ever known. Sometimes you heard the answer about two years later, in his seminar.
I also remember him saying “I have learned more in the last six months than in the previous ten years.”
Maybe one quotation explains the other.
Related: Dr. Deming quotes - Instant Pudding - Deming on being Destroyed by Best Efforts - Where to Start Improvement
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.”
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.
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
Deming’s 14 points (for software development) by Jamie Dinkelacker (Geo/Maps Engineering Program Manager at Google Inc. Focus on lean principles and agile practices for software development):
A good read. Also a good blog on management improvement ideas and software development (though not very active). See my Deming on Management resource where I try to explain what Dr. Deming actually said and meant and dispel some misconceptions.
Related: Dr. Deming’s 14 Points - Deming’s Ideas at Markey’s Audio Visual - Lean, Toyota and Deming for Software Development - Google: Ten Golden Rules
Three Amazing PHP/MySQL/Perl Developers Now Available - Posting on Craigslist. The url will expire so I included everything but the contact info below (follow the link for contact info).
Yesterday I had to do one of the more difficult things — lay off three of my good friends, all of whom are talented and professional developers.
I’m posting here today in hopes that someone out in the world is looking for some seasoned talent, people who can get things done for you. I will personally recommend all three of these guys, and I’ll detail below each of them. If you are interested, I’m including my phone number. I’ll take your contact information and give it to the person(s) you are interested in, and you can take it from there.
Here goes.
Developer #1
I’ve worked with Developer #1 since 2005. He’s worked for Fortune 500 companies and small startups. His strengths are conceptualizing and implementing complex systems using PHP and MySQL. These systems are not limited to the web, however the web is where most of his work has been for the last few years. During his employment with me, he:
* Designed a complex billing system, complete with audit trails
* Developed a site-wide internationalization system, allowing us to easily translate any phrase on the system to a different language
* Designed and successfully implemented several difficult projects based on half-way decent specifications documents (my fault)
Related: People are Our Most Important Asset - Bad Management Results in Layoffs - Hiring the Right People - Severance Plans to Respect People - Curious Cat Management Improvement Jobs
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Does it surprise you to learn traders would cover up losses to protect bonuses? It shouldn’t, it happens over and over. Would it surprise you that almost any bonus (or quota) scheme increases the odds that the data will be doctored to meet the goals? It shouldn’t. Intelligent measures to make such doctoring difficult can help reduce the practice. But it is a likely risk of any such goal. As we have quoted Brian Joiner as saying: there are: “3 ways to improve the figures: distort the data, distort the system and improve the system. Improving the system is the most difficult.” So it is no shock that distorting the data is often the tacit people use (especially when the rewards are great or the punishment for missing is severe).
Of course the people that take unethical or illegal action are responsible for their actions. But managers that set up poor systems and then get poor results should not be surprised. You mainly read about the exciting distortion of data - but there is much more such distortion that doesn’t seem interesting enough for the press.
Traders at top investment bank ‘covered up losses to protect their bonuses in £1.4 bn scam’
Shares in the bank, which is based in Zurich, tumbled 7.5 per cent yesterday. Credit Suisse admitted it had discovered intentional “pricing errors” by a small number of traders involved in complex investments linked to the mortgage market.
Related: Problems with Bonuses - Be Careful What You Measure - Measuring and Managing Performance in Organizations - Another Quota Failure Example
WaMu: Skip customers; save the execs
The board decided in February to use different performance yardsticks that could make it look like Killinger and other top executives were doing great jobs — and all but ensure them millions of dollars in bonuses for 2008. Those huge losses piling up because of subprime loans and foreclosures? At bonus time, the bank will ignore them.
The behavior of executives that take what they have no right to in unjustifiable pay schemes continues to be a disgrace. Thankfully more people are shedding light on the unconscionable behavior. Excessive executive pay is both a sign of awful ethics and a driver of bad management action. I add two new diseases of western management to Dr. Deming’s 7 deadly diseases; massively overpaid executives is one.
Related: Tilting at Ludicrous CEO Pay - Obscene CEO Pay - “Too often, executive compensation in the U.S. is ridiculously out of line with performance” Warren Buffett
Part of the deal is that if 37signals helps you pay, you have to share what you’ve learned with everyone. Not just everyone at 37signals, but everyone who reads our blog. So expect to see some blog posts about these experiences.
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We just ask people to be reasonable with their spending. If there’s a problem, we’ll let the person know. We’d rather trust people to make reasonable spending decisions than assume people will abuse the privilege by default.
Dr. Deming proposed supporting education of any type for employees (point 13 in the 14 points). That is not often done, but 37 signals is not alone in doing this. Great stuff. Create a great environment for people to work in and you can get great things done. Also good old PDSA at work - try things on a small scale and then institute those experiments that succeed on a wider scale.
Related: Google Experiments Quickly and Often - Vacation: Systems Thinking - Getting and Keeping Great Employees - Joy in Work - Complicating Simplicity - Workplace Management
Rich Sharpe posted to his blog on his recent reading of Dr. Deming – The American Who Taught the Japanese About Quality by Rafael Aguayo in Lean Programming and Dr. Deming. And he posted a response he received from Rafael Aguayo with some good points including:
Related: Another Failure Due to Quotas - Targets Distort the System - Goodbye Quarterly Targets - Books on Deming’s management ideas - Making Changes and Taking Risks
There are those rare companies where interacting with them is not a dreaded experience: Trader Joe’s, Southwest Airlines, Ritz Carlton, Crutchfield, Cannon, Groovix. There are not many. And even just providing something that just works is seen as a treat. The all too common dis-service, combined with the internet, leads to Consumer Vigilantes:
Pretty lousy systems thinking (or really failures to think systemically). Pay executives obscenely and cut service until customers literally can’t stand you so much they don’t just want to avoid you they want you out of business.
And then instead of fixing the system, just burn the toast (follow the link for an explanation). Then wait from those that get the burnt toast to tell everyone that you sold them burnt toast. Then, after they do that, go scrape it for them. This is not what Dr. Deming meant when he encouraged companies to eliminate the need to inspect for quality. Of course you know that (you are reading this blog after all). Maybe the business schools decided to cut down Deming’s ideas to just eliminating inspection and a couple other sound bites. And then tell the MBA’s not to bother reading all the rest of that… we have to get on to the cost reduction strategies that will make sure you move into the c-level and get the real money.
But some companies just push people so far they have to let people know about how poorly they have been treated. Some past posts highlight the frustrating experiences bloggers, including me, share about how badly we have been treated: Ritz Carlton (good) and Home Depot (bad) - Incredibly Bad Customer Service from Discover Card - More Bad Customer Service Examples - Poor Service, an Industry Standard? (HP) - Comcast HD DVR Is Simply, Terribly Awful
Consumerist, is a great site, doing what it can to counter some of the horrible service.
Do corporations exist solely to maximize their bottom lines? We don’t think so., Forbes Magazine:
They don’t mention the importance of other stakeholder (employees, customers, suppliers - other than the Starbucks example) but still it is nice to read some support for the principles Deming supported: the corporation seeking to benefit all stakeholders.
Related: Curious Cat management search engine - Deming on Management - Focus on Customers and Employees
The percent of GDP spent on health care in the USA increased again in 2006 - to 16%. Health care spending reached a total of $2.1 trillion, or $7,026 per person in 2006, up from $6,649 per person in 2005.
Related: USA Healthcare Costs Now 16% of GDP - Measuring the Health of Nations - USA Paying More for Health Care
I like to continue to push for some things that might not seem achievable to many. It is too easy to accept that things have to stay the way they are. Several of Dr. Deming’s list of Seven Deadly Management Diseases are now accepted as serious problems by most. Performance appraisal is a strange disease: most people agree performance appraisals are not effective and indeed are harmful. Yet, most still don’t think anything can be done about it. But we can, and should, take steps to improve. Just don’t do it.
Managers are from Mars, Performance Appraisals from Venus discusses Mary Poppendieck’s recent presentation - Appraisals and Compensation: The Elephant in the Room
Mary went over the false assumptions behind individual pay-for-performance (money, motivation, individual assessment), and the negative effects they have on the system.
She finished by a case study done by HP across 13 organizations over a year 4 year period where each division implemented a different type of incentive plan. The results are just mind boggling. They all failed and got canceled.
I strongly suggest chapter 9 (Performance Without Appraisal) of The Leader’s Handbook, by Peter Scholtes, for those thinking about this topic.
Related: Righter Performance Appraisal - Problems Caused by Performance Appraisal - Performance Without Appraisal - Find the Root Cause Instead of the Person to Blame
Comment on New or Different? by Matthew May:
I wrote a similar post on my blog awhile back: Better and Different:
Frankly, if you have to choose one, just being better will work most of the time. The problem is (using an example from Deming, page 9 New Economics) when, for example, carburetors are eliminated by innovation (fuel injectors) no matter how well you make them you are out of business.
I agree with Matthew May that it is often easy to see “new things”, when you look from a different perspective, as really just an enhancement of existing things or combining existing things in a somewhat novel way. Especially since so many things are packaged as amazing new breakthroughs when really they are nice enhancements.
Even management ideas are sold this way. And, for management ideas, I think they are most often actually degradations of what Deming, Ohno, Shewhart, Ishikawa, Ackoff… said - not enhancements. See: failures of management consulting advice.
Related: Process Improvement and Innovation - Toyota, Lean, Consultants… - Google Innovation - Management Improvement History - Doing the Wrong Things Righter - Six Sigma and Innovation - leading management thinkers
The Rationale of Scientific Experimentation by John Dowd explains the value of designed experiments.
In addition to their efficiency, factorial designs also offer the only method of detecting interactions through experimentation. Because numerous factors can be combined in the same series of experimental runs, the interactions can be detected and the nature of their effects can be evaluated when they are present.
The paper also explains analytic and enumerative studies. Dr. Deming stressed the importance of understanding the distinction between the two.
Related: management improvement articles - Design of Experiments articles - Statistics for Experimenters - search statistical management improvement sites - Using Design of Experiments
Do Lean Companies Create Fewer Jobs?
No, they create more. If you assume the lean company grows sales at the same rate as some poorly management company then it may well be that the lean company creates fewer jobs. However that is not a valid assumption. Deming provided the reason in his presentations to Japan in the 1950’s with his chain reaction. From page 3 of Out of the Crisis
For an example of this process at work see GM, Ford and Toyota. Toyota defines lean (Toyota’s management system is what was called lean manufacturing by Jim Womack and Dan Jones). Toyota continues to add employees while Ford and GM have been shedding jobs.
It is true, for lean (and un-lean) companies alike, productivity is improving (it just improves more at lean companies) which means that fewer people are needed to produce the same amount as we have in the past. We have posted previously about the mistaken belief that jobs are moving overseas.
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