Currently browsing the Deming Category

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


Long Term Thinking with Respect for People

Posted on May 9, 2012  Comments (4)

Toyota nearly went bankrupt near 1950 and had to lay off a third of their employees. A huge focus of the Toyota Production System as envisioned by Taiichi Ohno was to secure the long term success of the company. The priority of doing so is easier to see when you respect people and are in danger of witnessing the destruction of their careers.

photo of John Hunter with a walking stick

I can’t find the quote (maybe Jon Miller, or someone else, can provide one), but I recall one along the lines of the first priority of management is providing long term viability of the company (my sense is this is first due to the respect of the workers and also for all the other stakeholders). The respect for people principle requires executive put the long term success of employees at the top of their thinking when making decisions for the company. I don’t believe it is a ranked list I believe there are several things right at the top that can’t be compromised (respect for people, safety of society, support for customers…).

This means innovating (Toyota Management System, Toyota Prius, Toyota Robots, Lexus brand, etc.) and seeking growth and profit with long term safety that does not risk the failure of the company. And it means planning for the worst case and making sure survivability (without layoffs etc.) is nearly assured. Only when that requirement is met are risks allowed. You do not leverage your company to put it at risk of failure in dire economic conditions even if that would allow you to be more profitable by various measures today. And you certainly don’t leverage just to take out big paychecks for a few short term thinkers.

The economic situation today is extremely uncertain. The whole eurozone financial situation is very questionable. The government debt burden in the USA and Japan is far too high (and of course Europe). China is still far from being a strong economy (they are huge, fast growing and powerful but it is still fairly fragile and risky).

The failures in the current financial system have not been addressed. Band-aids were applied to provide welfare to the largest 30 financial institutions in the form of hundreds of billions or trillions in aid. The system was left largely untouched. It is hard to imagine a more textbook example of failing to fix the causes and just treating the symptoms. This leaves a huge financial risk poised to cause havoc.

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Lean Manufacturing and the Toyota Production System

Posted on May 3, 2012  Comments (5)

In this post I explore my thought about what lean (lean manufacturing, lean thinking…) means. The way I think about it is that lean manufacturing sprung from Toyota. It seems to me the lean manufacturing name was meant to capture the entire Toyota Way. Capturing the whole of what that encompasses isn’t possible in 1 or 2 or even 10 books so it wasn’t done completely.

To me the difference between lean manufacturing described early on by Womack and Jones and the Toyota Way was more about what can be captured and conveyed than about an intentional creation of “lean” ways that are different than Toyota ways.

The question is further complicated by what happens with any management idea of any popularity: the using of the name with all sorts of watered down and even just plain not-lean implementations. So much of what is called “lean” is not the Toyota Production System (TPS), it isn’t even lean.

It seems to me today there is no real accepted authority for what is lean. LEI is good. Some people might say they should be the arbiter but they are not in any way I know of.

Then too, over time any organization of people changes. So what Toyota does today isn’t exactly what Taiichi Ohno would say they should be doing. Even the Toyota Way can be ignored by Toyota. And Ohno certainly wouldn’t think standing still was the answer. Just like Deming; Kiichiro, Sakichi and Shoichiro Toyoda; Ohno expected the management system itself to continually improve. And just like Deming, they would expect the implementation in a different organization (different system) to be different.

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Management Blog Posts From November 2006

Posted on April 26, 2012  Comments (0)

I have selected a few great posts from the Curious Cat Management Blog back in November 2006.

  • What Could we do Better? – There are many important ideas to improve management. This is one of the most important tips to aid improvement that I know of: it is easy to do, brings huge benefits and most organizations fail to do it. Ask your customers: “What one thing could we do to improve?”
  • Ackoff’s F-laws: Common Sins of Management presents 13 common sins of management, such as: Managers who don’t know how to measure what they want settle for wanting what they can measure
  • Common Cause Variation – “Every system has variation. Common cause variation is the variation due to the current system. Dr. Deming increased his estimate of variation due to the system (common cause variation) to 97% (earlier in his life he cited figures as low as 80%). Special cause variation is that due to some special (not part of the system) cause.”
  • Sub-Optimize by Interrupting Knowledge Workers – “The general consensus is that the loss from interrupting [software] developers is much greater than for interrupting most other forms of work and therefor a great deal of effort is placed on improving the system to allow developers to focus.”
  • Amazon Innovation – “I believe Amazon uses technology very well. They have done many innovative things. They have been less successful at turning their technology into big profits. But I continue to believe they have a good shot at doing so going forward (and their core business is doing very well I think).” [Amazon announced great sales numbers today, continuing their long term tread. They are also continuing to be very slow to grow profits (CEO, Jeff Bezos remains willing to challenge common practices - such as his willingness to build business and sacrifice current profits)].

Motivation, Rewards, Performance Appraisals and Your Career

Posted on April 12, 2012  Comments (1)

In this interview Dan Pink again makes some great points relating to psychology, managing people and managing your career.

Q. What kinds of programs can managers and companies put into place to motivate their workforce?

Assuming companies are paying people fairly, they should do what they can to foster autonomy, mastery, and purpose. One of my favorite specific ideas is this: The Australian company Atlassian conducts what they call “FedEx Days” in which people work on anything they want for 24 hours and then show the results to the company the following day. These one-day bursts of autonomy have produced a whole array of fixes for existing products, ideas for new ones, and improvements to internal processes that would have otherwise never emerged. For creative tasks, the best approach is often just to hire great people and get out of their way.

I agree. Focusing on motivation is wrong, as Douglas McGregor detailed in the Human Side of Enterprise over 50 years ago. The problems with theory x management (motivation through fear and rewards) has been detailed over and over again decade after decade. I get tired of us ignoring very well done work to help us manage better for decades :-(

Q. Are you suggesting that offering someone a 50 per cent raise won’t motivate him or her to work harder?

…most organizations dangle what I call “if-then” rewards — as in, “If you do this, then you get that” — bonuses, commissions, and like. Fifty years of social science tells us that “if-then” rewards are great for simple, routine, algorithmic work [but not creative work]… The best use of money as a motivator is to hire great people and then pay them enough to take the issue of money off the table.
…
By the way, even that juicy, non-contingent 50 per cent raise has some serious limits. People will be thrilled in the short-run, but over the long term (say, the third paycheck) the thrill will become the status quo…

Again I agree: When Performance-related Pay Backfires, Righter Incentivization, Build an Environment Where Intrinsic Motivation Flourishes.

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How Could They Know?

Posted on March 28, 2012  Comments (3)

I am a big fan of Dr. Deming’s ideas on management. The way I see one of the quotes of Dr. Deming used I don’t agree with. Dr. Deming said “How could they know?” to explain why people continued to follow less successful practices (for example, page 55 of Out of the Crisis). How could they know of better practices, he would say.

I must say I have always thought the answer to that question was pretty easy. They could learn about the job they were paid to do. It is a shame that many organizations do a very poor job of preparing or coaching those they promote into management for their new position. However, I don’t see that as an excuse to fail to learn yourself.

There are plenty of books with great information. How could they know? They could read.

Yes, there are also plenty of management books filled with nonsense. That does make it a bit more difficult. But I still don’t have much sympathy for hearing, “how could they know” as a reason for continuing performance appraisals or failing to understand variation or falling to know that “motivating” through monetary rewards backfires or… If you wish to manage human systems I don’t think it is too much to expect you to know about how to do so, and have the knowledge to distinguish nonsense from well reasoned thoughts.

If you want to take on a management job you should take your responsibility seriously. Choosing not to take advantage of the wealth of great material in the past 70 years on how to manage more effectively is not a decent excuse. How could they know? They could take responsibility to learn. If they chose not to do so that is their choice. They chose not to know. I guess some can see that as an acceptable excuse. I don’t.

If they are trying to apply ideas and having trouble: I have sympathy for that. Applying ideas on management is not easy. Human systems are complex and there are no simple guides that tell what is needed in your specific situation and organization. but ignorance of basic management principles, with no evidence of concerted efforts to learn I don’t have sympathy for.

I seem to expect more from managers than most people I talk with. Most seem to find it a perfectly acceptable excuse that a manager never bothered to learn about management. I don’t really understand that. Dr. Deming did seem to hold senior executives accountable for failing their organizations, but he was more accepting of manager’s ignorance than I am.

Read and use The Leader’s Handbook and The Improvement Guide and you will be well ahead of most of the management practice I see.

Related: Curious Cat Essential Management Books – Bad Management Results in Layoffs – The Importance of Management Improvement

Massively Unjust Executive Compensation Damages Companies and Investments

Posted on March 13, 2012  Comments (3)

For years I have believed the massively unjust executive compensation packages have been doing great harm to American businesses. As an investor, one of the big risks that has to be evaluated is how much of the business profits executives will divert to their personal bank accounts. And investors also have to worry about the risks executives take to reach huge incentives which then greatly damage your investment.

In 2007, I added two of my own deadly diseases to Dr. Deming’s list. These deadly diseases have emerged since Dr. Deming created the list of 7 deadly diseases (which started out at 5 deadly diseases- he added 2 more later). Excessive executive compensation is one of those new deadly diseases. Our outdated and harmful laws, regulation and tolerated behavior relating to patents, copyright and “intellectual property” is the other.

The Incentive Bubble by Mihir Desai, Harvard Business Review

Mature corporations without large shareholders may become bloated with perquisites or preoccupied by empire building that satisfies managers rather than shareholders—the classic principal-agent problem.
…
In order for these pay mechanisms to be successful, managers and investors should be rewarded only for success beyond what would normally be generated. Said another way, there are returns that one can generate by doing little, and managers and investors shouldn’t be compensated for those returns.

A very important point to consider in calculating “excess” returns is an understanding of variation. This core component of Dr. Deming’s management system is not understood by most executives today and leads to mis-assigning credit and blame. In addition, an appreciation of systems thinking shows the fallacy of assigning individual causal credit or blame when in reality much of the result is systemic in nature (result of the system with little ability to sensibly assign individual cause – not that those wishing to have huge transfers of corporate wealth deposited in their bank account won’t pay lots of money to people that will create fancy formulas to try and justify such payments).

The rapid spread of stock options over the past two decades resulted in large windfalls for managers because no effort was made to subtract average performance during a period of remarkable returns in asset markets. Moreover, wide varieties of misbehavior have been traced to incentives created by the “cliffs” in most compensation packages: strike prices and vesting dates. Reaching for extra earnings by cutting small corners when such large amounts were at stake was inevitable. The corporate governance crises of the past 15 years had many roots; large stock option grants and the distorted incentives they provide loom large among them.
…
Absent regulators, irresponsible intermediaries, and oblivious homeowners were all important agents in creating the financial crisis, but the transformation of investment banks into risk-hungry institutions was central to it—and that transformation is connected to the growth of financial-markets-based compensation. At a basic level, the appetite for risk by managers of investment banks can be linked to the rise of compensation structures that provided them with highly asymmetrical incentives
…
Second, it is tempting to diminish the role of the skewed incentives identified above and reorient the debate toward ethics and morality: If only we hadn’t lost our sense of right and wrong. Such complaints may be well-grounded, but they obscure just how important these high-powered incentives are. More can be achieved by understanding incentive structures and the ideas that underpin them than by bemoaning a decline in character or promoting the virtues of professionalism. And moving away from shareholder-centered capitalism toward stakeholder capitalism risks overcorrecting the excesses of the past three decades. Indeed, capitalism appears to be serving managers and investment managers at the expense of shareholders.

Well said. From a Deming management perspective I see the huge problems created by the deadly disease of unjustly outsized executive compensation. And as an investor I see great risk in executives destroying investment returns as they try and extract hugely excessive amounts of the profits the organization makes to their personal treasuries.

Related: Taking What You Don’t Deserve, CEO Style – Obscene CEO Pay, 2005 data – Executives Again Treating Corporate Treasuries as Their Money – “Too often, executive compensation in the U.S. is ridiculously out of line with performance” Warren Buffett – Leverage, Complex Deals and Mania – The soaring executive pay in the 1990′s turned Drucker into a leading critic of unjust pay (and those levels were tiny compared to what executives are taking from treasuries today) – No Excessive Senior Executive Pay at Toyota – Brooks Brother Bureaucrats – Losses Covered Up to Protect Bonuses

Keys to the Effective Use of the PDSA Improvement Cycle

Posted on March 6, 2012  Comments (9)

The PDSA improvement cycle was created by Walter Shewhart where Dr. Deming learned about it. An improvement process is now part of many management improvement methods (A3 for lean manufacturing, DMAIC for six sigma and many other modifications). They are fairly similar in many ways. The PDSA cycle (Plan, Do, Study, Act) has a few key pieces that are either absent in most others processes of greatly de-emphasized which is why I prefer it (A3 is my second favorite).

The PDSA cycle is a learning cycle based on experiments. When using the PDSA cycle prediction of the results are important. This is important for several reasons but most notably due to an understanding of the theory of knowledge. We will learn much more if we write down our prediction. Otherwise we often just think (after the fact); yeah that is pretty much what I expected (even if it wasn’t). Also we often fail to think specifically enough at the start to even have a prediction. Forcing yourself to make a prediction gets you to think more carefully up front and can help you set better experiments.

An organization using PDSA well will turn the PDSA cycle several times on any topic and do so quickly. In a 3 month period turning it 5 times might be good. Often those organizations that struggle will only turn it once (if they are lucky and even reach the study stage). The biggest reason for effective PDSA cycles taking a bit longer is wanting more data than 2 weeks provides. Still it is better to turn it several times will less data – allowing yourself to learn and adjust than taking one long turn.

The plan stage may well take 80% (or even more) of the effort on the first turn of the PDSA cycle in a new series. The Do stage may well take 80% of of the time – it usually doesn’t take much effort (to just collect a bit of extra data) but it may take time for that data to be ready to collect. In the 2nd, 3rd… turns of the PDSA cycle the Plan stage often takes very little time. Basically you are just adjusting a bit from the first time and then moving forward to gather more data. Occasionally you may learn you missed some very important ideas up front; then the plan stage may again take some time (normally if you radically change your plans).

Remember to think of Do as doing-the-experiment. If you are “doing” a bunch of work (not running an experiment and collecting data) that probably isn’t “do” in the PDSA sense.

Study should not take much time. The plan should have already have laid out what data is important and an expectation of what results will be achieved and provide a good idea on next steps. Only if you are surprised (or in the not very common case that you really have no idea what should come next until you experiment) will the study phase take long.

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Why Use Lean if So Many Fail To Do So Effectively

Posted on February 15, 2012  Comments (9)

If less than 1% of companies are successful with Lean, why are we doing it?

Lots of us are not. I would say the efforts I see “fail” are because they don’t do it. They have something they call TQM, six sigma, lean management or whatever and try out 10-30% of it in some half-measures, with big doses of Dilbert’s pointy haired boss methods and then don’t get great results. Wow.

The biggest complaint (with some merit) I see is why is lean/Deming/six sigma… so hard to actually do. If companies constantly fail to do it at all (even when they use the name) isn’t that an issue. Isn’t that a weakness of the “solution.” My answer is: yes. The caveat is, until someone comes up with the management system that both gets the results using Deming’s management ideas can, and is super easy for organizations to actually fully adopt (and have the great success that doing so provides) I know of nothing better than trying to do these things.

Certainly I believe you are much better off attempting to use Deming, lean or six sigma than listen to someone that tells you they have management instant pudding that will give you great results with no effort.

My belief is that a partial success rate is much higher than 1%. While many organization never go beyond slapping a few good tools on a outdated management system those few tools actually have good results. Maybe 50% of the implementations are so lame they have almost no positive results (not even getting improvement worth the time and effort). They could be seen as “failures,” to me. Those that actually have a right to say they are practicing “lean” I would say is a pretty small number but still above 1%?

There is also an advantage to this stuff being hard to do. You really don’t have to invent anything new. If you just have persistence and keep continually improving along the path applying ideas proven over decades from Deming, Ohno, McGregor, Christensen, Drucker, Scholtes, Womack, Roger Hoerl (six sigma)… you have a great advantage over all those organizations that ignored the ideas or made a bit of effort and then gave up.

Related: Engage in Improving the Management System – Rethinking or Moving Beyond Deming Often Just Means Applying More of What Dr. Deming Actually Said – Management Advice Failures – Management Improvement Flavors – Has Six Sigma Been a Success?

Looking at Auto Manaufacturing in the USA

Posted on February 6, 2012  Comments (1)

America’s Dirty War Against Manufacturing

Bob Lutz, the former head of GM, says it was neither uncompetitive wages nor unions that drove the Big Three into decline. It was a management with its eye focused on the bottom line and the short term.

That sentiment should be familiar to students of Deming (it is one of Deming’s 7 deadly diseases). It is sad that this bad management practices, short-term thinking, continues to do harm several decades later. Hopefully we can do better in the next few decades.

retiree health care and pensions — burdens that are borne by society, not manufacturing plants, in every other advanced country. That disparity, the result of policy decisions made in Washington rather than wages negotiated by the United Auto Workers, was the source of most of the labor-cost advantage enjoyed by foreign companies.

The excessive health care costs in the USA, another of Deming’s 7 deadly diseases, has continued to get worse every year since he classified it as one. The damage that the failed health care system in the USA does to the USA is enormous.

Related: Manufacturing Skills Gap or Management Skills Gap? – Manufacturing in the USA, and Why Organizations Often Don’t – Big Failed Three, Meet the Enlightened Eight

Pull Consulting: Immediate Management Consulting As You Need It

Posted on February 2, 2012  Comments (0)

2013 Update – New method for by the minute consulting with John Hunter.

As happens in this fast paced world this service is no longer available. The company has shut down their web site.

I think the potential for consulting as you need it is great. I actually was looking into creating an application to support the ability to provide this service with someone else; but we just had too many other things going on. I have now made myself available for consulting you pull as you need it through MinuteBox. You can get consulting when you need it for as little time as you need.

So if you are trying to apply the ideas I discuss on this blog and run into issues you would like to get some help with connect with me and you can get some immediate coaching on whatever you are struggling with. I am offering a special rate of $1.99 a minute, for now. The graphic on the right of this post (any post on this blog, actually) will show if I am available right now (as does johnhunter.com). If so, you can connect and get started. If not, you can leave a message and we can arrange a time.

I am featured on MinuteBox with this cool graphic, isn’t it nice :-)

home page of MInute Box with John Hunter graphic

John Hunter feature on Minute Box homepage

One advantage of this model is that those of you following this blog have a good idea of what topics you would like to delve into more deeply with me. If you have any questions on a particular topic you would like answered today or arranging coaching on specific topics over a period of time or help planning a project or someone to bounce your ideas off give this consulting as you need it model a try.

For those of you management consultants reading this blog (I know there are many) you can create your own Minute Box account easily and provide this service also. And even if you are not a consultant if you have advice worth sharing (and I know there are many of you also) you can also set up an account.

Related: John Hunter’s professional life timeline – John Hunter online – John Hunter LinkedIn profile – Top Leadership blogs – Top Management and Leadership blogs

We are Being Ruined by the Best Efforts of People Who are Doing the Wrong Thing

Posted on January 30, 2012  Comments (5)

Deming’s Second Theorem: “We are being ruined by best efforts.”

What did Dr. Deming mean by this?

Another quote by Dr. Deming might give you a clue? “Best efforts will not substitute for knowledge.”

Irwin, the porcupine at the Animal Rescue League Wildlife Center has to work a little harder for his breakfast in this clip. The wildlife center likes to provide animals in captivity puzzles and challenges to keep them interested in their environment so they stuck his breakfast to the bottom of the mug.

Thankfully the baby porcupine in the video doesn’t ruin anything and instead just gives us an enjoyable video. He does spends a great deal of energy putting forth his best efforts, but without a theory :-) Best efforts can often cause damage to the organization when people give their best efforts but are not guided by knowledge of what is useful and what is harmful.

Another Deming Quote: “We are being ruined by the best efforts of people who are doing the wrong thing.” Please share your comments on how organizations are ruined by best efforts.

And I will wrap up the post with another quote from Dr. Deming: “We want best efforts guided by theory.”

Related: quotes by W. Edwards Deming – Deming on being Destroyed by Best Efforts – Righter Incentivization

Web Seminar with Gerald Suarez: Better Thinking About Leadership

Posted on January 23, 2012  Comments (0)

In2In offers some great opportunities for those interested in management improvement. Their conference is excellent. They also offer various conference calls with speakers knowledgeable about Deming and Ackoff’s ideas. These normally take the form of conference call presentations (similar to a podcast) followed by some question and answers. The consistently get remarkable people like, Gerald Suarez, and earlier: Peter Scholtes and Brian Joiner.

Gerald Suarez is kicking off the new InThinking Network monthly webinar series. I worked for Gerald at the White House Military Office. He is one of the best presenters and most knowledgeable experts on Deming and Ackoff’s ideas working today.

Gerald Suarez will present on February 9th on the topic of “Better Thinking About Leadership.” This is a great opportunity and there is no cost to participate. If you participate from outside the USA you can connect via Skype (from the USA you will be given a toll-free number to connect with – or Skpye, if you wish). If you can’t join the call, audio downloads will be available at some later date. Register here. If you can’t make the live event, I strongly recommend listening to the audio download once it is made available.

The format of these sessions is a 90-minute session, each month – from February through November. They are held the second Thursday of the month, from 11:30 AM to 1 PM Pacific Time.

Future sessions that we have to look forward to include:

  • Paul Hollingworth will present in March: An Introduction to Systems Thinking
  • Graham Rawlinson, in May to explore “Thinking About Thinking”
  • Gipsie Ranney, in September: “Cause(s) of Concern,” a session designed to present and advance the understanding of common causes and special causes of variation.

Gerald is currently a professor on the faculty of the University of Maryland’s Robert H. Smith business school and works as a consultant and keynote speaker. Look for him to share his expertise in leadership, which includes 8 years of service in the White House under Presidents Clinton and Bush, as the Director of Presidential Quality — the first such post in the institution’s history.

Related: Transformation and Redesign at the White House Communications Agency – Managing Fear – The aim of leadership is not merely to find and record failures of men

Trust But Verify

Posted on January 16, 2012  Comments (2)

The following are my comments, which were sparked by question “Trust, but verify. Is this a good example of Profound Knowledge in action?” on the Linked In Deming Institute group.

Trust but verify makes sense to me. I think of verify as process measures to verify the process is producing as it should. By verifying you know when the process is failing and when to look for special causes (when using control chart thinking with an understanding of variation). There are many ways to verify that would be bad. But the idea of trust (respect for people) is not just a feel-good, “be nice to everyone and good things happen”, in Deming’s System of Profound Knowledge.

I see the PDSA improvement cycle as another example of a trust-but-verify idea. You trust the people at the gemba to do the improvement. They predict what will happen. But they verify what does actually happen before they run off standardizing and implementing. I think many of us have seen what happens when the idea of letting those who do the work, improve the process, is adopted without a sensible support system (PDSA, training, systems thinking…). It may actually be better than what was in place, but it isn’t consistent with Deming’s management system to just trust the people without providing methods to improve (and education to help people be most effective). Systems must be in place to provide the best opportunity to succeed. Trusting the people that do the work, is part of it.

I understand there are ways to verify that would be destructive. But I do believe you need process measures to verify systems are working. Just trusting people to do the right thing isn’t wise.

A checklist is another way of “not-trusting.” I think checklists are great. It isn’t that I don’t trust people to try and do the right thing. I just don’t trust people alone, when systems can be designed with verification that improves performance. I hear people complaign that checklists “don’t respect my expertise” or have the attitude that they are “insulting to me as a professional” – you should just trust me.

Sorry, driving out fear (and building trust – one of Deming’s 14 points) is not about catering to every person’s desire. For Deming’s System of Profound Knowledge: respect for people is part of a system that requires understand variation and systems thinking and an understanding of psychology and theory of knowledge. Checklists (and other forms of verification) are not an indication of a lack of trust. They are a a form of process measure (in a way) that has been proven to improve results.

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Taking What You Don’t Deserve, CEO Style

Posted on December 8, 2011  Comments (5)

The excesses to which CEO’s and their board buddies go to in taking from corporate treasuries what they don’t deserve continues to amaze me. The level to which the bad behavior is accepted is apparent in the lack of progress at dealing with those that are taking what they have no moral right to. As shouldn’t have to be explained (but maybe does) leadership isn’t about avoiding being indicted. The levels to which these people take from the organization they are suppose to be leading is a very sad commentary on our leaders. They act as though the corporation exists to enrich them, and their friends, personally: and all the other stakeholders are just leeches on the system.

CEO’s deserve to be paid well. As they were in 1970. As their abuses (with the support of subservient boards) became greater and greater the outrage increased. Peter Drucker moved from defending highly paid CEOs (say 20 or even 30 times the median employee pay) to expressing dismay at the massively excessive pay packages in the 1990s (which were much lower than that taken by the current crop of self important leeches).

Taking such excessive amounts from the corporate treasury is innately dis-respectful to all other employees (though usually they through large amounts of cash at those they have to see often which bring them into the camp of those taking instead of the masses being taken from). Whatever nice words they use to try and give an illusion that they respect those they work with (or their stockholders, suppliers, customers, communities…) doesn’t change their disrespectful actions.

Company CEO 2010 Pay
5 year pay CEO % of 2010 Earnings total employees
UnitedHealth Group Stephen Hemsley $101,960,000 $120,470,000 2.2% 87,000
Qwest Communications Edward Mueller $65,800,000 $75,000,000 company lost $55 million *
Walt Disney Robert Iger $53,320,000 $147,080,000 1.3% 156,000
Express Scripts George Paz $51,520,000 $100,210,000 4.4% 13,170
Coach Lew Frankfort $49,450,000 $137,870,000 6.7% 8,200
Polo Ralph Lauren Ralph Lauren $43,000,000 $155,250,000 9.0% 24,000
Gilead Sciences John Martin $42,720,000 $204,240,000 1.5% 4,000

Executive pay from Fortune, annual earnings from Google Finance, employee totals from Yahoo Finance. * Quest was merged into CenturyTel and I can’t find Quest employee data.

This problem is far worse in the USA than anywhere else. Some CEO’s have become jealous and urged that they be allowed to take more so they can not feel so sad about how much less they make. And so companies from other countries are moving in the wrong direction. The USA continues to move so quickly away from any sense of propriety however that they seem to be gaining on the rest of the world for how badly we can do in this area. There are of course, companies in the USA that don’t believe in letting the CEO treat themselves to whatever they want. Costco is a great example of this. That CEO respects his fellow employees and customers. We need more outrage at those CEOs that refuse to lead and instead just seek to take whatever loot they can before they leave.

Related: Another Year of CEO’s Taking Hugely Excessive Pay (2007) – CEO’s Castles and Company Performance – Honda’s top 36 employees received $13 million total (2006)

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Dr. Deming in 1980 on Product Quality in Japan and the USA

Posted on December 5, 2011  Comments (0)

I posted an interesting document to the Curious Cat Management Library: it includes Dr. Deming’s comments as part of a discussion organized by the Government Accounting Office in 1980 on Quality in Japan and the United States.

The document provides some interesting thoughts from Dr. Deming and others; Dr. Deming’s statements start on page 52 of the document. For those really interested in management improvement ideas it is a great read. I imagine most managers wouldn’t enjoy it though (it isn’t giving direct advice for today, but I found it very interesting).

Some selected quotes from the document follow. On his work with Japan in 1950:

This movement, I told them, will fail and nothing will happen unless management does their part. Management must know something about statistical techniques and know that if they are good one place, they will work in another. Management must see that they are used throughout the company.
Quality control must take root with simple statistical techniques that management and everyone in the company must learn. By these techniques, people begin to understand the different kinds of variation. Then quality control just grow with statistical theory and further experience. All this learning must be guided by a master. Remarkable results may come quick, but one has no right to expect results in a hurry. The learning period never ends.

The statistical control of quality is not for the timid and the halfhearted. There is no way to learn except to learn it and do it. You can read about swimming, but you might drown if you had to learn it that way!

One of the common themes at that time was Deming’s methods worked because Japanese people and culture were different. That wasn’t why the ideas worked, but it was an idea many people that wanted to keep doing things the old way liked to believe.

There may be a lot of difference, I made the statement on my first visit there that a Japanese man was never too old nor too successful to learn, and to wish to learn; to study and to learn. I know that people here also study and learn. I’ll be eighty next month in October. I study every day and learn every day. So you find studious people everywhere, but I think that you find in Japan the desire to learn, the willingness to learn.

You didn’t come to hear me on this; there are other people here much better qualified than I am to talk. But in Japan, a man works for the company; he doesn’t work to please somebody. He works for the company, he can argue for the company and stick with it when he has an idea because his position is secure. He doesn’t have to please somebody. It is so here in some companies, but only in a few. I think this is an important difference.

At the time the way QC circles worked in Japan was basically employee led kaizen. So companies that tried to copy Japan told workers: now go make things better like the workers we saw in Japan were doing. Well with management not changing (and understanding Deming’s ideas, lean thinking, variation, systems thinking…) and staff not given training to understand how to improve processes it didn’t work very well. We (those reading this blog) may all now understand the advantages one piece flow. I can’t imagine too many people would jump to that idea sitting in their QC circle without having been told about one piece flow (I know I wouldn’t have), and all the supporting knowledge needed to make that concept work.

QC circles can make tremendous contributions. But let me tell you this, Elmer. If it isn’t obvious to the workers that the managers are doing their part, which only they can do, I think that the workers just get fed up with trying in vain to improve their part of the work. Management must do their part: they must learn something about management.

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Psychology of Improvement

Posted on November 16, 2011  Comments (1)

Even if ideas are good and have significant importance (high value to customers, reduce waste dramatically, improve safety…) implementing the ideas can be difficult. Getting people to make an effort to improve a situation by simply laying out the dry facts is not very effective. You need to engage in the management system to make your ideas something other people care about and want to do (you need to consider the psychology of getting things done in human systems).

Often a good way to do this is not to just think what is best for the performance of the system, but figure out what people want fixed/improved… and then figure out what I think could help. Then pick among various options to improve based upon the advantages to the performance of the organization, desires of decision makers and the ability of an improvement effort to build the capacity of the organization for customer focused continuous improvement.

Few places I have worked just want to adopt Deming’s ideas (which is my belief for what is the best way to improve performance). But they have things they care about – reducing the times people get mad at them, increasing cash flow… I find it much easier to help them with their desires and slowly get them to appreciate the benefit of Deming’s management ideas, lean thinking and quality tools. Though even this way it isn’t easy.

Even if the organization I am working with doesn’t think based on Deming’s ideas, I do. So I believe any effort to improve the management system must consider all 4 areas of Deming’s management system. In the beginning of an improvement effort psychology is very important for the change agent to consider and deal with. With an understanding of psychology and an understanding of the organization you can build appropriate strategies to improve and build the capacity of the organization to improve over the long term.

I also think about the long term as I am thinking of how to help. It is important to not just solve the current dilemma but to improve the organizational capacity to improve in the future. And for me that means increasing people’s understanding of the ideas I explore in the Curious Cat Management Improvement blog.

Related: Building the Adoption of Management Improvement Ideas in Your Organization – Stop Demotivating Employees – How to Improve

Practical Ways to Respect People

Posted on November 3, 2011  Comments (7)

What matters is not your stated respect for people but your revealed respect for people. Here are some ideas I collected after being prompted by a post by Ron Pereira: 7 Practical Ways to Respect People.

  • Don’t waste people’s time: have meetings only when necessary and provide agendas in advance. Use email effectively instead of presenting material in meetings that can better be presented in email. Don’t have complex benefit manuals, aimed at making lawyers happy, that employees are expected to use.
  • Do what you say you will.
  • Provide bad news early (don’t hope it will get fixed somehow so you don’t have to address it, let people know what is going on and let them help).
  • Pay people fairly – I would venture to say most senior executive pay today is inherently disrespectful, If I am wrong about the “most” part, certainly a huge amount executive pay is inherently disrespectful.
  • Put the long term success of all stakeholders as the focus (don’t risk people’s jobs for short term bonuses, don’t use large amounts of leverage risking the future of the company…). Respect all stakeholders and provide them confidence their long term success is important. Companies that find themselves laying off workers due to managements failure to succeed over the long term are not being respectful to those workers. That failure is most obvious today but the important improvement is not in handling the layoff today, it is in the behavior for years before that did not build a system that was successful in the long term.
  • Tell people what they can do to improve. It is respectful to help people improve. It is treating people like a child that needs to be shielding from any hint of weakness in need of improvement.
  • Don’t expect a few people to do far more than their fair share of work because management allows poor performance to continue un-addressed.

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Rethinking or Moving Beyond Deming Often Just Means Applying More of What Dr. Deming Actually Said

Posted on October 26, 2011  Comments (9)

Don Reinertsen – Is It Time to Rethink Deming? from AGILEMinds on Vimeo.

I feel very strongly about the value of Deming’s ideas. I am glad people challenge those ideas and try to push forward management thinking. Helping us manage organizations better (to get better results and allow people to better enjoy their jobs and lives) is why I value Deming’s ideas. To the extent we find better ideas I am very happy. I understand I will disagree with others on the best ways to manage, and believe healthy debate can be productive.

What Don Reinertsen discusses in the video, about special and common cause is not the best way to look at those ideas, in my opinion (though I would imagine it is the most common view). For data points that are common cause (within the control limits and not a special cause pattern) it is most effective to use common cause tools/thinking to improve. For indications of special cause (points outside the control limits or patterns in the data, such as continually increasing results that indicate a special cause) it is most effective to use special cause tools to improve.

This does not mean that a point outside the control limits is caused by a special cause (also know as assignable cause). It is just best to use special cause tools and thinking to address those data points (and the reason this is true is because it is most likely there is an assignable cause). The control limits do not define the nature of the point, they define the type of improvement strategy that should be used.

Don also says repeatedly that you don’t “respond to random variation” in Deming’s view. That is accurate. But then he implies this means you don’t address system performance, which is not. You work on improving systems (that are in control) by improving the system, not by responding to individual common cause data points (random variation) as if it were assignable cause variation.

The purpose of the control chart (that Shewhart developed) was to help you most effectively take action (knowing if special cause thinking, or system improvement, was the best improvement strategy). The control chart shows if the results are in control and tells you that the system is preforming consistently (and identifies a special cause so special cause tools can be used immediately, this is important because special cause improvement strategies are time sensitive). It tells you nothing about if the results are acceptable.

Continual improvement was also central to Deming’s management philosophy (based on the business value of the many improvement options available in every organization). For Deming this meant working on improving the system, if the results are in control, instead of trying to deal with finding a specific assignable cause for one data point and acting on that. If the issue is one of the system performance (no indication it is a special cause) the most effective strategy to get better results is to improve the system, rather than approach it as a special cause issue (examining individual data points, to find special items in that event to be improved). You can use special cause thinking, even where system improvement thinking would be better. It will work. It is just not very effective (improvement will be much slower) compared to focusing on system improvement.

I agree with Don that the United States mentality, not only in nuclear plants but everywhere, is to apply special cause thinking as the strategy for process improvement. This is one the areas Deming was trying to change. Deming, and I, think that setting your improvement strategy based on a common cause (system improvement) or assignable/special cause (learn what is special about that one instance) is the most effective way to achieve the best results. We believe in continual improvement. We believe that the effective way to improve, when a system is in statistical control, is by focusing on the whole systems (all the data) not assignable cause (special cause) thinking where you look at what is special about that bad (or good) individual result.

The economic consideration of whether the costs of improvements are worth the benefit is sensible (and I do not see Dr. Deming arguing against that). That is separate from the best method to improve. For Deming the best method to improve means using special cause thinking for assignable cause issues and common cause thinking for systems issues.

The idea of where to focus improvement efforts is not something Dr. Deming made as clear as he could have, in my opinion. So I see the argument of Deming not prioritizing where improvement should occur voiced occasionally. This is a weakness in Deming’s content, I believe, more than his philosophy (but I can understand it causing some confusion).
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Deming Prizes for 2011 go to Companies Based in India, Taiwan and Thailand

Posted on October 14, 2011  Comments (1)

image of the Deming Prize medal

The Union Japanese Scientists and Engineers (JUSE) has awarded the Deming Prize to 3 companies in 2011:

Follow the links I included for the companies to see a bit about their management philosophies. As has been the case since 2000, India and Thailand again did well. Between them the are home to 27 of the 38 award winning organizations.

I have moved to Malaysia and have started some work in Singapore helping organization improve management performance, maybe we can get those 2 countries represented in the coming years (this isn’t a short term effort). I may also do some work in other parts of Asia and Australia.

Organizations receiving the Deming Prize since 2000, by country. Prior to 2000, nearly all winners were from Japan:

Country Prizes
India 17
Thailand 10
Japan 7
USA 1
Singapore 1
China 1
Taiwan 1

The 2011 Deming Prize for Individuals went to Mr. Masamitsu Sakurai, Chairman, Ricoh Company, Ltd. (Japan). Previous recipients include: Kaoru Ishikawa, Genichi Taguchi, Shoichiro Toyoda, Hitoshi Kume and Noriaki Kano.

Related: 2010 Deming Prize – 2009 Deming Prize – 2008 Deming Prize: Tata Steel – Deming Prize 2007 – 2006 Deming Prize

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You’ve Got to Find What You Love

Posted on October 5, 2011  Comments (3)

Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it. And, like any great relationship, it just gets better and better as the years roll on. So keep looking until you find it. Don’t settle.

- Steve Jobs



Watch this great commencement speech by Steve Jobs at Stanford in 2005.

We lost a great person today, when Steve Jobs died at the age of 56. His words are just as important today: you have got to find what you love to do. Keep looking until you find it. It won’t necessarily be easy to do. But life is too short to waste merely getting by.

My father found what he loved and pursued that throughout his life. He also died young. They both died young, but they both had great lives because they took charge to make the most of their lives. By doing what they loved they made the world a better place for many others, and themselves. Take that message to heart and make your life the best it can be.

Related: Quotes from Steve Jobs – Peter Scholtes – Positivity and Joy in Work – Build an Environment Where Intrinsic Motivation Flourishes – Remembering Bill Hunter

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