The 2010 Deming Prize for Individuals went to Dr. Takao Enkawa, Professor, Department of Industrial Engineering and Management, Tokyo Institute of Technology. Previous recipients include: Kaoru Ishikawa, Genichi Taguchi, Shoichiro Toyoda, Hitoshi Kume and Noriaki Kano.
The device is a masterpiece of simplification. The multiple buttons on conventional ECGs have been reduced to just four. The bulky printer has been replaced by one of those tiny gadgets used in portable ticket machines. The whole thing is small enough to fit into a small backpack and can run on batteries as well as on the mains. This miracle of compression sells for $800, instead of $2,000 for a conventional ECG
Frugal products need to be tough and easy to use. Nokia’s cheapest mobile handsets come equipped with flashlights (because of frequent power cuts), multiple phone books (because they often have several different users), rubberised key pads and menus in several different languages. Frugal does not mean second-rate.
The article goes on to talk about several methods for how to profit from reducing costs which seem misguided. Frugal innovation is about thinking about meeting the needs of huge numbers of customers that can’t afford conventional solutions. By talking a new look at the situation and attempting to find solutions with significant price constraints new markets can be opened. Often this requires thinking similar to disruptive innovation (products that serve a similar need but less completely than current options).
It also requires the engineering principles of appropriate technology. I highlight this thinking in my Curious Cat Engineering blog and find it very worthwhile. For organizations that have a true mission to serve some purpose using such thinking allows a greatly expanded potential market in which to make a difference in the world.
There is a great quote from Jeff Bezos that captures one reason why organizations so often fail to address frugal innovation: “There are two kinds of companies, those that work to try to charge more and those that work to charge less.” Many organizations are focused on trying to charge more, not less. Another problem is that decision makers often have no life experience with cheap solutions – this doesn’t prevent frugal innovation but it does make them less likely to see the need and to decide to solve those customer needs.
This lean thinking webcast from India actually does a pretty decent job of providing an overview (for a business TV channel) even if they get some things a bit confused. The discuss TQM in India preceding lean which is an accurate view in my opinion – quality management shared many lean principles. They even talk of lean at Ford doing lean first. But they get the decades for that a bit off. They seem to mash together the “quality is job one” refocus on quality lead by Dr. Deming in the 1980′s with Henry Ford in the early 1900′s.
The webcast includes Jim Womack discussing lean thinking. He mentions the misunderstanding of lean as primarily cost cutting.
With so much focus on Mumbai this week, Joe Munte’s post on the dabbawallas of Mumbai focuses on a illuminating and positive aspect of the dynamic city that provides lessons for effective management…
Keep it simple! Checklists and Change Programs by Crossderry is a couple months old – but I still like it. It provides a “useful reminder to avoid a common error made when PMOs first implement processes and controls – over-engineering”…
John Hunter reflects on Management at Google, and features a video of Schmidt and Hamel chatting. I am a big fan of Google because they skillfully implement effective, agile quality systems in an environment highly conducive to innovation…
The USA’s share of the manufacturing output of the countries that manufactured over $200 billion in 2007 (the 12 countries on the top of the chart above) in 1990 was 28%, 1995 28%, 2000 33%, 2005 30%, 2006 28%, 2007 27%. China’s share has grown from 4% in 1990, 1995 7%, 2000 11%, 2005 13%, 2006 15%, 2007 16%.
Total manufacturing output in the USA was up 76% in 2007 from the 1990 level. Japan, the second largest manufacturer in 1990, and third today, has increased output 15% (the lowest of the top 12, France is next lowest at 32%) while China is up an amazing 673% (Korea is next at an increase of 271%). Continue reading →
Mr. B. Muthuraman, Managing Director, Tata Steel, while expressing satisfaction over this accomplishment said, “No other activity made us think so deeply about our business and relationships than the process of applying for the Deming Prize. Total Quality Management (TQM) is a fundamental way of managing business and every organization can gain from institutionalizing the culture necessary to win this prize.” He dedicated this recognition to the employees of Tata Steel, its customers and business partners who have consistently embraced the culture of continuous improvement and demonstrated a great teamwork leading to several recognitions in the last 20 years since the TQM journey started at the Steel Company in 1988.
India continues to do very well, collecting more Deming Prizes than all other countries combined since 2000. Countries of organizations receiving the Deming Prize since 2000 (prior to that almost all winners were from Japan):
The 2007 Deming Prize for Individuals went to Mr. Masahiro Sakane, Chairman, Komatsu Limited, Japan. Previous recipients include: Kaoru Ishikawa, Genichi Taguchi, Shoichiro Toyoda, Hitoshi Kume and Noriaki Kano.
When I last visited India in 2002, I looked carefully at several operations of the TVS group in the Chennai area. I found that they were the best examples of lean manufacturing I had ever seen outside of Toyota City. In my mind these facilities completely eliminated any questions as to whether “lean” would work in India. However, I have not visited India in six years and I have no data on the performance of Indian firms on average, so I can’t say what the trend is or how many success stories I might find if I had the time to visit at length. How-ever, I have high expectations for the potential of Indian firms to embrace the full range of lean principles and methods.
Toyota is investing $350 million in a second Indian manufacturing plant. The plant is focused on producing vehicles for the local market – as the Toyota Production System suggests that production be close to the market.
The new plant will have a production capacity of 100,000 units and will become operational by 2010, he added. The company’s current plant has a capacity of 63,000 units a year.
The plant will make the Corolla sedans along with the small cars The company plans to have high level of localisation for the small car by procuring several components and sub-systems from Indian vendors. Primarily the car maker plans to sell the small car in the fast growing domestic market, though some will be exported as well, the company stated.
The Japan-based automaker said last year that it plans to capture 10 per cent of India’s market. In 2007 Toyota sales accounted for a mere 0.6 per cent of the Indian car market
Jules Verne predicted cars would run on air. The Air Car is making that a reality. The car would be powered by compressed air. Certainly seem like an interesting idea. Air car ready for production:
Refueling is simple and will only take a few minutes. That is, if you live nearby a gas station with custom air compressor units. The cost of a fill up is approximately $2.00. If a driver doesn’t have access to a compressor station, they will be able to plug into the electrical grid and use the car’s built-in compressor to refill the tank in about 4 hours.
The car is said to have a driving range of 125 miles so by my calculation it would cost about 1.6 cents per mile. A car that gets 31 mpg would use 4 gallons to go 124 miles. At $3 a gallon for gas, the cost is $12 for fuel or about 9.7 cents per mile. I didn’t notice anything about maintenance costs. I don’t see any reason why the Air Car would cost more to maintain than a normal car. Five-seat concept car runs on air
An engineer has promised that within a year he will start selling a car that runs on compressed air, producing no emissions at all in town.
Tata is the only big firm he’ll license to sell the car – and they are limited to India. For the rest of the world he hopes to persuade hundreds of investors to set up their own factories, making the car from 80% locally-sourced materials.
“Imagine we will be able to save all those components traveling the world and all those transporters.” He wants each local factory to sell its own cars to cut out the middle man and he aims for 1% of global sales – about 680,000 per year. Terry Spall from the Institution of Mechanical Engineers says: “I really hope he succeeds. It is a really brave experiment in producing a sustainable car.”
Now does that sound like the Toyota Production System to you? It should. If I were an executive at Toyota I would sure examine this to see if it really is as promising as it looks. And if it is Toyota sure has plenty of cash and the management practice to make a very compelling case for allowing Toyota to produce this globally. The engineers desires closely match what Toyota has learned. Both seek to eliminate the waste of transportation (friction).
“One of the important lessons we’ve seen on the ground is how Wipro approached the launch of this lean initiative,” Staats says. “They didn’t come out with big banners and say, ‘OK, today your work is lean work, and yesterday it wasn’t.’ They started with a small group and recruited other people from there. It was a very controlled experimentation.”
In their research, Staats and Upton document how the use of lean principles affected the workflow at Wipro. The concept of “kaizen,” or continuous improvement, for example, resulted in a more iterative approach to software development projects versus a sequential, “waterfall” method in which each step of the process is completed in turn by a separate worker.
By sharing mistakes across the process, the customer and project team members benefit individually and collectively from increased opportunities to learn from their errors; the project also moves along more quickly because bugs are discovered in the system earlier in the development process.
Iteration is very important. It is important in proper use of the PDSA cycle – many quick iterations are much better than one long slow one. And for software application development it is an excellent strategy.
I think iteration is even more important in software application development than most other areas (for now anyway) because many stakeholders cannot visualize what they need from software. Therefore attempts to force rigid requirements up front fail. No matter how much effort you put in the stakeholder just doesn’t know until they see it and use it – then they can tell you what they want changed. so design a system that works given this – iteration and agile development work very well.
The sleek, clean factory in the Delhi suburb of Noida seems more Taiwan than India. Engineers in white overalls and goggles watch over an automated production line that spits out four billion state-of-the-art DVDs and CDs a year. To get to the factory floor, you have to pass through three air-cleaning passages – a process that makes it clear you’re no longer in crowded, dirty Delhi.
This is not some futuristic vision of India. It’s the main factory of Moser Baer, a 24-year-old Indian company that was one of the first in the world to make high-definition DVDs and is now starting on flash memories and solar panels. And while not typical of most Indian factories, Moser Baer is one of a number of companies utilizing the same brainy ability that fueled the country’s IT boom to remake its manufacturing landscape.
The second problem is India’s infrastructure, especially power shortages and the grossly inadequate highways and ports that make it difficult to transport goods. New highways are helping, but growing urban congestion is making the problem worse, and there are seemingly endless bureaucratic and physical delays at ports.
India has a great deal of potential for manufacturing. The roadblocks are largely economic I think. Poor infrastructure is a huge problem that requires huge investments be made. China has made huge investments in infrastructure and they have paid off. Another incredible drain on India’s progress in manufacturing is the government bureaucracy.
India continues to shine with Deming Prizes (and of course there economy and stock market have been doing pretty well too). Companies based in India took home both Deming Prizes this year and the Japan Quality Medal. Countries of organizations receiving the Deming Prize since 2000 (prior to that almost all winners were from Japan):
The 2007 Deming Prizes went to Asahi India Glass Limited, Auto Glass Division and Rane (Madras) Limited. Three different divisions of Rane received awards in the previous the last 4 years, making this Rane’s fourth prize in 5 years.
The 2007 Japan Quality Medal went to Mahindra & Mahindra Limited, Farm Equipment Sector.
The 2007 Deming Prize for Individuals went to Mr. Masayoshi Ushikubo, Chairman, Sanden Corporation. The Sanden International portion of Sanden was the third USA based organization to win a prize in 2006 (prior winners were: Florida Power & Light Company in 1989 and AT&T Power Systems in 1993). I mentioned India’s economy and stock market above, China’s economy and stock market are doing amazingly well also and then have yet to have a Deming Prize winner. I hope China, USA and many another countries can follow India’s current performance in this area. Deming Prizes are not awarded on a quota or forced ranking basis – any deserving applicants in any year can receive a prize.
Gopal Srinivasan is Director of TVS Electronics Limited, Joint Managing Director of Sundaram-Clayton Limited and Director of various other TVS Group companies. TVS group companies, based in India, have been awarded 5 Deming Prizes. He discusses Deming and quality a bit. He also discusses their experiences in manufacturing in China and the strengths they have found in each country. And he discusses the Indian economy and manufacturing.
The costs of having two offices, which are twelve time zones apart, is significant. People in both offices frequently had conference calls at 10pm and midnight every night (as a result the office in the US didn’t get started until noon sometimes or people rolled in tired). We were all traveling constantly. Development and communication moved slower due to the distance and teams. However, all of this was worth it so long as the ROI was there.
Bangalore wages have just been growing like crazy. To give you an example, there is an employee of ours who took the first 5 years of his career to get from 1% to 10% of his equivalent US counterpart. He then jumped from 10% to 20% of his US counterpart in the next 1 year. During his time with us (less than 2 years) he jumped to 55% of the US wage. In the next few months we would have had to move him to 75% just to “keep him at market.”
A good post on some of the difficulties of outsourcing. Also a good illustration of how economics is suppose to work. If labor is underpriced in India and the market is opened labor rates should rise to a level where they are equivalent (given productivity… differences). Don’t be lead to believe all labor prices in India have experienced anything like this. Those areas where the value to cost difference was largest is where rates increased a great deal in a short period of time.
The newest data from the UN confirms most of the recent trends in manufacturing output – most notably that China continues to grow dramatically. The data also shows a stagnation in USA manufacturing output over the last several years, though the USA remains by far the largest manufacturer. The most significant news from this latest data, I believe, is that that manufacturing output growth in the USA has been slower than global manufacturing output growth from 2002-2005. This was not the case prior to 2002. I will be writing more on this data in the Curious Cat Investing and Economics Blog. UN Data, in billions of current US dollars:
helping China’s share of the world’s exported goods to triple to 7.3% between 1993 and 2005. In comparison, every member of the G8 group of rich nations, with the exception of Russia, saw its share fall. It is a similar story with manufacturing output. Whereas China doubled its share of global production to almost 7% in the decade to 2003, most of the G8 saw their shares fall. Interestingly, only the United States and Canada saw their shares rise
It is nice to see this reported properly. The USA manufacturing share of global output has risen, not fallen, as we have stated numerous times: Manufacturing Value Added Economic Data – Manufacturing Jobs Data: USA and China – Global Manufacturing Data by Country. The most fundamental facts of global manufacturing – Global output is increasing. Jobs are decreasing (everywhere, not moving from one place to another – decreasing everywhere). China’s output is growing rapidly. The USA is still by far the largest manufacturer, USA output is growing faster than global output and much slower than China’s output. Japan is the second largest manufacturer with China third, by a fairly large margin though China is growing very rapidly.
Essentially the study says the outsourcing IT will continue to grow though more slowly than it has. It also states the benefits of outsourcing have not reached the level that was predicted for a number of reasons. The study predicts vastly increased competition from China for IT outsourcing work (which reinforces the general consensus).
Perhaps most interesting, however, is the phenomenal growth in the expectations of China as an outsourcing destination. In 2004 only 8 percent of study participants expected to be outsourcing anything to China over a 3–5 year period. In 2005 this number had grown to 40 percent and in 2006 it sits at an impressive 56 percent. We believe that the hype of the Chinese outsourcing phenomenon has potentially outpaced reality.
However, while Six Sigma’s pedigree can indeed be traced to TQM, it is differentiated from these earlier approaches by the bottom-line focus and intensity of its application. Experience has shown that Six Sigma works and if applied appropriately, it can be the key to enhance customer experience by adding to the bottom line. This can provide you a winning edge.
A delegation of top officials from leading Japanese industries — mostly comprising Toyota group and its suppliers — had also visited the Lucas TVS’ Chennai plant. The delegation is part of the central Japan Quality Control Association, an organisation promoting quality control in cooperation of the Union of Japanese Scientists and Engineers (JUSE).
The purpose of the visit was to introduce the delegation to the best practices amongst the member companies and also outside Japan. In 2004, Lucas TVS had won the prestigious Deming medal…
According to Balaji the Japanese delegation led by Tadashi Onishi, JTEKT Corporation, said that quality is not a magic solution but a systematic practice, and quality should not be measured by the absence of defect. A company should reach a condition where it innovates in quality. Further, all the stakeholders-employees, suppliers and others- should be involved in quality control. “The delegation also told us that quality systems should be at all levels of management and not only at the shop floor level,” Balaji said.