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Innovation is not a new idea (though the popular business press often seems to think it is). Deming on innovation.
Recommended posts: Better and Different - Innovation in Organizations - Managing Innovation - Reaction to Jeff Immelt - Ackoff, Idealized Design and Bell Labs - Six Keys to Disruptive Innovation
Articles by: Clayton Christensen and Gary Hamel
Some interesting thoughts from a new Google engineer, Things I’ve learned at Google so far
I think he overestimates the lack of central planning, still it is another interesting view of Google.
Related: Eric Schmidt on Management at Google – Google: Ten Golden Rules – The Myth of the Genius Programmer
Business Week has a good article on the strides one hospital has been able to make at reducing costs and improving quality. Hospitals: Radical Cost Surgery
The crazy world of hospital economics does not offer a lot of incentives to change. Both Medicare and private insurers reimburse on a piecework basis – known as fee-for-service – that encourages hospitals to treat more, prescribe more, and test more.
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Providence has also published data showing that infections, lengths of stay, and surgical complications have dropped since starting its own program.
But hospitalists are still controversial in many communities, because primary care physicians are wary of giving up control of their patients, along with their share of inpatient fees. Dr. Joanne C. Roberts, one of the first hospitalists at Providence, has not seen this conflict in Everett, possibly because most of the hospitalists and primary care doctors are associates at one large medical practice, Everett Clinic. That’s not true everywhere, she says. “In another community where I worked, independent doctors were pretty hostile. Everyone was trying to grab part of the money. That just doesn’t happen here.”
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In a study of 2,531 operations at Providence, Brevig reported that the incidence of transfusions was reduced to just 18% in 2007, from 43% in 2003, while the average patient stay was reduced by half a day. The changes have saved Providence an estimated $4.5 million.
Brevig has been proselytizing for his plasma practices at medical meetings, but to little avail. Only some 200 U.S. hospitals have a blood conservation program. Since patients are billed the cost of the plasma, doctors aren’t motivated to change their habits.
There are many more great examples of positive actions being taken in health care. But all you have to do is look at the overwhelming evidence of how amazingly poorly the health care system in the United States is doing to know that it is, overall, an enormous failure. For decades the enormous cost of supporting special interest groups that benefit from the current broken system have forced the rest of society to pay for their unwillingness to improve. We can no longer afford to accept the poor performance. We need to adopt the new ideas much more quickly and eliminate the taxes on the rest of society to support those that want to take an every increasing amount from society to support their outdated, failed policies.
Related: Community Medical Care Successes – CEOs Want Health-Care Reform – USA Spends Record $2.3 trillion ($7,681 Per Person) on Health Care in 2008 – Health Care: Lessons for the USA from Switzerland
There are many significant problems with the medical care system in the USA. It makes sense that a system that costs over 50% more than other countries and has no better outcomes, from all that extra spending, suffers from many failures. Coverage for small business is one of the problems we face now – When Health Insurers Dump Small Companies:
Just from an insurance perspective the companies are not providing what is needed. They are quick to say you can’t have healthy people remain uncovered and wait to buy insurance once for example, “their house is on fire” (they are sick). They are right. Well you also can’t have the insurance company cancel coverage during the fire and have a system that works.
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We lost another of the absolutely best minds in management history, this week. Somehow, many managers, do not know of Russell Ackoff’s ideas. I find that amazing. Dr. Ackoff is one of two management thinkers that any manager, that is serious about improving management results in their organization, must study (the other is Dr. Deming).
The Curious Cat management library includes many articles by Russell Ackoff. Transformation and Redesign at the White House Communications Agency by March Laree Jacques is a great articles exploring adopting his ideas.
Like many management greats he had no limit to the great ideas he put forth. He believed in the value of people and the importance of social systems. He is well known his ideas on systems thinking and specifically human systems. He understood to create effective management structures the human element must be at the heart of the system. He firmly believed in respect for people and his management ideas built on providing the opportunity for people to flourish.
We lost another great management mind. But by reading Ackoff’s books and articles and learning from him we can continue the improvements he brought to management during his life. His ideas will continue to provide those that adopt them great success for a long long time. And the management community will continue to build on his work and that of others to help managers improve their organizations.
Earlier this year we lost Peter Scholtes, another management leader and friend of Russell Ackoff. Russell wrote the forward to Peter’s Leader’s Handbook.
Those words also describe Russell Ackoff perfectly. He inspired those he worked with to adapt and transform his ideas as they worked to improve their organizations. Take this opportunity to learn more about his ideas, you will not be disappointed.
Related: Russell L. Ackoff, Management Consultant & Systems Thinker, 1919 -2009 – Ackoff, Idealized Design and Bell Labs – Quotes By Dr. Russell L. Ackoff – Dr. Russell Ackoff Webcast on Systems Thinking – From Mechanistic to Social Systemic Thinking – Traffic Congestion and a Non-Solution – Write it Down to Improve Learning – Designing a New Organization – Ackoff’s New Book: Management f-Laws – The Importance of Management Improvement
An Introduction to Deming’s Management Teaching and Philosophy by Peter Scholtes – webcast from the Annual W. Edwards Deming Institute conference in Madison, Wisconsin, November 9th, 2008. My previous post on this speech: 6 Leadership Competencies.
Next month, the Annual Deming Institute conference will be held at Purdue on Oct 10th, 2009.
Related: Peter Scholtes’ Life – Curious Cat’s Deming on Management – The Leader’s Handbook – Performance without Appraisal
Unfortunately I cannot actually use the website to watch more than 5 minutes because the site fails to support linux operating system with their solution for longer videos. Google will only allow 10 minute videos without special permission – YouTube has not replied to my request for over 6 months. Update: Twitvid let me upload the whole video.
Amazon is acquiring the unique company – Zappos: we have written about Zappos previously: Paying New Employees to Quit. Jeff Bezos uses the webcast above to talk to the employees of Zappos. Excellent job. The letter from Tony Hsieh, the Zappo’s CEO, to employees is fantastic. This is a CEO that respects employees. These are leaders I would follow and invest in (and in fact I am glad I do own Amazon stock).
We learned that they truly wanted us to continue to build the Zappos brand and continue to build the Zappos culture in our own unique way. I think “unique” was their way of saying “fun and a little weird.” 
Over the past several months, as we got to know each other better, both sides became more and more excited about the possibilities for leveraging each other’s strengths. We realized that we are both very customer-focused companies — we just focus on different ways of making our customers happy.
Amazon focuses on low prices, vast selection and convenience to make their customers happy, while Zappos does it through developing relationships, creating personal emotional connections, and delivering high touch (“WOW”) customer service.
Toyota has developed a thought-controlled wheelchair (along with Japanese government research institute, RIKEN, and Genesis Research Institute). Honda has also developed a system that allows a person to control a robot through thoughts. Both companies continue to invest in innovation and science and engineering. The story of a bad economy and bad sales for a year or two is what you read in most newspapers. In my opinion the more important story is why Toyota and Honda will be dominant companies 20 years from now. And that story is based on their superior management and focus on long term success instead of short term quarterly results.
Yes Toyota can improve their performance, based on the last few years. Does management understand what they need to do? I think so. Does management understand that the system needs to be improved rather than the numbers on the spreadsheets of various managers have to be made better? I think so. Do I think most companies today, with bad results, understand the difference between bad numbers on spreadsheets that are used to judge various managers and a system that needs to be improved? No.
I do not believe the bad earnings for the last year for Toyota are indicative of a failed system. The results do show a weakness in the Toyota system that allowed them to perform this poorly during this credit crisis. The risk to Toyota’s future is that they become too focused on short term results, mistakenly thinking the problem to be fixed in the bad quarterly results recently. They need to focus on improving the system for the long term. And the recent experience likely shows some areas that need to be improved. But in no way do the fundamental tenants of the management system need to be changed. For many other companies today, changing fundamental aspects of their management is what is needed.
Related: Toyota as Homebuilder – Honda’s Robolegs Help People Walk – Honda has Never had Layoffs and has been Profitable Every Year – Toyota’s Partner Robot – NUMMI, and GM’s Failure to Manage Effectively – Toyota iUnit – Invest in New Management Methods Not a Failing Company by William Hunter, 1986
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How P&G Finds and Keeps a Prized Workforce by Roger O. Crockett
Career education takes place outside the classroom, too. P&G pushes every general manager to log at least one foreign assignment of three to five years. Even high-ranking employees visit the homes of consumers to watch how they cook, clean, and generally live, in a practice dubbed “live it, work it.” Managers also visit retail stores, occasionally even scanning and bagging items at checkout lanes, to learn more about customers.
Going to visit the gemba, the actual place is incredibly important, and far too often ignored by managers today.
The emphasis on life long learning (in practice, not just words) is also very wise. In my experience far to little emphasis is placed on continual improvement of what many companies will say is their most important asset: their people. If you don’t invest in education of your staff that is going to harm your long term success. The investment P&G makes shows a respect for people.
Related: Jeff Bezos Spends a Week Working in Amazon’s Kentucky Distribution Center – Workplace Management by Taiichi Ohno – Respect for People, Understanding Psychology – Ohno Circle
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Get Rich Slow by Josh Quittner
“At this point, it would be hard for companies to get any cheaper,” Graham said. Since everyone already has an Internet-connected computer, “it’s gotten to the point that you can’t detect the cost of a company when added to a person’s living expenses. A company is no more expensive than a hobby these days.”
I see a great deal of truth to this and it provides interesting opportunities. Including being able to build a business slowly while still working full time. I have written about Y-combinator previously they have helped make this model popular. And the services these companies make seem to me to often be much more refreshing than ideas so watered down they lose much passion (so common from so many companies). Though some large companies provide great web sites.
Related: Some Good IT Business Ideas – Find Joy and Success in Business – Our Policy is to Stick Our Heads in the Sand – Small Business Profit and Cash Flow
W. Edwards Deming
Page 182, Out of the Crisis
More of Deming on Innovation
Related: Innovation Thinking with Clayton Christensen – Engineering Innovation – Managing Innovation – Gary Hamel on Management Innovation
The Innovator’s Prescription: A Disruptive Solution to the Healthcare Crisis
The push for widespread healthcare reform must come from employers, who in spite of their declared intent to cut healthcare costs also know “they profit when their employees are healthy and productive.” Affordable healthcare, he concludes, “doesn’t come by expecting high end, expensive institutions or expensive caregivers to become cheap, but by bringing technology to lower cost providers and venues of care, so they can become more capable.”
Clayton Christensen is the rare management thinker that I feel real provides profound insights into thinking about management. There are many other good management thinkers that offer valuable idea, just most of them (in my opinion) really are presenting material in ways that offer managers a good way to take action on all the long known good management ideas that we fail to adopt successful for decades.
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The newspaper industry is facing challenging times. One success story is the Lawrence Journal-World in Lawrence, Kansas. I first heard about their efforts years ago:
Watchful Eyes on Kansas Media Innovations, NPR, 2005
The Newspaper of the Future, by Timothy O’Brien, New York Times
A related Web site, lawrence.com, is aimed at college readers. It allows visitors to download tunes from the Wakarusa Music Festival, find spirited reviews of local bars and restaurants and plunge into a vast trove of blogs
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The steward of this online smorgasbord is Dolph C. Simons Jr., a politically conservative, 75-year-old who corresponds via a vintage Royal typewriter and red grease pencil while eschewing e-mail and personal computers. “I don’t think of us as being in the newspaper business,” said Mr. Simons, the editor and publisher of The Journal-World and the chairman of the World Company, the newspaper’s parent. “Information is our business and we’re trying to provide information, in one form or another, however the consumer wants it and wherever the consumer wants it, in the most complete and useful way possible.”
The company has continued on an path of customer focus and innovation. There work shows what can be done by understanding what need you fulfill for customers.
They understand what they offer customers (and it isn’t just paper). They understand the technology related to their business (not the technology of their past methods of working but the technology possibilities related to serving their customers). They understand the realities of the marketplace. And they have divined a strategy based on this knowledge (they have innovated). And finally, the Lawrence Journal-World has maintained a constancy of purpose.
Related: Zipcar Innovation – Innovation Strategy – Information Technology and Business Process Support (more…)
I am a big believer in marketing by providing some content for free. It is a great idea for consultants. It is also a great idea for those looking to sell books and audio-visual content.
Can Free Content Boost Your Sales? Yes, It Can
And you know what? Despite the entertainment industry’s constant cries about how bad they’re doing, it works. As we wrote yesterday, Monty Python’s DVDs climbed to No. 2 on Amazon’s Movies & TV bestsellers list, with increased sales of 23,000 percent.
Similar approach worked for Nine Inch Nails and other artists. And yet, lately we hear more about various restrictions to free redistribution of copyrighted content than ever before.
If you are looking to create some business in the rough economy, try thinking creatively and expand your ideas of what is a good strategy for gaining customers. Providing sensible online resources is a far better strategy than hiring a bunch of lawyers to sue college students. I posted a link to Monty Pythons great explanation of what they were doing on one of my other blogs last November. Enjoy.
Related: Giving Away Your Service for Free on Weekends – Innovative Marketing Podcast – Seth Godin on Marketing and the Internet – Marketers Are Embracing Statistical Design of Experiments
Clayton Christensen’s ideas on disruptive innovation are very powerful. I have written about Innovation Thinking with Clayton Christensen previously. Here is an example of such innovation. All you need is a broadband internet connection and you can Kiss your phone bill good-bye:
I ordered mine from Amazon for $203 and have been using it for a month, it has been great. Relatively easy to setup (they had a pretty good customer survey and I recommended they use colored cables – they color cables in the drawings in the users guide but give you 3 white cable to use – they are different types of cables so it isn’t tough to figure out but that would make it a bit easier).
I have been using Vonage for awhile and it is ok, but I don’t see any reason to pay each month when Ooma doesn’t charge a monthly fee (even on the lowest option on Vonage the bill is over $22/month). When I tried to cancel Vonage they refuse to allow it through the web site. Then forced me through voice mail maze only to then say we only answer the phone for you between 9-5 EST on workdays (that is about 75% of the time they are unavailable). I called back a week later, when I got a chance and they forced me through 10 minutes of wasted time but at lest I was able to get it canceled – once they refused to allow cancellation over the web site I was worried the customer disservice would be greater than it was.
Related: Six Keys to Building New Markets by Unleashing Disruptive Innovation – Save Money on Food – The Innovators Solution by Clayton M. Christensen and Michael E. Raynor – Using Google to Eliminate IT Costs
When financial and economic realities reach the point that labor costs must be cut I believe a good option to consider is cutting hours (and pay) instead of people. Some people will have extreme hardship if the cut in hours and pay is significant, but once you get is a bad situation no answers are likely to be without problems. I would try to offer the cuts to those that want them first. I would likely take an unpaid sabbatical, if offered, and the organization was in financial trouble.
Another way of doing something similar is profit sharing (where costs go down when profits go down). You should be careful how such sharing is designed, it can create bad incentives if done incorrectly. Also by paying a portion of wages as bonuses that expense can be reduced when times are bad without layoffs.
The Rise of the Four-Day Work Week
Related: Bad Management Results in Layoffs – Some Firms Cut Costs Without Resorting to Layoffs – Operational Excellence – posts on respect for employees
Brazil’s Camaçari plant is model for the future
Here is an interesting video on the plant. It is sad how poor management at GM, Ford and Chrysler has created such a bad situation for those working at those companies, their suppliers, the communities that support their production… GM and Ford had the advice they needed to succeed from Deming in the 1980’s but they chose to focus on the short term, large executive payments, accounting gimmicks instead of continual improvement…
They each have improved over the years, but the standard is not just improving but doing so effectively and enough and they failed at that. The UAW shares some responsibility for failing to successfully lead their workers to a promising future but management is much more responsible for the failure in my opinion (the video and article try to say Ford wants to be innovative in the USA but the UAW won’t let them). It is management’s jobs to focus the organization on cooperation and success for all stakeholders. When management is more concerned with getting themselves huge payoffs (from the pockets of the other stakeholders) and then try to blame one of those other stakeholders for fighting management is disingenuous. Executive’s contempt for other stakeholders leads to the other stakeholders feeling that they should be just as greedy as management.
Related: Ford’s Wrong Turn – Ford and Managing the Supplier Relationship – Global Manufacturing Data 2007 – Toyota’s New Texas Plant – Womack Podcast on GM – VW Phaeton Manufacturing plant
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Low-Tech, High Impact Innovation
Great post. My father, Dr. William Hunter, did a great deal of work with appropriate technology (he was a chemical engineering, industrial engineering and statistics professor) and in management improvement.
Often the failure to adopt appropriate technology solutions results from a combination of 3 things:
Thinking about why appropriate technology is so effective, but underutilized can help anyone improve the solutions they adopt. Thankfully the adoption of appropriate technology solutions has been increasing over the last few decades.
I would especially encourage people to stop looking for the newest management book and actually read and adopt and then re-read and… the excellent management books from the last 50 years. Stop chasing some new shiny thing and adopt solutions that are effective – even if they seem boring.
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Data from World Wind Energy Association, for installed Mega Watts of global wind power capacity in 2007. 19,696 MW of capacity were added in 2007, bringing the total to 93,849 MW. Europe accounts for 61% of installed capacity, Germany accounts for 24% and the USA 18%.
Post from the Curious Cat Science and Engineering blog (more posts on energy and engineering). The graph shows the top 10 producers (with the exceptions of Denmark and Portugal) and includes Japan (which is 13th).
Related: USA Wind Power Installed Capacity 1981 to 2005 – Wind Power has the Potential to Produce 20% of Electricity by 2030 – Top 12 Manufacturing Countries in 2007
The End of Theory: The Data Deluge Makes the Scientific Method Obsolete by Chris Anderson
So proclaimed statistician George Box 30 years ago, and he was right. But what choice did we have? Only models, from cosmological equations to theories of human behavior, seemed to be able to consistently, if imperfectly, explain the world around us. Until now. Today companies like Google, which have grown up in an era of massively abundant data, don’t have to settle for wrong models. Indeed, they don’t have to settle for models at all.
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Speaking at the O’Reilly Emerging Technology Conference this past March, Peter Norvig, Google’s research director, offered an update to George Box’s maxim: “All models are wrong, and increasingly you can succeed without them.”
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There is now a better way. Petabytes allow us to say: “Correlation is enough.” We can stop looking for models. We can analyze the data without hypotheses about what it might show. We can throw the numbers into the biggest computing clusters the world has ever seen and let statistical algorithms find patterns where science cannot.
see update, below. Norvig was misquoted, he agrees with Box’s maxim
I must say I am not at all convinced that a new method without theory ready to supplant the existing scientific method. Now I can’t find peter Norvig’s exact words online (come on Google – organize all the world’s information for me please). If he said that using massive stores of data to make discoveries in new ways radically changing how we can learn and create useful systems, that I believe. I do enjoy the idea of trying radical new ways of viewing what is possible.
Practice Makes Perfect: How Billions of Examples Lead to Better Models (summary of his talk on the conference web site):
Related: Will the Data Deluge Makes the Scientific Method Obsolete? – Pragmatism and Management Knowledge – Data Based Decision Making at Google – Seeing Patterns Where None Exists – Manage what you can’t measure – Data Based Blathering – Understanding Data – Webcast on Google Innovation
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The Ergonomics of Innovation by Hayagreeva Rao and Robert Sutton
Related: Saving Lives: US Health Care Improvement – 5 Million Lives Campaign – PBS Documentary: Improving Hospitals – Hospital Reform – IHI on CBS – Articles on Improving Health Care Performance – Drug Prices in the USA – posts on innovation
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