Category Archives: Popular

20 Most Popular Posts on the Curious Cat Management Blog in 2016

These posts were the most popular posts on the Curious Cat Management Improvement Blog in 2016 (as measured by page views, as recorded by my analytics application).

photo of John Hunter

John Hunter, Frijoles Canyon, Bandelier National Monument, New Mexico, USA.

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20 Most Popular Posts on the Curious Cat Management Blog in 2015

This is a list of the 20 most popular posts on the Curious Cat Management Improvement Blog last year (as measured by page views, as recorded by my analytics application).

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Toyota Posts Record Profit: Splits $15 million in Pay and Bonus for top 21 Executives

After posting record profits of $17.9 billion Toyota proposes to increase the pay and bonus for the top 21 executives to $14.9 million. That is not as you might expect just the increase in the bonus to the CEO. That is the entire pay and bonus for the top 21 executives. That places all 21 together below the top 50 CEO paydays in the USA.

Toyota’s net income for the year surged 89.5%. While the profits are partially due to good management at Toyota the decline in value of the yen also greatly aided results.

Management Pockets A 19% Raise As Toyota Racks Up Records Profits

Toyota proposed 1.52 billion yen ($14.9 million) in combined compensation and bonuses to 21 directors, including President Akio Toyoda, in a notice to shareholders Tuesday. The Toyota City, Japan-based company paid 1.28 billion yen the previous fiscal year.

By comparison, total pay for union workers increased 8.2 percent [this was linked to an article as a source but the link was broken, so I removed it] on average from last fiscal year. The carmaker granted the union’s request for workers’ average bonus to rise to 2.44 million yen, the equivalent of 6.8 months of salary.

The company forecasts a 2% slip in net profit to $17.5 billion for 2015.

Toyota continues to generate cash flow extremely well and has over $20 billion in cash at the end of their 2014 FY. They are also increasing the dividend to stockholders and buying back more stock.

Less than a handful of USA CEOs that is took more from their companies treasuries than all 21 off the Toyota leaders take together led their company to greater earnings than Toyota (only a few companies earned more: Apple, Google, Exxon…). The thievery practiced by senior executives in the USA is immoral and incredibly disrespectful to the other workers at the company and the stockholders.

ExxonMobil did earn more and their CEO took $28.1 million. I think Chevron and Wells Fargo may have earned more than Toyota with a CEOs taking $20.2 and $19.3 million respectively.

Alan Mulally, Ford CEO, took $23.2 million while the company earned $7 billion. If you can ignore his massive and disrespectful taking what he doesn’t deserve he has been an acceptable CEO in other ways.

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Building a Great Software Development Team

twitter screen shot of the quoted conversation

Elliot: I worked with some of the best programmers I’ve ever known at the tiny, obscure ASEE

Adam Solove: Why do you think that happened? They hired for passion, rather than experience?

If I had to pick one thing, passion would likely be it but really it is a complex assortment of things. Passion for the right things, based on what we aimed to be, mattered a great deal. That took the form of being passionate about the user experience, being passionate about good software development practices, being passionate about good software itself, being passionate about treating each other with respect, being passionate about learning and improving.

I think there were several other important factors, such as: the skill to turn a passion for good software into actual good software. This required intelligence, interest and knowledge about software development but didn’t require specific experience (computer science degree, 2 years of Ruby on Rails development, certification or any such thing). Hiring based on experience is a big mistake. In my opinion hiring based on capability and potential (which is based partially on experience) is wise.

Another factor is that we had people (those first few hires were critical) that were really knowledgable about programing good software and that became a self reinforcing process. The gaps one person’s ability and knowledge could be filled by someone else helping them understand and get better.

The expectation was that we found great solutions. If we didn’t we kept looking and asked each other for help (another factor in creating a great team). We didn’t just accept that we were confident the solution wasn’t very good but couldn’t find any better options so I guess this is the best we can do.

We were interested enough in good results that we would push for better options instead of just accepting something that was kind of ok. This shouldn’t be such a big deal; but in practice it is huge. So many places just end up avoiding conflict to the extent that it is a huge detriment to results.

Without confidence, honest debate about ideas is suppressed as people are constantly taking things personally instead of trying to find the best ideas (and if doing so means my idea is criticized that is ok). Our group was great at this. It is something I find it a bit silly to say a workplace was “great” at but in most places I find the fear of someone being concerned stifles discussion to an unbelievable extent.

This is also one of many areas where the culture within the team was self reinforcing. As new people came on they understood this practice. They saw it in practice. They could see it was about finding good ideas and if their idea was attacked they didn’t take it nearly as personally as most people do in most places. I sought to understand if people we looked at hiring would be comfortable in such an environment.

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Deming and Software Development

I am sometimes asked about how use Deming’s ideas on management in a software development context. My belief is Deming’s ideas work extremely well in a software development context. The main issue is often unlearning some assumptions that people might have about what the Deming management system is.

It really is surprising to me how many “knowledge workers” respect Deming ideas but then say his attempts to treat factory workers as thoughtful people who should be respected and involved in improving their processes doesn’t make sense for them because they are “knowledge workers.”

There are many good things being done to improving the software development process. I think many of them are very Deming-like in their approaches (but to me miss out on aspects of the Deming management system that would be helpful). I think Dr. Deming’s approach to software development would focuses on the system of profound knowledge (the 4 inter-related areas below):

  • Understanding variation – software development has quite a bit of variation, some probably innate [unique work] and some due to not having good procedures, batching work, not fixing problems right when they are seen, quick fixes that leave the system venerable in the long term (when you make one simple change to the code it has an unanticipated consequence due to poor practices that could have been eliminated), etc.. Many good coding practices are effective strategies to deal with this issue. And building an understanding of variation for managers (and business process owners/product owners) is very helpful to the software development process. The ideas in agile and kanban of focusing on smaller delivery units of work (one piece flow, just in time, cycle time…), customer value, maintainable code, sustainable work conditions, etc. are directly found in a Deming management system.
  • Appreciation for the system of software development. Don’t just complain about bugs. Examine the process of development and then put in place mistake proofing efforts (don’t duplicate code, use integrated regression tests, don’t put artificial constraints on that result in system distortions – unrealistic targets…). Use things like kanban, limited work in progress, delivering value to customers quickly, think of success in terms of getting working software to customers (not meeting internal delivery goals), etc. that take into account our experience with systemic software development problems over the decades.
  • Theory of knowledge – how do we know what we know? Are estimates reliable? Lets look at what users do, not just what they say (A/B testing…). Software developers often appreciate the value of usability testing, even though they rarely work for organizations willing to invest in usability testing. In my experience when software developers object to usability testing it is normally really an objection to overwork, and the usability testing is just going to give them more work or criticize things they were not allowed to spend the time they needed to do great work. That won’t always be the reason but it is the main one in my experience (I suppose their is also fear and just the psychology of not wanting to hear anything negative about what has been created – even if the usability testing shows tons of great results people will often focus on the negative).
  • psychology and respect for people – This pretty much seems like it is the same for software development as everywhere else.

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Managers Are Not Non-Leaders: Managers Need to Practice Things We Classify as Leadership Traits

Saying “Managers care about efficiency and leaders care about effectiveness” is like saying “Doctors care about theory and nurses care about patients.”

Managers that don’t care about effectiveness are lousy managers.
Leaders that don’t care about the gemba are lousy leaders.
Doctors that don’t care about patients are lousy doctors.
Nurses that don’t care about theory are lousy nurses.

Your role in the organization (and for the particular situation in question) and training and the situation will impact how you contribute. But the attitude that leaders are visionaries that think big thoughts, make decisions then tell everyone what to do (act as the brain for the organization) is outdated. Every list of what traits are for leaders that then contrasts them with managers that I have seen shows leadership traits managers need.

Seeking to separate leadership and management is a bad idea. If you want to have a few leadership traits that you want to focus on at various points (creating engagement, communicating a vision, building consensus, setting organizational direction) that is fine. But those things are traits managers need; they are not traits reserved for some separate leadership cadre.

And disconnected leaders that don’t understand the organization, the organizations customers etc. are not going to lead well (normally the contrast lists have the managers doing all the hands on stuff, at the gemba, with customers etc.). Nurses may not have as complete an understanding of the theories behind medical treatment decisions but they need to know a great deal of theory to do their jobs well. Everyone contributes and has different roles to play but I don’t see value in the contrast of leaders and managers mentality.

From what I have seen mainly the manager v. leader comparisons seem to be about belittling managers and elevating leaders; but leaders are this vague concept that isn’t well defined. Who are these leaders? Are they only senior executives? They can’t be managers because you are contrasting them with managers – by the contrasting model used they can’t be leaders and managers.

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Stated Versus Revealed Preference

My father provided me a good example of the flawed thinking of relying on stated preference when I was growing up. Stated preference is, as you might deduce, the preferences voiced by customers when you ask. This is certainly useful but people’s stated preference often do not match there actions. And for a business, actions that lead to customers are more important than claims potential customers make about what will make them customers.

His example was that if you ask people if clean bathrooms in a restroom is required for a restaurant they will say yes. Potential customers will say this is non-negotiable, it is required. But if you eat at many “ethnic restaurants,” as we always did growing up, you would see many popular restaurants did not have clean restrooms. If the food at atmosphere was good enough clean restrooms were negotiable, even if customers stated they were not.

Now I think clean restrooms is a wise move for restaurants to make; it matters to people. Instead of creating a barrier to repeat customers that has to be overcome with much better food and atmosphere it is wiser to give yourself every advantage by giving the customers what they want. But I think the example is a simple example of stated versus revealed preferences.

McDonald’s gets a great deal of success by doing certain things well, including clean bathrooms, even if they miss on things some people think are important for a restaurant. McDonald’s really gets a fair amount of business for people driving a long distance that really want a clean bathroom and a quick stretch of their legs and quick food. This is a small percentage of McDonald’s customer visits but still a very large number of visits each day I am sure. Understanding, and catering to, the problem your customers are trying to solve is important.

The point to remember is what your potential customers say they will do is different than what they do. It is sensible to listen to stated preferences of customers just understand them for what they are.

We need to pay more attention to revealed preferences. Doing so can require putting in a bit more thinking than just asking customers to fill out a questionnaire. But it is worth the effort. A simple restaurant based example would be to have wait staff pay attention to what people leave on their plate. If you notice certain side dishes are not eaten more often, look into that and see what can be done (improving how it is prepared, substituting something else…).

Related: Voice of the CustomerThe Customer is the Purpose of Our WorkCustomers Are Often IrrationalPackaging Affects Our Perception of TasteBe Careful What You Measure

94% Belongs to the System

I should estimate that in my experience most troubles and most possibilities for improvement add up to the proportions something like this: 94% belongs to the system (responsibility of management), 6% special.

Page 315 of Out of the Crisis by Dr. W. Edwards Deming.

the system that people work in and the interaction with people may account for 90 or 95 percent of performance.

Dr. Deming’s quote from the introduction to the Team Handbook

I think, in looking at the total of Deming’s work, that the point he is trying to make is that looking to blame people is not a good strategy for improvement. The impact due solely to a person’s direct action (not including their interaction with the system and with others) is small in comparison to that of the system within which they work. So, Deming (and I) want people to focus on improving the system; which will achieve better results than searching for what people did wrong.

What did Deming want people to take from his statements?

Did he want us just to accept bad results? No. He was not saying it is the system there is nothing we can do just accept that this is how things are. He wanted us to focus on the most effective improvement strategies. He saw huge waste directed at blaming people for bad results. He wanted to focus the improvement on the area with the greatest possibility for results.

Did he want to say people are just cogs in the machine? No. Read or listen to most anything he said at any significant length (a full chapter of this book, a full article he wrote on management, an hour from one of his videos) and it is hard to maintain such a thought.

photo of forest trail

Pinetree Trail, Frasers Hill, Malaysia by John Hunter

Did he believe that people were not important? No. He was trying to direct the focus of improvement efforts to look not at the fault with one person but to look at the system. I believe strongly he was correct. If you blame a person as the root cause of a problem, my first, second and third reactions are why? why? why? It is possible the person is to blame and there is no benefit to exploring system improvement instead of settling for blaming the person. But that is rare.

I have written about the importance of developing people to build the capability of the organization. My father wrote about it previously, “American organizations could compete much better at home and abroad if they would learn to tap the potential information inherent in all processes and the creativity inherent in all employees.”

I wrote about the importance of the ideas behind Deming’s quotes here, back in 2006 – Find the Root Cause Instead of the Person to Blame

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Keys to the Effective Use of the PDSA Improvement Cycle

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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One factor at a time (OFAT) Versus Factorial Designs

Guest post by Bradley Jones

Almost a hundred years ago R. A. Fisher‘s boss published an article espousing OFAT (one factor at a time). Fisher responded with an article of his own laying out his justification for factorial design. I admire the courage it took to contradict his boss in print!

Fisher’s argument was mainly about efficiency – that you could learn as much about many factors as you learned about one in the same number of trials. Saving money and effort is a powerful and positive motivator.

The most common argument I read against OFAT these days has to do with inability to detect interactions and the possibility of finding suboptimal factor settings at the end of the investigation. I admit to using these arguments myself in print.

I don’t think these arguments are as effective as Fisher’s original argument.

To play the devil’s advocate for a moment consider this thought experiment. You have to climb a hill that runs on a line going from southwest to northeast but you are only allowed to make steps that are due north or south or due east or west. Though you will have to make many zig zags you will eventually make it to the top. If you noted your altitude at each step, you would have enough data to fit a response surface.

Obviously this approach is very inefficient but it is not impossible. Don’t mistake my intent here. I am definitely not an advocate of OFAT. Rather I would like to find more convincing arguments to persuade experimenters to move to multi-factor design.

Related: The Purpose of Factorial Designed ExperimentsUsing Design of Experimentsarticles by R.A. Fisherarticles on using factorial design of experimentsDoes good experimental design require changing only one factor at a time (OFAT)?Statistics for Experimenters

Respect for People Doesn’t Mean Avoiding Any Hint of Criticism

As I said in a post a few years ago on respect for people and Taiichi Ohno‘s sometimes very aggressive style:

The difference between respect and disrespect is not avoiding avoiding criticism. In fact often if you respect someone you can be much more direct and critical than you can with someone you treat as though they don’t have the ability to listen to hard truths and improve. I think we often have so little respect for people we just avoid dealing with anything touchy because we don’t want to risk they won’t be able to react to the issues raised and will instead just react as if they have been personally attacked.

Masaaki Imai described Taiichi Ohno’s style this way

he had such a high expectation of the staff and managers under him. If they were not doing something the right way, he would explode. And when he exploded, he really would explode.

But for those who came to him and really asked for help, he was very patient. He wouldn’t give them the answer, but preferred to provide them with enough of an understanding of the situation, as well as help on how they could deal with the problem. So he was very much a teacher and a leader.

I would say that while Taiichi Ohno was truly remarkable that doesn’t mean he did everything right. And he might well have failed to communicate in a way that conveyed respect for people fully, when he exploded. He was great, but his methods could also be improved. At the same time some extent showing some fire may be helpful at times to get people to take things seriously (avoiding the need for this is even better, but not everything will be done as well as it possible can be).
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Building Adoption of Management Improvement Ideas in Your Organization

Continuation of How to Get a New Management Strategy, Tool or Concept Adopted

Target something that actually provides a good story. It often helps if there have been failures in attempts to solve a problem in the past. That makes the new success more impressive. Something that is relate-able to the audience you are trying to win over is also useful. Even if senior management cares about an issue, if the solution is so technical they are completely baffled, they will be happy with a solution but they won’t be as excited about expanding the strategy you are trying to encourage when they can understand the process that lead to a solution.

Favor efforts that will help you build organizational capacity to do more of what you want going forward (adopt lean thinking, use design of experiments…). Some of this is about building expertise in the organization. It is also about building your circle of influence. Growing your ability to influence how the organization grows will help you encourage the improvements you believe in.

It is very helpful to show connections between individual efforts. Often you build using various tools: in several instances using PDSA cycle to guide improvement, in others mistake-proofing to cement improvement, in another adopting one piece flow to make problems visible and encourage improvement, in another assuring the respect for people to build the right culture for improvement, and in another using an understanding of variation to make evidence based decision rather than jumping to faulty conclusions with limited information. These management tools, concepts, methods and ideas any many more, are used together for a reason. They support each other. So it is very helpful if you tie them together. As you start adding new tools, ideas and concepts to the management system show how they support each other. Individual tools can help. But the gains they offer are minor compared to the gains possible with a systemic change of management.

Another good strategy is picking the right people to involve in an effort. If you are trying to gain support, find those people in the organization that set the tone that others follow (which are not merely those with organizational power due to their job title). It is nice if you can find such people that have generally positive outlooks and like new challenges (this is often the case). If the culture is very toxic you may well have some who are likely to try and discourage hope in others (often because they have been disappointed so many times themselves they have finally decided not to be disappointed again). Often (though not always) you can win these people over.
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How to Get a New Management Strategy, Tool or Concept Adopted

Often when learning about Deming’s ideas on management, lean manufacturing, design of experiments, PDSA… people become excited. They discover new ideas that show great promise to alleviate the troubles they have in their workplace and lead them to better results. But how to actually get their organization to adopt the ideas often confounds them. In fact, I believe most potential improvements efforts may well fail even before they start because people can’t get past this problem.

I believe the way to encourage adoption of management improvement tools, methods and ideas is to solve people’s problems (or give them new opportunities). Instead of trying to convince people by talking about why they need to adopt some new ideas, I think it is much better to show them. To encourage the adoption of whatever it is (a philosophy like Deming or a new tool) try to find projects that would be good candidates for visible success. And then build on those successes.

For adopting whole new ways of working (like lean thinking) you go through this process many times, adding more and more new ideas to the accepted way of doing things. It is a bit easier if you are the CEO, but I think the strategy is very similar whoever you are. For smaller efforts a boss can often just mandate it. But for something like a large improvement in the way work is done (adopting a lean management system, for example), the challenge is the same. You have to convince people that the new methods and ideas are valuable and that they can use the ideas to help improve results.

Start small, it is very helpful if initial efforts are fairly small and straight forward. You often will have limited resources (and limited time people are willing to invest) at first. so start by picking projects that can be accomplished easily and once people have seen success more resources (including what is normally the most important one – people’s time) should be available. Though, honestly getting people to commit will likely be a challenge for a long time.

It is a rare organization that adopts a continual improvement, long term focus, system thinking mindset initially. The tendency is often strong to focus on fire fighting, fear (am I taking a risk by doing x, if I spend time improving y – what about the monthly target my boss is measuring me on…) and maintaining the status quo. It is baffling to many hoping for improvement, when you have huge successes, and yet the old way of doing things retains a great hold. The inertia of organizations is huge.
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How to Manage What You Can’t Measure

In Out of the Crisis, page 121, Dr. Deming wrote:

the most important figures that one needs for management are unknown or unknowable (Lloyd S. Nelson, director of statistical methods for the Nashua corporation), but successful management must nevertheless take account of them.

So what do you do then? I am a strong advocate of Deming’s ideas on management. I see understanding system thinking, psychology, the theory of knowledge and variation as the tools to use when you can’t get precise measures (or when you can).

Even if you can’t measure exactly what you want, you can learn about the area with related data. You are not able to measure the exact benefit of a happy customer but you can get measures that give you evidence of the value and even magnitude. And you can get measures of the costs of dis-satisfied customers. I just mention this to be clear getting data is very useful and most organizations need to focus on gathering sensible data and using it well.

Without precise measure though you have to use judgment. Judgment will often be better with an understanding of theory and repeated attempts to test those theories and learn. Understanding variation can be used even if you don’t have control charts and data. Over-reaction to special causes is very common. Even without data, this idea can be used to guide your thoughts.

The danger is that we mistake measures for the thing itself. Measures are a proxy and we need to understand the limitation of the data we use. The main point Deming was making was we can’t just pretend the data we have tells us everything we need to know. We need to think. We need to understand that the data is useful but the limitations need to be remembered.

Human systems involve people. To manage human systems you need to learn about psychology. Paying attention to what research can show about motivation, fear, trust, etc. is important and valuable. It aids management decisions when you can’t get the exact data that you would like. If people are unhappy you can see it. You may also be able to measure aspects of this (increased sick leave, increased turnover…). If people are unhappy they often will not be as pleasant to interact with as people who are happy. You can make judgments about the problems created by internal systems that rob people of joy in work and prevent them from helping customers.

For me the key is to use the Deming’s management system to guide action when you can’t get clear data. We should keep trying to find measures that will help. In my experience even though there are many instances where we can get definite data on exactly what we want we fail to get data that would help guide actions a great deal). Then we need to understand the limitations of the data we can gather. And then we need to continually improve and continually learn.

When you have clear data, Deming’s ideas are also valuable. But when the data is lacking it is even more important to take a systemic approach to making management decisions. Falling back into using the numbers you can get to drive decision making is a recipe for trouble.

Related: Manage what you can’t measureStatistical Engineering Links Statistical Thinking, Methods and Toolsoutcome measures

Involve IT Staff in Business Process Improvement

I started out basically working on management improvement from the start of my career. My makeup (I am never satisfied and figure things should always be better) along with a few traits, experiences and probably even genes made this a natural fit for me. I tend to take the long view and find fire fighting a waste of time. Why fix some symptom, I want to fix the system so that problem doesn’t happen again. My father worked in statistics, engineering and business improvement and as I was growing up I had plenty of experience with process improvement, understanding variation, experimenting, measuring results

I came into the IT world as I had needs and found the best solution was to write some software to help me accomplish what I wanted to. One thing that better software tools allowed is this type of thing when organizations failed to use technology well, individuals could just do so themselves. Without these tools people had to rely on the organization, but today atrophied IT organizations can often be circumvented. Though the IT organizations often try to avoid this largely by bans (instead of by providing the tools people need), which is not a good sign, in my opinion.

I then spent more and more of my time working with technology but I always retained my focus on improving the management of the organization, with technology playing a supporting role in that effort. That is true even as where I sat changed. And I have become more convinced organizations would be served well by using the information technology staff as business process experts.

At one point I sat in the Office of Secretary of Defense, Quality Management Office where I was able to focus on management improvement and using technology to aid that effort. Then I went to the White House Military Office, Customer Support and Organizational Development office and focused largely on how to using technology to meet the mission. Then I was moved into the White House Military Office, Office of Information Technology Management.

And now I work for the American Society for Engineering Education in the Information Technology department. My role started as partially program management and partially software development and as we have grown and hired more software developers I am now nearly completely a program manager.

I believe technology is a central component of understanding business processes today. But the truth is, many business people don’t have as complete an understanding as I feel they should. Now I believe, most anyone interested in planning their management career needs to develop a facility with technology and specifically how to use software applications to improve performance. You don’t need to be an expert programmer but you need to understand the strengths, weakness, limits of technical solutions. You need to understand how technology can be used (and the risks of options).

At the same time I just don’t think it is likely management everywhere will get a decent understanding of application software development. I also believe that in many cases organizations should do software development in house. This is a issue that certainly can be argued (but I won’t do it here). Basically I don’t think organizations should cram their processes into designs required by off the shelf software. Instead I believe they should design processes optimal for their organization and using off the shelf software often does the opposite (forces the process decisions around what software someone decided to buy). There is plenty of use for off the shelf software that doesn’t force you to make your processes fit into them (and sometimes even if it does that is the business decision that has to be made – I just think far too often organizations look at short term costs and not the overall best solutions for the system).
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The Toyota Way – Two Pillars

Toyota is receiving plenty of criticism now, much of it for good reason. There is also a large amount of psychology involved. From what I have seen, the insurance companies still see better claims history (fewer and lower cost claims) against Toyota than other manufacturers. And there is another strain that seems to enjoy criticizing what has been praised. Toyota does need to improve. But that is improvement of the existing management system, not a need to radically change the management of the company.

I think Toyota, even with the problems, is a fantastic example of a very well managed company. Yet even with all the study of lean manufacturing even basic ideas are overlooked. For example, the two main pillars of the Toyota way are “continuous improvement” and “respect for people.” For all of us, it is valuable to refocusing on core principles. We are too often looking for the next new idea.

This is one way of looking at the pillars of the Toyota Production System, from the Toyota Technical Center – Austrailia

Image of Toyota's pillars of management: respect for people and continuous improvement

Continuous Improvement means that we never perceive current success as our final achievement. We are never satisfied with where we are and always improve our business by putting forth our best ideas and efforts: we are keen to create better alternatives, question our accomplishments and investigate future definitions of success.

There are three building blocks shaping our commitment to Continuous Improvement:

1. Challenge – we form a long term vision, meeting challenges with courage and creativity to realize our dreams;
2. Kaizen – we improve our business operations continuously, always driving for innovation and evolution
3. Genchi Genbutsu – we go to the source to find the facts to make correct decisions, build consensus and achieve goals.

Respect For People refers to our own staff as well as the communities and stakeholder groups that surround us and we are part of. We respect our people and believe the success of our business is created by individual efforts and good teamwork.

Respect For People is translated in:

1. Respect – we respect others, make every effort to understand each other, take responsibility and do our best to build mutual trust
2. Teamwork – we stimulate personal and professional growth, share the opportunities of development and maximize individual and team performance.

These elements combined define our corporate DNA, provide a way of operating that is recognised by each and every Toyota-member around the globe and enables us to sustain our success in the future.

Back to Basics for Toyota by Akio Toyoda

When my grandfather brought Toyota into the auto business in 1937, he created a set of principles that has always guided how we operate. We call it the Toyota Way, and its pillars are “respect for people” and “continuous improvement.” I believe in these core principles. And I am convinced that the only way for Toyota to emerge stronger from this experience is to adhere more closely to them.

While recent events show Toyota obviously needs to improve, that has been true all along (it is just more obvious lately). Some may see this as an indication that these lean manufacturing ideas based on Toyota’s practices are no better than other management practices. I don’t believe this. I feel just as strongly about the value of lean management as ever. I think that the recent events show you that no matter how well an organization in managed there is plenty of room to improve. Toyota never was close to perfection. They have much to improve, but they are still one of the best managed companies in the world.

My comments in 2005:

I think the instances of such failures are just a sign that even Toyota still has quite a bit to improve. I think this announcement likely is a result of common cause variation (it is the natural result of the current system). The natural result (of the system) is not that they have this particular failure, but that this recall is consistent with the % of vehicles that required a recall of this general character. I believe they are getting better over time but they still have a long way to go. With a result based on common cause you want to look at the entire system when designing an improvement plan not at the root cause of the seat belt issue. See Responding to Variation online and the book, Forth Generation Management, by Brian Joiner.

Related: Toyota Stops Lines – Lots of LinesAkio Toyoda’s Message Shows Real LeadershipDeming CompaniesRespect for People Does Not Mean No Criticism

And my comments in 2007:

I don’t agree that they need to rethink their purpose in life (I have a feeling that is taken out of context). They need to maintain and maybe even increase their commitment to their purpose in life.

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Aligning Marketing Vision and Management

Why do so many companies market one thing and provide something else? I know it might be easier to sell something different than what you offer your customer today. But if you decide to market one vision, why don’t you change your organization to actually offer that?

I suspect this is substantially due to the outsourced nature of large marketing efforts. It makes sense to me that when you outsource your marketing message creation it isn’t tied to your management system and the two silos can pursue their own visions.

I would imagine marketers would claim they “partner” yada yada yada (and sometimes it actual seems to happen, but not often). As a consumer it sure looks to me like companies outsource marketing to ad agencies that come up with marketing plans that are not in harmony with the real company at all. I can understand putting a positive spin on things, but so much marketing is just completely at odds with how the company operates.

Treating a marketing message as something separate from management is a serious problem. When your marking message says one thing and your customers get something else that is a problem. I think the message is often based on what the executives wish the company was (and the outsourced marketers think it should be), but it isn’t the customer experience the management system provides.

If you believe the vision of your marketing then make sure your organization has embraced those principles. I think, often, companies would be wise to follow the vision their marketers came up with. But instead they tell customers to expect one thing and manage the organization to provide something else. I just don’t see how that is sensible.

Related: Marketing in a Lean CompanyPackaging ImprovementCustomer Service is ImportantConfusing Customer FocusIncredibly Bad Customer Service from Discover Card
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Circle of Influence

In, The Seven Habits of Highly Effective People, Steven Covey discusses the circle of control, circle of influence and circle of concern. This provides a good framework from which to view issues as you look for improvement strategies.

Within your circle of control you have much more autonomy and have less need to win others over to your plan. However, in practice, even here, you benefit from winning over those who are involved (for example you are their boss).

Our circle of concern covers those things we worry about. Often, we believe because we worry we should find solutions. Problems that fall into this category (but outside our circle of influence) however often prove difficult to tackle. And often people don’t understand why they get frustrated in this case. You can save your energy for more productive activities by seeing some things are outside your influence and avoid wasting your energy on them.

A problem with this, I see in practice however, is that if you are creative many things that people think are beyond their influence are not. With some imagination you can find ways to have influence. Good ideas are powerful. And often that is all that is needed for influence is offering a good idea.

Understanding to what extent an issue is within your control or influence can help a great deal in determining good strategies. Where you have a good chance to influence the process you can focus on strategies that may require much more of your participation to be successfully adopted. As you have less influence such a strategy is likely a poor one.

You should remember, that there is a temporal component to your circle of influence. On some current issue, I may have a very low chance of success for getting the organization to adopt an improvement I think is best. But certain actions can build the understanding that will allow me later to have more influence. This can even be completely separate from how people normally think of circle of influence. By building an organization that moves toward data based decision making and therefore reduces HiPPO (Highest Paid Person’s Opinion) decision making I increase my ability to influence decision making in the future.

Long term thinking is a very powerful, and much under-practiced, strategy. Your influence within an organization is limited today but has great potential to expand, if you act wisely.

Thinking about the extent a current issue falls within your sphere of influence is important it determining the best strategies. But the most valuable insight is to understand how import your sphere of influence is. It determines what strategies you can pursue. And building your sphere of influence should be part of your decision making process.

By taking the long view you can put yourself in good positions to have influence on decisions. There are many ways to do this. My preferred method is fairly boring. Prove yourself to be valuable and you will gain influence. Help people solve their problems. They will be inclined to listen to your ideas. Provide people useful management tools and help them apply them successfully. Help get people, that you know are good, opportunities to succeed. Often this gains you two allies (the person you helped gain the opportunity for and the person that was looking for someone to step in). Work hard and deliver what is important. It isn’t some secret sauce for quick success but if you make those around you successful you grow your circle of influence.

Related: How to ImproveHelping Employees ImproveOperational ExcellenceManagement Advice FailuresManagement Improvement

An Introduction to Deming’s Management Ideas by Peter Scholtes (webcast)

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’ LifeCurious Cat’s Deming on ManagementThe Leader’s HandbookPerformance without Appraisal

Dr. Deming Webcast on the 5 Deadly Diseases

The W. Edwards Deming Institute has posted Dr. Deming’s 1984 video on the 5 deadly diseases of western management.

  • Lack of constancy of purpose
  • Emphasis on short term profits – “creative” accounting, focus on quarterly profits
  • Annual Performance Appraisals – management by objective, management by fear
  • Mobility of management – [see Toyota for a great example of a company that operates on different principles – where the leadership has been with Toyota for decades]
  • Running a company on visible figures alone – many important factors are “unknown and unknowable.”

Dr. Deming added 2 diseases to reach his famous 7 deadly diseases: excessive medical care costs and excessive legal damage awards swelled by lawyers working on contingency fees.

Personally I believe all 7 of those diseases are still prevalent and causing damage. I do think some progress has been made on longer term thinking but far too many organizations still are extremely short term focused. And I would add two new deadly diseases of management: excessive executive compensation and an outdated intellectual property system.

Related: Deming CompaniesPurpose of an OrganizationContinual ImprovementCreating JobsNew Management Truths Sometimes Started as Heresies