George Box Webcast on Statistical Design in Quality Improvement

Posted on June 11, 2014  Comments (0)

George Box lecture on Statistical Design in Quality Improvement at the Second International Tampere Conference in Statistics, University of Tampere, Finland (1987).

Early on he shows a graph showing the problems with American cars steady over a 10 years period. Then he overlays the results for Japanese cars which show a steady and significant decline of the same period.

Those who didn’t get to see presentations before power point also get a chance to see old school, hand drawn, overhead slides.

He discusses how to improve the pace of improvement. To start with informative events (events we can learn from) have to be brought to the attention of informed observers. Otherwise only when those events happen to catch the attention of the right observer will we capture knowledge we can use to improve. This results in slow improvement.

A control chart is an example of highlighting that something worth studying happened. The chart will indicate when to pay attention. And we can then improve the pace of improvement.

Next we want to encourage directed experimentation. We intentionally induce informative events and pay close attention while doing so in order to learn.

Every process generates information that can be used to improve it.

He emphasis the point that this isn’t about only manufacturing but it true of any process (drafting, invoicing, computer service, checking into a hospital, booking an airline ticket etc.).

He then discussed an example from a class my father taught and where the students all when to a TV plant outside Chicago to visit. The plant had been run by Motorola. It was sold to a Japanese company that found there was a 146% defect rate (which meant most TVs were taken off the line to be fixed at least once and many twice) – this is just the defect rate before then even get off the line. After 5 years the same plant, with the same American workers but a Japanese management system had reduced the defect rate to 2%. Everyone, including managers, were from the USA they were just using quality improvement methods. We may forget now, but one of the many objections managers gave for why quality improvement wouldn’t work in their company was due to their bad workers (it might work in Japan but not here).

He references how Deming’s 14 points will get management to allow quality improvement to be done by the workforce. Because without management support quality improvement processes can’t be used.

With experimentation we are looking to find clues for what to experiment with next. Experimentation is an iterative process. This is very much the mindset of fast iteration and minimal viable product (say minimal viable experimentation as voiced in 1987).

There is great value in creating iterative processes with fast feedback to those attempting to design and improve. Box and Deming (with rapid turns of the PDSA cycle) and others promoted this 20, 30 and 40 years ago and now we get the same ideas tweaked for startups. The lean startup stuff is as closely related to Box’s ideas of experimentation as an iterative process as it is to anything else.

Related: Ishikawa’s seven quality control tools

He also provided a bit of history that I was not aware of saying the first application of orthogonal arrays (fractional factorial designs) in industry was by Tippett in 1933. And he then mentioned work by Finney in 1945, Plackett and Burman in 1946 and Rao in 1947.

The Education System

Posted on June 8, 2014  Comments (1)

The current topic for ASQ Influential Voices to address is the importance of the education system and the impact on the capability of employees.

The education system is important and not very good in my opinion. As a kid I found it boring and constraining and a system designed more to extinguish my quest for knowledge than increase my desire to learn. As a kid I was told by adults that adults knew better and I shouldn’t complain.

I was told “don’t you realize you are in one of the best school systems in the USA?” With a bit of data I was convinced that seemed likely. To me this seemed like an even more ominous sign. If the best was this bad what was everything else like?

The argument that made the most sense to me (for why I should be happy with, or at least accept, the lousy system I was stuck in) was that as a kid I probably just didn’t understand why this environment that seemed to bore not just me, but most all the kids around me and this system that crushed our desire to learn must somehow be working otherwise the adults would certainly fix it.

As an adult what I find is my thoughts as a kid were essentially completely correct (except that last one that adults wouldn’t stick with some pitiful system without good reason) and plenty of education experts had been saying the same things. Adults seem perfectly fine not adopting proven better education practices just as they are fine not adopting proven better management practices.

When Dr. Deming was asked what to do instead of performance appraisal, when he railed against performance appraisal, he said do “whatever Peter Scholtes says.” To the question of what we should we do about the education system I say do whatever David Langford and Alife Kohn say.

I know more about the specifics of what educational systems following David Langford’s idea are like, and all I can say is they are wonderful. If I had kids I would definitely consider moving somewhere that had such a system (like Leander, Texas where they have been moving down that path for 20 years). They focus on helping student learn in a way that is so much more sensible than the one I had to sit through and most everyone reading this had to sit through.

The percentage of students that graduate with a desire to keep learning from an educational system like Leander is much greater than the traditional path. My high school had more National merit scholars than any public high school in the USA the year I graduated (some prep schools beat us, but only a few – partially because we were so large and they are often small). We had many students that were smart, dedicated and capable of succeeding at prestigious universities. Of course with tons of University of Wisconsin faculty as parents this is not a very surprising result.

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Practicing Mistake-Promoting Instead of Mistake-Proofing at Apple

Posted on June 5, 2014  Comments (4)

Mistake proofing is a wonderful management concept. Design systems not just to be effective when everything goes right but designing them so mistakes are prevented.

I have had several bad customer experiences in the short time I have had my iPad mini. One of the most pitiful is caused by mistake-promoting process design. As the name implies that isn’t a good idea. Mistake-proofing processes is a good practice to strive for; processes that create extra opportunities for failure impacting customers negatively are a bad idea.

My experience below is but one mistake-promoting practice that has caught me in its grips in the short time I have owned my iPad mini. I want to view books on the mini but can’t find any book reader. So I decide, fine I’ll just install the Kindle reader app.

I go to do so (run into additional issues but get through them) and then Apple decides for this free app, on an iPad I just bought with my credit card a week ago, to block me from getting what I need and force me to revalidate my credit card. This is lame enough, but I am used to companies not caring about the customer experience, so fine, what hoops does Apple want to force me through?

But guess what, the unnecessary steps Apple decided to force me through are broken so I can’t just waste my time to make them happy. No. They have created a failure point where they never should have forced the customer in the first place.

So they not only didn’t mistake-proof the process they mistake-promoted the process by creating a unnecessary step that created an error that could have been avoided if they cared about mistake proofing. But instead they use a mistake-promoting process. As a consumer it is annoying enough to cope with the failures companies force me through due to bad management systems that don’t mistake proof processes.

Companies creating extra opportunities to foist mistakes onto customers is really something we shouldn’t have to put up with. And when they then provide lousy and then even incomprehensible “support” such the “change your name” vision Apple decided to provide me now it is time to move on.

After 5 years of buying every computing device from Apple, they have lost my entire good will in one week of mess ups one after the other. I knew the reason I moved to Apple, the exceptional Macbook Air, was no longer the unmatched hardware it once was; but I was satisfied and was willing to pay a huge iPad premium to avoid the typical junk most companies foist on you. But with Apple choosing to make the process as bad as everyone else there isn’t a decent reason to pay them a huge premium.

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

Posted on June 2, 2014  Comments (0)

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 great 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 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

Posted on May 29, 2014  Comments (1)

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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Cognition: How Your Mind Can Amaze and Betray You

Posted on May 27, 2014  Comments (0)

The webcast above is from the excellent folks at Crash Course. This webcast provides another view into the area of Deming’s management system on the theory of knowledge (the one most people forget), how we know what we know and how that belief isn’t always right.

Two of the four components of Dr. Deming’s management system were about our brains (psychology is the other) which makes a great deal of sense when you think about how focused he was on the human element in our organizations (and the others are viewed significantly by how they interact with our brains – how we view variation, how we often fail to look at the whole system when drawing conclusions, etc.).

I believe most people don’t give nearly enough attention to theory of knowledge especially and also psychology within the context of an organization. They are a bit messy and vague and dependent and not easy to create simple cut and paste instructions for how to manage. This webcast takes a different look at it without connections back to management but I think most people need to spend more time thinking about these ideas. This video can help you do that.

If you are constantly (multiple times a minute in this video) seeing the connections with Deming and how the points relates to management that is a good sign. If not, that probably means you should spend more time reading and thinking about the theory of knowledge and psychology (see managing people posts).

Related: Customers Are Often IrrationalRevealed preference versus stated preferenceHow We Know What We KnowThe Neuroscience of DemingIllusions: Optical and Other

A Good Management System is Robust and Continually Improving

Posted on May 22, 2014  Comments (2)

imagine various people working within it, somehow swapping out gears and cogs without the clock stopping or slowing down even a little.

This is a fairly good quote on a good management system. Some people might not like the mechanistic model – comparing an organization to a clock, and I agree that isn’t the right model, but even so it is a good quote.

The quote, from a story about the San Antonio Spurs captures what should happen with a good management system. Things just keep running well as inevitable changes take place (and keep getting better in the case of a management system).

A good management system doesn’t rely on heroic efforts to save the day. The organization is designed to success. It is robust. It will succeed with all the variation thrown at it by the outside world. A good management system takes advantage of the contributions people offer, but it is not perform poorly when others are relied on.

A well run organization has graceful degradation (when one component fails or one person is missing the performance doesn’t suffer, bad results are avoided).

With software for example, a decently created web sites may use javascript to enhance the user experience but if javascript is unavailable the site works fine (just missing some neat features that are nice but don’t prevent users from getting what they need). Poorly designed software has critical dependencies on conditions that cannot be guaranteed to be present for end users and the software just fails to work when those conditions are not met. Ungraceful degradation is too common in software. It is also too common in our management systems.

An organization succeeds because of the efforts of many great people. But the management system has to be created for an organization to prosper as what we all know will happen, happens: people will leave and need to be replaced. And the people that stay will need to adjust to new conditions inside the organization and in response to external forces. A good management system is constantly improving performance, innovating, increasing the robustness of systems and increasing the capability of people.

Related: Bad Weather is Part of the Transportation SystemHow to Sustain Long Term Enterprise ExcellencePerformance dependent on specific individuals is not robust and not capable of continuous high quality performanceEuropean Blackout: Human Error-Not

Your Purpose Must Be About You

Posted on May 19, 2014  Comments (1)

Guest post by Jurgen Appelo

I’m a writer. It’s the one thing that I intend to do for the rest of my life. That means, when I focus on writing, I cannot focus on knitting. Somebody else will have to do the knitting, so I can focus on the writing. And maybe later, I can trade my wonderful book for someone’s beautiful sweater. This concept applies to all other professionals too. Everyone is entangled in a web of economic dependencies, and therefore, the purpose you choose for yourself should somehow generate value for the others around you. Or else nobody will give you a knitted sweater.

This all makes perfect sense to complexity scientists, who have known for a while that complex adaptive systems find a global optimum through local optimizations and interdependencies. (At Home in the Universe by Stuart Kauffman) The parts in a complex system all try to optimize performance for themselves, but their efforts depend on the dependencies imposed on them by the parts around them. With a mix of competition and collaboration, the parts interact with each other without any focus on a global purpose. Nevertheless, the end result is often an optimized system. Biologists call it an ecosystem. Economists call it an economy. I call it common sense.

Putting the “Why” in Your Mission Statement

Most management scholars and experts have ignored the insights from the complexity sciences (or are unaware of them) and some have suggested goals for teams, and purposes for businesses, that are too narrow. There are many corporate mission statements in the world expressing ideas such as, “Make money for shareholders”, “Put customers first”, and “Achieve superior financial results” (The Leader’s Guide to Radical Management by Stephen Denning). In each of these cases, the purpose of the organization is (too) narrowly defined as providing value to one type of client or stakeholder.

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George Box Articles Available for a Short Time

Posted on May 14, 2014  Comments (0)

A collection of George Box articles have been selected for a virtual George Box issue by David M. Steinberg and made available online.

George E. P. Box died in March 2013. He was a remarkably creative scientist and his celebrated professional career in statistics was always at the interface of science and statistics. George Box, J. Stuart Hunter and Cuthbert Daniel were instrumental in launching Technometrics in 1959, with Stu Hunter as the initial editor. Many of his articles were published in the journal. Therefore we think it is especially fitting that Technometrics should host this on-line collection with some of his most memorable and influential articles.

They also include articles from Journal of the American Statistical Association and Quality Engineering. Taylor & Francis is offering these articles freely in honor of George Box until December 31st, 2014. It is very sad that closed science and engineering journals block access to the great work created by scientists and engineers and most often paid for by government (while working for state government universities and with grants organizations like the National Science Foundation[NSF]). At least they are making a minor exception to provide the public (that should be unlimited access to these works) a limited access to these articles this year. These scientists and engineers dedicated their careers to using knowledge to improve society not to hide knowledge from society.

Some of the excellent articles make available for a short time:

The “virtual issue” includes many more articles.

Related: Design of Experiments: The Process of Discovery is IterativeQuotes by George E.P. BoxThe Art of DiscoveryAn Accidental Statistician: The Life and Memories of George E. P. Box

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Interview on PDSA, Deming, Strategy and More

Posted on May 8, 2014  Comments (3)

Bill Fox interviewed me and has posted part one of the interview on his web site: Predicting Results in the Planning Stage:

Bill: John, what is your best process improvement strategy or tactic that has worked well for you or your clients?

John: I would say the PDSA improvement cycle and a few key practices in using the PDSA properly like predicting the results in the plan stage—something that a lot of the times people do not do—to determine what would be done based on the results of that prediction.

People discover, especially when they’re new to this stuff, regarding the data that they’re collecting, that maybe even if they got the results they are predicting, they still don’t have enough data to take action. So you figure that even if that number is 30, they would need to know three other things before they make the change. So then, in the plan stage, you can figure that you need to address these other issues, too. At any time that people are collecting data is useful to figure out, for instance: “What do we need to do if the result is 30 or if the result is 3?” And if you don’t have any difference, why are you collecting the data?

Another important piece is the D in Plan, Do, Study, Act. It means “do the experiment”. A lot of times, people get confused into thinking that D means deploy the results or something like that, but thinking of D as ‘doing the experiment’ can be helpful.

A really big key between people that use PDSA successfully and those who don’t is that the ones that do it successfully turn the cycle quickly.

Another response:

Bill: What is the biggest misunderstanding about the Deming Management System you think people have?

John: I would say that there are a couple. The followers that want to pin everything to Deming tend to overlook the complexities and nuances and other things.

The other problem is that some of the critics latch on to a specific quote from Deming, something like a one-sentence long quote, and then they extrapolate from that one sentence-long quote what that means. And the problem is that Deming has lots of these one-sentence quotes that are very memorable and meaningful and useful, but they don’t capture every nuance and they don’t alone capture what it really means (you need to have the background knowledge to understand it completely).

They are sort of trying to oversimplify the message into these sound bites, and I find that frustrating. Because those individual quotes are wonderful, but they are limited to one little quote out of hours of videotape, books, articles, and when you don’t understand the context in which that resides, that’s a problem.

See the full interview for more details and other topics. I think it is worth reading, of course I am a bit biased.

Related: more interviews with John HunterInterviews with John Hunter on his book: Management MattersDeming and Software DevelopmentLean Blog Podcast with John Hunter

More Evidence of the Damage Done by Kleptocrat CEO Pay

Posted on April 21, 2014  Comments (1)

I have been writing about the problems of overpaid executives that has lately become so bad that verbiage understand the nature of the problem. Today I see many CEO’s are acting as kleptocrats do – taking food out of others mouths to build their castles. The damage done to everyone else involved is of no concern. Both groups love bankers that flood them with cash for new and larger castles at the expense of the futures of their company (or country).

This paper does a very good job of providing more evidence of the damage done by these kleptocrat CEOs and their apologists.

Are Top Executives Paid Enough? An Evidence-Based Review by Philippe Jacquart and J. Scott Armstrong

Our review of the evidence found that the notion that higher pay leads to the selection of better executives is undermined by the prevalence of poor recruiting methods. Moreover, higher pay fails to promote better performance. Instead, it undermines the intrinsic motivation of executives, inhibits their learning, leads them to ignore other stakeholders, and discourages them from considering the long-term effects of their decisions on stakeholders. Relating incentive payments to executives’ actions in an effective manner is not possible. Incentives also encourage unethical behaviour. Organizations would benefit from using validated methods to hire top executives, reducing compensation, eliminating incentive plans, and strengthening stockholder governance related to the hiring and compensation of executives.

Many of the problems with the poor thinking around executive pay stem from the failure to grasp ideas Dr. Deming wrote about decades ago.

Executives are often evaluated on the basis of the success or failure of the business units for which they are responsible. In practice, many internal and external factors influence outcomes for firms, and assessing the role played by a given executive is not possible. For example, should a manager get credit for a firm’s success when the economy is booming or blame for the firm’s losses during a recession? When answering such questions, evaluators are biased toward ignoring contextual factors and overly attributing outcomes to leaders. This bias was illustrated in a laboratory experiment in which groups of participants had to solve a coordination task. In the experiment, group size varied, and participants could perceive that the task was harder when the group was larger. Despite this, participants credited group leaders for the success of small groups and blamed them for the failure of large groups (Weber et al. 2001).

The quote from their paper show a failure to understand variation (attributing variation to those near the variation at the time – good marks when the variation is good, bad marks when it is bad). And a failure to understand the organization as a system (the results of any subsystem are greatly influenced by the whole system and the conditions outside the system (the economy, the macro-economic conditions for the industry…). And a failure to understand the theory of knowledge: people should know our brains leap to causation explanations when the evidence doesn’t support it. Then confirmation bias and psychology lead us to accept the data that supports our biases.

Nonexperimental studies also find that increases in CEO compensation occur following increases in firm performance that result from factors beyond the CEO’s control—CEOs are paid for being lucky. For example, CEOs in the oil industry were compensated for increased profits resulting from fluctuations in the price of crude oil—a factor beyond their control (Bertrand and Mullainathan 2001).

You see this just looking at the money heaped onto executives (in addition to the already huge payments taken) in industries whenever those industries (not individual companies, the entire industry) have macro-economic windfalls.

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Innovative Thinking at Amazon: Paying Employees $5,000 to Quit

Posted on April 15, 2014  Comments (1)

Amazon continues to be innovative not just in technology but with management thinking. Jeff Bezos has rejected the dictates espoused most vociferously by Wall Street mouthpieces and MBAs that encourage short term thinking and financial gimmicks which harm the long term success of companies.

Most CEOs and executives are too fearful or foolish to ignore what they are told they must do because Wall Street demands it. CEO’s and boards often ratchet up the poor management thinking by tying big bonuses to financial measures which are much more easily achieved by gaming the system than by improving the company (so companies get the games there boards encouraged through their financial extrinsic motivation focus).

Amazon does many good things focused on making Amazon a stronger company year after year. These innovative management practices seem to largely be due to the thinking of the strong willed founder and CEO: Jeff Bezos. Jeff was smart enough to see the great things being done at Zappos by Tony Hsieh and bought Zappos.

Jeff Bezos has added his letter to shareholders to Warren Buffett’s (for Berkshire Hathaway) as letters worth reading each year. In the latest Amazon letter he includes many worthwhile ideas including:

Career Choice is a program where we pre-pay 95% of tuition for our employees to take courses for in- demand fields, such as airplane mechanic or nursing, regardless of whether the skills are relevant to a career at Amazon. The goal is to enable choice. We know that for some of our fulfillment center employees, Amazon will be a career. For others, Amazon might be a stepping stone on the way to a job somewhere else – a job that may require new skills. If the right training can make the difference, we want to help.

The second program is called Pay to Quit. It was invented by the clever people at Zappos, and the Amazon fulfillment centers have been iterating on it. Pay to Quit is pretty simple. Once a year, we offer to pay our associates to quit. The first year the offer is made, it’s for $2,000. Then it goes up one thousand dollars a year until it reaches $5,000. The headline on the offer is “Please Don’t Take This Offer.” We hope they don’t take the offer; we want them to stay. Why do we make this offer? The goal is to encourage folks to take a moment and think about what they really want. In the long-run, an employee staying somewhere they don’t want to be isn’t healthy for the employee or the company.

A third inward innovation is our Virtual Contact Center. It’s an idea we started a few years back and have continued to grow with terrific results. Under this program, employees provide customer service support for Amazon and Kindle customers while working from home. This flexibility is ideal for many employees who, perhaps because they have young children or for another reason, either cannot or prefer not to work outside the home.

The first point reinforces Dr. Deming’s words encouraging companies to do exactly that – pay for education even if it wasn’t related to the work the employee was doing or would do for the company. Still quite rare decades after Deming’s advice.

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Toyota Understands Robots are Best Used to Enhance the Value Employees Provide

Posted on April 8, 2014  Comments (0)

Toyota has always seen robotics as a way to enhance what staff can do. Many USA executives think of robotics as a way to reduce personnel. Toyota wants to use the brainpower of employees to continually improve the organization. Toyota wants to free people for monotonous or dangerous work to let them use their minds.

Humans Steal Jobs From Robots at Toyota

Humans are taking the place of machines in plants across Japan so workers can develop new skills and figure out ways to improve production lines and the car-building process.

“We cannot simply depend on the machines that only repeat the same task over and over again,” Kawai said. “To be the master of the machine, you have to have the knowledge and the skills to teach the machine.”

Kawai, 65, started with Toyota during the era of Taiichi Ohno, the father of the Toyota Production System envied by the auto industry for decades with its combination of efficiency and quality. That means Kawai has been living most of his life adhering to principles of kaizen, or continuous improvement, and monozukuri, which translates to the art of making things.

“Fully automated machines don’t evolve on their own,” said Takahiro Fujimoto, a professor at the University of Tokyo’s Manufacturing Management Research Center. “Mechanization itself doesn’t harm, but sticking to a specific mechanization may lead to omission of kaizen and improvement.”

We need more companies to learn from the executives at Toyota. They show real respect for people. They are not focused on how much they can extract from the corporate treasury to build themselves castles at the expense of other employees, customers and stockholders as far too many USA executives are.

Toyota has been extremely innovative in investing in robotics as human assistants (partially this is due to the extreme demographic problems Japan faces): Toyota Develops Thought-controlled WheelchairToyota’s Partner RobotToyota Winglet – Personal Transportation Assistance.

Related: Webcast on the Toyota Development ProcessDon’t Hide Problems in ComputersAkio Toyoda’s Message Shows Real Leadership

Steve Jobs on Quality, Business and Joseph Juran

Posted on March 31, 2014  Comments (1)

This webcast shows an interesting interview with Steve Jobs when he was with NeXT computer. He discusses quality, business and the experience of working with Dr. Juran at NeXT computer. The video is likely from around 1991.

America’s in a tough spot right now, I think. I think we have forgotten the basics. We were so prosperous for so long that we took so many things for granted. And we forgot how much work it took to build and sustain those basic things that were supporting out prosperity. Things like a great education system. Things like great industry.

We are being out-planned, we are being out-strategized, we are being out-manufactured. It there is nothing that can’t be fixed but we are not going to fix it up here, we are going to fix it by getting back to the basics.

I agree with this thought, and while we have made some progress over the decades since this was recorded there is a long way to go (related: complacency about our contribution the USA has received from science and engineering excellencewhen you were as rich as the USA was in the 1950s and 1960s more and more people felt they deserved to be favored with economic gifts without effort (forgetting the basics as Jobs mentioned)Silicon Valley Shows Power of Global Science and Technology Workforce). After World War II the USA was able to coast on an economic bubble of extreme wealth compared to the rest of the world for several decades (and the economic success built during that period even still provides great advantages to the USA). That allowed wealthy living conditions even without very good management practices in our businesses.

Where we have to start is with our products and our services, not with our marketing department.

Quality isn’t just the product or service. Its having the right product. Knowing where the market is going and having the most innovative products is just as much a part of quality as the quality of the construction of the product. And I think what we are seeing the quality leaders of today have integrated that quality technology well beyond their manufacturing.

Now going well into their sales and marketing and out as far as they can to touch the customer. And trying to create super efficient processes back from the customer all the way through the delivery of the end product. So they can have the most innovative products, understand the customer needs fastest, etc..

The importance of customer focus is obvious at the companies Jobs led. It wasn’t a weak, mere claim of concern for the customer, it was a deep passionate drive to delight customers.

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Analysis Must be Implemented by People to Provide Value

Posted on March 25, 2014  Comments (0)

Guest Post by Bill Scherkenbach

photo of W. Edwards Deming with a cat

Every time I look at this picture, I think of Dr. Deming’s words to drive out fear and take joy in your work. We were talking in my home office when Sylvester saw a good lap and took it. Our conversation immediately shifted when both Dr. Deming and Sylvester started purring.

The greatest statistical analysis is nothing if it can’t be implemented by people. But people learn in different ways. Some like good stories, others like pictures. Only a few like equations. Dr. Deming always liked a good laugh; and a good purr.

By what method do you get your analyses implemented?

Bill Scherkenbach taught with Dr. Deming at the Deming 2 day seminars and received the Deming Medal and the author of several books on Deming management principles.

Related: How to Get a New Management Strategy, Tool or Concept Adopted part 1 and part 2Getting Known Good Ideas AdoptedRespect People by Creating a Climate for Joy in WorkPlaying Dice and Children’s Numeracy

Deming and Software Development

Posted on March 17, 2014  Comments (1)

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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Kleptocrat CEOs and Their Apologists

Posted on March 10, 2014  Comments (2)

I am disgusted by the lack of ethical and moral fiber of CEO’s (along with their cronies and apologists) in the USA. This lack comes out in many ways (see all the scandals at the too-big-to-fail banks etc.) but the problem I am upset about now is the increasingly commonplace kleptocrat behavior.

CEOs, and their cronies, were well paid decades ago. As their greed about their pay got to be unethical Peter Drucker started to speak out against their ethical failures. As those abuses became more extreme he increased his objections.

What Peter Drucker railed against was minor compared to the ethical meltdowns we allow in those serving in executive positions today.

Bloomberg study on What CEOs are Taking From Corporate Treasuries

Across the Standard & Poor’s 500 Index of companies, the average multiple of CEO compensation to that of rank-and-file workers is 204, up 20 percent since 2009

The average ratio for the S&P 500 companies is up from 170 in 2009, when the financial crisis reduced many compensation packages. Estimates by academics and trade-union groups put the number at 20-to-1 in the 1950s, rising to 42-to-1 in 1980 and 120-to-1 by 2000.

These CEOs act like kleptocrat dictators, taking what they can and challenging anyone to do anything about it. As with the kleptocrats they surround themselves with apologists and spread around the looting (from corporate treasuries for the CEO and the countries for the dictators) to those that support their kleptocrat ways.

Extremely Excessive Executive pay is so critical I classify it as a New Deadly Disease. I have discussed the problems created by allowing such morally and ethically bankrupt people in leadership positions: CEO’s Taking What They Don’t Deserve (2011)CEOs Plundering Corporate Coffers (2008)Tilting at Ludicrous CEO Pay (2007). In 2005 I spelled out some of the problems we face when we have kleptocrats running our companies:

The excesses are so great now they will either force companies to:

  1. take huge risks to justify such pay and then go bankrupt when such risks fail (and some will succeed making it appear, to some, that the pay was deserved rather than just the random chance of taking a large risk and getting lucky)
  2. make it impossible to compete with companies that don’t allow such excesses and slowly go out of business to those companies that don’t act so irresponsibly
  3. hope that competitors adopt your bad practice of excessive pay (this does have potential as most people are corrupted by power, even across cultural boundaries). However, my expectation is the competitive forces of capitalism going forward are going to make such a hope unrealistic. People will see the opportunity provided by such poor management and compete with them.

As long as the pay packages were merely large, and didn’t effect the ability of a company to prosper that could continue (slicing up the benefits between the stakeholders is not an exact science). The excesses recently have become so obscene as to become unsustainable.

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Manufacturing Outlook and History In the USA and Globally

Posted on February 27, 2014  Comments (1)

I write primarily about management improvement on this blog – which makes sense given the title. In the very early days I had more on investing, economic data, science, engineering and travel. Then I created three new blogs (Curious Cat Investment and Economics Blog, Curious Cat Science and Engineering Blog, Curious Cat Travel Photos blog) and that made this blog more focused.

Even so the lines of what fits where can be a bit fuzzy and I continue to write about manufacturing, and health care, with a focus on economic data, occasionally. And that is what I am doing today while touching on management related to manufacturing a bit.

As I have written before the story of manufacturing in the USA, and globally, is greatly increased quality of processes and output as well as greatly improved productivity over the last few decades. Manufacturing output also increased, including in the USA, as I have written consistently for a decade now. For example: (Top 10 Countries for Manufacturing Production from 1980 to 2010.

Still many people have the notion that USA manufacturing has been declining, which hasn’t been true, and certainly isn’t true now (the last couple of years have been especially strong and even the general public seems to realize the idea of the USA losing manufacturing is a myth).

Chart of Manufacturing Output fro 1992 to 2012 - USA, China, Japan and Germany

Based on data from the UN. See my blog post on my economics for more details on the data (to be posted next week).

The chart is impressive and illustrates the point I have been hammering home for years. The USA manufacturing base is growing and far from crumbling (job losses are deceiving as they are global and not an indication of a USA manufacturing decline). China’s manufacturing growth is incredible. China and the USA are far away the top 2 manufacturing countries. Japan and Germany make out the top 4 before a large gap which then is followed by a group of countries that are very close (Korea is 5th with less than half the production of Germany).

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Poor Results Should be Addressed by Improving the System Not Blaming Individuals

Posted on February 6, 2014  Comments (2)

My response to: Where is the Deming study that asserts most errors are in organization or process?

There is no such study, it is based on Dr. Deming’s experience as I discuss in 94% Belongs to the System (improve the system, don’t blame the people in 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 W. Edwards Deming

Getting hung up on the figure 94% is a mistake. His point was that you improve performance going forward by improving the system not blaming people. His two books provide background and the thought process involved behind why we are failing to manage better. Changing the people, while leaving the system in place, most often doesn’t help.

Variation does confuse people sometimes. The same mistake as say yelling at someone any time results are really bad. Most likely results will get better. Not because yelling helps but essentially regression to the mean. So you can move people out after really bad results and things get better. Of course, most of the time they would have gotten better if you left the people there (and did nothing or yelled).

Even when the person did totally mess up, why did the system allow that? Why did the system put that person in a place where they were not qualified? Answering and fixing these types of questions would help improve the system and the results going forward.

Yes, occasionally the answer might be that Joel was hired sensibly, managed and coached sensibly but he just became a complete jerk and won’t respond to coaching and this is only his fault. But normally that won’t be the case, even when the person seems nearly totally to blame (and that isn’t even a very common situation – normally there are obvious weaknesses in the system that put them in the place to fail and will likely put anyone else in the same place in the future).

Related: Firing Workers Isn’t Fixing ProblemsPeople: Team Members or CostsCreate a System That Lets People Take Pride in Their WorkFind the Root Cause Instead of the Person to Blame

6th Annual Curious Cat Management Blog Review

Posted on January 30, 2014  Comments (1)

Each of the participants post reviews of several blogs on their blog. Links to all the 2013 Management Blog Review posts are listed below, ordered by the number of years each author has participated in the annual review.

2013 Hosts Years
Blog reviews

Evolving Excellence 6 Timeback, Matthew May, HBR: Brad Power
Lean Reflections 5 Deming Institute blog, MIX
TimeBack Management 5 Michel Baudin, Manufacturing Leadership Center, The Lean Thinker
QAspire 4 Squawk Point, Jesse Lyn Stoner, Jamie Flinchbaugh
A Lean Journey 3 Beyond Lean, Lean Pathways, Old Lean Dude
Beyond Lean 3 Lean Blitz, Personal Kanban
Lessons in Lean 2 Gemba Panta Rei, The Drucker Exchange
encob blog 2 Lean Post, Gemba Coach
Michel Baudin 2 The Lean Edge
Lean Blitz 1 Lean Blog, Karen Martin, Quality and Innovation, Let’s Talk About Quality



Only 3 blogs have been reviewed in all 6 years: Evolving Excellence, Gemba Panta Rei and Timeback Management.

Related: 2012 Management Blog Review2011 Management Blog Review2008 Management Blog Review

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