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

Posted on October 26, 2011 Comments (6)

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

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

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

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

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

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

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

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

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

The idea of where to focus improvement efforts is not something Dr. Deming made as clear as he could have, in my opinion. So I see the argument of Deming not prioritizing where improvement should occur voiced occasionally. This is a weakness in Deming’s content, I believe, more than his philosophy (but I can understand it causing some confusion).
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Posted by John Hunter
Categories: Deming, Process improvement, Psychology, quote, Software Development
Tags: commentary, continual improvement, curiouscat, Deming, John Hunter, management webcast, Process improvement, Psychology, quote, respect for people, Software Development

Problems with Management and Business Books

Posted on April 18, 2011 Comments (9)

We really need to change how we improve the practice of management. Far too often management strategies are just the latest fad from some new book that successfully marketed an idea. The marketing effectiveness of a book, or consultant, has very limited correlation to their ability to improve management, in my experience. It is often true that they make very good keynote speakers, however. So if you want an entertaining keynote speaker looking at the authors of the best selling business books may make sense. But if you want to improve management, I don’t see much value in doing so.

Year after year we have the same basic business books repackaged and marketed. They present a magic bullet to solve all your problems. Except their bullet is far from magic. Usually it does more harm than good.

They amazingly oversimplify things to make their bullet seem magic. This also fails miserably in practice. There are usually not good management options that are simple and easy. Usually the answers for what should be done is a lot of “it depends,” which people don’t seem to like.

Authors fail to place their book (or their trademarked strategy they hope turns into a movement/fad) in the appropriate context. Most books just take a few good ideas from decades old practices add a new name and leave off all references to the deep meaning that originally was there. I guess quite often the authors don’t even know enough about management history to know this is the case; I guess they really think their minor tweak to a portion of business process re-engineering is actually new. This also would make it hard for them to place their ideas within a management philosophy.

On a related note, I find it interesting how different the lean manufacturing and six sigma communities are online (and this has been going on for more than a decade). One of the problems with six sigma is there is so little open, building on the practices of six sigma. Everyone is so concerned with their marketing gimmick for six sigma that that don’t move forward a common body of work. This is a serious problem for six sigma. Lean manufacturing benefits hugely from the huge community of those building openly on the body of knowledge and practice of lean. You can find 10 great lean manufacturing blogs without trouble. You will have difficulty finding 3 good six sigma blogs (and even those spend most of the time on other areas – often lean thinking).
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Posted by John Hunter
Categories: Books, Deming, Lean thinking, Management, Six sigma
Tags: Books, commentary, Deming, Lean thinking, management, management history, open access, Six sigma

Engage in Improving the Management System

Posted on April 14, 2011 Comments (0)

To actually improve management you need to engage in continual improvement of your management systems. This requires doing the hard work of challenging complacency. The job of those improving the practice of management is not to make everyone happy and just ignore that the words about improvement are not actually carrying through to changes in behavior.

Do Executives “Get It?”

So many times executives spout the importance of new initiatives like wellness programs, safety programs, or improvement projects like Lean, Six Sigma, etc. They talk about how great they are and how everyone should embrace them so the company can improve, but when push comes to shove, their actions indicate they really don’t believe in them.

If you are trying to bring about change you need in-process indications of actual success at improving the management system. Instead it seems to me, most of the time, the focus is on spinning what is being done to convince others that what is being done is good. This is not helpful and not useful.

Without in-process indications of how the movement to a better management system is performing the pattern is all too common. People want to show they are doing a good job (which often includes not being too negative – because if they criticize results they can be branded as negative). So instead we end up with actions that would be used if one assumed that while we had problems with the last 4 management fads we implemented, now we have this wonderful new idea it will avoid all the problems.

So we start our new process, and write up reports and presentations for meetings talking about our successes. We are careful to ignore any warning signs. Then, after 1, 2… years (in a good economy this can last quite a bit longer), the boss says the results are not improving, this isn’t working. Everyone quickly agrees and the improvement effort is dropped. Usually there will be a period of time taken until and a new fad is found that everyone agrees is wonderful for 2-5 years until they then all agree was a failure. Repeat for the rest of your career.

To break this cycle and actually continually improve we can’t go along with the in-process indications that the management improvement system is not really working. We need to seek out indications that it is not working and address those issues and build a strong continually improving management system.

Related: Management Advice Failures – flavors of management improvement efforts – manage what you can’t measure – Federal Government Chief Performance Officer (a specific example of the repeated failure to improve), just pretending the failures in the past didn’t exist doesn’t help the current effort

Posted by John Hunter
Categories: Deming, Lean thinking, Management, Psychology, quote, Systems thinking
Tags: business, commentary, continual improvement, Deming, John Hunter, lean manufacturing, management, management history, Psychology, quality, quote, Six sigma, Systems thinking, workplace improvement

Don’t Treat People Like You Want to be Treated

Posted on December 2, 2010 Comments (11)

I have never understood the logic behind the idea that you should treat people like you want to be treated. I know I am different; I don’t want what lots of other people seem to want. If I treat them how I want to be treated, they are not happy.

I understand the sentiment behind the statement. I think it is much more effectively stated as: treat people how they want to be treated. An understanding of psychology will provide you with the understanding that people are different and want to be treated differently, while wanting to feel that they are valued and respected. Some people will like a boisterous extroverted environment and others will want to be able to have some time to concentrate and think by themselves. Some people will want to avoid confrontation at almost any costs others will want to deal openly and directly with issues confronting the organization. And most people will be somewhere in between the alternatives.

I don’t want to be thanked for trivial matters. But I have seen lots of people do like this. I do like to be challenged on what I claim and debate the merits of the idea (if I can learn I am wrong, it is much better to do it early and change – instead of waiting for some problem to develop). I notice a lot of others don’t like this at all. I don’t like to be interrupted when I am trying to concentrate. I know lots of others don’t understand this. And when they are treating others as they want to be treated the thought that others are trying to concentrate doesn’t cross their minds. They are not intentionally trying to be disruptive. They are trying to include others as they would like to be included. I find it annoying when we celebrate some minor success while much more serious problems are left unaddressed. I realize most others don’t have this problem.

I like to see data and evidence to back up claims and to explore what the data strongly shows and what conclusions are more tenuous. I know many just get bored by numbers and don’t want to see endless charts and figures. I like to be challenged and asked difficult questions in meetings. I know lots of people do not like this. I would like to ask other people difficult questions (but don’t – if I went with the treat people like you want to be treated idea I would ask). I like change that is part of a sensible strategy of improvement (that measures results to avoid change for that isn’t improvement, which I don’t like). However, I understand many people are uncomfortable with change. I despise sitting in meetings without agendas or a clear purpose that wander and don’t seem to accomplish anything. Others seem un-bothered by this (though I know in this feeling I am with the majority).

I think a key to managing people is to take time to think about the individuals involved, what your intention is, and then to act in a way that is tailored to how that person wants to be treated. Some people will want to be recognized publicly. Some people may want to discuss in private how they could do even better. Some people may like to be given the opportunity to lead a meeting. Others would rather be given the opportunity to create a new design for the intranet. Others may like the opportunity to train new staff on some aspect of their job. Some people may want opportunities to move up the corporate ladder. Others would rather have some time off to pursue other interests.

You should treat people how they want to be treated, not how you want to be treated.
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Posted by John Hunter
Categories: Deming, Management, Psychology
Tags: commentary, communication, curiouscat, Deming, John Hunter, managing people, Psychology, tips

Airport Security with Lean Management Principles

Posted on November 16, 2010 Comments (1)

The ‘Israelification’ of airports: High security, little bother

We [Israel] said, ‘We’re not going to do this. You’re going to find a way that will take care of security without touching the efficiency of the airport.”
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“The whole time, they are looking into your eyes — which is very embarrassing. But this is one of the ways they figure out if you are suspicious or not. It takes 20, 25 seconds,” said Sela. Lines are staggered. People are not allowed to bunch up into inviting targets for a bomber who has gotten this far.

Lean thinking: customer focus, value stream (don’t take actions that destroy the value stream to supposedly meet some other goal), respect for people [this is a much deeper concept than treat employees with respect], evidence based decision making (do what works – “look into your eyes”), invest in your people (Israel’s solution requires people that are good at their job and committed to doing a good job – frankly it requires engaged managers which is another thing missing from our system).

The USA solution if something suspicious is found in bag screening? Evacuate the entire airport terminal. Very poor design (it is hard to over-emphasis how poor this is). It will take time to design fixes into physical space, as it always does in lean thinking. It has been nearly 10 years. Where is the progress?

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A screener at Ben-Gurion has a pair of better options. First, the screening area is surrounded by contoured, blast-proof glass that can contain the detonation of up to 100 kilos of plastic explosive. Only the few dozen people within the screening area need be removed, and only to a point a few metres away.

Second, all the screening areas contain ‘bomb boxes’. If a screener spots a suspect bag, he/she is trained to pick it up and place it in the box, which is blast proof. A bomb squad arrives shortly and wheels the box away for further investigation.

This is a very small simple example of how we can simply stop a problem that would cripple one of your airports,” Sela said.

Lean thinking: design the workspace to the task at hand. Obviously done in one place and not the other. Also it shows the thought behind designing solutions that do not destroy the value stream unlike the approach taken in the USA. And the better solution puts a design in place that gives primacy to safety: the supposed reason for all the effort.
Continue reading →

Posted by John Hunter
Categories: Creativity, Customer focus, Deming, Lean thinking, Psychology, Respect
Tags: airlines, commentary, Creativity, evidence based management, Innovation, Lean thinking, problem solving, Quality tools, Systems thinking

Worth Does Not Equal Wealth

Posted on November 11, 2010 Comments (0)

Warren Buffet often says he happens to be very good at something that is very financially rewarding – effectively allocating capital. He says this while making the point that plenty of other people are exceptionally gifted in ways that are not as financially rewarding (teachers, grandparents, nurses, Peace Corps assignment…) but are important to society. He understands that his worth as a person is not tied to this bank account. It might be one reason he and Bill Gates have so generously used their wealth to help others. They understand those actions are related to the their worth.

People should not tie their feeling of their own worth to their income. We don’t talk about it much directly but I see it far too often in the way we discuss things. Most people agree we shouldn’t judge people by their bank account or their earning power but we still do it. Hey we have flaws. We also judge people based on how attractive they are and how tall they are and other far from sensible things. Study after study shows we do this even if we want to pretend we don’t.

At least in the USA far too often people mistake financial success for worthiness. Financial success is great (I am not one of those that sees wealth as a bad thing – even if the correlation to bad behavior can seem high, at times). Even in companies this is often done where those with higher salaries are seen as more worthy – not everywhere, not all the time, but still more than we should. And when the economy is bad more and more people face not only financial struggles but the added pressure of feeling less worthy as they struggle financially.

I think it is good that we feel a desire to contribute and play our part in making our communities successful. But we shouldn’t be overly critical when we are making real efforts to contribute but for example, the job market is very bad and we can’t be as financially successful as we were before. Or feel we have to judge our success versus our siblings, friends, childhood friends, co-workers, children… based on our material wealth.

Warren Buffett quotes:

“I happen to have a talent for allocating capital. But my ability to use that talent is completely dependent on the society I was born into. If I’d been born into a tribe of hunters, this talent of mine would be pretty worthless. I can’t run very fast. I’m not particularly strong. I’d probably end up as some wild animal’s dinner.” – quoted in The Audacity of Hope, page 191.

Posted by John Hunter
Categories: Psychology, Respect
Tags: charity, commentary, control chart, Economics, ethics, Psychology, respect for people

Involve IT Staff in Business Process Improvement

Posted on July 6, 2010 Comments (5)

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).
Continue reading →

Posted by John Hunter
Categories: Career, Deming, IT, Management, Popular, Process improvement, quote, Software Development, Systems thinking
Tags: agile management, Career, commentary, curiouscat, IT, John Hunter, management, Popular, Process improvement, quote, Software Development, Systems thinking

Classic Management Theories Are Still Relevant

Posted on June 7, 2010 Comments (5)

Good management is good management: it doesn’t matter if someone figured out the good idea 100 years ago or last week.

Are “Classic” Management Theories Still Relevant?

It did make me wonder about the staying power of management models, processes, skills, and conventional wisdom…

There are way too many people in our field that are not true professionals – they don’t do their homework, and rely too much on their own personal experience. They’re the ones who tend to jump from one fad to the next, enthusiastically promoting each one with an almost religious passion.

However, there’s also a danger of not keeping up with the times and sticking with models or skills that really have outlived their usefulness. At best, you run the risk of coming across as a dinosaur when you explain a management model that was developed in the 1920′s to a group of Millennials. Even worse, you may be relying on models that really don’t apply in today’s world.

Classic management ideas are definitely very valuable today. It is amazing how little use of long known good leadership lessons actually takes place in organizations. You don’t need to discover secrets to improve, just adopt ideas others ignore since they are not new (or whatever justification they use for ignoring them).

One of the main things I have been trying to do with my web sites is to get people to use the already well documented successful management practices.

Bad management ideas are bad: Regardless if they were good ideas 40 years ago, or not. I find bad management practices most often never were good practices so worrying about outdated good practices is not something that merits much time. Just avoid bad practices, don’t worry about when the practices were adopted.

As Dan McCarthy says in his post: “Read and respect the classics and keep up with the latest.”

And if you have to focus on one, focus on the classics. Most of what is new isn’t worthwhile so you will likely spend a lot of time reading about fads that die before you can even try to adopt the ideas into your organizational system. There are good new ideas – read Clayton Christensen, for some good new ideas (even many of those are nearly 10 years old now). Agile software development is another area where good tactics seem new. Mainly agile management offers good ideas on tactics for applying lots of good management ideas (often these ideas are not new), it seems to me.

Posted by John Hunter
Categories: Deming, Management, quote, Systems thinking
Tags: commentary, management, management experts, management history, Systems thinking, tips

Statistical Engineering Links Statistical Thinking, Methods and Tools

Posted on June 3, 2010 Comments (0)

In Closing the Gap Roger W. Hoerl and Ronald D. Snee lay out a sensible case for focusing on statistical engineering.

We’re not suggesting that society no longer needs research in new statistical techniques for improvement; it does. The balance needed at this time, however, is perhaps 80% for statistics as an engineering discipline and 20% for statistics as a pure science.

True, though I would put the balance more like 95% engineering, 5% science.

There is a good discussion on LinkedIn:

Davis Balestracci: Unfortunately, we snubbed our noses at the Six Sigma movement…and got our lunch eaten. Ron Snee has been developing this message for the last 20 years (I developed it in four years’ worth of monthly columns for Quality Digest from 2005-2008). BUT…as long as people have a computer, color printer, and a package that does trend lines, academic arguments won’t “convert” anybody.
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Recently, we’ve lost our way and evolved into developing “better jackhammers to drive tacks”…and pining for the “good ol’ days” when people listened to us (which they were forced to do because they didn’t have computers, and statistical packages were clunky). Folks, we’d better watch it…or we’re moribund

Was there really a good old days when business listened to statisticians? Of course occasionally they did, but “good old days”? Here is a report from 1986 the theme of which seems to me to be basically how to get statisticians listened to by the people that make the important decisions: The Next 25 Years in Statistics, by Bill Hunter and William Hill. Maybe I do the report a disservice with my understanding of the basic message, but it seems to me to be how to make sure the important contributions of applied statisticians actually get applied in organizations. And it discusses how statisticians need to take action to drive adoption of the ideas because currently (1986) they are too marginalized (not listened to when they should be contributing) in most organizations.
Continue reading →

Posted by John Hunter
Categories: Science, Six sigma, Statistics
Tags: commentary, engineering, John Hunter, Quality tools, Science, Six sigma, Statistics, William Hunter

Net Neutrality, Policy, Economics and Intelligent Engineering

Posted on April 13, 2010 Comments (3)

I believe net neutrality should be championed to prevent decay of the usability of the internet. It seems to me internet connectivity is a natural monopoly that economic theory says should be a regulated monopoly. Smart countries have invested in providing much better internet connectivity that the USA has at much lower prices. Now in the USA we have companies that seek to control internet connectivity and then use that monopolistic control to favor higher margin efforts. So force those that have resources available on the internet to pay or the ISP threatens to degrade the connectivity to their resources.

chart showing internet connectivity speed (USA 18th)

The investment in equipment and fiber that allows internet connectivity has to be paid for. If those regulated ISPs wanted to set bandwidth use pricing that is fine with me. If we decided it is best to have one low price say $30 a month for access at a similar perforance of 10 other countries (Japan, Germany, South Korea, Canada, United Kingdom…) and then charge extra for individuals those that use more than some amount fine. But I think it should not be tied to whether you use service that haven’t paid the ISP money to be favored. The USA is currently 18th and slowed down, while others continue to speed up.

The 2008 ITIF Broadband Rankings show the USA in 15th place, out of 30 OECD countries, for broadband adoption, speed and price. In 2001 the USA was in 4th place.

If ISPs don’t want to be in the business they should be in – providing internet connectivity. Fine, get out of that business and go into the business they want to be in. But don’t try to take control of a natural monopoly and then use that control to extort money from those that rely on the natural monopoly.

Google accused of YouTube ‘free ride’

Some of Europe’s leading telecoms groups are squaring up for a fight with Google over what they claim is the free ride enjoyed by the technology company’s YouTube video-sharing service. Telefónica, France Telecom and Deutsche Telekom all said Google should start paying them for carrying bandwidth-hungry content such as YouTube video over their networks.

I can understand why they would think that way. But isn’t it equally valid to say hey those that pay you for internet connectivity really want to use YouTube. If you need to make more investments in your infrastructure to support your customers use, then do so and raise the prices. I completely disagree with the ISP negotiating what content users can see. But if that were to happen why couldn’t Google instead of paying say, hey your customers really want YouTube – if you don’t pay us we won’t let you deliver it to your customers?

Net Neutrality: This is serious by Tim Berners-Lee

When I invented the Web, I didn’t have to ask anyone’s permission. Now, hundreds of millions of people are using it freely. I am worried that that is going end in the USA.
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Yes, regulation to keep the Internet open is regulation. And mostly, the Internet thrives on lack of regulation. But some basic values have to be preserved. For example, the market system depends on the rule that you can’t photocopy money. Democracy depends on freedom of speech. Freedom of connection, with any application, to any party, is the fundamental social basis of the Internet, and, now, the society based on it.

Let’s see whether the United States is capable as acting according to its important values, or whether it is, as so many people are saying, run by the misguided short-term interested of large corporations.

I hope that Congress can protect net neutrality, so I can continue to innovate in the internet space. I want to see the explosion of innovations happening out there on the Web, so diverse and so exciting, continue unabated.

Google’s Traffic Is Giant, Which Is Why It Should be Your ISP
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Posted by John Hunter
Categories: Economics, Google, Innovation, IT
Tags: commentary, Economics, economy, engineering, internet, IT

Soren Bisgaard

Posted on December 22, 2009 Comments (1)

photo of Soren Bisgaard

Soren Bisgaard died earlier this month of cancer. Soren was a student of my father’s who shared the commitment to making a difference in people’s lives by using applied statistics properly. I know this seem odd to many (I tried to describe this idea previously, also read his acceptance of the 2002 William G. Hunter award). Soren served as the director of the director of the Center for Quality and Productivity Improvement at the University of Wisconsin-Madison (founded by William Hunter and George Box) for several years.

Most recently Soren Bisgaard, Ph.D. was Professor of technology management at Eugene M. Isenberg School of Management at the University of Massachusetts – Amherst. He was an ASQ Fellow; recipient of Shewart Medal, Hunter Award, George Box Medal, among many others awards.

I will remember the passion he brought to his work. He reminded me of my father in his desire to improve how things are done and allow people to have better lives. Those that bring passion to their work in management improvement are unsung heroes. It seems odd, to many, to see that you can bring improvement to people’s lives through work. But we spend huge amounts of our time at work. And by improving the systems we work in we can improve people’s lives. Soren will be missed, by those who knew him and those who didn’t (even if they never realize it).

Contributions in honor of Søren may be made to The International Mesothelioma Program or to the European Network for Business and Industrial Statistics. Read more articles by Søren Bisgaard.

The Future of Quality Technology: From a Manufacturing to a Knowledge Economy and From Defects to Innovations (pdf) by Soren Bisgaard

Posted by John Hunter
Categories: Psychology, Six sigma, Statistics
Tags: commentary, John Hunter, Madison, Six sigma, SPC, Statistics, William Hunter

No More Executive Bonuses!

Posted on November 30, 2009 Comments (5)

Henry Mintzberg, wrote an excellent article for the Wall Street Journal today, No More Executive Bonuses!

Don’t pay any bonuses. Nothing.

This may sound extreme. But when you look at the way the compensation game is played – and the assumptions that are made by those who want to reform it – you can come to no other conclusion. The system simply can’t be fixed. Executive bonuses – especially in the form of stock and option grants—represent the most prominent form of legal corruption that has been undermining our large corporations and bringing down the global economy. Get rid of them and we will all be better off for it.
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So, again, there is but one solution: Eliminate bonuses. Period. Pay people, including the CEO, fairly. As an executive, if you want a bonus, buy the stock, like everyone else. Bet on your company for real, personally.
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All this compensation madness is not about markets or talents or incentives, but rather about insiders hijacking established institutions for their personal benefit.

Too many large corporations today are starved for leadership – true leadership, meaning engaged leadership embedded in concerned management. And the global economy desperately needs renewed enterprise, embedded in the belief that companies are communities. Getting rid of executive bonuses, and the gambling games that accompany them, is the place to start.

It is an great article on bad pay systems that let a few top executives (and their hand picked board members) in many companies to loot the treasury of the company. I have written about this problem many times, including: CEOs Plundering Corporate Coffers – Excessive Executive Pay (2005) – Narcissistic Cadre of Senior Executives – The Best Leadership Is Good Management – Another Year of CEO’s Taking Hugely Excessive Pay – More on Obscene CEO Pay – More on Failed Executives

There are executives that don’t act like corrupt dictators looting their country, unfortunately they are less common than those that act like looters. And they all seem to have built cultures that taking respect for people is more important that feeding a few bloated egos. Akio Toyoda’s Message Shows Real Leadership, Tony Hsieh, the Zappo’s CEO – Warren Buffett – Honda has Never had Layoffs and has been Profitable Every Year

The obscene pay is not just a matter of people taking a tens of millions of dollars they don’t deserve. Companies whole management systems are distorted in ways that lead the company to risk all the other stakeholders future for the potential gain of a few senior executives.

Posted by John Hunter
Categories: Deming, Management, Performance Appraisal
Tags: bonus, commentary, ethics, executive pay, leadership, management, overpaid executives, respect for people

Narcissistic Cadre of Senior Executives

Posted on July 22, 2009 Comments (0)

In yet another voice against the looting mentality of the current crop of executives Chris Bones, dean of Henley Business School writes a A crisis of confidence?

This has resulted in the creation of a narcissistic cadre of senior executives who knew no right but their own perception and brooked no criticism or check on their ambition. In their demands for personal rewards we have seen them in their true light.
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Secondly, a responsible organisation should set limits above which senior reward will not stray. I cannot see a reason why any annual bonus plan should be worth more than 100% of salary or should pay out more than 50% of this in the year in question. I do not think there is any justification for the annual value of chief executives’ rewards to be more than 20 times that of the average employee. Rocketing executive pay is in no one’s interests, except the small number of executives involved, and limiting it voluntarily is a better solution than the state intervening through taxation changes.
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Business schools can help rebuild confidence in business leadership. But they too have to change—to become critical friend rather than fawning supporter. MBA programmes have to produce values-driven general managers, not finance-driven technocrats. They must build critical thinkers with the ability to make decisions that benefit all stakeholders, not just themselves.

It really is a shame that the executives leading so many companies are so moral, ethically and managerially bankrupt. We need to stop allowing such people to become executives in organizations. With such fundamental problems in their basic understanding of human systems the correct solution is to stop allowing such flawed people to have power not to try and convince such flawed people to behave responsibly.

That executives believe they should act as royalty taking what they wish from the value produced by others is so fundamental a failure that I do not believe reform is the best solution. They should just be removed. If you are lucky some competitor will hire them and you can gain not only from their removal but from the damage they cause your competitor.

Posted by John Hunter
Categories: Economics, Psychology, Systems thinking
Tags: business, commentary, executive pay, overpaid executives

Another Year of CEO’s Taking Hugely Excessive Pay

Posted on April 6, 2009 Comments (5)

I continue to do my part to publicize the abusive CEO pay packages that the current crop of unethical CEO’s, and those sitting on corporate boards have supported (Tilting at Ludicrous CEO Pay 2008 – 2007 post on CEO pay abuses). It does seem there is more anger now at the looting these corrupt CEOs have engaged in; though far too many people seem to think the corruption is some isolated few CEO’s. The widespread failure of ethical standards by an enormous number CEO’s (those taking from corporate treasuries as though it was their own personal bank account) is the problem (not a few individuals). The looters certainly have littered their “courts” with apologists for their egregious behavior. Even with the large amounts they pay such lackeys I am surprised they find such willing apologists, in such large numbers.

2007 pay rank	Company	CEO	2008 Pay	2007 Pay	CEO % of 2008 Earnings	total employees
1	Motorola	Sanjay Jha	$104,400,000		company lost $4.2 billion	64,000
2	Oracle	Lawrence Ellison	$84,600,000	$61,200,000	1.5%	86,600
3	Walt Disney	Robert Iger	$51,100,000	$27,700,000	1.2%	150,000
4	American Express	Kenneth Chenault	$42,800,000	$50,100,000	1.6%	66,000
5	Citigroup	Vikram Pandit	$38,200,000		company lost $27.7 billion	322,800
6	Hewlett-Packard	Mark Hurd	$34,000,000	$26,000,000	7.4%	6,200
7	Calpine	Jack A. Fusco	$32,700,000		327%	2,000

This executive pay data is for 2008, from the New York Times article, Pay at the Top. Earnings and employee data for 2008 from Google Finance. I would not pay any of these guys 1% of what they were paid if I owned the company, myself.

These guys and their friends have created a culture where their looting is as accepted as the clothes the emperor is not wearing. We need to wake up and stop letting these people steal the bounty created by the employees, customers, community, suppliers, investors… They want a world where they can behave like nobility – taking whatever they want from the value created by others. And lately they have succeeded in creating such a world. They leave in their wake very weakened companies and societies.
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Posted by John Hunter
Categories: Economics, Management, Management Articles
Tags: bonus, commentary, economic data, ethics, executive pay, Investing, leadership, overpaid executives

Harvard’s Masters of the Apocalypse

Posted on March 11, 2009 Comments (2)

This article makes some good points, even if it is a bit sensationalist, and intentionally so: Harvard’s masters of the apocalypse by Philip Delves Broughton

Business schools have shown a remarkable ability to miss the economic catastrophes unfolding before their eyes.

In the late 1990s, their faculties rushed to write paeans to Enron, the firm of the future, the new economic paradigm. The admiration was mutual: Enron was stuffed with Harvard Business School alumni, from Jeff Skilling, the chief executive, down. When Enron, rotten to the core, collapsed, the old case studies were thrust in a closet and removed from the syllabus, and new ones were promptly written about the ethical and accounting issues posed by Enron’s misadventures.
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Is there a pattern here? Go back to the 1980s, and you find that Harvard MBAs played a big enough role in the insider trading scandals that washed through Wall Street for a former chairman of the SEC to consider it a good move to donate millions of dollars for the teaching of ethics at the school.

Time after time, and scandal after scandal, it seems that a school that graduates just 900 students a year finds itself in the thick of it. Yet there is remarkably little contrition.

Last October, Harvard Business School celebrated its 100th birthday with a global summit in Boston. While Wall Street and Washington descended into an economic inferno, Jay Light, the dean of the school and a board member at the Black-stone private equity group, opened the festivities by shrugging off any responsibility.

“We all failed to understand how much [the financial system] had changed in the past 15 years or so, and how fragile it might be because of increased leverage, decreased transparency and decreased liquidity: three of the crucial things in the world of financial markets,” he said.
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You can draw up a list of the greatest entrepreneurs of recent history, from Larry Page and Sergey Brin of Google and Bill Gates of Microsoft, to Michael Dell, Richard Branson, Lak-shmi Mittal – and there’s not an MBA between them.

Yet the MBA industry continues to grow, and business schools provide vital income to academic institutions: 500,000 people around the world now graduate each year with an MBA, 150,000 of those in the United States, creating their own management class within global business.

Given the present chaos, shouldn’t we be asking if business education is not just a waste of time, but actually damaging to our economic health?

Business schools unfortunately continue to take a heavily simplistic number (without an understanding of variation) and fad driven approach to management. W. Edwards Deming was against the damage they were causing decades ago, and I see little evidence they have learned from their failures.

Schools are good for making connections and getting a piece of paper. Some companies won’t consider you for some jobs unless you have an document saying you have an MBA. I strongly question the wisdom of only hiring an MBA to do some job. But many companies like to use simple criteria like – without a piece of paper saying you have an MBA we won’t consider you for this job. So if you want a job from them getting that piece of paper is important.

Posted by John Hunter
Categories: Management
Tags: commentary, Data, management

Community Banks Asks Why They Must Pay for Wall Street Greed

Posted on March 7, 2009 Comments (1)

Minnesota Bank Asks Why It Pays for Wall Street Greed

TCF is among more than 8,300 banks and lenders insured by the FDIC facing increased fees and a one-time “emergency” charge designed to raise $27 billion this year for the agency’s depleted coffers.
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Community banks rely more on deposit funding, so they suffer a “much heavier burden” as a result of deposit insurance proportionate to size than peers such as New York-based Citigroup Inc. and Wells Fargo & Co., with its headquarters in San Francisco, Fine said.
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Community lenders “are feeling like they are paying for the incompetence and greed of Wall Street,” Fine said this week in an interview.
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FDIC assessments are set per $100 in deposits and not weighted by bank size. That’s a formula that could be modified to shift the cost burden to the largest banks “that caused this train wreck,” Fine said. TCF never “securitized anything, we never engaged in any of those unscrupulous activities,” said Cooper, 65.

I am not very surprised that politicians provide big favors to those that give them huge amounts of money (former investment banks, farming interests, private plane owners, Fortune 100 companies, owners of oceanfront mansions, private equity speculators…). I am a bit surprised how much money is being lavished on those huge donors now, with the bailouts. Especially with how lacking in even minor consequences those huge gifts to their donors are (normally if the payoffs to supports get too huge there are at least some cover provided by putting in consequences for this “need” to send taxpayer money to their contributors).

The FDIC is a great government program. But allowing huge banks to take enormous risks and then passing on the much of the costs, of a small portion of those risks (FDIC insured deposit accounts), to banks that do not act as irresponsibly as the risk takers is a bad idea. Insurance should have increasing costs based on increasingly risky behavior.
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Posted by John Hunter
Categories: Economics
Tags: commentary, economy, ethics, government, John Hunter

Federal Government Chief Performance Officer

Posted on January 15, 2009 Comments (0)

A Quality Manager for Obama

President-Elect Obama has hired a quality manager, and her name is Nancy Killefer. She is the newly appointed “Chief Performance Officer” whose mandate is to manage budget reforms while eliminating waste in government processes, ultimately making it more effective. An MIT & McKinsey alum, Time calls her the “first official waste watchdog.”

Previous administrations have had exactly the same thing (regardless what Time magazine says), so I don’t think we should get carried away. Eliminating wasteful government spending is a refrain from every new administration. She will be running the Office of Management and Budget (OMB) and have this new title “Chief Performance Officer.” OMB has been the official waste watchdog, for at least decades. They are far from understanding muda. Time will tell if there is any change on that score going forward, I am skeptical.

Here is very typical OMB language from a 1995 memo by Alice M. Rivlin, Director of OMB:

Management controls are the organization, policies, and procedures used to reasonably ensure that (i) programs achieve their intended results; (ii) resources are used consistent with agency mission; (iii) programs and resources are protected from waste, fraud, and mismanagement; (iv) laws and regulations are followed; and (v) reliable and timely information is obtained, maintained, reported and used for decision making.

I worked with improving management in the federal government at the Office of Personnel Management, Office of the Secretary of Defense, Quality Management Office and the White House Military Office. I was one of the founders of the ASQ Public Sector Network (now Government Division) and have managed the Public Sector Continuous Improvement Site since 1995. There have been plenty of great efforts to improve management in government that have made real progress. But there is much more that needs to be done.

There are complications in applying management improvement in government but they are fairly minor comparatively. In general, the difficulty is not the necessary adjustments for a different environment than the private sector, but similar challenges to improving private sector management.

In 1982, The Grace Commission provided a report to the Regan Administration. Radio Address to the Nation on the Management of the Federal Government by Ronald Reagan, October 29, 1988

“We also set up the Private Sector Survey on Cost Control led by Peter Grace — almost 200 top business executives. This Commission spent months looking at every part of the Government, finding out where modern business practices could eliminate waste, fraud, and abuse in the Government. When they were through, they’d come up with 2,478 suggestions. And almost every recommendation we could put into effect without congressional action has been implemented. And we’ve saved close to $80 billion. We’re hoping that the next Congress will pitch in and do its part.”

The Clinton administration had the National Performance Review which was the closest thing to an attempt to move toward my concept of management improvement.

The current administration had their own President’s Management Agenda. Government Accountability: Efforts to Identify and Eliminate Waste and Mismanagement Hearing before the Committee on International Relations, House of Representatives, September 4, 2003.
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Posted by John Hunter
Categories: Management, Public Sector
Tags: change, commentary, curiouscat, Deming, government, John Hunter, management, Public Sector, quality, quote

What to Wear to an Interview

Posted on January 3, 2009 Comments (6)

Response to What to Wear for an IT Job Interview?. Is this just a huge bit stereotypical?

Who can blame them for not wanting to bother with their wardrobes? Fashion is fickle. Fashion is expensive. Fashion requires imagination and inspiration, and let’s face it, after a long day spent debugging code or trouble-shooting computer problems, there’s not a lot of creativity left for clothing.

But if there’s one professional occasion when a tech worker should think fashion first, it’s the job interview. CIOs says so. According to research conducted by Robert Half Technology, more than one-third (35 percent) of CIOs surveyed say that IT professionals should sport a suit for a job interview.

I don’t see any harm in wearing a suit and tie or such business attire if you have no other information to go on for IT, or other employees. That advice to candidates is perfectly fine. Asking what is appropriate attire when the interview is set is also a good idea. In fact, that is all you need to take from this post as an interviewee, in my opinion.

Is there any value in you wearing a suit? If so, then not doing so might be a negative. The psychology of what makes people uncomfortable is tricky. And dress is one of those factors that may seem trivial but to differing extents most people base opinions partial on dress (even if they claim they don’t). Some organization with casual dress codes may also look at being too dressed up as a bad sign (out of touch…). Basically they are experiencing the same discomfort with your dress even though most likely they would profess to find those making judgments based on dress to be superficial. The Manager FAQ does a good job of looking at the thought process behind some managers thinking on the topic.

My manager seems to dress funny. Is there any way to impress upon him the pointlessness of corporate appearance?

Your manager is probably aware that, in the abstract, the way she dresses changes nothing. However, part of her job is to interact with other people, and there are rules of etiquette for these dealings. Your manager’s clothing, even when she’s not dealing with other people, is selected in part as a way of telling you that she takes you seriously; it’s just like calling people “sir”. It’s a convention, but that doesn’t mean it’s not a real convention, and your manager is honoring it.

Even if there is no value to doing so there are many people who make judgments on silly factors like clothing.

Now for the most important point for manager’s, from this post, if you evaluate software developers on how they dress please quit and go work in some other line of work. You really don’t have what is needed to manage software developers or system administrators. If you are hiring someone to sit in meetings with MBAs and translate technology to them, then maybe being comfortable in a suit is a valued trait. But if you are hiring someone to create code 90+% of the time the suit is a completely silly measurement of value.

Posted by John Hunter
Categories: Career, IT, Psychology, Software Development
Tags: Career, commentary, curiouscat, hiring, jobs, Joel Spolsky, John Hunter, productivity, programming, Software Development, tips

Managing Passionate Employees

Posted on December 22, 2008 Comments (0)

Passion vs. Productive

There are actually few organizations that can support passionate employees – even if they say they want them. That’s because the original industrial revolution was designed to support productivity. Productivity means you produce. That’s how you’re measured. Passion is difficult to quantify
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Managers want passionate employees, but don’t always know how to manage them. Passionate employees question things, probe and push. Who’s got the time to deal with that? Productive employees get things done. No questions asked.
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if you align someone’s passion with their job description—you just might boost your department’s productivity.

Passionate employees are often not the easiest employees to manage. If a manager confuses ease of managing with best employee they discount the value of a passionate employee. And they often do confuse the two values. A passionate employee can seem like a bother, not willing to just go along but constantly challenging and pushing for new ideas.

One of the things that great managers do is to understand the value of passion and make the extra effort to cultivate and support those passionate employees. Even if occasionally they just want that person to just do their job and stop being so different. The great manager realizes that treating everyone the same is a very bad meme that somehow seems to have taken hold in many people’s mind. People are not the same. Managing a system of people is not the same as maintaining a machine.

A managers job is not to make their own job as easy as possible. When the system is best served by an extra passionate employee, then the manager needs to support that employee. And smooth out others that might get annoyed (often others find the passionate employee should just be like everyone else).

Posted by John Hunter
Categories: Creativity, Management, Psychology, quote, Respect, Systems thinking
Tags: commentary, curiouscat, John Hunter, management, managers, productivity, Psychology, quote, respect for people, Systems thinking, tips

Big Failed Three, Meet the Successful Eight

Posted on December 15, 2008 Comments (1)

Big Three, Meet the “Little Eight”

The 1,300-acre plant, in which Toyota has invested $5.3 billion, produces a car roughly every minute. Georgetown’s population has doubled. In fields where farmers once grew tobacco and raised cattle, McMansions, apartment complexes, and condominiums have sprouted. A 150,000-square-foot upscale retail center is rising near the Toyota plant, the better to serve its 7,000 employees.
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In San Antonio, the Toyota Tundra plant lay idle for three months this fall, though Toyota hasn’t laid off anyone. Instead, according to Richard Perez, president and CEO of the Greater San Antonio Chamber of Commerce, Toyota offered the city “a whole bunch of folks who need to get busy.” (San Antonio put them to work on beautification projects.) Of course, Toyota has resources to act in a more paternalistic manner – in part because the parent companies aren’t saddled with the burdens of providing health care and retirement for workers in home markets.

This is not behaving in a paternalistic manner, this is behaving in an honorable manner with the other long term stakeholders that have a shared interest in the long term success of the company. When managers and executives do their jobs the company will succeed in good times and have a plan for bad times and will deal effectively with obvious long term issues. Health care costs, pensions costs, and bad labor-management relations have been obvious critical issues to solve for GM, Ford and Chrysler for decades. The pathetic job those 3 have done with those, and other issues (they still don’t understand how to work with suppliers, how to stop the obsessive focus on quarterly profits, how to demand honorable behavior [not looting] from senior executives…), lead to their current situation.

The poor economy leads the the situation you now see with Toyota and Honda: profits being cut, having to put in place plans to retain employees while they are not needed to produce output today, etc.. You don’t see companies needing billions to survive a few months unless they were incredibly poorly lead. And those leading them were paid many times more than those that led Toyota and Honda. They have had decades to act responsibly. They have failed. And there failure will be felt by those that enabled them to take huge pay packages that were not warranted. They should be ashamed.
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Posted by John Hunter
Categories: Economics, Manufacturing
Tags: cars, commentary, Economics, Manufacturing, Respect, Toyota