Google does great things and makes good decisions most often. However a recent move on their part has ended very lamely. As part of what their 10th anniversary celebration they provided a search of the 2001 index (the oldest index they could find to search now). This was extremely cool.

Now if you go to find it so you can try it out you will be disappointed. Search for it on Google you will find a link to Google Search 2001 which gives you a page that says: “The page - www.google.com/search2001.html - does not exist.” Is it amazingly lame that Google took the search down, has it has the first result on searches, and has no explanation on that page of what it was about.

It would be cool for them to leave it up (it was interesting). And I would think they could make a great deal of money showing ads (I can’t remember if they did show ads). But not leaving a page at that address (which was linked to over 95,000 times) explaining what the page did and that it is now offline is very lame. Breaking 95,000 links is bad enough for some pointy haired boss that believes the internet is made up of tubes but for a well run internet company to do that is pitiful.

This move shows Google in a similar light as Gap when managers shut down the Gap’s web site for days (in 2005). Google failed when exiting the video business (DRM issues), then realized their mistake and recovered. The fix for this would take all of 1 hour. Someone just has to put up a page discussing what the page was for and that the search has been discontinued.

But really they should explore if it is better to just make it live - maybe it doesn’t but I would certainly want to look into that option. If not, I would put up some interesting results from the experiment (though if the choice is just a 1 hour solution or nothing then just put up a page in 1 hour) and link to commentary about the search and interesting things people found. This would be an interesting task for an intern, or someone else, and could provide an interesting and popular page. but most importantly at least not breaking 95,000 links (plus all those who go to the page from search results pages) is the minimum Google should do.

Related: web pages should live forever - Search Share Data Checking the ACSI - Ways for Google to Improve (more…)

In, Don’t do what your users say, Hanford Lemoore, provides a nice illustration of why customer focus is important but must be done with care.

This is a great example of looking for the root cause and going to the gemba. You must focus on customers but you must bring thought into how you react. Just doing what they say is likely a bad idea. Ignoring them is also bad. But listening and learning and then adjusting is good.

Related: Pleasing Customers - Confusing Customer Focus - What Could we do Better? - Good Customer Service Example - Find the Root Cause

Why is 37signals so arrogant? by Don Norman

I don’t agree. Not compromising leads to solutions that are unlikely to be all things to all people. But with an intelligent and knowledgeable leader will lead to excellent solutions for those that share desires. Now I don’t think this is the best strategy, especially for growth. But it can be an excellent strategy for startup, innovators and those seeking 1,000 fans.
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From Toyota’s blog, Living Up to Our Commitment

Once again Toyota shows what it means to go beyond the traditional way of thinking (where often MBA bean-counters and lawyers decide what should be done) instead of someone interested in having the company actually live up to a higher mission. From a previous post on their blog:

Related: Toyota IT Overview - Deming Companies - Reacting to Product Problems - Toyota Management Develops the New Camry - Corporate Blogging - Dell Innovation

There are those rare companies where interacting with them is not a dreaded experience: Trader Joe’s, Southwest Airlines, Ritz Carlton, Crutchfield, Cannon, Groovix. There are not many. And even just providing something that just works is seen as a treat. The all too common dis-service, combined with the internet, leads to Consumer Vigilantes:

Pretty lousy systems thinking (or really failures to think systemically). Pay executives obscenely and cut service until customers literally can’t stand you so much they don’t just want to avoid you they want you out of business.

And then instead of fixing the system, just burn the toast (follow the link for an explanation). Then wait from those that get the burnt toast to tell everyone that you sold them burnt toast. Then, after they do that, go scrape it for them. This is not what Dr. Deming meant when he encouraged companies to eliminate the need to inspect for quality. Of course you know that (you are reading this blog after all). Maybe the business schools decided to cut down Deming’s ideas to just eliminating inspection and a couple other sound bites. And then tell the MBA’s not to bother reading all the rest of that… we have to get on to the cost reduction strategies that will make sure you move into the c-level and get the real money.

But some companies just push people so far they have to let people know about how poorly they have been treated. Some past posts highlight the frustrating experiences bloggers, including me, share about how badly we have been treated: Ritz Carlton (good) and Home Depot (bad) - Incredibly Bad Customer Service from Discover Card - More Bad Customer Service Examples - Poor Service, an Industry Standard? (HP) - Comcast HD DVR Is Simply, Terribly Awful

Consumerist, is a great site, doing what it can to counter some of the horrible service.

Last week their was a recall of 143 million pounds of beef in the USA. Lets take a short systemic view at what is going on. The public has an interest in a safe food supply which is difficult to enforce through caveat emptor (buyer beware). So this is a natural situation for government regulation (to protect the public interest) - plus it relates to public health which is another natural for government regulation.

The USDA regulates the industry and puts in place rules as new threats emerge. So a few years ago they instituted rules that if an animal can’t walk after the USDA pre-death inspection they be re-inspected “largely as a precaution against bovine spongiform encephalopathy, or mad cow disease .” It seems hard to argue with that plan. If the pressures to maximize profits (assuring every cow is processed) exceed the desire to take precautions to ensure the safety of customers the risk of losing the trust of consumers is great.

There have been several instances, that have been made public, which call into question how effective the system is at preventing self interest from endangering the food supply. That then calls into question the safety of all meat that is part of that system. Many in the industry seem not to realize that they will be judged by the failures of any in the industry. And in my view, it is in their interests to have strong protections industry-wide.

The export market for meat is large. For political reasons some countries aim to protect local farmers and ranchers (the USA is a huge subsidizer of farmers and ranchers - Sugar Industry Quotas). And when the system continually shows that bad practices are allowed to continue it makes it a very easy decision to not allow the import of meat. Why would a country want to import food from a system that fails to follow food safety standards (especially if politically that is what they want to do - this provides them a pretty darn good reason to do what they want).
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Re: Boing Boing post - Why HP’s region coding excuse is bogus

There is a simple method for large multi-national companies to use to protect against currency fluctuation. They can use foreign exchange futures to do so. Companies do this all the time (some also chose not to for their own business reasons). “Foreign Exchange is the largest of the global financial markets. Daily trading volume in the currency markets is estimated to be 1.1 US trillion dollars.” - Smith Barney Citigroup. Some companies choose to speculate on the direction they believe exchange rates will go (either directly, or by not hedging when they believe rates will move in their favor and hedging when they predict doing so will benefit them).

In fact the United States government gives beneficial tax treatment (60% of profits are classified as long term capital gains, regardless of the holding period, thus reducing the taxes owed) to profits from “futures” trading. The reasoning is that creating a market for companies to hedge their risks is so important we must provide tax benefits to create a market for this activity. Some may think that the special tax advantages are more likely due to large payments from lobbyists to those who write the tax code than the merits of such tax law. In fact I may be one of them. Farmers often use futures contracts (on, for example, wheat or corn) in much the same way that companies can use future currency contracts to hedge their risks. That point is mentioned by the lobbyists, I would imagine.

The argument that you need to cripple products by geographic area to cope with currency fluctuations is false. It might be that a company wants to practice Price Discrimination (definition from US Federal Trade Commission or from the Digital Economist) to charge more where they can get more and less where they can get less. In the view of such a company, the internet, and other factors, have made it increasingly easy for people to buy in the low cost region and resell the items in the region where the company wants to charge higher prices. If you want to keep practicing price descrimination as a company you have to erect barriers to the free trade of your products by your customers.

Reimporting drugs is another clear example where companies try to use price discrimination - to charge US consumers more than Canadian consumers. Drug companies have successfully created legal road blocks to those trying to get around the geographic price discrimination. However, since lately those responsible for enforcing those laws have not been very eager to do so you can imagine the drug companies would like a drug that only worked in the country it was purchased. Another example of price discrimination are the regional versions of Windows.

I happen to believe companies should have the right to practice price discrimination. And in fact they should have the right to make products that have replacement parts that have been crippled to work only in products sold in specific countries. I would rather deal with companies that were trying to provide me more value not less. So I would be reluctant to buy from companies that practice such anti-consumer behavior. And luckily the internet and blogs are making it very difficult for companies to hind such practices. My guess is once attention is focused on such practices some companies will take advantage of such behavior by pledging “to do no evil.” And those companies will gain customers. The process will be quite a bit more confusing in the real world but that is how things will play out in the long run.

Hedging Currency Fluctuations:

• To Hedge or Not to Hedge? - for an individual investor (from Vanguard Australia)
• Foreign currency hedging transactions under Section 988 temporary regulations

Topic: Management
Written in response to this post on the DEN. The reponses on this topic show the strength of the DEN.

1) thoughtful responses that should help the person posting the original message
2) thoughtful responses that are of interest to many of us
3) the chance to explore concepts in some greater depth than we may otherwise

Relating to the 3rd item in my list I would like to explore part of Myron’s response. “Loss functions are highly personal. To ascribe a loss function to society requires plenty of hutzpah!” I think, the Taguchi Loss Function is meant to show the loss to society as a whole. My understanding, is that the Taguchi Loss Function is meant to show the overall quantifiable loss to society.

I must say that while viewing the overall loss to society is worthwhile, I think it is often more useful to see (or think of) the losses to each of the various parties. I believe this for the following 2 reasons.

First, to ascribe the loss to society, as Myron notes, requires plenty of chutzpah and I think is often going to lead to attempts to quantify impacts that are difficult to quantify. My understanding is that the Taguchi Loss Function limits the losses to quantifiable losses. If the losses are actually quantified then it should be a simple matter to include whatever losses you choose to get a picture of the factors you wish to focus on, which is good.

However, in practice, I have seen the concept of the Taguchi Loss Function used quite a bit. I have never actually seen any losses quantified and totaled and shown on a graph. I think focusing specifically on who suffers a loss and what that loss could be, can help. I think actually quantifying the losses to society can be daunting. So, while I see the value in framing the concept that way I think to actually get the losses quantified you are best served by starting with those closest to the process and then adding additional loses to those results.

Second, if you attempt to use the concept to help you manage (as a guide in decision making) the impacts to society are a factor, but, I think the loss to your company, the customer and perhaps the end user are most important. A negative impact to society at large is not going to have the same impact to a decision maker as the same negative impact to the customer. The decision maker will likely be willing to invest more to reduce the loss to a customer than to society at large (and that seems logical and sensible to me).

I believe the Taguchi Loss Function is a great conceptual model. I also think it is important to understand that the shape of a loss function in any situation depends on that specific situation. A parabola does a good job of illustrating the concept that loss is normally not binary and often increases somewhat slowly very close to the optimal result and more dramatically as the deviance from the optimal result increases. The loss is often not equal on either side of the optimal result in which case a parabola would not be the best model.

The import factor when making a decision, in a specific case, is to look at the losses that actually exist for that case. And, in my opinion, knowing where the loss is felt matters – so only viewing the overall loss to society is not sufficient. However, this concept is not part of the Taguchi Loss Function, but rather, is my opinion of how the concept can be applied most effectively. And while the concept of the Taguchi Loss function does a great job of showing why specification limits are not sufficient to good management, it is true that is some situations the loss can be pretty much binary, good (no loss) or bad (100% loss) with little, or no, “grey area.”

John Hunter