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Web Seminar with Gerald Suarez: Better Thinking About Leadership

Posted on January 23, 2012  Comments (0)

In2In offers some great opportunities for those interested in management improvement. Their conference is excellent. They also offer various conference calls with speakers knowledgeable about Deming and Ackoff’s ideas. These normally take the form of conference call presentations (similar to a podcast) followed by some question and answers. The consistently get remarkable people like, Gerald Suarez, and earlier: Peter Scholtes and Brian Joiner.

Gerald Suarez is kicking off the new InThinking Network monthly webinar series. I worked for Gerald at the White House Military Office. He is one of the best presenters and most knowledgeable experts on Deming and Ackoff’s ideas working today.

Gerald Suarez will present on February 9th on the topic of “Better Thinking About Leadership.” This is a great opportunity and there is no cost to participate. If you participate from outside the USA you can connect via Skype (from the USA you will be given a toll-free number to connect with – or Skpye, if you wish). If you can’t join the call, audio downloads will be available at some later date. Register here. If you can’t make the live event, I strongly recommend listening to the audio download once it is made available.

The format of these sessions is a 90-minute session, each month – from February through November. They are held the second Thursday of the month, from 11:30 AM to 1 PM Pacific Time.

Future sessions that we have to look forward to include:

  • Paul Hollingworth will present in March: An Introduction to Systems Thinking
  • Graham Rawlinson, in May to explore “Thinking About Thinking”
  • Gipsie Ranney, in September: “Cause(s) of Concern,” a session designed to present and advance the understanding of common causes and special causes of variation.

Gerald is currently a professor on the faculty of the University of Maryland’s Robert H. Smith business school and works as a consultant and keynote speaker. Look for him to share his expertise in leadership, which includes 8 years of service in the White House under Presidents Clinton and Bush, as the Director of Presidential Quality — the first such post in the institution’s history.

Related: Transformation and Redesign at the White House Communications Agency – Managing Fear – The aim of leadership is not merely to find and record failures of men

Taking What You Don’t Deserve, CEO Style

Posted on December 8, 2011  Comments (3)

The excesses to which CEO’s and their board buddies go to in taking from corporate treasuries what they don’t deserve continues to amaze me. The level to which the bad behavior is accepted is apparent in the lack of progress at dealing with those that are taking what they have no moral right to. As shouldn’t have to be explained (but maybe does) leadership isn’t about avoiding being indicted. The levels to which these people take from the organization they are suppose to be leading is a very sad commentary on our leaders. They act as though the corporation exists to enrich them, and their friends, personally: and all the other stakeholders are just leeches on the system.

CEO’s deserve to be paid well. As they were in 1970. As their abuses (with the support of subservient boards) became greater and greater the outrage increased. Peter Drucker moved from defending highly paid CEOs (say 20 or even 30 times the median employee pay) to expressing dismay at the massively excessive pay packages in the 1990s (which were much lower than that taken by the current crop of self important leeches).

Taking such excessive amounts from the corporate treasury is innately dis-respectful to all other employees (though usually they through large amounts of cash at those they have to see often which bring them into the camp of those taking instead of the masses being taken from). Whatever nice words they use to try and give an illusion that they respect those they work with (or their stockholders, suppliers, customers, communities…) doesn’t change their disrespectful actions.

Company CEO 2010 Pay
5 year pay CEO % of 2010 Earnings total employees
UnitedHealth Group Stephen Hemsley $101,960,000 $120,470,000 2.2% 87,000
Qwest Communications Edward Mueller $65,800,000 $75,000,000 company lost $55 million *
Walt Disney Robert Iger $53,320,000 $147,080,000 1.3% 156,000
Express Scripts George Paz $51,520,000 $100,210,000 4.4% 13,170
Coach Lew Frankfort $49,450,000 $137,870,000 6.7% 8,200
Polo Ralph Lauren Ralph Lauren $43,000,000 $155,250,000 9.0% 24,000
Gilead Sciences John Martin $42,720,000 $204,240,000 1.5% 4,000

Executive pay from Fortune, annual earnings from Google Finance, employee totals from Yahoo Finance. * Quest was merged into CenturyTel and I can’t find Quest employee data.

This problem is far worse in the USA than anywhere else. Some CEO’s have become jealous and urged that they be allowed to take more so they can not feel so sad about how much less they make. And so companies from other countries are moving in the wrong direction. The USA continues to move so quickly away from any sense of propriety however that they seem to be gaining on the rest of the world for how badly we can do in this area. There are of course, companies in the USA that don’t believe in letting the CEO treat themselves to whatever they want. Costco is a great example of this. That CEO respects his fellow employees and customers. We need more outrage at those CEOs that refuse to lead and instead just seek to take whatever loot they can before they leave.

Related: Another Year of CEO’s Taking Hugely Excessive Pay (2007) – CEO’s Castles and Company Performance – Honda’s top 36 employees received $13 million total (2006)

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The Impact of Leadership on Business Outcomes

Posted on October 18, 2011  Comments (6)

photo of Joe Folkman

Joe Folkman

Guest post by Joe Folkman

Have you ever been part of an organization where things were proceeding smoothly, where goals were achieved, people were busy and the organization was doing well? Then, a new leader came and everything suddenly changed for the better. The energy level of employees went up substantially, pride in the organization increased, the effort and dedication of individuals jumped, bold objectives were enthusiastically accepted and even greater results were achieved. The differences were not only measurable by the accountants, but everyone could feel it.

Perhaps you had the opposite experience where things were things were going along smoothly and a new leader was introduced and things quickly began to fall apart. High performers quit, conflicts became more apparent, work seemed much less important and there was no fun. Colleagues skulked into corners, not wanting to be engaged. Overall satisfaction decreased. Grousing and carping criticism of the leaders became rampant. People receiving promotions were chosen because of politics, not performance. Management decisions felt arbitrary and unfair. Results began to slide, and employees became the cause of the problems as much as the economy or market conditions. Key employees were laid off while the remaining people were asked to carry a bigger load. Results continued to decline, and your job felt increasingly harder and you found yourself beginning to think about quitting.

Those who have experienced great leadership or poor leadership have felt the difference. Could these changes have been predicted? Are there clear correlations between the effectiveness of a leader and the success of an organization?

Case Study on the Impact of Leadership on Customer Satisfaction
A large telecommunication company was focused on an effort to improve customer satisfaction ratings. The company wanted to know which factors impacted the customer satisfaction. A group of 81 leaders received 360 feedback from their immediate managers, peers, direct reports and others. The leadership effectiveness of each manager was evaluated by a 49 item assessment. Based on the overall rating from the 49 items, managers were divided into five groups, from leaders at the bottom 10th percentile (the worst leaders) to those at the top 10% (the best leaders).

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Best Selling Books In the Curious Cat Bookstore

Posted on August 3, 2011  Comments (0)

The most popular books in July at Curious Cat Books were, Statistics for Experiments (1st edition), followed by Statistics for Experiments (2nd edition) and the Leader’s Handbook by Peter Scholtes. These books are great, I am happy others have been finding them and reading them. Statistics for Experimenters is co-authored by my father.

Top sellers so far this year (adding together all editions, including Kindle):
1) The Leader’s Handbook
2) Statistics for Experimenters
3) New Economics
4) Abolishing Performance Appraisals
5) The Team Handbook
6) Out of the Crisis

The Leader’s Handbook is far away in the lead. The order of popularity on Amazon overall: 1) Out of the Crisis, 2) New Economics, 3) The Team Handbook, 4) Abolishing Performance Appraisals, 5) Statistics for Experimenters and 6) The Leader’s Handbook. The only thing that surprises me with the overall numbers is the Leader’s Handbook. The Amazon rankings are hugely biased by recent activity (it isn’t close to a ranking of sales this year). Still I expected the Leader’s Handbook would rank very well. It is the first book I recommend for almost any situation (the only exceptions are if there is a very specific need – for example Statistics for Experimenters for multi-factorial designed experiments or The Improvement Guide for working on the process of improvement.

My guess is Curious Cat site users (and I am sure a fair number of people sent by search engines) are much more likely to buy those books I recommend over and over. Still many books I don’t promote are bought and some books I recommend consistently don’t rack up many sales through Curious Cat.

I started this as a simple Google+ update but then found it interesting enough to expand to a full post. Hopefully others find it interesting also.

Related: Using Books to Ignite Improvement – Workplace Management by Taiichi Ohno – Problems with Management and Business Books – Management Improvement Books (2005)

The aim of leadership is not merely to find and record failures of men

Posted on June 13, 2011  Comments (3)

The aim of leadership should be to improve the performance of man and machine, to improve quality, to increase output, and simultaneously to bring pride of workmanship to people. Put in a negative way, the aim of leadership is not merely to find and record failures of men, but to remove the causes of failure: to help people to do a better job with less effort.

W. Edwards Deming, page 248, Out of the Crisis

This is a great quote, from Deming’s classic Out of the Crisis. He continues with the following lines:

Actually, most of this book is involved with leadership. Nearly every page heretofore and hereafter states a principles of good leadership of man and machine or shows an example of good or bad leadership.

I recommend Out of the Crisis for those that are serious about improving management. The book isn’t as easy to read as some management books, but the value within its covers is enormous. Deming’s 14 points for management are meant to help tie together various ideas (they not meant to be complete as a stand alone list). The 14 points were included in Out of the Crisis. He evolved to explaining his management ideas using the system of profound knowledge as a better way to capture the systemic nature of the management system. Dr. Deming’s point number 7 (in his 14 points) was to “Adopt and institute leadership for the management of people, recognizing their different abilities, capabilities, and aspiration.” His quote above explains that leadership was not some idea of being charismatic or commanding or the like but leading a system of people using all the ideas laid out in Out of the Crisis (many of which people don’t usually think of when thinking of leadership – such as using control charts).

Far too many leaders think their role is to hold people accountable. Such thinking shows much that is wrong with those that seek simple answers instead of improvement.

Related: Management and Leadership quotes by Dr. Deming – The Best Leadership Is Good Management – Problems with Management and Business Books – Leadership is the act of making others effective in achieving an aim. – The Leader’s Handbook

Sometimes Micro-managing Works

Posted on April 27, 2011  Comments (3)

Sometimes micro-managing works. That doesn’t mean it is a good strategy to replicate. If you benchmark Apple you might decide that you should have a tyrannical obsessive involved CEO who is directly involved in every detail of products and services. After all Apple is now the second most valuable company in the world with a market capitalization of $324 billion (Exxon Mobil is the top at $433 billion) and a huge part of that is Steve Jobs.

Nice quote from How to beat Apple

Apple products & services that Apple does well are the ones that Steve Jobs uses

An interesting point, and really it doesn’t matter if it is completely true it illustrates a point that Steve Jobs is the rare leader that helps by being completely involved in nearly every detail. And at the same time he provides strategic leadership rivaled by very few others. But if you try to benchmark this (simplistically – as most benchmarking is done) you will fail. This works with Steve Jobs and maybe a handful of other people alive today. But with most leaders and organizations it would fail completely.

On another point Jason Kottke makes, I would normally suggest the opposite approach:

Openness and secrecy. Competitors should take a page from Apple’s playbook here and be open about stuff that will give you a competitive advantage and shut the hell up about everything else. Open is not always better.

I think you may well be better off doing the opposite and countering Apple’s secrecy with openness. It would depend on your organization, but, I think you might be better off trying to exploit Apple’s weakness instead of trying to do what they do well. Now things are never this simple but on a cursory level I think that is where I would look.

Google now has a market cap of $171 billion, Apple is almost double that – just 3 years ago Apple first exceeded Google’s value.

Related: Leadership is the act of making others effective in achieving an aim – The CEO is Only One Person – Jeff Bezos Spends a Week Working in Amazon’s Kentucky Distribution Center – Respect for People – Dee Hock on Hiring

Quality is Made in the Board Room

Posted on April 8, 2011  Comments (1)

Dr. Deming stated “Quality is made in the board room,” page 202 Dr. Deming: the American who taught the Japanese about quality. I believe, once the board and executive leadership has put in place the right management system (one that respects people, continual improves using a standardized improvement process (that itself is being improved), practices evidence based management, focuses on customer value, improves processes rather than blames people, builds the capacity of the organization over time…) then quality is everyone’s responsibility.

Executive leadership can’t do it themselves. Making it everyone’s responsibility after the system allows everyone to participate effectively is sensible. That does not, in any way, excuse blaming those stuck in a bad system for failures they didn’t heroically overcome.

Continuing from the quote from Deming above:

A worker can deliver lower quality, but she cannot deliver quality better than the system allows…
Exhortations not only have no long-term effect, but eventually they backfire

Related: The Two Pillar of the Toyota Way: continuous improvement and respect for people – Dr. Deming on Management – Books on Applying Deming’s ideas

Productivity Improvement for Entrepreneurs (and Everybody Else Really)

Posted on March 14, 2011  Comments (2)

The 3 Factors That are Limiting Your Productivity by Evan Carmichael

Elimination is at the core of every successful business. You have to focus on what you’re really good [at], what drives your business forward, and what you’re legally required to do in order to stay in business. Everything else should be eliminated.
…
Just because everyone else does it or because you’ve always done it that way, it doesn’t mean you have to continue doing it.
…
The order of Eliminate, Automate, Delegate is very important.

Eliminate is first. You don’t want to automate or delegate something that can be eliminated because it’s a non-productive task. Automate is next. You don’t want to delegate something that can be automated because it is more expensive and more prone to error.

I agree that eliminating non-value/low-value work should be done much more often. Automating makes a great deal of sense, though I would generalize it to process improvement. Automation is great: I think that is a specific form of process improvement – automation is wise, but maybe limiting. You improve productivity both by taking less time and by producing more effectively. If you produce something of more value to customers in the same time that improves productivity.

I also think there is another important area for people to think about – new ideas. Spending more time on something might seem counter-productive to productivity improvement. It takes time after all. Going and seeing what is really going on with your own eyes takes time, but trying to save time by acting based on reports results in ineffective and therefore unproductive action.

One of the things I first when looking at using internet technology to improve performance was that the technology opens new opportunities that were not feasible previously. People often focused just on how to improve what was done. People forget to look at things that were not pursued before that are now possible. With the time you save by eliminating, improving and delegating maybe you would get a big productivity improvement by coaching someone – or by being coached yourself. Or by reading about how to apply successful management improvement strategies that are too often ignored. Or you can learn about a new strategy that is more effective such as, combinatorial testing. Or learn to eliminate ineffective strategies such as: multitasking .

A number of “new ideas” are round about ways to eliminate work, in some form, though in a bit less direct way than people normally would consider elimination. For example, if you focus on reducing turnover, you can eliminate time spent bringing new people up to speed. If you make a process more reliable you can reduce the time spent dealing with the problems from a less reliable process.
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Annual Management Blog Review: Software, Manufacturing and Leadership

Posted on January 9, 2011  Comments (2)

In my contribution to the 3rd annual management blog roundup I will take a look at 3 blogs: Dennis Stevens, How to implement “Lean Thinking” in a Business and the Three Star Leadership Blog. This year 14 management bloggers contributed to highlight over 40 blogs, be sure to check out all the posts.

photo of Dennis Stevens

Dennis Stevens


Dennis Stevens writes a blog of the same name focused on agile software development principles with a strong focus on Dr. Deming’s ideas and lean thinking.

  • What’s Deming got to do with Agile – “Deming is not about manufacturing. He is about showing management how to create an environment for success. Deming is about culture – and his System of Profound Knowledge creates an environment that is especially effective for knowledge work… In knowledge work, where products are invisible, impact can be difficult to demonstrate. Kanban clearly shows progress and demonstrates the contribution of each person to the delivery of value. Additionally, PDSA provides opportunities for everyone to contribute to improving the quality of the organization’s capabilities.”
  • Kanban Mental Models and Double Loop Learning – “the Kanban cycle supports continuous learning that the team internalizes. Argyris’s model gives us some insight into why Kanban teams are consistently achieving double-loop learning and rapid maturity.”
  • We are Doing QQ All Wrong- “Developers should be using tools that support automated unit testing and only checking in code that passes all their unit tests… Test driven development or test just after development should be ubiquitous – but it is not. Continuous Integration environments that ensure that each check-in results in a valid and testable platform help teams perform integration and build validation.”
  • Shorten and Reduce Variability in Lead Times Using Kanban – ” identify and leverage strategies like reducing waiting, reducing rework, making work ready, defining small size work, and swarming, to improve lead time. Tracking causes of defects and blockages can help make decisions to focus these strategies appropriately. Reducing lead time duration and variability will result in increased predictability, faster feedback, improved flexibility and responsiveness.”
photo of Tracey Richardson

Tracey Richardson

Tracey Richardson writes the How to implement “Lean Thinking” in a Business blog focused on the lean manufacturing and the Toyota Production System.

  • Common Mistakes when we are Problem Solving – “Not utilizing the ‘Power of the gemba’,–or often referred to as “Go see the work/process“.!! I often see teams working together in a room trying to solve the problem by using their experiences, hypothetical guesses, and what their opinion is. I quickly disperse the huddle to “go-see” with their own eyes the current situation.”
  • How many different types of A3′s are there? – “I will briefly describe the 4 different types of A3′s and when to use them based on my experience: Problem Solving A3, Proposal A3, Status Report A3, Strategic Planning A3. All A3′s should follow the PDCA thinking regardless of which type you are working on.”
  • Why is asking “Why” so important? – “It is important to ask why repeatedly when visiting the gemba to determine what is current happening versus what should be happening. In many cases we stop at a symptom to the problem because we are often pressured for results and quickly solving the problem without going past the symptom seems to be the best answer.” [this one is actually from 2009 but I included it anyway - John]

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

Posted on December 6, 2010  Comments (6)

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

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

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

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

It is a rare organization that adopts a continual improvement, long term focus, system thinking mindset initially. The tendency is often strong to focus on fire fighting, fear (am I taking a risk by doing x, if I spend time improving y – what about the monthly target my boss is measuring me on…) and maintaining the status quo. It is baffling to many hoping for improvement, when you have huge successes, and yet the old way of doing things retains a great hold. The inertia of organizations is huge.
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The role of leadership in software development

Posted on August 30, 2010  Comments (0)

The webcast of Mary Poppendieck’s talk, The role of leadership in software development, at Google. As usual Mary does a very nice job of providing some good historical background while exploring wise management practices (tied to software development but plenty useful for any manager).

via: Sheep of a different fold

Related: Lean, Toyota and Deming for Software Development – Webcast on the Toyota Development Process – Don’t Use Performance Appraisals – Lean Software Development – The Leader’s Handbook

Dee Hock on Hiring

Posted on August 16, 2010  Comments (1)

Great quote from Dee Hock, founder of Visa:

Hire and promote first on the basis of integrity; second, motivation; third, capacity; fourth, understanding; fifth, knowledge; and last and least, experience. Without integrity, motivation is dangerous; without motivation, capacity is impotent; without capacity, understanding is limited; without understanding, knowledge is meaningless; without knowledge, experience is blind. Experience is easy to provide and quickly put to good use by people with all the other qualities.

This short article from Fast Company is packed with powerful management and leadership insight. Read more Curious Cat management article suggestions, on our recently improved site.

Related: Hire People You Can Trust to Do Their Job – Hiring the Right People for the Job – find management improvement jobs: lean manufacturing, six sigma… – posts for managers on hiring staff – management and leadership quotes

Build an Environment Where Intrinsic Motivation Flourishes

Posted on August 8, 2010  Comments (8)

50 years after Douglas McGregor’s classic, The Human Side of Enterprise, too many managers still have not learned that using extrinsic motivation is not an effective way to manage complex human systems (organizations). The issue is important to me because their is a huge amount of poor management based on this thinking (focused on how people need to be fixed/motivated) instead of fixing what management really needs to fix.

You can succeed as a manager, and progress in your career, by viewing your role as helping people do their jobs well. As McGregor shows workers want to do a good job. He termed managing with this understanding theory y; and theory x is the idea that people should be motivated with carrots and sticks because they are not going to do work otherwise. Organizations have often so systemically de-motivated people they seem to have lost that desire. What you need to focus on is not motivating them with cheap tricks. Instead focus on eliminating the factors that de-motivate them.

Often simplistic motivation is seen as a replacement for fixing management performance (improving the management systems…). Instead managers should focus on eliminating the sources of de-motivation in the workplace. If you need hints, Dilbert does a good job of showing you what management does that de-motivates.

To succeed as a manager assume people wish to do a good job. If employees are not performing some task well, the manager needs to figure out what is wrong with the system that leads to this outcome (not what is wrong with the employees). When a manger views the problem as one of motivating workers that puts the problem within the worker. They need to be changed. That is the wrong strategy, most of the time. Instead you will have much more success if you seek to improve the system to improve performance.

I believe there is often a burden to overcome. As people have their intrinsic motivation crushed time after time day after day, week after week, year after year they try to protect themselves by shutting off their hope to achieve intrinsic motivation at work. You may have to show you really are serious before they will open up again. You have to make real changes and do so consistently that shows respect for people. The intrinsic motivation is a strong force and a few earlier adopters will quickly come along in all but the most broken organizations. You can build on that success (eliminating more and more de-motivation) to grow intrinsic motivation in more and more people.
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Building on Successful Improvement

Posted on July 13, 2010  Comments (3)

Do ‘Quick Wins’ Hurt Lean Initiatives?

This becomes very difficult, since in many organizations these executives have the strategic attention span equivalent to the life-cycle of a mayfly. When the ‘quick win’ approach is taken, the savings / impact becomes like a drug to the executives. They see the benefit and they want more – NOW. Usually they are able to get this for a while, since they are very interested in the program at the beginning and show their support thought attending events and removing obstacles, and in general there are a lot of opportunities in healthcare for immediate improvement. However, as these opportunities dry up, and the work gets harder, while the executives focus shifts elsewhere, the expectation is to continue to deliver exponential results (a clear sign the truly do not understand the fundamental concepts at play here), and those who are leading the Lean charge, try to appease.

If you don’t change how people think, the quick improvement can end up not helping much. I think quick wins help. But managing how those quick wins happen is important. Creating a maintaining a dialogue that while quick wins are possible, much bigger wins are possible by building on the gains to adopt more critical improvement (and often more complex and requiring more effort) .

As quick wins are achieved try and be sure they are building capacity at the same time. Get people to think in new ways and see improvement opportunities. Also have people learn new tools to attack more problems with. I firmly believe you learn lean best by doing lean. So getting quick successes is great training – better than classroom training. But in doing so, you do want to focus on making sure people understand how the quick fix is a process they can repeat to improve other areas.

And one of the skills you have to practice in the example mentioned in the post mentioned above is managing up. It is tricky but part of what you need to do is coach your bosses to understand lean so that you can expand the adoption of more lean thinking in your organization.

Related: How to Improve – Building a Great Workforce – Flaws in Understanding Psychology Lead to Flawed Management – Leadership

Management Improvement Carnival #100

Posted on June 10, 2010  Comments (6)

I started the management improvement blog carnival in 2006. At the time the number of blogs posting useful management ideas had already grown to a large number. It took years after I started my Curious Cat Management Improvement site, in 1996, to have even a handful of consistently useful web sites for those interested in improving the management of organizations.

Blogs really started the explosion of good management content online. Now we have more great blogs nearly every month. This jumbo sized edition could be much larger and still not run out of great posts to include. Hopefully the regular carnivals help you keep up with great management posts from blogs you already enjoy, and introduce you to new blogs to add to you RSS (blog feed) reader.

Photo of Arches National Park

Arches National Park by John Hunter, Curious Cat Travel Photo Blog

  • What’s Deming Got To Do With Agile? by Dennis Stevens – “If you equate Kanban with manufacturing you won’t be successful. You need to understand what Deming has to say about knowledge work and how management is responsible for creating an environment for success. Kanban brings an easy to implement – low friction implementation of Deming’s philosophy.”
  • Remember – We Want to See Problems by Bryan Zeigler – “Well if you designed your system to truly follow the lean ideals, you have problems! That’s the whole point! Make your problems visible instead of hiding them with inventory, extra labor, long lead times, etc.”
  • Control Systems and Feedback Loops by Tom Foster – “why don’t we change this control system into a feedback loop? Why don’t we have the feedback loop tell the team, and why don’t we run the feedback loop in real time? The manager just gets in the way.”
  • My Favorite Southwest Airlines Moment by Rachel Barry – ” If you live with gratitude, you will have reached life’s highest ideals. And your letter is grateful. You are a wonderful woman. Thank you, thank you, for being you and for writing me. The truth is, it just doesn’t get any better than that. ” (Southwest encourages people to act like people [and treat customers like people not numbers] instead of cogs in a machine. Not amazing when put that way but when contrasted with most other large companies it is an amazing difference. – John)
  • Organizational Kryptonite: Fear of Confrontation by Kris Dunn – “Because the world is full of people who suffer from fear of confrontation, giving good, direct, honest feedback in a professional way is often the best way to stand out as someone who can be trusted.”
  • The False Theory of Meritocracy by Nigel Nicholson – “A true theory of meritocracy would acknowledge that we all have multiple talents and motivations; and that we all can learn and improve in most of the roles in which we are placed — though how much and how fast will vary from person to person.”
  • Corporate Renewal, Waste, and Turnaround by Pete Abilla – “Each of us has a responsibility to improve those areas where we have influence. Given that, what are you going to do today to improve the business you are in? Help the people you work with? Improve the world around you?”
  • Show Me the Results by Mike Wroblewski – “Despite our efforts to make all results objective and quantifiable, in many cases, subjectivity remains. Overlooking this problem, we obsess over results… In our obsession with results, do we actually miss something, perhaps something greater?”
  • Drucker’s Surprising View of Corporate Social Responsibility by William Cohen – “Drucker concluded that considerations for workers in and out of the workplace were the responsibility of the corporate leader just as much as the profits, survival, and growth of the business or organization. Therefore, he taught that there were social responsibilities of business.”

    • Continue reading →

Bill George on Leadership

Posted on March 15, 2010  Comments (6)

Bill George is professor of management practice at the Harvard Business School and former chairman and CEO of Medtronic, the world’s leading medical technology company. Under his leadership, Medtronic’s market capitalization grew from $1.1 billion to $60 billion, averaging 35 percent a year. He is the author of the best-selling Authentic Leadership and a board member of Goldman Sachs, Target, and Novartis.

His board membership at Goldman Sachs certainly leaves him with something to answer for (which I don’t think he does in this webcast). With the damage that company has done to the USA economy you certainly can’t excuse a board member of responsibility for the actions that company has taken. You can listed to his first few minutes and don’t get the idea that he was a leader of the company most responsible for the credit crisis.

His words do sound nice but seem a bit short on much new. Lots of the “new leadership ideas” (like today you can’t have one leader that everyone follows – isn’t that at least 20 years old as a well know bad idea?). Also the idea that an organization exists to provide value to customers not to maximize shareholder value. I understand more people do not understand this point, so it is nice a Harvard MBA professor is pushing this idea (but again it isn’t new at all).

I guess I am a little disappointed in the video but others seem to like it and I do think he makes worthwhile points, just nothing really special (from where I sit). I did like how he discussed value tests come in real life.

I share what seemed to be his opinion that talking abstractly about values is less important than actions you take in the real world. I must admit I am getting more and more frustrated in the lack of moral and ethical values in those with power in our society (this is my feeling, not the speakers). And I do not have must patience for their ability to try to explain away their unethical behavior. I repeatedly see our lack of accountability of those with power (just look at how many people are in jail for all the hundreds of billions of financial fraud in the last few year (what maybe 5 people? 10?) and compare that to those in jail for much much less damaging crimes that have less power). His blog has some posts worth reading.

Related: Jeff Bezos Spends a Week Working in Amazon’s Kentucky Distribution Center – Harvard’s Masters of the Apocalypse – An Introduction to Deming’s Management Ideas by Peter Scholtes (webcast) – Eric Schmidt on Management at Google – Looting: Bankruptcy for Profit

The CEO is Only One Person

Posted on December 14, 2009  Comments (5)

The CEO is important but they are only one person. Rarely do they determine the success of a company. The instances where they seem to are so rare as to almost seem like just random luck. I think they can make a difference, but that they make a significant difference rarely. Steve Jobs seems to have made a huge difference to Apple, for example (and Jeffery Bezos at Amazon – note both of these examples are also founders of the company). Jason Zweig has a good article on Why a New CEO Isn’t Always a Panacea

Management is important, which is why Warren Buffett puts such stock in the character of the people who run the companies he invests in. But management isn’t nearly as important as many investors think, which is why Benjamin Graham, Mr. Buffett’s mentor, paid so little attention to it. In fact, Mr. Graham seldom bothered to meet the managers of the companies he invested in, partly because he felt they would tell him only what they wished him to hear and partly because he didn’t want his judgments of business value to be influenced by impressions of personal character.

If you took the CEOs with the best track records and brought them in to run the businesses with the worst performance, how often would those companies become more profitable? According to economist Antoinette Schoar of Massachusetts Institute of Technology’s Sloan School of Management, who has studied the effects of hundreds of management changes, the answer is roughly 60%. That isn’t much better than the flip of a coin.

“Some people,” Prof. Schoar says, “may have this almost blind belief that the manager at the top changes everything. Our results show that managers do matter, but they don’t change everything.”

Since the 1970s, several other studies have measured what happens when companies bring in new bosses. Most of the findings have been consistent: Changes in leadership account for roughly 10% of the variance in corporate profitability on average.
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a company will be much more inclined to replace the CEO after a run of bad losses—and to bring him in from a firm that has been on a hot streak. That leads to an illusion: “You change the CEO,” Dr. Kahneman says, “then performance reverts to the mean, and you attribute the improvement to the new guy.”

Furthermore, the hot profits at the new CEO’s former company are likely to cool off—by regression to the mean alone. When investors see that, they will mistakenly conclude that he is such a good boss that his old firm can’t thrive without him.

The management system is far more important than one person. Jim Press, Toyota N. American President, Moves to Chrysler (don’t expect much – Sept 2007). We are often fooled by randomness (understanding psychology lets you know this truth and factor it into your thinking): Illusions – Optical and Other, Attributing Random Results to a Special Cause, Seeing Patterns Where None Exists.

CEOs like to think they are royalty and take huge amounts of money from the company’s treasury, as a way, they hope, of providing evidence of this false belief. Don’t be fooled.

Jason Zwieg is the editor of the last few issues of the Intelligent Investor where he adds commentary on Benjamin Graham’s classic.

Related: Narcissistic Cadre of Senior Executives – CEO’s Given Lottery Sized Payouts – Diversification not Dazzling in Investing – Tilting at Ludicrous CEO Pay 2007 Edition

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.

The Best Leadership Is Good Management

Posted on September 6, 2009  Comments (5)

The Best Leadership Is Good Management by Henry Mintzberg

Let me suggest that you should, because what we’ve been calling a financial crisis is actually one of management. Corporate America has had too much of fancy leadership disconnected from plain old management.
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How did this happen? It became fashionable some years ago to separate “leaders” from “managers”—you know, distinguishing those who “do the right things” from those who “do things right.” It sounds good. But think about how this separation works in practice. U.S. businesses now have too many leaders who are detached from the messy process of managing. So they don’t know what’s going on.
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We’re overled and undermanaged. As someone who teaches, writes, and advises about management, I hear stories about this every day: about CEOs who don’t manage so much as deem—pronouncing performance targets, for instance, that are supposed to be met by whoever is doing the real managing.
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Instead of distinguishing leaders from managers, we should encourage all managers to be leaders. And we should define “leadership” as management practiced well.

Very well said. I have never been comfortable with the attempts to separate leadership from managing. Normally the tone is that leadership is what matters and managing is just then carrying out what leaders have determined and allowed.

I understand why we focus some areas of management as in the area of leadership: it is hard to understand the whole all at once. We can make sense of things more easily by breaking them down (analysis) and speaking of aspects as within the realm of leadership is part of this. We can discuss certain traits as leadership-related. And we can discuss the difference between leadership and power based on position: so leaders within an organization separate from those with authority shown on the organizational chart. But I do not see management and leadership as separate things.

Books by Henry Mintzberg: Managing (2009) – Managers Not MBAs – The Rise and Fall of Strategic Planning

Related: Akio Toyoda’s Message Shows Real Leadership – Seven Leadership Leverage Points – If Your Staff Doesn’t Bring You Problems That is a Bad Sign – Management Improvement Leaders
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CEO’s Castles and Company Performance

Posted on August 8, 2009  Comments (2)

Where are the Shareholders’ Mansions? CEOs’ Home Purchases, Stock Sales, and Subsequent Company Performance by Crocker H. Liu, Arizona State University and David Yermack, New York University – Stern School of Business

We study real estate purchases by major company CEOs, compiling a database of the principal residences of nearly every top executive in the Standard & Poor’s 500 index. When a CEO buys real estate, future company performance is inversely related to the CEO’s liquidation of company shares and options for financing the transaction. We also find that, regardless of the source of finance, future company performance deteriorates when CEOs acquire extremely large or costly mansions and estates. We therefore interpret large home acquisitions as signals of CEO entrenchment. Our research also provides useful insights for calibrating utility based models of executive compensation and for understanding patterns of Veblenian conspicuous consumption.
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To understand better the reasons behind the underperformance of companies whose CEOs acquire very large homesteads, we read news stories about major events affecting the firms in our sample in which a CEO acquires a property with at least 10 acres or a 10,000 square foot house. These news stories suggest parallels between the CEOs’ oversight of their personal assets and management of their companies. No less than nine of the 25 CEOs attempted major corporate acquisitions in the two years following their personal acquisitions of very large real estate,9 and seven of the 25 announced significant capital investment initiatives involving the construction or expansion of corporate facilities. An additional two firms became mired in accounting scandals shortly after their CEOs purchased mansions, and one firm saw a previously agreed merger collapse.
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Using a database of principal residences of company CEOs, we study whether these executives’ decisions about home ownership contain information useful for predicting the future path of their companies’ stock prices. We find that CEOs who acquire extremely large properties exhibit inferior ex post stock performance, a result consistent with large mansions and estates being proxies for CEO entrenchment. We also find that the method of financing a home’s acquisition is informative about future stock returns. A general pattern of CEO sales of their firms’ shares and options exists over the twelve months leading up to the date of home acquisition. However, when the CEO does not sell any shares, his stock performs significantly better ex post than the stocks of firms whose CEOs do liquidate equity to finance their houses. The retention of company shares simultaneous with a new home purchase, despite the presence of an evident personal liquidity need, appears to send a signal of commitment by a CEO to his company.

That we put in power CEO’s that see themselves as nobility with the right to build castles (and many of these CEO castles dwarf all but the most conspicuous castle built by nobility) by taking the wealth produced by others from corporate coffers is a sign of our failure to select acceptable leaders for companies.

Related: Another Year of CEO’s Taking Hugely Excessive Pay – Excessive Executive Pay – Exposing CEO Pay Excesses – Narcissistic Cadre of Senior Executives – 9 Deadly Diseases

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