Category Archives: Popular

Dr. Deming Webcast on the 5 Deadly Diseases

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

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

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

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 And I would add two new deadly diseases of management: excessive executive compensation and an outdated intellectual property system.

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

Helping Employees Improve

One aspect of managing people is to provide positive feedback and show appreciation. Doing so is important. People benefit from encouragement and reinforcement. In addition to just telling them, take action to show your appreciation.

The Dilbert workplace is alive and well. And even in above average management systems there is plenty of resistance faced by those looking to improve systems. For those employees that are making the attempt to improve the organization go beyond saying thanks: actually demonstrate your appreciation. Do what you can to help them achieve.

A manager should be enabling their employees to perform. That means taking positive steps that help them perform. This is even more appreciated than saying thanks. And has the added benefit of helping the organization by helping along their good idea. It is win, win, win. They win, you win and the organization wins.

Thoughts on: Rewards and Recognition

Related: Keeping Good EmployeesRespect for People Requires Understanding PsychologyPeople are Our Most Important AssetMotivationIncentive Programs are Ineffective

Creating Customers For Life

How These Businesses Made Me A Customer For Life

So I walked out of Ray’s that day with a great deal and everything that I needed to get started. Since then, I have made every single sewing related purchase possible from their store. In some cases, I have gone way out of my way to drive there (it takes 20 minutes) just to pick up some spools of thread. I have also referred them to all of my friends. As far as I’m concerned, there are no other sewing dealers that I’m willing to deal with other than Ray’s.

I can speak so highly about these businesses because I’m extremely passionate about what they have to offer. Can you extract this kind of loyalty with your small business? You bet you can. Just think about the places and businesses that you are loyal to and replicate what they do. What sets your business apart from the competition? What can you do to provide lasting value? Keep a tally of these attributes, focus on the long run and you’ll be on the right path.

I love how easy it is to deal with Amazon. I’ll use them unless they don’t have an item. Shopping at Trader Joe’s is odd. The workers actually seem like they like that they have customers. And seem as though they want to do what they can to please customers. You wouldn’t think this would be an odd trait if you read about management in a book and never actually went to stores. But I find almost few retail employees see happy provide customer service.

Related: Ritz Carlton and Home Depot contrast in customer serviceGood Customer Service ExampleSeven Steps to Remarkable Customer ServicePaying New Employees to QuitCustomer Service is Important

Eric Schmidt on Management at Google

Eric Schmidt speaks at the Management Lab Summit on May 29, 2008 in Half Moon Bay, California. Conversation with Professor Gary Hamel.

  • “The culture can be thought of as a ship and iterate culture with transparency for what people are doing. And that model scales pretty well.”
  • “I have two jobs, two roles. The first is to make sure every issue that is important is really debated to find, not the common outcome, but the best decision… second thing is to put pressure to make it happen quick.”
  • “it [managing better] starts with listening, it has to do with curiosity
  • “everything has to be based on some fact”
  • “It’s only about the people.” [respect for people is critical, Google really acts as though the people are their most important asset – John].
  • “What is the number 1 goal of the company? It is end user happiness with search. What is the number 2 goal? It’s end user happiness with advertising. What is the number 3 goal? The construction of the Google network of partners to effectuate the first two. What is the number 4 goal? To grow and scale the business… You will eventually get extraordinary returns for your shareholders and maximize advertiser happiness if all those things happen… There are a lot of business executives that get confused on what the goal is and they think that shareholder value is the goal. Shareholder value is a consequence of the goal.”

Related: Eric Schmidt Podcast on Google Innovation and EntrepreneurshipInterview with Google CEO Eric SchmidtInnovation at GoogleGoogle: Experiment Quickly and OftenMarissa Mayer Webcast on Google InnovationGoogle Management by Gary HamelLarry Page and Sergey Brin Interview Webcast

Toyota Execution Not Close to Being Copied

The Open Secret of Success

Toyota’s innovations, by contrast, have [focused] on process rather than on product, on the factory floor rather than on the showroom. That has made those innovations hard to see. But it hasn’t made them any less powerful.

At the core of the company’s success is the Toyota Production System, which took shape in the years after the Second World War, when Japan was literally rebuilding itself, and capital and equipment were hard to come by. A Toyota engineer named Taiichi Ohno turned necessity into virtue, coming up with a system to get as much as possible out of every part, every machine, and every worker. The principles were simple, even obvious – do away with waste, have parts arrive precisely when workers need them, fix problems as soon as they arise. And they weren’t even entirely new – Ohno himself cited Henry Ford and American supermarkets as inspirations. But what Toyota has done, better than any other manufacturing company, is turn principle into practice. In some cases, it has done so with inventions, like the andon cord, which any worker can pull to stop the assembly line if he notices a problem, or kanban, a card system that allows workers to signal when new parts are needed.

Very true, except one thing. Toyota’s innovation is not limited to process and execution. Toyota’s long term vision results in very dramatic innovation (that granted is not getting the press today – check back in 20 years, I think you will be reading about it then). For some examples see: Toyota’s Partner Robot, Toyota as Homebuilder, Toyota Engineers a New Plant: the Living Kind and The Birth of Prius.

A company truly driven by a focus on continual improvement, respect for all employees and reasonable executive compensation might be a company serious about adopting Deming and Toyota management principles. It is hard for me to imagine such a situation that doesn’t truly seek, as the primary aim of the organization, to benefit many stakeholders (workers, owners, suppliers, customers…) not just executives (or just executives, board and owners…).

Related: Toyota Management Develops the New CamryBetter and DifferentDeming and ToyotaToyota Keeps ImprovingMore Positive Press for Toyota ManagementGood Execution is Important

Creating Jobs

Do Lean Companies Create Fewer Jobs?

No, they create more. If you assume the lean company grows sales at the same rate as some poorly management company then it may well be that the lean company creates fewer jobs. However that is not a valid assumption. Deming provided the reason in his presentations to Japan in the 1950’s with his chain reaction. From page 3 of Out of the Crisis

  • Improve Quality —>
  • Costs decrease because of less rework, fewer mistakes, fewer delays, snags, better use of machine-time and materials —>
  • Productivity Improves —>
  • Capture the market with better quality and lower price —>
  • Stay in Business —>
  • Provide jobs and more jobs

For an example of this process at work see GM, Ford and Toyota. Toyota defines lean (Toyota’s management system is what was called lean manufacturing by Jim Womack and Dan Jones). Toyota continues to add employees while Ford and GM have been shedding jobs.

It is true, for lean (and un-lean) companies alike, productivity is improving (it just improves more at lean companies) which means that fewer people are needed to produce the same amount as we have in the past. We have posted previously about the mistaken belief that jobs are moving overseas.
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Deming Companies

I get asked for examples of Deming managed companies fairly often. And recently I have had a number of such requests. So I figured I would provide an answer as a blog post. First, Dr. Deming would respond to such questions by referring to the theory of knowledge and the fallacy of trying to learn via examples. So remember to read up on why learning from examples is dangerous before taking to much from this.

I see Toyota as the best example of a Deming company. Dr. Deming did not propose a cookbook to follow. Instead he proposed a theory that requires learning and application within the specific institution. Toyota has created a management system that is based on Dr. Deming’s ideas and then they have evolved that over 60 years into something that is consistent with Deming’s management philosophy and has new ideas Deming did not mention. As odd as it may sound that very act of developing new concepts that were not mentioned by Dr. Deming is exactly what makes them the company that most exemplifies Deming’s management system.

Other companies that have also done a great job applying his ideas. Peaker Services has done great things. Ian Bradbury is the President and a friend. He spoke at a seminar I co-presented and I included links to a couple documents of his in a blog post. He worked at GM Power System when Dr. Deming was working with GM. Richard R. Steele founder and also serves on the Deming Institute board of trustees.

Hillerich & Bradsby Company has been following Dr. Deming’s ideas since 1984. John A. Hillerich is President and Chairman of the Board of Hillerich & Bradsby Company and serves on the Deming Institute board of trustees. The companies brands include: Louisville Slugger and Powerbuilt.

A couple of good books explore companies adopting Dr. Deming’s ideas: Free, Perfect and Now by Robert Rodin (a great book by the CEO of Marshall Industries), highly recommended). Unfortunately the company was bought by a larger company and I do not believe the Deming philosophy is alive and well (but I could be wrong). Always Think Big by Jim McIngvale is by the CEO. Mattress Mack: One man, one store, one of a kind.

Omnilingua has had amazing success applying Dr. Deming’s idea and I am proud to call Eric Christiansen their president a friend. Lean Blog Podcast with Eric Christiansen “A Deming Company”. In a previous post I recapped another example: Dr. Deming’s Ideas at Markey’s Audio Visual.

Companies awarded the Deming prize can also provide good examples. Four subsidiaries of the Rane Group in India has received awards in the last few years. Numerous people have done great things within companies – creating pockets of Deming practice. Some great examples include Steven Prevette – see some of his articles on Deming. David Anderson has incorporated Deming ideas within Microsoft and then Corbis – see his Agile Management Blog. William Bellows has a long term effort at Boeing’s Rocketdyne Propulsion & Power business unit. They offer conference call study sessions on Deming’s ideas for those within Boeing and also allow outside participation. He is also a member of the Deming Institute board of trustees.

This is just off the top of my head so I am sure I have left off many good examples. Also, for me the company needs to have an understanding what they are doing evolved from Dr. Deming’s ideas to list them (many companies have practices which are Deming based but they do not have an appreciation for Deming’s system of management – I think that appreciation is needed to be a “Deming company”). Many companies that truly and deeply practice lean manufacturing are applying many of Deming’s ideas. However to me if they do not understand the roots of the ideas from Dr. Deming I don’t consider that a “Deming company.” But that label is not all that meaningful anyway – so this just explains my thinking.

Feel free to add your suggestions in the comments.

Related: The Purpose of an OrganizationDeming management blog posts

Arbitrary Rules Don’t Work

Photo showing evidence of people ignoring gate

Procedurally Enforcing Workflow by Michael Salamon:

UI gem, and a great reminder for the RIAA/MPAA:

You can’t force people to follow directions they deem arbitrary.

I bet if that gate spit out $100 bills people would use it.

Why matters. You can’t just expect people to act in a way that seems arbitrary. As I stated in Poka-Yoke Assembly, Do you Read Instructions Carefully Before Assembly? Nope, I don’t. I expect I can make a quick judgment if I really need to or I basically get it and can put things together well enough. I expect the supplier to make very obvious anything critical. It is not ok to expect people to think the way you want them to. You have to understand how people will react and create solutions based on that.

We have discussed similar ideas: Why Isn’t Work Standard?Visual Work InstructionsVisual Instructions ExampleEuropean Blackout: Human Error-NotFind the Root Cause Instead of the Person to Blame

A similar example I learned long ago. Many schools try to force students not to walk on the lawn and create ugly paths through the grass. A smart alternative. Wait for the students to wear a path. Then pave that. If you are frustrated because people won’t follow your rules your rules are probably bad. Fix the rules (or procedures…). Don’t expect telling people in a loud voice (or stern memo or…) that they must follow your rules.

Great Marissa Mayer Webcast on Google Innovation

Marissa Mayer speech at Stanford on innovation at Google (23 minutes, 26 minutes question and answers). She leads the product management efforts on Google’s search products- web search, images, groups, news, Froogle, the Google Toolbar, Google Desktop, Google Labs, and more. She joined Google in 1999 as Google’s first female engineer. Excellent speech. Highly recommended. 9 ideas:

(inside these are Marissa’s comments) [inside these are my comments]

  1. Ideas come from anywhere (engineers, customers, managers, executives, external companies – that Google acquires)
  2. Share everything you can (very open culture)
  3. You’re Brilliant. We’re Hiring [Google Hiring]
  4. A license to pursue dreams (Google 20% time)
  5. Innovation not instant perfection (iteration – experiment quickly and often)
  6. Data is apolitical [Data Based Decision Making – this is true but as an operating principle requires people that really understand data. See: Data can’t lie.
  7. Creativity loves Constraints [process improvement and innovation]
  8. Users not money [the opposite of what business school’s teach business case]
  9. Don’t kill projects morph them

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Bad Management Results in Layoffs

In response to Is Laying People off Really Anti-Lean? [the broken link was removed]:

Let’s say you, a Lean enthusiast, are named CEO of a mid sized manufacturing company. Let’s also assume your market has turned down and the constraint is clearly the market. Let’s also assume you need to improve operating income above all else. The final assumption is the company you inherited is not even good at mass production. They just stink at everything.

If you come into this situation and realize that you can implement some basic lean and six sigma principles and only need half the workforce to meet customer demand what do you do?

Layoffs are a failure of management. If the company has not been executing a long term strategy to respect people and manage the system to continually improve, manage for the long term, working with suppliers… it might be they have created an impossibly failed organization that cannot succeed in its current form. And so yes it might be possible that layoffs are required.

It is very easy to jump to layoffs as the “answer” though. While it is possible to construct a situation in which they make sense that such a hypothetical situation it rarely is the case that an organization is committed to lean and then makes layoffs. Instead they just think the same old way and mention the word lean since they see others doing it and layoff sounds like it is lean to someone that doesn’t know the first thing about lean thinking.

I would not see, “a focus on improving operating income above all else” as a lean way of thinking. Improving that is one focus among many that are needed to achieve long term success.

Does that mean a organization doing a great job of managing in a truly lean way may not find itself in a position where layoffs are necessary? No. Failing to predict and execute may have consequences and those may include layoffs. In your example things are confused a bit by separating the responsibility of getting into the mess from what to do next. Definitely, riding out a few poor quarters would be preferable. I have absolutely no question about that.

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