Extrinsic Incentives Kill Creativity

Posted on September 21, 2009 by John Hunter

If you read this blog, you know I believe extrinsic motivation is a poor strategy. This TED webcast Dan Pink discusses studies showing extrinsic rewards failing. This is a great webcast, definitely worth 20 minutes of your time.

  • “you’ve got an incentive designed to sharpen thinking and accelerate creativity and it does just the opposite. It dulls thinking and blocks creativity… This has been replicated over and over and over again for nearly 40 years. These contingent motivators, if you do this then you get that, work in some circumstances but in a lot of tasks they actually either don’t work or, often, they do harm.”
  • “there is a mismatch between what science knows and what business does“
  • “This is a fact.”

What does Dan Pink recommend based on the research? Management should focus on providing workplaces where people have autonomy, mastery and purpose to build on intrinsic motivation.

via: Everything You Think about Pay for Performance Could Be Wrong [the broken link was removed]

Related: Righter Incentivization – What’s the Value of a Big Bonus? – Dangers of Extrinsic Motivation – Motivate or Eliminate De-Motivation – Great Marissa Mayer Webcast on Google Innovation

Posted in Creativity, Deming, Management, Performance Appraisal, Psychology, quote, Science | Tagged , , , , , , , , , , , | 5 Comments

Management Improvement Carnival #76

Posted on September 20, 2009 by John Hunter

Kevin Meyer is hosting the Management Improvement Carnival #76 on the Evolving Excellence blog, highlights include:

Read more management improvement carnivals

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Finding Savings with Six Sigma

Posted on September 19, 2009 by John Hunter

I don’t see any evidence six sigma is making a comeback but magazines like to talk about new ideas rather than just explore what continues. They like to discuss common cause variation as though it were special cause. Six Sigma Makes a Comeback

Unlike in the 1990s, when such executives as General Electric’s Jack Welch embraced Six Sigma with missionary zeal, consultants say today’s converts generally are looking for a fast way to save money.

How sad. Six sigma has always been hampered by a lack of core values (like respect for people, constancy of purpose) and a focus on cost cutting but the direct desire to pursue a deadly disease (short term focus) is sad indication of where some have taken what can be very useful tools.

Still, Six Sigma is finding new life, especially in retail. Target (TGT) claims more than $100 million in savings over the past six years from the program. Mike Fisher, Best Buy’s (BBY) senior director of Lean Six Sigma, says projects like streamlining appliance installation have helped the company save up to $20 million in some cases. “Without a doubt, it put us in a better position to muscle through the recession by getting all of those inefficiencies out,” says Fisher.

Six sigma and quality management other efforts can be very useful. But many of the efforts (as many of any management efforts) are executed poorly and do little good and much that is rightly ridiculed.

Related: Quality and Innovation – Six Sigma Much More than Common Sense – Process Improvement and Innovation

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How ‘Buy American’ Can Hurt U.S. Firms

Posted on September 16, 2009 by John Hunter

How ‘Buy American’ Can Hurt U.S. Firms

Canadian communities angered by perceived American chauvinism have started a Buy Canadian campaign to exclude U.S. bidders from municipal contracts. “If that sticks, well, there goes 25% of my business,” said Mr. Pokorsky. “To me, Ontario may as well be Indiana.”

Halton Hills, a town of 50,000 people about 25 miles west of Toronto, is one of about a dozen Canadian communities forging ahead with plans to amend their procurement policies to freeze out American companies. “We won’t be taking any products from any country that is discriminating against us,” said Mayor Rick Bonnette.
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Aquarius gets a lot of its parts from abroad, particularly from Canada. Such integration became even tighter after the North American Free Trade Agreement in 1994 joined the U.S., Canada and Mexico in a free flow of goods and services.

Trojan Technologies Inc. of Ontario, North America’s dominant maker of ultraviolet disinfection equipment for treating sewage, is a key supplier to Aquarius and other companies. Because of the Buy American provisions, Trojan has had to shift production to a plant in Valencia, Calif., a move that has resulted in delays and additional costs being passed on to customers, said Trojan executive Christian Williamson.

The challenges of trying to legislate market choices such as what products to buy are difficult. It is understandable to want to direct stimulus funds to improving the economy today in the USA. Creating legislation that can cope with interactions and unintended consequences inherent in such attempts is not easy.

Related: China and the Sugar Industry Tax Consumers – New Look American Manufacturing – Russell Ackoff Webcast on Systems Thinking – Why Congress Won’t Investigate Wall Street

Posted in Competition, Economics, Lean thinking, Systems thinking | Tagged , , , , | 2 Comments

An Introduction to Deming’s Management Ideas by Peter Scholtes (webcast)

Posted on September 14, 2009 by John Hunter

An Introduction to Deming’s Management Teaching and Philosophy by Peter Scholtes – webcast from the Annual W. Edwards Deming Institute conference in Madison, Wisconsin, November 9th, 2008. My previous post on this speech: 6 Leadership Competencies.

Next month, the Annual Deming Institute conference will be held at Purdue on Oct 10th, 2009.

Related: Peter Scholtes’ Life – Curious Cat’s Deming on Management – The Leader’s Handbook – Performance without Appraisal

Posted in Creativity, curiouscat.com, Deming, Education, Innovation, Lean thinking, Management, Performance Appraisal, Popular, Process improvement, Psychology, quote, Respect, Science, Systems thinking, webcast | Tagged , , , , , , , , , , , | 4 Comments

Understanding How to Manage Geeks

Posted on September 12, 2009 by John Hunter

The unspoken truth about managing geeks [the broken link was removed] by Jeff Ello

IT pros are sensitive to logic — that’s what you pay them for. When things don’t add up, they are prone to express their opinions on the matter, and the level of response will be proportional to the absurdity of the event. The more things that occur that make no sense, the more cynical IT pros will become… Presuming this is a trait that must be disciplined out of them is a huge management mistake. IT pros complain primarily about logic, and primarily to people they respect. If you are dismissive of complaints, fail to recognize an illogical event or behave in deceptive ways, IT pros will likely stop complaining to you. You might mistake this as a behavioral improvement, when it’s actually a show of disrespect. It means you are no longer worth talking to, which leads to insubordination.
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Good IT pros are not anti-bureaucracy, as many observers think. They are anti-stupidity. The difference is both subjective and subtle.
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The primary task of any IT group is to teach people how to work. That’s may sound authoritarian, but it’s not. IT’s job at the most fundamental level is to build, maintain and improve frameworks within which to accomplish tasks.
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it’s all about respect. If you can identify and cultivate those individuals and processes that earn genuine respect from IT pros, you’ll have a great IT team. Taking an honest interest in helping your IT group help you is probably the smartest business move an organization can make. It also makes for happy, completely non-geek-like geeks.

The article makes very good points. As I have said before software developers expect more of management than most staff do. And I would say software developers are seen as more cynical than most staff because they accurately evaluate management’s failures (and are more willing to speak up about problems).

Pretending software bugs don’t exist doesn’t work. Pretending management bugs don’t exist doesn’t work either, but most are willing to pretend management bugs don’t exit. Programmers often figure bugs should be acknowledged and dealt with, rather than pretending they don’t exist. But they are called cynical when they mention management bugs – which only makes them less confident in the ability of management to preform their responsibilities.
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Posted in IT, Management, Psychology, Respect, Software Development | Tagged , , , , , | 6 Comments

Management Improvement Carnival #75

Posted on September 10, 2009 by John Hunter
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Loan Default Rates Continue to Increase

Posted on September 9, 2009 by John Hunter
chart of loan default rates 1998 to 2009Chart showing loan default rates for real estate, consumer and agricultural loans for 1998 to 2009 by the Curious Cat Investing Economics Blog, Creative Commons Attribution, data from the Federal Reserve.

Default rates on commercial (up another 151 basis points) and residential (93 basis points) real estate continued to increase dramatically in the second quarter. Credit card default rates increased but only by 20 basis points.

Real estate default rates exploded in 2008, in the aftermath of the financial market meltdown. In the 4th quarter of 2007 residential default rates were 3.02% by the 4th quarter of 2008 they were 6.34% and in the 2nd quarter of this year they were 8.84% (582 basis points above the 4th quarter of 2007). Commercial real estate default rates were at 2.74% in the 4th quarter of 2007, 5.43% in the fourth quarter of 2008 and 7.91% in the 2nd quarter of 2009 (a 517 basis point increase).

Credit card default rates were much higher than real estate default rates for the last 10 years (the 4-5% range while real estate hovered above or below 2%). Now they are over 200 and 300 basis points bellow residential and commercial default rates respectively. From 4.8% in the 3rd quarter 2008 to 5.66% in the 4th and 6.5% in the 1st quarter of 2009.

Small steps to reduce the large consumer debt have been made recently: consumer debt declined a record $21.5 billion in July. Since April of 2008 consumer debt has been reduced by $70 billion in the USA. Unfortunately we still have $2.47 trillion or
$8,233 for every person (using 300 million as the total population).
Data from the Federal Reserve

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The Best Leadership Is Good Management

Posted on September 6, 2009 by John Hunter

The Best Leadership Is Good Management [the broken link has been removed] 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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Posted in Management, Management Articles, Systems thinking | Tagged , , , , | 7 Comments

Management Improvement Carnival #74

Posted on September 1, 2009 by John Hunter

Curious Cat Management Improvement Blog Carnival

  • What Else Can Software Development and Testing Learn from Manufacturing? Don’t Forget Design of Experiments (DoE). by Justin Hunter – “In short, Design of Experiments methods are a proven approach to creating and manage experiments that alter variables intelligently between each test run in a structured way that allows the experimenter to learn as much as possible in as few experiments as possible.”
  • The Versatile Leader by Ron Pereira – “I firmly believe the best leaders are those that can apply the appropriate leadership style at the appropriate time.”
  • Manually Collecting Data is a Good Thing! by Lee Fried – “having the teams and local managers collect the data manually is one of the best things they can do to learn their processes and understand the problems of their area.”
  • Scrum of Scrums: Making it visual by Xavier Quesada Allue – “There are only two columns: ‘Story’ and ‘Status’. Story has a copy of the story card that is on the team board. Status is normally ‘not started, ‘in progress’, ‘done’ or ‘done-done’ (a curious distinction between ‘we think we’re done’ and ‘we’re sure we’re done’).”
  • Hospital Gets Vendor Visits Under Control by Karen Wilhelm – “An estimated $10 million has been saved as doctors now prescribe generic drugs 74% of the time, up from 60% in the past. Without sales reps prodding them, they use more tried-and-true medications unless the new ones have been shown to be really more effective.”
  • Lean Energy Treasure Hunts at GE by Jon Miller – “The energy treasure hunt is the classic ‘go see’ activity. Form a cross-functional team and go find energy waste.”

    • Continue reading →

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