| Page 55

Dr. Deming Webcast on the 5 Deadly Diseases

Posted on August 26, 2009 by John Hunter

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 And I would add two new deadly diseases of management: excessive executive compensation and an outdated intellectual property system.

Posted in Deming, Economics, Lean thinking, Management, Performance Appraisal, Popular, quote, webcast | Tagged Deming, long term thinking, management, management experts, management webcast, Performance Appraisal, Popular, quote, webcast | 7 Comments

Management Improvement Carnival #73

Posted on August 20, 2009 by John Hunter

Curious Cat Management Improvement Blog Carnival

The Maddening Effectiveness of Root-Cause Analysis – “And I wonder: how often this is a subtle blockage to individuals and teams doing good root cause analysis? How often am I fearful of Really Knowing just what is at the root of some undesirable outcome?”
Lean and Basketball – “in a strong Lean business, it is essential to have a well-trained and motivated staff to execute all of the good tools and methodologies that have been introduced to them.”
Phronetic Leadership — Father of Scrum explores a new type of Leadership by Kenji Hiranabe – “Phronesis is a concept that synthesizes ‘knowing why’ as in scientific theory, with ‘knowing how’ as in practical skill, and “knowing what” as a goal to be realized. Unlike episteme, it emphasizes practices in particular contexts. However, phronesis is not just knowledge within a certain, particular context per se. Since it is knowledge to serve the “common good”, it implies an affinity with universal principles.”
What Happened to the Deming Philosophy? by Rip Stauffer – “I have had Quality executives from major corporations tell me that “Deming was just a philosophy,” implying that it was pie-in-the-sky, without any practical use for business. It’s hard to get these people to listen to you after you explain how ignorant a statement that is…”
One reason why so many lean initiatives fail by Dan Markovitz – “But it’s worth thinking about whether top management is doing what they need to do to make it work. As Jamie Flinchbaugh says, when clients tell him that management is 100% behind them: ‘Behind is still behind. Leadership is about being out in front.'”

Continue reading →

Posted in Carnival, Management | Tagged Carnival | Comments Off

Blame the Road – Not the Person

Posted on August 19, 2009 by John Hunter

The system is responsible for 90, 92, 94, 97% of problems – W. Edwards Deming. Fix the system, don’t blame the people. When you seek system fixes you approach situations differently than if you search for people to blame.

By the way, I am often asked about the data supporting Deming’s contention that the system was responsible for 97% of the problems. This statement was not based on a set of data but on Dr. Deming’s decades of experience. And he increased the percentage over time – as he learned more.

Roads that are designed to kill

Half blamed the runner, saying she should not have been running in the street at that hour. Half blamed the driver, for not paying close enough attention. Not a single writer blamed the road.
…
Your streets are designed to kill people.
…
Vision Zero started about 30 years ago, when traffic safety researcher Claes Tingvall got the idea that we didn’t have to accept road traffic deaths as a fact of life. Tingvall and his colleagues said that these deaths were not “accidents’’ but were predictable and preventable. And they set out to prove it.

One of the ways they began to protect people was to put barriers down the center of two-lane roads. They showed that this could be done cheaply. When Mylar – a strong polyester film – is supported by closely spaced plastic poles, it can keep cars from crossing the median. When the Swedes used this type of center barrier to separate the traffic going in opposite directions, they effectively prevented head-on collisions and the death rate on these roads fell by 70 percent to 80 percent.

Global health research shows more improvements can save lives. For example, Ghana put in rumble strips – small bumps spaced closely together – across all the roads leading into the capital city of Accra, reducing fatalities by 35 percent. Research has shown that speed bumps on roads are one of the “best buys” in all of global health.
…
Most people think we are doing all that can be done to keep our roads safe. They are wrong. Road traffic injuries kill more than a million people a year worldwide, including 40,000 a year in the United States.

Is a situation killing 40,000 people in the USA a year a health care issue? It sure seems to me it would be. It probably isn’t a disease management issue though (some might try to say bad roads are a disease but I wouldn’t say that). I think this is one, of many examples, that shows that we have a disease and injury management system not a health care system (in addition to illustrating systems thinking, effective root cause analysis, PDSA, innovation, respect for people…).

Posted in Creativity, Data, Deming, Economics, Health care, Management, Systems thinking | Tagged Creativity, Deming, Economics, Health care, health care system, Innovation, Systems thinking | 5 Comments

YouTube Uses Multivariate Experiment To Improve Sign-ups 15%

Posted on August 17, 2009 by John Hunter

Google does a great job of using statistical and engineering principles to improve. It is amazing how slow we are to adopt new ideas but because we are it provides big advantages to companies like Google that use concepts like design of experiments, experimenting quickly and often… while others don’t. Look Inside a 1,024 Recipe Multivariate Experiment

A few weeks ago, we ran one of the largest multivariate experiments ever: a 1,024 recipe experiment on 100% of our US-English homepage. Utilizing Google Website Optimizer, we made small changes to three sections on our homepage (see below), with the goal of increasing the number of people who signed up for an account. The results were impressive: the new page performed 15.7% better than the original, resulting in thousands more sign-ups and personalized views to the homepage every day.
…
While we could have hypothesized which elements result in greater conversions (for example, the color red is more eye-catching), multivariate testing reveals and proves the combinatorial impact of different configurations. Running tests like this also help guide our design process: instead of relying on our own ideas and intuition, you have a big part in steering us in the right direction. In fact, we plan on incorporating many of these elements in future evolutions of our homepage.

via: @hexawise – My brother has created a software application to provide much better test coverage with far fewer tests using the same factorial designed experiments ideas my father worked with decades ago (and yet still far to few people use).

Posted in Customer focus, Data, Design of Experiments, Google, IT, Management, Process improvement, Quality tools, quote, Science, Software Development, Statistics | Tagged curiouscat, Customer focus, Data, Design of Experiments, experiments, Google, Innovation, internet, management, Science, Software Development, Statistics | 2 Comments

Baking in Quality to Software Development

Posted on August 15, 2009 by John Hunter

One of the reasons my organizations switched to Ruby on Rails for software development was the great integration with automated testing. We always wanted to have good test coverage on our software applications (which are web applications – some used only inside our organization) but didn’t actually find the time to do so. Since we adopted Ruby we have been doing much better in this regard. It isn’t just the switch to Ruby, of course, but the switch to Ruby coincided with the beginning of many improvements to our software development practices that have continually improved over the last couple of years.

Here is a post on How to build quality software by an agile, Ruby, lean software developer

I’ve mentioned previously about baking-in quality and not having developers throw code over a wall to testers.
…
Everyone on the team is concerned with not only assuring quality in what we deliver, but making it visible to ourselves and the business.

We work in an agile manner, iterating through development with extreme programming practices and Behaviour Driven Development. Facilitating our relationship with the business is Scrum and we utilise kanban principles and systems thinking to maintain a speedy throughput of high-quality work. This mixture allows us to communicate effectively, develop the correct features properly and continuously deploy our work when it is complete, thus maximising business value. I should also mention that we are fortunate enough to have our business people/customer sat across from us.
…
Without testers or a QA team there is no wall over which work can be thrown and the responsibility for quality absolved.
…
The inspection typically carried out end-of-cycle only yields bugs that were low severity and of no real impact to the end user.
…
An agile testing must-have, we use TeamCity to continuously run our unit tests on each check-in. We also execute our Cucumber acceptance tests on scheduled runs. The status of the builds are visible on dedicated monitors around the office as well as a nice 6”² projected screen.

via: @benjaminm

Posted in Deming, IT, Lean thinking, Management, Process improvement, Quality tools, Software Development | Tagged agile management, Deming, inspection, Lean thinking, Quality tools, Ruby, Software Development, software testing | 2 Comments

Don’t Hide Problems in Computers

Posted on August 11, 2009 by John Hunter

Making things visible is a key to effective management. And data in computers can be easy to ignore. Don’t forget to make data visible. Paul Levy, CEO of Beth Israel Deaconess Medical Center in Boston recently hosted Hideshi Yokoi, president of the Toyota Production System Support Center and wrote this blog post:

Together, we visited gemba and observed several hospital processes in action, looking for ways to reduce waste and reorganize work. It was fascinating to have such experts here and see things through their eyes. Mr. Yokoi’s thoughts and observations are very, very clear, notwithstanding a command of English that is still a work in progress.

The highlight? At one point, we pointed out a new information system that we were thinking of putting into place to monitor and control the flow of certain inventory. Mr. Yokoi’s wise response, suggesting otherwise, was:

“When you put problem in computer, box hide answer. Problem must be visible!”

The mission of the Toyota Production System Support Center to share Toyota Production System know-how with North American organizations that have a true desire to learn and adopt TPS.

Posted in Data, IT, Lean thinking, Management, Quality tools, Toyota Production System (TPS) | Tagged Data, Health care, IT, lean healthcare, lean management, lean manufacturing, Lean thinking, Toyota Production System (TPS) | 3 Comments

Management Improvement Carnival #72

Posted on August 10, 2009 by John Hunter

Jon Miller is hosting the Management Improvement Carnival #72 on the Gemba Panta Rei blog, highlights include:

Three Key Principles when Leading without Authority – One piece of advice passed down by Toyota managers is to “lead as if you had no power” George Ambler writes about the three key principles of leading without authority. They are built around having enthusiasm, humility and the strength to not let results come before leadership. Most of us who lead or attempt to do so are lacking in one or more of these areas. If I said that my weakness was enthusiasm, would that mean I fail at humility?
Lean Accounting SuperGroup – Although not exactly a blog, the Lean Accounting SuperGroup is a destination for its growing body of information on lean, management and how to count correctly. The five videos introducing lean accounting are not t be missed.
When is it time for lean “lite”? – For a full scale implementation there are certain things that should first be in place, but there are plenty of broken windows we can fix. Jamie Flinchbaugh tells us that it’s better to get started where you can, stumble and learn than to wait.
What if we chose leaders differently? – This was a thought provoking piece on Wally Block’s Three Star Leadership Blog. Those of us who live in countries where we can elect our leaders are fortunate, and should ask ourselves this question. I do every election cycle, looking at the choices we are given for leaders. On a more practical level, anyone who is a member of a team or a leader of a team has influence on the selection of a leader. The answers to this question aren’t easy but this is a question worth pondering.

Visit the Curious Cat Management Improvement Carnival home

Posted in Carnival | Tagged Carnival | 1 Comment

CEO’s Castles and Company Performance

Posted on August 8, 2009 by John Hunter

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.
…
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.
…
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.

Posted in Data, Economics | Tagged executive pay, leadership, management research, overpaid executives, research | 3 Comments

Bogus Theories, Bad for Business

Posted on August 6, 2009 by John Hunter

The Wall Street Journal has a book review of The Management Myth by Matthew Stewart. The book flushes out the ideas Matthew Stewert explored in a previous article in the Atlantic about the failure of management to mature as a discipline.

Mr. Stewart quotes Bruce Henderson, the founder of the Boston Consulting Group, who describes consulting as “the most improbable business on earth” and who goes on to ask: “Can you think of anything less improbable [sic] than taking the world’s most successful firms, leaders in their businesses, and hiring people just fresh out of school and telling them how to run their businesses, and they are willing to pay millions of dollars for their advice?”

I’m not sure about the book, I have not read it but that is a great statement. And I firmly believe managers need to become experts at managing and by and large they have quite a long way to go. Dr. Deming talked about how we “know” what we know in the aspect of his management called the theory of knowledge (which is not included in any other management philosophy I have seen). That area (with interactions in other areas) explores why people often believe what is not so. And management seems to have a surplus of beliefs that are not based on sound theories.

Read this good article I have mentioned before on this topic by Carlie and Christensen: The Cycles of Theory Building in Management Research [the broken link was removed].

Posted in Books, Deming, Lean thinking, Management, Science | Tagged Deming, Lean thinking, management, management experts, management research, managing people, Systems thinking | Comments Off

When Performance-related Pay Backfires

Posted on August 3, 2009 by John Hunter

When Economic Incentives Backfire by Samuel Bowles, Sante Fe Institute

Dozens of recent experiments show that rewarding self-interest with Economic incentives can backfire when they undermine what Adam Smith called “the moral sentiments.”

Punished by Rewards, by Alfie Kohn, is a great book on this topic. The area of “motivating” employees is one it is often hard for managers to learn. Even managers that have been studying Deming, Ackoff, Ohno… for years still have trouble with the idea that trying to find the right incentive scheme to motivate the right behavior is the wrong approach. Read the The Human Side Of Enterprise by Douglas Mcgregor (in 1960) to re-enforce the understanding of human motivation provided by Toyota’s respect for people principles.

Managers need to eliminate de-motivation in the work systems not try and find bonus schemes to motivate behavior. Eliminating de-motivation is often much more work. You can’t just get some money from the bonus pool and start giving it away. You have to manage. But if you are a manager you shouldn’t be afraid to actually manage the system and make it better.

When performance-related pay backfires:
Continue reading →

Posted in Competition, Data, Deming, Economics, Management, Performance Appraisal, Psychology, quote, Statistics, Systems thinking | Tagged bonus, demotivate, executive pay, management, management research, motivation, respect for people | 4 Comments