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Losing Consumers’ Trust

Posted on February 24, 2008 by John Hunter

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

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

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

The export market for meat is large. For political reasons some countries aim to protect local farmers and ranchers (the USA is a huge subsidizer of farmers and ranchers – Sugar Industry Quotas). And when the system continually shows that bad practices are allowed to continue it makes it a very easy decision to not allow the import of meat. Why would a country want to import food from a system that fails to follow food safety standards (especially if politically that is what they want to do – this provides them a pretty darn good reason to do what they want).
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Posted in Economics, Management, Psychology, Science, Systems thinking | Tagged Customer focus, export, food, government, health, Psychology, regulation, safety, Systems thinking, trade | 5 Comments

User Happiness with Search Engines

Posted on February 23, 2008 by John Hunter

Awhile back I wrote about why I didn’t think the American Customer Satisfaction Index claim that Yahoo beat Google for customer satisfaction was evidence of a broken indicator. Well here is another indicator, but this time it puts Google clearly in 1st place, while Yahoo has been improving: Search Engines: Intense Competition Drives Better User Experiences

In the December 2007 Keynote study, Google makes a clean sweep of first place in all four key index rankings: Overall Customer Experience, Brand Impact, Future Usage Impact, and Customer Satisfaction. Yahoo! takes second place in every category, and Ask.com, MSN, and AOL follow in order. It is almost without precedent in Keynote studies of any industry that the rankings are so rigidly stratified (see Figure One). Typically, there will be some shuffling up or down in one or several of the indices. But in the past two studies, the competitors finished in rank order, straight across the board.

Google still has plenty of room to improve (for one example, their blog search is still very poor). And Yahoo is better than many people realize. But I think Google is still clearly better from my experience and looking at the available data (Google keeps gaining market share for one import piece of data).

Posted in Customer focus, Google, Management | Comments Off

What Motivates Programmers?

Posted on February 22, 2008 by John Hunter

A fun read on What motivates programmers?

I will start with a question, if you have a spare £400 in your development budget do you A) Reward your star programmer with a £400 bonus or B) Buy him a 24 Inch 1920—1200 LCD screen? If you answered ‘A’ then you need to read on.
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Programmers see meetings as wastes of time. Most communication between programmers is done via email or by a quick wander to another desk to clarify something that is beyond the scope of an email. Therefore any time within a meeting room is ‘unhappy time’ and unhappiness increases exponentially with the length of the meeting. So at all costs if you do need to drag your development team into a meeting either include some form of Lego to play with (I am serious) or keep them very short.

The tips in the post are worth reading. Yes, real world situation are always more complex but there is a great deal of truth in the post. Also, I will repeat my statement for all managers for all employees: your job is to eliminate de-motivation not to motivate.

If you really want to manage programmers well, read these blogs and take action to prevent yourself from becoming a pointy haired boss: Signal vs. Noise – Joel on Software – Paul Graham – Coding Horror – Scripting News – xkcd

Posted in IT, Management, Psychology | Tagged Psychology, respect for people | 5 Comments

Severance Plans to Respect People

Posted on February 21, 2008 by John Hunter

Yahoo’s Severance Plans a Defense Against Microsoft?

Yahoo’s board of directors has created an expansive severance package for all full-time employees who are either terminated without “cause” or leave on their own with “good reason” following a “change in control of the company.”

The severance packages would extend regular compensation for a period of four months to two years, depending on the employee’s job level. Employees would also receive continued health benefits, financial assistance for finding a new job (up to $15,000) and accelerated vesting of stock options. The move comes as reports are circulating that Microsoft will go hostile in its acquisition bid, waging a proxy battle to replace Yahoo’s board rather than raise its offer.

Interesting. Yahoo does seem to be losing staff so there is a business reason (even for those that don’t think the way I do about benefiting all stakeholders). It also seems to fit with respect for people to me. I actually am leaning toward thinking this is something lean/Deming companies should adopt to show that the company does not support treating employees as costs to be reduced. I could see those that see companies more like balance sheets than system would object to implementing a new idea that makes MBA style layoffs more difficult. I am fine with that. I’m sure Yahoo! is actually driven partially by the poison pill feature of such a plan (which isn’t the greatest place to start but I can live with that). I haven’t thought this through completely but I like it now.

Posted in Creativity, Management, Respect | Comments Off

Renting Toys

Posted on February 21, 2008 by John Hunter

That kids get tired of many toys long before the toys are worn out is not a recent revelation Those frustrated by this waste surely number in the millions in the last few decades alone. Some attempts to reduce the waste exist: garage sales, goodwill, saving for younger siblings… but the waste remains frustratingly high. While I am sure some override the cultural bias against (at least in the USA) gifting used, perfectly serviceable, toys, that practice doesn’t seem to be acceptable to many parents doing the giving (I doubt most kids would care – at least until they absorb the throw away culture as their own). Netflix for the Toddler Set highlights an attempt to deal with this waste aided by technology.

Baby Plays was launched last October by a Houston, Texas mother who became frustrated as she watched her home fill with toys her twin infant sons quickly lost interest in. As she thought about how she could rent DVDs online, she realized that a rental option for toys would satisfy her need perfectly. But since no company she could find was offering such a service, she decided to launch one herself.

Good, I hope it is successful. It does remind me a bit of something I saw online recently (a joke I assume) looking for something that was like Netflix but for books. Um, libraries have existed for quite a long time.

Posted in Creativity, Management | Comments Off

USA Spent $2.1 Trillion on Health Care in 2006

Posted on February 20, 2008 by John Hunter

The percent of GDP spent on health care in the USA increased again in 2006 – to 16%. Health care spending reached a total of $2.1 trillion, or $7,026 per person in 2006, up from $6,649 per person in 2005.

Posted in Deming, Economics, Health care | Tagged economic data, Health care | 5 Comments

Popular Mechanics: Made in the USA

Posted on February 19, 2008 by John Hunter

Five American Manufacturers Doing It Right

America’s manufacturing sales stagnated at the $4 trillion mark in the late 1990s. But then something surprising happened. America started selling again—finding more customers for tractors, steel, plastics, knives and medicines than ever before. Manufacturing sales hit a record $5 trillion in 2006, according to the U.S. Census Bureau
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“Our biggest advantage is manufacturing in the United States,”
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“If Circuit City wants more of a certain set in three weeks, we couldn’t possibly do it from Asia,” Sollitto says. Shipping the televisions and maneuvering them through customs would consume a month or more. “The most important thing in electronics is execution and speed,” he says. “You have to bring ideas to market when they’re hot, and stay ahead.”

Posted in Economics, Management, Manufacturing | Comments Off

Software Supporting Processes Not the Other Way Around

Posted on February 19, 2008 by John Hunter

Rental Car IT

What was funny about that exercise were the looks we got from the no nonsense King of IT: “Of course, we want things to be simple and flexible — why are you bothering to tell us this?” Yet, in the next sentence, they are talking about spending 3 million dollars on a packaged application to help them with one small part of their business, rather than building it themselves (which we all thought would be cheaper but take longer). That’s $3,000,000. But, of course, the packaged application talks directly to their databases, meaning that we can no longer freely make changes to the database without breaking the package, meaning that we can’t evolve the database, meaning that we’ve lost both simplicity and flexibility. Over and over, they complain when we talk about rethinking their priorities, then turn around and make the same decisions that got them where they are now. Frustrating!

This is a good post on the systemic drivers of complex processes, take the time to read the whole post. I have a bias is against off the shelf software as it often ends up forcing the process to be designed around the software. And with the amazing power and relative ease of web based applications creating solutions that are specifically designed to the organization are often relatively easy. And yet, as indicated in this article there is often a strong bias in the other direction for buying off the shelf software because it is cheaper and/or faster.

Of course, the decision in each case must be weighed to determine the benefits and cost of the various alternatives. Just remember, if you decide you want simple and flexible, to have your decisions reflect that. I enjoy a telling quote from a software vendor on Toyota’s IT expectations: “it demands that the software or technology be flexible and adapt, often by customizing the code, to its business processes, and not the other way around.” They are right.

Posted in Data, IT, Lean thinking, Management, Software Development, Systems thinking | 10 Comments

Innovation Strategy

Posted on February 18, 2008 by John Hunter

Six Principles for Making New Things by Paul Graham

The answer, I realized, is that my m.o. for all four has been the same. Here it is: I like to find (a) simple solutions (b) to overlooked problems (c) that actually need to be solved, and (d) deliver them as informally as possible, (e) starting with a very crude version 1, then (f) iterating rapidly.

Great advice. Similar to the evidence Clayton Christensen documents in the Innovators Solution on how to innovate successfully. New products and services often start out simple and limited and often are dismissed as unacceptable in various ways. But they solve a real problem and over time are improved and grow market share.

Experimenting quickly and often (iteration) is extremely important and given far to little focus. The PDSA improvement cycle provides a tool to encourage such thinking but still few organizations practice rapid iteration.

Posted in Creativity, Innovation, Management | Tagged Clayton Christensen, Innovation, Paul Graham, strategy | 3 Comments

Samuel Adams Acts Like a Good Neighbor

Posted on February 17, 2008 by John Hunter

Some people think business is only about making money. I agree with Dr. Deming that the purpose is much larger than that. Even if you take a view similar to mine though, it is not often companies intentionally help those that compete with them. But here is an example where Samuel Adams acts like a good neighbor:

For a couple of months now, we’ve all been facing the unprecedented hops shortage and it’s affected all craft brewers in various ways. The impact is even worse on the small craft brewers–openings delayed, recipes changed, astronomical hops prices being paid and brewers who couldn’t make beer.

So we looked at our own hops supplies at Boston Beer and decided we could share some of our hops with other craft brewers who are struggling to get hops this year. We’re offering 20,000 pounds at our cost to brewers who need them.
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We’re not looking to make money on this so we’re selling them at our cost of $5.72 a pound plus $.75 a pound to cover shipping and handling
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The purpose of doing this is to get some hops to the brewers who really need them. So if you don’t really need them, please don’t order them. And don’t order them just because we’re making them available at a price way below market. Order them because you need these hops to make your beer. We’re not asking questions, so let your conscience be your guide.

I can see a farmer helping out his neighbors in a similar way. But I don’t see companies acting this way often. I applaud Boston Beer’s action even as my cynical nature sees this as possibly more a marketing gimmick than just solely an effort to help. Still I applaud it. Too few organizations seem to have progressed beyond thinking that business is amoral. Actual good behavior is worthy of praise compared to what else goes on so often.

Posted in Competition, Creativity, Management | Tagged Creativity, ethics | Comments Off