Learn from Russel Ackoff

The In Thinking network offers many great ways to learn. This week they have 4 hour long conference call discussions with Russ Ackoff. Thought Pieces (suggested links to review in preparation for the conference call)
Lecture on “Systems Practice” at Open University (audio file)
Transforming the Systems Movement
A Major Mistake that Managers Make
From Mechanistic to Social Systems Thinking

These four resources are great, even if you are not going to participate in the conference calls.

Related: articles by Russel AckoffCurious Cat Management Improvement CalendarWrite it DownTransformation and RedesignAckoff’s F-laws: Common Sins of Management
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Posted in Career, Education, Management, Systems thinking | Comments Off on Learn from Russel Ackoff

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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Posted in Career, Deming, Economics, Lean thinking, Management, Popular, Systems thinking | Tagged , , , , | 5 Comments

Top 10 Manufacturing Countries 2006

Here is updated data from the UN on manufacturing output by country. China continues to grow amazingly moving into second place for 2006. I plan to write more on this data in the Curious Cat Investing and Economics Blog. UN Data, in billions of current US dollars:

Country 1990 2000 2004 2005 2006
USA 1,040 1,543 1,545 1,629 1,725
China 143 484 788 939 1096
Japan 808 1,033 962 954 929
Germany 437 392 559 584 620
Italy 240 206 295 291 313
United Kingdom 207 230 283 283 308
France 223 190 256 253 275
Brazil 117 120 130 172 231
Korea 65 134 173 199 216
Canada 92 129 165 188 213
Additional countries of interest – not the next largest
Mexico 50 107 111 122 136
India 50 67 100 118 130
Indonesia 29 46 72 79 103
Turkey 33 38 75 92 100

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Posted in China, Economics, India, Manufacturing, quote | 4 Comments

Poor Service from Amazon

I like using Amazon, most of the time. But their decision to erect barriers for communication I find extremely annoying. Any time anything goes wrong you might as well be dealing with some organization in the middle of nowhere without phones, any internet connection or even physical mail. I ordered a printer from them a couple weeks ago. Today I get an email that “the following item from your order is not currently available for purchase. This item has been canceled from your order. If your credit card was charged, a refund has been processed.”

First, it is very lousy service to sell someone something and then figure out you don’t have it to sell a few weeks later. Second, if you find you have done such a lame thing – buy it from someone else and deliver it as promised. Third, don’t make it nearly impossible for the customer you just wronged to contact you. This is the equivalent of providing lousy service and then closing the door in someones face refusing to deal with your failure.

And if you really want your business to take those customer unfriendly actions: just sell stuff you don’t have, then tell people a couple weeks later you are not going to sell it to them after all and then tell them if you charged them (you can’t even bother to see if you did? pretty lame) then you will give them their money back it still makes sense to give them the chance to buy another printer from you instead of just closing the door.

Granted some people are going to decide they don’t want to deal with such bad service and chose to deal with a more customer focused company but some will actually still give you another chance – make it easy for them to buy another printer. For example write them instead of what I received something like: sorry for our bad service, and to show we really mean that (we are not just sending you meaningless drivel our consultant dreamed up to say we care when our actions say we don’t) we will discount a replacement printer you buy in the next two weeks by $50. Here are 5 similar printers. Follow the links to purchase one of these printers (or view many others on our site) and we will also express mail the printer selected at no additional cost.

The sad thing is that there are not many alternatives to Amazon that actually provide good service. Though Crutchfield is one – for electronics.

Related: Customer Hostility from Discover CardAmazon InnovationNo More Lean ExcusesMore Bad Customer Service Examples 🙁12 Stocks for 10 Years (yes including Amazon)

Posted in Creativity, Customer focus, Management, Process improvement | 6 Comments

Prediction Markets with Google Employees

Another interesting experiment from Google: Using Prediction Markets to Track Information Flows: Evidence from Google

In Google’s terminology, a market asks a question (e.g., “how many users will Gmail have?”) that has 2”5 possible mutually exclusive and completely exhaustive answers (e.g., “Fewer than X users”, “Between X and Y”, and “More than Y”). Each answer corresponds to a security that is worth a unit of currency (called a “Gooble”) if the answer turns out to be correct (and zero otherwise). Trade is conducted via a continuous double auction in each security.

Google’s prediction markets are reasonably efficient, but did exhibit four specific biases: an
overpricing of favorites, short aversion, optimism, and an underpricing of extreme outcomes.

Interesting paper. I would guess most readers of this blog won’t be able to apply prediction markets to there workplace in the short term but never-the-less I find the paper interesting.

Related: Management is PredictionGoogle Experiments Quickly and OftenSecrets of the World’s Best Companies

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Management Improvement Carnival #27

The Management Improvement Carnival #27 (Best of 2007) has been posted by Ron Pereira. Highlights include:

  • 10 Common Misconceptions About Lean Manufacturing: 1. Lean production = volume production. In Taiichi Ohno’s Workplace Management he suggested that the Toyota system was ideally suited for low volume production, and not as well suited for the higher volume production…
  • L.A.M.E. = Lean As Misguidedly Executed: We need a phrase that describes these “bad” or misguided attempts at Lean, things that give Lean a bad name. How about: LAME: “Lean” As Misguidedly Executed.
  • Reacting to Visual Cues: The Toyota Production System makes effective use of visual cues to mark location in time and space, boundaries, and to answer the question “How am I doing” in a production setting.
  • Dabbawallas, UPS, and FedEx: Mumbai residents rely on an intricately organized, labor-intensive operation that puts some automated high-tech systems to shame.
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Measuring the Health of Nations

Measuring the Health of Nations: Updating an Earlier Analysis

In a Commonwealth Fund-supported study comparing preventable deaths in 19 industrialized countries, researchers found that the United States placed last. While the other nations improved dramatically between the two study periods (1997–98 and 2002–03) the U.S. improved only slightly on the measure.

Rankings: 1) France 2) Japan 3) Australia 4) Spain 5) Italy 6) Canada… 18) Portugal 19) USA. Maybe the United States is last but still not significantly behind?

According to the authors, if the U.S. had been able reduce amenable mortality to the average rate achieved by the three top-performing countries, there would have been 101,000 fewer deaths annually by the end of the study period.

It might seem like a stretch to compare the lowest ranked country to the average of the top 3, but, for all those that feel the USA is the best health care system it raises the questions of why they don’t think 100,000 annual deaths is a significant enough problem to lower their opinion of the current system. And remember the USA system costs something like twice as much as the average system: up to 16% of GNP in 2006.

I must say I would rather have the Toyota mindset shown by those talking about the USA health system instead of the claims of how the current USA health system is number 1. In Toyota’s horrible last year they still had a profit of about $14 billion (I believe something like 20 companies have every made that much). The United States health system sure has some things to point to positively but the system seems to be losing ground to the rest of the world more and more quickly while many cling to a belief it is the best system around.

Related: Evidence-based Managementposts on improving health careImproving Hospital Performancearticles on improvement health careBest Research University RankingsTop 10 Manufacturing CountriesDr. Deming’s Seven Deadly Diseases of Western Management

Posted in Economics, Health care, UK | Tagged , , , , | 5 Comments

IT Talent Shortage, or Management Failure?

IT talent shortage, or management failure? [the broken link was removed]

Is there a talent shortage? Only because employers have created it. The real shortage is in good management. Without proper seeding, feeding and cultivating, the IT community withers like any other garden. Companies are madly trying to hire skills, not talent. They want to harvest fruit overnight. Give a smart IT worker some manuals, a workstation, an objective, and a little time, and they’ll come up to speed every time. That requires strong leadership.

But if you leave it to some personnel jockey who relies on buzzwords and resumes, you’ll never hire real talent — and it will always seem there is a talent shortage. What’s difficult to understand about that?

Great post. I agree: the main problem is poor management. Dr. Deming kept increasing the percentage of problems due to systemic issues (which are management responsibility to address), he was saying 97% of issues were commons cause problems (from the system) at the end of his life.

So what should managers do? Read the Curious Cat Management Blog and follow the advise in our previous posts, including: Stop Demotivating Employees (IT employees are especially disdainful of pointy haired boss actions that others tolerate more easily) – Signs You Have a Great Job … or NotJoy in Work for IThiring silicon valley styleBad Management Results in Layoffs

Posted in Career, IT, Management, Software Development | Tagged | 7 Comments

Stratification and Systemic Thinking

I am reading a fascinating book by Jessica Snyder Sachs: Good Germs, Bad Germs. From page 108:

At New York Hospital, Eichenwald and infectious disease specialist Henry Shinefield conceived and developed a controversial program that entailed deliberately inoculating a newborn’s nostrils and umbilical stump with a comparatively harmless strain of staph before 80/81 could move in. Shinefield had found the protective strain – dubbed 502A – in the nostrils of a New York Hospital baby nurse. Like a benign Typhoid Mary, Nurse Lasky had been spreading her staph to many of the newborns in her care. Her babies remained remarkably healthy, while those under the care of other nurses were falling ill.

This is a great example of a positive special cause. How would you identify this? First you would have to stratify the data. It also shows that sometimes looking at the who is important (the problem is just that we far too often look at who instead of the system so at times some get the idea that it is not ok to stratify data based on who – it is just be careful because we often do that when it is not the right approach and we can get fooled by random variation into thinking there is a cause – see the red bead experiment for an example); that it is possible to stratify the data by person to good effect.

The following 20 pages in the book are littered with very interesting details many of which tie to thinking systemically and the perils of optimizing part of the system (both when considering the system to be one person and also when viewing it as society).

I have recently taken to reading more and more about viruses, bacteria, cells, microbiology etc.: it is fascinating stuff.

Related: Science Books by topicData Can’t LieUnderstanding Data

Posted in Creativity, Data, Deming, Health care, Innovation, Management, Quality tools, Science, Statistics, Systems thinking | Tagged , , , , , , | 2 Comments

Six Sigma In New York Local Government

New Erie County Government Executive, Chris Collins, discusses the director of six sigma position that will drive their new six sigma efforts.

Related: Six Sigma for Erie County GovernmentPublic Sector Management Improvement SitePosts on improving management in the Public Sectormanagement webcasts

Posted in Management, Public Sector, Six sigma, webcast | 2 Comments