Tag Archives: targets

Out of Touch Executives Damage Companies: Go to the Gemba

When your customer service organization is universally recognized as horrible adding sales requirements to customer service representatives jobs is a really bad practice. Sadly it isn’t at all surprising to learn of management doing just that at our largest companies. Within a system where cash and corruption buys freedom from market forces (see below for more details) such practices can continue.

Such customer hostile practices shouldn’t continue. They shouldn’t be allowed to continue. And even though the company’s cash has bought politically corrupt parties to allow such a system to survive it isn’t even in the selfish interest of the business. They could use the cover provided by bought-and-paid-for-politicians-and-parties to maintain monopolistic pricing (which is wrong ethically and economically but could be seen as in the self interest of a business). But still provide good service (even while you take monopolistic profits allowed with corrupt, though legal, cash payments).

Of course, Adam Smith knew the likely path to corruption of markets made up of people; and he specifically cautioned that a capitalist economic system has to prevent powerful entities efforts to distort markets for individual gain (perfect competition = capitalism, non-competitive markets = what business want, as Adam Smith well knew, but this is precisely not capitalism). Sadly few people taking about the free-market or capitalism understand that their support of cronyist policies are not capitalist (I suppose some people mouthing those words are just preaching false ideas to people known to be idiots, but really most don’t seem to understand capitalism).

Anyway, this class of protected businesses supported by a corrupt political and government (regulators in government) sector is a significant part of the system that allows the customer hostility of those politically connected large businesses to get away with a business model based on customer hostility, but wasn’t really what I meant to write about here.

Comcast executives have to know they are running a company either rated the worst company in the country or close to it year after year. They, along with several others in their industry, as well as the cell phone service providers and too-big-to-fail-banks routinely are the leaders of companies most reviled by customers. Airlines are also up their for treating customer horribly but they are a bit different than the others (political corruption is much less of the reason for their ability to abuse customers for decades than is for the others listed above).

Leaked Comcast employee metrics show what we figured: Sell or perish [Updated]
Training materials explicitly require a “sell” phase, even in support calls.

The company’s choice to transform what is traditionally a non-revenue-generating area—customer service—into a revenue-generating one is playing out with almost hilariously Kafkaesque consequences. It is the nature of large corporations like Comcast to have dozens of layers of management through which leadership instructions and directives are filtered. The bigger the company, the more likely that members of senior leadership (like Tom Karinshak) typically make broad policy and leave specific implementations to lower levels.

Here, what was likely praised in the boardroom as an “innovative” strategy to raise revenue is instead doing much to alienate customers and employees alike. Karinshak’s assurances that he doesn’t want employees to feel pressured to sell in spite of hard evidence that Comcast demands just that are hard to square with the content of the document.

So what is going on here? Most people can easily see this is likely a horrible practice. It is a practice that a well run company theoretically could pull off without harming customers too much. But for a company like Comcast to do this it is obviously going to be horrible for customers (same for all those too-big to fail banks, cell phone service providers and other ISPs and cable TV providers).

Lets just pretend Comcast’s current leadership executives were all replaced with readers of the Curious Cat Management Improvement blog. And lets say that for now you are suppose to focus on improving the policies in place (while thinking about policy changes for later but not making them yet).

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Pay Attention to the Results that Matter

Play pumps is a great sounding idea. Most people reading this blog have clean tap water a few steps away. Over a billion people today still struggle to get water every day. A common method to get water is using pumps to bring up water from deep in the ground.

Some energy is needed to bring up the water and that often mean people (at time wind energy is used). Most sites that are providing water to villagers don’t have integrated energy system that can be tapped to bring the water up – as most of those of the readers of this blog rely on (without having to think about it).

Play pumps had the idea of putting a merry-go-round on the site and letting children playing on it provide the energy. It sounded great and I wrote about it on my engineering blog. Many others found it exciting and funded it with tens of millions (The USA government, Steven Case foundation [AOL founder], )… Which is great.

Frontline, which is a great news organization, went back to look at the success of the program after much fanfare in the marketing of the program. Sadly the pumps are having many issues. The solution does not appear to have been executed well.

Several factors are extremely disappointing. There seems to be little customer focus. As with any enterprise that fails this basic tenet of good management this spells trouble. The maintenance process appears to be completely broken. In our throw away lives maintenance is often a minor project point. For bringing water to those without it maintenance is known to be the primary issue. For decades the failure of program has had this as the primary reason (the possible competition is corruption). Failing on the known largest issue is again extremely disappointing.
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Managing to Test Result Instead of Customer Value

Computer hardware and software creators use benchmarks as one tool to compare the performance of alternative products. At times this can be very useful. You can learn what software of hardware is faster and that may be a very valuable factor. However, any measure is determined by the operational definitions used in collecting the measure. And if people have incentives to improve the measured number they often will do just that (improving the measure) rather than improving the system (the measure is meant to serve as a proxy for some function of that system).

Information technology people actually understand this much better than most mangers (who also rely on measures for many things like return on equity, profit growth, productivity of various plants…) – so actually I find they are not nearly as fooled by measures compared to managers. On Reddit there is an interesting discussion on coding the product to provide good benchmark results [in this context benchmarking has to do with measured results on standard performance tests – not TQM style benchmarking). The technical details in this case don’t matter so much to my point, which is just that when people treat the measure as the true value instead of a proxy for the true value it is risky.

Technology companies compete fiercely and claiming the software or hardware is faster is one big area of competition. And the comment on Reddit is claiming one competitor changed some code only to get a better measure (that provides no benefit to customers). The problem with such actions, is they provide no actual value: all they do is make the measure less meaningful as a proxy.

Now it is also perfectly understandable why it would be done – when you are focused on improving the number, it might well be easier to distort the system to provide a better number (used by to measure performance) instead of actual improve the performance. It is easy to see why a company would do this if they want to have marketing claim their products are the fastest.
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Why Setting Goals can Backfire

Dr. Deming long ago stated in his 14 obligations of management: “Eliminate numerical goals, numerical quotas and management by objectives.” I think he was right then, and is right now. A goal can help set the scope of the effort. If you are aiming for 2% improvement different strategies may make sense than if you are aiming at 50% improvement. But that type of use is rare. The problem with goals is what actually happens in organizations. They create serious systemic problems and should be avoided (other than in setting the scope). They are deeply ingrained in the way many people think, but we would be better if we could eliminate the use of goals, as they are used now (mainly as arbitrary numerical goals).

Ready, Aim … Fail, Why setting goals can backfire

In clawing toward its number, GM offered deep discounts and no-interest car loans. The energy and time that might have been applied to the longer-term problem of designing better cars went instead toward selling more of its generally unloved vehicles. As a result, GM was less prepared for the future, and made less money on the cars it did sell. In other words, the world’s largest car company – a title it lost to Toyota last year – fell victim to a goal.
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Rather than reflexively relying on goals, argues Max Bazerman, a Harvard Business School professor and the fourth coauthor of “Goals Gone Wild,” we might also be better off creating workplaces and schools that foster our own inherent interest in the work. “There are lots of organizations where people want to do well, and they don’t need those goals,” he says. Bazerman and others hold up Google as an example of a company that manages to do this, in part by explicitly setting aside time for employees to pursue their own projects and interests.

Today, as the economic situation upends millions of lives, it is also forcing the reexamination of millions of goals – not only the revenue targets of battered firms, but the career aims of workers and students, and even the ambitions of the newly installed administration. And while it never feels good to give up on a goal, it may be a good time to ask which of the goals we had set for ourselves were things we really needed to achieve, and which were things we only thought we should – and what the difference has been costing us.

Goodbye Quarterly Targets?

Goodbye Quarterly Targets? [the broken link was removed], Business Week:

For about a decade, companies have tried to goose their stocks-or manage the market’s expectations-by putting out quarterly earnings projections. Now the practice has come under fire as business leaders fret that the focus on short-term targets undermines long-term growth.

On March 14 the Commission on the Regulation of U.S. Capital Markets in the 21st Century, a project of the U.S. Chamber of Commerce, urged executives to stop issuing their short-term goals. The practice is a “self-inflicted wound by American CEOs,” says commission member Robert Pozen, chairman of MFS Investment Management, a Boston fund manager.

Debate over this issue has simmered for years. Indeed, dozens of companies, including Coca-Cola and McDonald’s, have quit publicizing quarterly earnings targets. Now the issue has become urgent, the Chamber argues, as U.S. companies face growing long-term competition from overseas, where such projections are not widely made.

Learning that a fixation on short term profits is bad for the organization is a good step. Deming talked about this problem over twenty years ago in seven deadly diseases of western management one of which was: the emphasis on short term profits.

Toyota Targets 50% Reduction in Maintenance Waste

Inside the Toyota Maintenance Reduction 50 Percent by Paul V. Arnold (sadly the site broke the link, so I removed it):

First, it is Maintenance Reduction 50 Percent, not Cost Reduction 50 Percent or Employee Reduction 50 Percent.

“The goal is to reduce maintenance activities and the maintenance that you perform on a machine by 50 percent. That goal covers every machine and every activity,” says TMMK facilities control manager David Absher.

This is not about arbitrarily chopping budgets or personnel. It’s a game plan that balances today’s corporate wants and needs with long-term implications and vision.

I think this is another example of how potentially dangerous targets or goals can be used within a excellent management system effectively. Still such target can be dangerous, even in an excellent management system – so it is a tool to be used with great care (especially when the management system does not embody many principles of management improvement). Continue reading →

SEC chief quotes Deming

Security and Exchange Chairman William H. Donaldson Speaks At Chartered Financial Analysts Institute Annual Conference [broken link removed]:

This approach will, ultimately, better serve investors, and it will also gradually temper the pressures on some corporate executives to fudge the numbers. It would behoove us all to remember the words of W. Edwards Deming: “People with targets, and jobs dependent on meeting them, will probably meet the targets – even if they have to destroy the enterprise to do it.”