Tuesday, December 27, 2005

America's Manufacturing Future

A Wake-up Call From Asia by Patricia Panchak:

China and India very aggressively are pursuing advanced manufacturing. Increasingly, China's exports to the U.S. are composed of advanced-technology products.
J.P. Morgan said it would add 4,500 employees in India by the year 2007, mainly by setting up operations in Bangalore to support its growing structured finance and derivatives businesses globally. Such jobs are not the simple, low-value call-center work that up to now we've associated with this developing economy. And J.P. Morgan isn't alone; UBS and Goldman Sachs earlier made similar announcements.

From my previous post, Relative Engineering Economic Positions:

The hope some retained that the United States would retain the highest end work and others would work on the less complex work is not what the future holds. The future will prove to be an international marketplace where the United States is a significant but not dominant player. That future can still be bright but it requires a different vision than one in which American dominance is taken as a given.

The challenges to USA manufacturing will continue. The best hope, as I see it, for retaining manufacturing leadership in the USA is through increasing the adoption of management improvement methods including lean manufacturing.

Even so, I believe it will be very difficult for the USA to remain the leading manufacturing economy; China seems poised to take that position. Still that is not a certainty, even though many act as though it happened long ago. And even if China were to take over the number one position, it is still possible for the US manufacturing economy to grow.

From 1990 - 2001 China's manufacturing output grew by 251%, while world manufacturing output grew by 22%. still the US manufacturing economy grew by 39% meaning we gained a larger share over those 11 years of total world manufacturing - World Bank data)

Related posts:

Saturday, December 24, 2005

Quality, SPC and Your Career

Topic: Management Improvement

Lead To Succeed (pdf document) by Stephen S. Prevette:

* Succeed as a quality professional by branding yourself and providing a service or product your manager and organization deem worth paying for.
* Lead your manager "your customers" by providing the data they need in a form they can understand.

This is a great article on how to apply quality (Deming, Statistical Process Control, Six Sigma, Lean Manufacturing) ideas and move forward professionally; even when those ideas are not always shared by the organization.

I caused this increase by using tried and true quality techniques that are more than 75 years old. My work at Hanford has been noticed favorably by people at the Fluor Corp. They believe I am cutting edge. Hmmm.

I will say yes, I am making use of modern computers and software to implement these 75-year-old techniques.

Of course, I like to see my beliefs cast in a positive light. I believe far too often we look for the newest ideas and miss all the great ideas that have been known for decades but are not practiced widely. The key to success is applying good ideas well - not just applying new ideas.

Transforming managers so they are willing to use SPC is not easy. My first interaction with a Fluor manager resulted in my hearing, "We don't know why Westinghouse employed a statistician. Fluor doesn't do statistics."

Success is not as easy as we might hope. Just discovering the ideas of Deming or Toyota or Ackoff is not enough. The great ideas don't, by themselves, convince managers to try a new way of managing. There is a great deal of education needed for most organizations to get to the point where they realize they could improve by applying "old" ideas such as: control charts, lean thinking, spc, not tampering...

The application of SPC and other quality tools can be rewarding. It can provide both financial and professional fulfillment. I believe my application of Deming's management theories has been crucial to Fluor Hanford's success.

More articles by Stephen Prevette.

Wednesday, December 21, 2005

Rebirth of American Industry

William Waddell excellent posts on the Evolving Excellence blog are always an interesting read. He, and Norman Bodek, have published a new book, Rebirth of American Industry. Read the full Excerpt from the book. The Evolving Excellence blog also has a post: A New Must-Read Book - From Our Own Bill Waddell.

Norman Bodek has also written: Kaikaku, The Idea Generator: Quick and Easy Kaizen (with Bunji Tozawa) and The Idea Generator: Quick and Easy Kaizen (Workbook) (with Bunji Tozawa). He also recently started his own blog: Kaikaku.

Articles by Norman Bodek:
  • The Best Factory in the World, from his book, Kaikaku: "Pictures of areas of the factory or the office hung throughout the plant. Workers were encouraged to look at the pictures and talk about them together, then to make improvements."

  • Lean Six Sigma - A Perspective, "Lean focuses on identifying value as perceived by the customer and then eliminating everything that isn�t value, the waste, out of the process. Lean comes from the industrial engineering discipline, whereas Six Sigma comes out of the statistical quality control discipline. Six Sigma focuses on reducing variability in the key output variables that are important to the customer."

Should GM be Removed from the DJIA?

Topic: Investing

Should Dow boot GM? by Chris Isidore, CNNMoney.com:

GM's market capitalization has fallen to about $11 billion, less than half that of the next smallest Dow stock...

"It is coming," he said of the idea of a foreign Dow component. "This whole globalization situation is making that more and more likely."

He said he doubts that GM would be replaced as long as it is still the world's leading automaker, but Toyota could claim that title from GM as soon as 2006.

"That would be the time to replace it, not before," said Hirsch.

I agree removing GM makes sense, though I see no reason to wait. Whether to replace it with Toyota (market cap: $167 Billion), DaimlerChrysler or something else is an interesting question. Of course the whole idea of the Dow Jones Industrial Average pretty much outlived its usefulness decades ago. The S&P 500 has long been far better measure of the stock market but still the dow has retained its status as news worthy, for some reason (View the current dow stocks).

As for the S&P 500 it looks like my guess that Google would be added to the S&P 500 by the end of this year is going to be incorrect. I must admit I think that failure was really a mistake by S&P, and not just because it makes me wrong. The market capitalization, trading and import of Google make it an obvious choice for the S&P 500. But I would rather be wrong about that and right to have bought it, than the other way around. Google's market cap: $126 Billion.

I will post more details soon but if you are interested the "10 stocks for 10 years fund" I am managing via Marketocracy has performance results available online.

Investment related:

Sunday, December 18, 2005

Planet Kaizen

Toyota has a section on their web site called Planet Kaizen: "what happens when you dig a little deeper and peel back the sheet metal to discover what makes a Toyota a Toyota."

It requires flash to view Planet Kaizen. I think it has amazingly bad visual controls (as do many flash applications). I can't figure out why it would be done in flash - other than some marketing person, or IT person, thought it would be cool. I certainly don't see how kaizen practices could have produced such an application. It seems to me one of the examples of how far Toyota still has to go.

Of course, as an automobile manufacturer failing to develop web applications well, is better than failing at manufacturing cars well. I would guess that this "planet kaizen" was not created by Toyota employees but instead outsourced to someone else. If it was done internally, I think Toyota's management of marketing with technology may be in as much need of help as GM's entire management is. In any case the non-manufacturing parts of Toyota, while some are managed well, still have plenty of room to improve.

Saturday, December 17, 2005

Joel Management

Topic: Management Improvement, Lean Thinking

Joel Spolsky writes the excellent Joel on Software blog and runs Fog Creek Software. Recently he has been writing about process improvement of the order fulfillment process for a movie on the experience of interns at Fog Creek Software, How to Ship Anything by Joel Spolsky

Shipping an international order now takes about 35 seconds, down from 3 minutes, and can be done by anyone, whether or not they have SQL and Mail Merge skills. Domestic orders are even faster since they don't need customs forms. Most of all, it's all really fun.

Joel is a great writer and tells a interesting story about of how they improved the process. This is one of a series of articles on the process improvement around order fulfillment for the documentary made of "project Aardvark":

Four interns are brought into Manhattan and given 12 weeks to design, develop, debug and ship a program that will change the way computer geeks around the world fix their friends' computers. Boondoggle Films presents a journey through the world of software development from the perspective of a unique upstart, four quirky interns, and the world of The Geek.

Shipping Update: "We discovered that 2 people working in tandem can ship an order every 12 seconds using the new system."

The level of detail in his posts is great. Aardvark'd DVDs Ship; Final P&L:

Incremental Expenses (per unit)

$2.00 - DVD production and delivery
$5.00 - Royalty to filmmaker
$0.30 - Envelope for shipping
$2.52 - Postage (weighted average)
$0.20 - Other supplies for shipping (labels, paper for packing slips, toner, boxes, etc)
$1.00 - Shipping labor (estimate, since most labor came from Fog Creek employees on the payroll anyway).

Total per unit: $11.02. Since we're selling at $19.95 that's $8.93 gross profit.

Fixed Expenses:

$5,000 - Stipend paid to Boondoggle Films
$5,000 - expense reimbursement to Boondoggle Films
So we need to sell 1694 copies to break even. As of today, we've sold 2595, so we made a profit on the movie of about $8048.

And he really understands the value of the movie to his company, which I agree with:

Not bad! I was hoping to break even on the movie, and make a "profit" through more applications to our summer internship program from people who saw the movie and were inspired to work for Fog Creek.

I want to work for them. More reasons to work for them:

Monday, December 12, 2005

Poka-Yoke Assembly

Got Boondogle asks, Do you Read Instructions Carefully Before Assembly? Nope, I don't. I expect I can make a quick judgment if I really need to or I basically get it and can put things together well enough. I expect the supplier to make very obvious anything critical.

I am much less likely to read instructions that seem to be written by a lawyer, as I imagine are many others. If they provide simple, clear instructions I will use them (like Ikea provided for this desk I am using now). I find many good instructions require almost no words (they use pictures very well).

As Mike Wroblewski stated in his post:

Good manufacturers will recognize that there exists in our world this great divide between the instruction readers and the intuitive assemblers. Great manufacturers will put a system in place to prevent operator errors for both groups.

Poka-Yoke (mistake-proofing) is one of my favorite ideas. I just love the idea of not only making something that works well but making something that is difficult to have work badly. I encourage you to follow Mike's advice: "Look at your processes and products. How can operator errors occur? Think how a simple poka-yoke can eliminate the error and make it mistake proof."

Web site: John Grout's Mistakeproofing Site provides some everyday examples.

Book: Poka-Yoke : Improving Product Quality by Preventing Defects by Nikkan Kogyo Shimbun.

Sunday, December 11, 2005

Carnival of Lean Leadership #4

Carnival of Lean Leadership #4. As usual there are a ton of great links and this one includes links to all the posts from project kaizen.


Thursday, December 08, 2005

Innovate or Avoid Risk

The Xooglers blog has some really interesting posts. In one, "But, but, that's just crazy talk!", Doug Edwards discusses a great example of what true leadership is about.

In my defense, my background conspired against me. Past public relations debacles had taught me always to evaluate worst-case scenarios before considering the possible benefits of any new initiative. "First, do no harm" had become my mantra.

This is the reality of many people. There are many reasons why avoiding risks is smart and should be encouraged. But when avoiding risks stifles innovation it the risks to the organization are huge.

And I took a notion that maybe I should be more open-minded about big ideas that, on the face of them, seemed ludicrous. I would have many opportunities to test this resolve in the years to come.

A great lesson. The hard part is that stupid decisions can easily be made when knowledge is lacking. There is no substitute for knowledge - W. Edwards Deming.

Quote from Lion of Lean, interview with Jim Womack:

So this guy, who was around 60, gives me an incredibly frosty look and says, "Because I know everything." Everything? "That's my job," he says.

You have to read the article to understand that quote.

Related Links:

Tuesday, December 06, 2005

Data Based Decision Making

Topic: Management Improvement

Acumen visits Google:

As a first step, we hope to collaborate with interested Googlers to find better ways to learn what works around the world. Identifying powerful solutions to poverty that are useful to people in different settings, and that are market-driven, scalable, and sustainable, is our greatest challenge. Second, we're hoping to strengthen how the world measures both social and financial returns to investments in delivering critical goods and services to the poor. Like Google, we hold a deep belief in the power of measuring everything we can.

Google has done a fantastic job of using data to make decisions. In fact so much so, that some think they may go overboard trying to find an algorithm for everything. My dinner with Sergey:

It was a classic Google moment. Your S.A.T. score was the measure of your intellectual capability; your GPA represented the numerical summary of your ability to execute on that potential. Your value to Google could be plotted using those two data points.

Sergey's desire to reduce every decision to an equation would cause me a fair amount of frustration in the years to come. While it forced a discipline on me that was likely lacking in my career up to that point, it also went against my deeply-held conviction that some things are not expressible simply by deriving the correct algorithm. A lot of engineers at Google would dispute that with religious conviction, though they might admit that deriving the correct algorithm would be "non-trivial."

I believe you can't measure everything that is important. I also believe in most organizations the amount of stuff you can't measure usefully and realistically is quite a bit higher than it is for Google. Having highly intelligent, skilled and experienced people who can derive complex formulas effectively does greatly expand the effective use of measurements.

Still there are limits, and those limits are much lower for most organizations that have neither, thousands of phd level mathematicians, rocket scientists, software engineers etc. nor a anything approaching Google's percentage of such people.

Still I think we will benefit from the innovation that will continue to take place at Google. The are making great strides in using data to inform their decision making process.

Monday, December 05, 2005

Performance of People and Appraisal

The Statistical and Scientifc Thinking blog has several interesting posts on the Performance of People:

Why can'’t performance be numerically rated and ranked? It can'’t be defined operationally, it can'’t be measured with any degree of precision, it canĂ‚’t be separated from other effects, and it is destined to vary over time in any case. Any one of these factors present significant (if not insurmountable) problems itself. Combined the problems create an impossible barrier.

Performance of People III:

This essentially ended the practice of raise administration as a '‘zero sum'’ game. Many (if not most) companies make a total figure available for raises. That figure is then stated in terms of a percentage of total salaries. Each supervisor is instructed to average’ that percentage in administering raises among his or her employees. Thus, a given employee can only receive more than the average if another employee within the same supervisory unit receives less. This fosters competition within small units of the company. That is disastrous.

Related Links:

Sunday, December 04, 2005

Gary Hamel's Idea Hatchery

Gary Hamel's Idea Hatchery by Whitney Sparks:

Q: So how do you hope to change the standard approach to management?
Sometimes innovation is about creating a whole new class structure. Hierarchies are not very good at getting the best out of people. Communities are where people are most likely to give their gifts, bound not by economic dependency but [with] dreams.

I'd like to make business more humane. How do you create organizations where people can bring all of their humanity?

I advocate a system in which executives have to re-earn their power, [in which] their ideas have to compete with everybody else's ideas. [Not based upon] outdated Henry Ford attitudes. Work life has not become more interesting or compelling over the past few decades.

I don't think he is talking about lean manufacturing ideas of Henry Ford.

I admire his desire to learn where management is headed and to improve management education. I do think our management education needs to improve.

Gary Hamel articles and books

Excessive Executive Pay

Topic: Management Improvement

Via Christian Sarkar, Too Many Turkeys, The Economist:

Executive compensation in America - —already far ahead of the rest of the world, despite the best efforts of overseas managers to catch up - —is now rising inexorably again. In fiscal year 2004 the total compensation of the median American company boss rose in every industry... according to a new report by the Conference Board, a research organisation. In the big companies that comprise the S&P 500 index, median total chief-executive compensation increased by 30.2% last year, to $6m, compared with a 15% rise in 2003

Christian Sarkar asks, can we outsource the CEO to a low-cost country? That is exactly what will happen at the ludicrous levels pay has risen to. If the United States were to lock into a payscale that is unsustainable globally US companies will be no be able to compete. My guess is plenty of people in the USA will be glad to compete against the brooks brothers bureaucrats but if not, others will.

The excesses are so great now they will either force companies to:
  1. take huge risks to justify such pay and then go bankrupt when such risks fail (and some will succeed making it appear that they pay was deserved rather than just the random chance of taking a large risk and getting lucky).
  2. make it impossible to compete with companies that don't allow such excesses and slowly go out of business to those companies that don't act so irresponsibly
  3. hope that competitors adopt your bad practice of excessive pay (this does have potential as most people are corrupted by power, even across cultural boundaries). However, my expectation is the competitive forces of capitalism going forward are going to make such a hope unrealistic. People will see the opportunity provided by such poor management and compete with them.

As long as the pay packages were merely large, and didn't effect the ability of a company to prosper that could continue (slicing up the benefits between the stakeholders is not an exact science). The excesses recently have become so obscene as to become unsustainable.

Companies will not be able to compete if they allocate huge portions of the benefits provided by the operations of the company to the few sitting on top of the bureaucracy. On the other hand large pay for Directors alternatively is sustainable as it hardly impacts the overall results of the company directly. The poor performance of boards that may well be caused by directors feeling more obligated to the top bureaucrats for their large pay is a different matter.

Companies that provide huge benefits to those few at the expense of investors, the rest of the employees, customers, suppliers... will find the other stakeholders find it better to go elsewhere and interact with those companies that are more equitable.

Because those that are taking excess portions of the benefits of corporations have power to determine whether those companies stop providing excessive benefits to themselves I am sure many will slowly go out of business all the while blaming other factors. With the current system the most likely force to stop such abuse are those representing the investors.

Those taking excessive gains for themselves have learned how to block the interests of the owners fairly effectively, turning boards into pawns of the top bureaucrats instead of the owners. Those bureaucrats have advantages in the battle to allocate the gains fairly but I believe they are overplaying that advantage and over time the tide will change. But time will tell what actually happens.

Related posts:

Tuesday, November 29, 2005

Firefox 1.5 and Rollyo

Topic: Internet

The new Firefox 1.5 web browser is available. It is a great browser I have been using for at least a year. It is free, secure and has great features.

You can also try a search "roll" I have setup for the various curiouscat.com sites (via Rollyo). This allows you to search those sites I have included in the "roll" and only those sites.

I have also setup a management "roll" which includes some of my favorite management sites. This is a great tool that lets you search a predefined list of sites (including blogs). You can also setup your own "rolls." I think this is a very nice feature, let me know what you think.

You can add these search rolls to your Firefox search box (so you can select to search using Google, Yahoo... or one of these search rolls).

Also, if you have not looked at Open Office yet, take a look at it also (previous post: OpenOffice 2.0). We also have a page with some of the freeware we think is worthwhile.

Monday, November 28, 2005

Toyota Chairman Comments on India and Thailand

Topic: Management Improvement

Toyota Chief Comments on India, Thai Cos.

The chairman of Toyota Motor Corp. said Monday that auto companies in India and Thailand may soon overtake those in Japan because of their increasing focus on quality.

While this might be a bit of an exaggeration part of what keeps Toyota improving is that they do not rest on their past success. They are continually looking to improve.

He said no Japanese firm has won the Deming prize in recent years as they are not showing interest in winning this coveted prize, whereas Indian companies such as motorcycle and scooter maker, TVS Motor Co. and Rane TRW Steering Systems Ltd. have won the Deming prize.

More news on Okuda Hiroshi's visit to India, Japan sees India shining

Toyota Motor Corporation chairman Okuda Hiroshi, who heads Japanese trade body Nippon Keidanren, will lead a high-powered mission to India from November 27-30.

The delegation is likely to meet Prime Minister Manmohan Singh, finance minister P Chidambaram and commerce minister Kamal Nath.

Related Posts:

Sunday, November 27, 2005

Management Improvement

Topic: Management Improvement

Lean Manufacturing Visionary Jim Womack On Frontiers Of Lean Thinking, webcast and additional questions and answers:

Question: For a firm seeking to improve -- what comes first? Six Sigma quality or lean implementation?

James Womack: Agh! These are all the same thing. You need to start with the value stream for very product, draw a map of its current state, and ask about each step: Is it valuable? Is it capable? Is it available? Is it adequate? Is it flexible? Then ask whether each step flows smoothly to the next but only at the pull of the customer as the process approaches perfection. Doing this simple exercise wraps together everything you need to know about TQM, TPM, TPS, Six Sigma, TOC, etc

I believe while they are similar to varying degree they are not the same thing. They may have similar goals - they are largely focused at improving performance of the organization (but even how they would measure success is different). And when implemented well each of these methods have value. However what is done in an organization focused on six sigma is different than one focused on lean thinking.

These efforts can all be compatible. And while I believe differences do exist between these concepts, I largely agree:

When I have a bit more time for a talk, I explain that "lean", "six sigma", and all the other programs focusing on process management are largely the same and are complimentary. It's only the packaging efforts of competing consultants that creates the perception of fundamentally different approaches.

Many of the tools are used between the different programs and many of the important concepts are similar. Some tools are much more common in one program, even if they are not limited to one program (such as Design of Experiments used heavily in six sigma). But design of experiments existed long before six sigma and was used by sensible people to improve for decades before six sigma.

The biggest difference I see in the programs is the overall aim. And that overall aim effects everything else. I happen to be a fan of Deming's ideas. Most of these programs take a great deal from Deming's ideas. I believe Lean is closest to Deming's ideas (which makes sense as Lean is essentially the Toyota Production System TPS). In 1991, Shoichiro Toyoda, Honorary Chairman and director of Toyota Motor Corporation stated:

"There is not a day I don't think about what Dr. Deming meant to us. Deming is the core of our management."

At Toyota, Ohno and then Shingo created TPS, which includes many new ideas that are truly unique to TPS and are not really a part of what Deming taught, though they are consistent with his ideas. The focus of TPS is different than Deming's though much closer to Deming's ideas that most any other company. I believe they evolved to something that is unique and valuable. This is exactly what I would expect as more companies adopt better management methods and then proceed to evolve those methods in their organizations.

I think in the current application of lean thinking many ignore some of the valuable ideas from Deming (which may well be related to, as Womack stated: "packaging efforts of competing consultants"). Toyota obviously put a high value on Deming's ideas and those that try to adopt lean without understanding his ideas, can improve, but I believe they will be less successful over the long term.

Management concepts should evolve and improve over time. We should build upon the good ideas of yesterday and build in new innovations as they are shown to be effective. It is difficult to do so when consultants try to make their "solutions" proprietary methodologies that are sold in that way.

Luckily working with the ideas of Deming, Ohno, Drucker, achieve, Shingo, Scholtes, Womack, Box, etc.. and building upon them is what is needed to be successful. I find that management thinkers focused on improving management rather than selling a proprietary solution have the best ideas that are needed to improve management. Eli Goldratt and Joel Barker have some valuable ideas but seem to be more proprietary about those ideas, to me, than most of the others.

I will admit I am biased against proprietary solutions. I especially find it annoying as many proprietary solutions offer nothing actually unique, they just take old management tools and then rename them or twist a bit and claim this is some great new thing. I also think many hide their ideas from public scrutiny claiming they are "proprietary." I understand some good ideas are lurking in this area, still, I would be very reluctant to adopt proprietary management tools.

The continued evolving of quality management in six sigma, lean thinking and the adoption of many of the concepts into traditional management is a good thing. The current state of management improvement offers more good ideas and more refined ideas then ever before. And I do see lean thinking, six sigma, deming, systems thinking, theory of constraints, etc. as part of management improvement. The more learning from those focused in different areas there is the better; rather than forming isolated camps for improving the practice of management.

Related Posts:

Friday, November 25, 2005

Google: Experiment Quickly and Often

Topic: Management Improvement

Google Thinks Small by Quentin Hardy, Forbes:

Brin and Page have created a corporate organism that tackles most big projects in small, tightly focused teams, setting them up in an instant and breaking them down weeks later without remorse. "Their view is that there is much greater progress if you have many small teams going out at once," Schmidt says. The mission overall: to collect "all the world's information" and make it accessible to everyone. "It's a cause."
Hundreds of projects go on at the same time. Most teams throw out new software in six weeks or less and look at how users respond hours later.

Google has advantages in making this work for them (it is easy to find reasons it won't work elsewhere). However, this is basically piloting changes on a small scale, analyzing the results and doing that quickly and often. That quick, frequent experimentation is something organizations should strive to achieve.

The clear visible mission is also helpful. When an organization has an organizing principle everyone can understand then action can be guided by individual aim toward that purpose. When the understanding is missing organizations often have to rely on top down instruction and having far too many issues passed up the hierarchy for a decision.

And getting a small group of people to make things work quickly is also great. Many organizations get bogged down with byzantine management structures that slow action to a crawl.

Thursday, November 24, 2005

2005 Baldrige Award

The 2005 Baldrige Award recipients are:

  • Sunny Fresh Foods, Inc., Monticello, Minn. (manufacturing)
    • Product rejections for SFF at all four plants have continuously declined. Reducing rework can provide significant productivity improvements: SFF's rework reduction percentage was measured at 15 percent from 2001 to 2002, 61 percent from 2002 to 2003, and 75 percent from 2003 to 2004.
  • DynMcDermott Petroleum Operations, New Orleans, La. (service)
    • The storage cost per barrel was $3.00 for Japanese Oil Reserves, $2.40 for U.S. industry storage, $1.60 for the European Oil Stockpile and $.20 for the Strategic Petroleum Reserve, managed by DynMcDermott.
  • Park Place Lexus, Plano, Texas (small business)
    • Park Place Lexus Grapevine location had a New Car Client Satisfaction Index (CSI) of 99.8 percent in 2004 making it the highest rated Lexus dealership in the nation
  • Richland College, Dallas, Texas (education)
    • RLC's systematic process for design and evaluation of learning-centered processes utilizes a combination of qualitative, quantitative, in-process formative and end-process summative measures to ensure process requirements are met and to manage processes during day-to-day operations. In addition, standardized process drivers, such as measurements for its many KPIs, and defined curricula for learning processes help ensure a repeatable system is used to meet requirements.
  • Jenks Public Schools, Jenks, Okla. (education)
    • Drop-out rates, a measure of student satisfaction for JPS students, have decreased steadily from 6.3 percent in 1999 to 1.2 percent at the close of the 2004 school year.
  • Bronson Methodist Hospital, Kalamazoo, Mich. (health care)
    • BMH shows strong performance improvement and results in Medicare Mortality Rate (mortality rates of people over 65 enrolled in Medicare programs), moving from 4.8 percent in 2002 to 3.5 percent for January-July 2005. This performance exceeds both the CareScience Expected Standard, and the CareScience Best Practice.
It is difficult to get a sense of whether the Baldrige winners are really doing great things, or not. It would seem to me if they truly were worthy of recognition for exceptional management the highlights provided (following the links above) should be more impressive.

Tuesday, November 22, 2005

Be Thankful for Lean Thinking

Topics: Management Improvement and Economics

The Dallas Federal Reserve white paper, Supply Chain Management: The Science of Better, Faster, Cheaper by Thomas F. Siems provides a macroeconmic view of what to be thankful due to the practice of lean thinking:

Through better information engineering, supply chain improvements have resulted in a reduced bullwhip effect, lower inventory levels, reduced logistics costs, and streamlined payments. These improvements appear to have helped produce macroeconomic benefits such as more stable economic output and higher productivity growth.

Mass Production Era. In the early 1900s, Henry Ford created the first moving assembly line. This reduced the time required to build a Model T from 728 hours to 1.5 hours and ushered in the mass production era. Over the next 60 years, American manufacturers became adept at mass production and streamlined supply chains with the help of scientific management methods and operations research techniques.

Lean Manufacturing Era. But in the 1970s, U.S. manufacturing's superiority was challenged. Foreign firms in many industries made higher quality products at lower costs. Global competition forced U.S. manufacturers to concentrate on improving quality by reducing defects in their supply chains.

Starting in the early 1970s, Japanese manufacturers like Toyota changed the rules of production from mass to lean. Lean manufacturing focuses on flexibility and quality more than on efficiency and quantity. Significant lean manufacturing ideas include six-sigma quality control, just-in-time inventory and total quality management.

Ok, I don't think most experts would call six-sigma a lean manufacturing idea but this is a member of the dismal science singing macro-economic praises for the practice of lean thinking, so I think that point can be overlooked.

Sunday, November 20, 2005

Innovation and Research and Development

Topic: Economics and Management Improvement

Innovation and R&D by John Hagel:

From a competitive viewpoint, what matters is the relative rate of productivity improvement. R&D spending and patent filings will matter little if they do not translate into faster productivity improvement -– in fact, they can be a significant distraction. Those who understand this will have a significant edge as competition intensifies in the global economy.

I would argue innovation can be related to productivity improvement or it can be completely unrelated. A company could innovate with an ideas like the remote control for televisions (or microlending or air bags). That innovation may not contribute in any way to manufacturing televisions more productively.

Other innovation may be related to improving the productivity alone and add no additional functionality to the customer. Many innovations will provide a combination of both benefits. Both innovation and productivity improvement are important.

Quoting Michael Schrage's article:
The simple fact is that R&D spending - whether in euros, dollars or as a percentage of sales - is an input, not a measure of efficiency, effectiveness or productivity. Ingenuity, invention and innovation are rarely functions of budgetary investment.

John Hagel then states:

I only wish that Michael had gone a bit further and spent more time attacking a related fallacy: equating patents with innovation.

I agree with the weakness of using research spending and patents to measure innovation. I do not believe they are worthless as measures, however. Are there better measures? Outcome measures? If so, what are they? From the post I might guess productivity improvement might be such a measure. While that might be a useful measure it is hardly a sufficient one. I agree people should understand the weaknesses with the measures but I still believe they are useful in understanding where things stand and how things are changing.

The Innovation/Productivity Quotient by John Hagel III and John Seely Brown:

The real winners in terms of IT investment to generate major productivity advances have been highly innovative at two levels: They redesigned key business processes to exploit IT capabilities, and they focused on implementing continuing innovations in these business processes.

Related posts:

Saturday, November 19, 2005

Laurence Haughton on Peter Drucker

Laurence Haughton on Peter Drucker via ChristianSarkar.com:

He criticized organizations who issued directives to "cut 5 or 10 percent from budgets across the board."
And I'll bet others can find 100 additional quoted and ignored lessons from Peter Drucker just like that one
I'm sorry to say that despite all the tributes, up to now, we've learned very little from Peter Drucker.

It is frustrating, but I wouldn't draw that conclusion.

As readers of this blog know, I am a big fan of W. Edwards Deming's ideas. Many of his ideas are ignored. However, even so, his influence on management in America, and worldwide, has been significant and positive. The way I see it even though managers are only benefiting from say 20% of the wisdom of Deming or Drucker that could very well still make Deming or Drucker the most influential management expert.

updated: Also see the Slacker Manager post on The Drucker paradox

Management Science for Software Engineering

Topics: Management Improvement, Software Development, Theory of Constraints

Management Science for Software Engineering:

using the Theory of Constraints 5 focusing steps and the drum-buffer-rope solution for production flow problems, it was possible to increase the productivity of a sustained engineering department by more than 200%. In the final, quarter of the study period, a 25% increase (elevation) of the capacity constrained resource, produces a 25% increase in overall system throughput - just as the theory and model would predict.

Read the full paper by David Anderson, Microsoft, From Worst to Best in 9 Months - Implementing Drum-Buffer-Rope in Microsoft's IT Department:

Estimation was sucking up to 40% of capacity. Removing estimating produced a big and immediate productivity improvement [Table 3]. However, permission to stop estimating required a change in mindset from customers and internal management. They needed to stop the cost accounting for prioritization and budgeting.

An excellent article for those interested in project management and software development (as well as those interested in Theory of Constraints, of course). David Anderson continues to post excellent material detailing actual results.

Related Posts:

Wednesday, November 16, 2005

Managing Innovation

TQM, ISO 9000, Six Sigma: Do Process Management Programs Discourage Innovation?

"In the appropriate setting, process management activities can help companies improve efficiency, but the risk is that you misapply these programs, in particular in areas where people are supposed to be innovative," notes Benner. "Brand new technologies to produce products that don't exist are difficult to measure. This kind of innovation may be crowded out when you focus too much on processes you can measure."

Well I don't think the idea that innovation is needed was not understood decades ago. It seems to be one of the typical refrains when people want to change - oh that old stuff was only about x and now we need to focus on Y.

I commented on this before: Fast Company Interview: Jeff Immelt

As to focusing only on measurable items: yeah that has been recognized as bad, again for decades.

Says Benner: "Our message is this: Companies that have process management in one area must realize that it can bleed into other areas of the company, and you must prevent that from happening. Use these approaches where they make sense -- and deliberately do not have them in areas that are focused on innovation."

I disagree. Managing processes is a good idea. You manage appropriately to the process, of course.

Google has a very well known management commitment to allowing engineering one day a week to work on personal projects:
Google engineers all have '20 percent time' in which they're free to pursue projects they're passionate about. This freedom has already produced Google News, Google Suggest, AdSense for Content, and Orkut - products which might otherwise have taken an entire start-up to launch.

You manage processes such as thinking up a new way to use computer technology than you a process to manufacture tires. But the idea that you don't manage and improve the process just because the process seems discontinuous is a mistake.

Some thoughts on managing innovation:

Tuesday, November 15, 2005

Curious Cat Science and Engineering blog

Topic: Science and Engineering

We have moved the Curious Cat Science and Engineering blog to a new home.

About Our Science and Engineering Blog:
The title of the blog gives you an idea of the topics we explore. Some additional insight into our aim:
  • Primary education (k-12) in science, math and engineering - we will post about the state of education (research etc.) and news and items of interest to teachers and students. We aim to be a resource that helps teachers and students learn about science and engineering. The K-12 category will be targeted at teachers and students. We are also trying a students category for items we think might be of particular interest to students (and we believe teachers might find useful as items to interest students in science and engineering).
  • Higher education (college, university, graduate school and other sources of advanced learning) - we will post about news about science and engineering higher education and items of interest to professor, students and those interested in higher education. The higher education category will be targeted at professors, students and those interested in higher education.
  • Economic impact of science and engineering - we will post about the macro economic and societal impacts of science and engineering: higher education, research funding, investments and political decisions and discussions. We believe science, engineering and technology can serve to improve living conditions around the world. We believe investments in science and engineering, research and higher education, will impact the economic success of countries and the world overall. The economics category contains posts on developments in this are and our thoughts on this topic.
  • Highlight interesting science and engineering information - we will post about interesting science and engineering news and blog posts as we see it.
Please let us know what you think of the blog.

Saturday, November 12, 2005

Management Guru Peter Drucker 1909-2005

Management expert Peter Drucker passed away at age 95. Peter F. Drucker Information from Claremount University.

In 2002, Peter Ferdinand Drucker was awarded the United States Presidential Medal of Freedom.

Drucker, was born in Vienna, Austria, in 1909 and moved to the United States in 1937. He taught at New York University as Professor of Management from 1950 to 1971. From 1971 through 2002 he taught at Claremont University. The university's School of Management was named for him in 1987.

He has written influential works about management since the 1940s. He has written about 30 books, and from 1975 to 1995 he was an editorial columnist for the Wall Street Journal.

He consulted for businesses and non-profit organizations. In 1990 he founded what is now the Leader to Leader Foundation. Curious Cat Peter Drucker Biography.

Management Visionary Peter Drucker Dies by Patricia Sullivan:

"There is only one valid definition of business purpose: to create a customer," he said 45 years ago. Central to his philosophy was the belief that highly skilled people are an organization's most valuable resource and that a manager's job is to prepare and free people to perform. Good management can bring economic progress and social harmony, he said
Mr. Drucker demanded that public and private organizations operate ethically and decried managers who reap bonuses by laying off employees. "This is morally and socially unforgivable, and we will pay a heavy price for it," he said.

Addition: My Grandfather, Peter Drucker, Died Today

Update 2: Management Guru Peter Drucker - podcast interview, on NPR, with Peter Drucker on management, the state of the world today and where we are headed. A profound view from Peter Drucker in his 95th year.

News articles: washingtonpost.com - CNN - LA Times

Wednesday, November 09, 2005

Government Lean Six Sigma

Topic: Management Improvement

Deep Thinkers by Kimberly Palmer, GovExec.com:

"This is not a fad that will die out. It's been tried, it's been tested, it's true. If you look at the best-run companies in industry, this is part of the heart and soul that's making them successful," says Mark Price, president of George Group Federal Services, part of Dallas-based George Group Consulting.

Unfortunately I would have to say the article does strike me as talking about fadish behavior ,not true transformation in management approaches. I was involved in management improvement efforts in government for years and the government does have examples of very well managed organizations (as well as poorly managed organizations). And too often superficial improvements were seen as a significant achievement. The article talks about things that are fine but just touch the surface of the needed improvements.

One of the problems in government management improvement is the mobility of management. To an even higher degree than Deming noted as a "deadly disease" of American business excessive mobility of management in government makes significant long term management improvement difficult. Exceptional managers often move up or move out long before the changes they start take a firm hold.

When looking at lean initiatives in government I think it is sensible to separate political from operational efforts. Ideally the political decisions should be informed by knowledgeable management experts. However, focusing on that is a recipe to frustration as political decisions will often remain mostly political (which have as factors how efficient and how effective a solution may be, but those are only factors and rarely the primary factor).

However, much of what government does is carry out the political decisions that are largely settled. And within those areas a framework eliminating waste is a great goal (as is effective solutions - elimination of waste is necessary but not sufficient). The decision on how the saving from elimination of waste should be used is again a political question.

Once the political decision has been made to eradicate polio then that desire can be carried out - and politics really has little impact. Other examples are not as simple. A political decision to eliminate AIDS runs into political controversies in selecting the best strategies to accomplish the goal.

A desire to eliminate hunger, poverty or homelessness run into differing opinions on how those problems should be addressed. I can't imagine any politician against the elimination of those problems. However, many politicians will be against various tactics to accomplish those goals.

Political decisions have management components but arguing about the poor management effectiveness of political decisions is a bit too advanced for our current capability, I believe. It seems silly for a government to subsidize mansions being built in hazardous areas where insurers would not insure construction, but for political reasons it continues. It seems silly to have the political leadership prohibit the government from negotiating lower drug costs from suppliers (Drug Dealings - Working to fix the problems with the new Medicare law), but they do.

Why would a government provide special tax breaks to big oil companies (Corporate Tax Bill, HR 4520 - House OKs energy bill laden with tax breaks) and they a few months later hold hearings on imposing special taxes on big oil companies "windfall" profits (Oil industry under fire - Oil Doesn't Want Focus on Big Profit). These political decisions, are worthy of both political and managerial criticism.

If aiming for management improvement in government there are huge targets of opportunities that will not run into political controversy. These areas of opportunity for extensive management improvement are the most sensible place to focus on government management improvement (almost nothing is free from politics but some things are less subject to those whims than others).

Focusing on more sensible systems thinking in political decisions is also fine but I think the focus there should be political. The focus should be on finding politically venerable decisions and pointing out the ineffectiveness of spending resources in such a manner.

If you want to see some examples of effective government look at the rates government pays for plane travel. When government agencies are freed to do their jobs they often do well - they also fail to do well. The scope of government is huge and includes examples of great and poor management.

How much credit does the United States government get for creating the conditions that allowed for Yahoo, Google, Ebay, Amazon... to grow? How much credit does it get for assisting in the sequencing the human genome? How much credit for creating a interstate highway system that allows for efficient transportation system? How much credit for create a society with the rule of law? How much credit for rebuilding the spirit of New York City? How much credit for creating and enforcing the American with Disabilities Act? How much credit for funding a child welfare system and giving a child a chance to flourish and become a productive member of society? How much credit for taking criminals off the street? How much credit for regulators taking action to provide clean water and air? How much credit for providing health care to those who do not have insurance or a way to pay? How much credit for educating a child? How much credit does the Japanese or Singaporian governments get for the economic growth the citizens have enjoyed? Most of these figures are unknown and unknowable?

Federal, state and local government needs to improve their management practices (as do other portions of our society). However, government also does well.

Some examples of effective government management:

Friday, November 04, 2005

Interview with Jim Womack

Lean Solutions book cover imageTopic: Management Improvement

Q&A With Jim Womack by Mark Graban:

The whole idea of lean solutions is to start with today's customer in today's circumstances and ask what the customer really wants. When we do this, the first thing to note is that manufactured goods have gotten vastly better, somewhat cheaper

James Womack also lists the six principles of Lean Solutions which seems to be boil down to one of the principles: "Get me exactly what I want" (though the way he describes this seems to be different than I read those words - "The proposition of retailers and other providers of goods from stock is that you can always find any of the items they have on offer"). That concept in then clarified by explaining what people want, such as: "don't waste my time," "Solve my problem completely," give it to me when and where I want...

We believe that by looking at the process the consumer follows to solve problems, comparing this with the process the provider follows (along with the manufacturer), and then synchronizing and rationalizing all three processes, we can product a win-win-win for consumers, providers, and manufacturers. These win-win-wins are lean solutions.

But we have also noticed for years the growing gap between the factory, where things are getting better, and the situation of providers and consumers where it often appears that things are getting worse.
We strongly believe that our future standard of living in America, Europe and Japan largely depends on our ability to improve the consumption and provision processes.

I agree. It is frustrating to see the poor results in improving performance in service industries. One of the reasons manufacturing has been so beneficial to economies is that manufacturing productivity has been increasing dramatically.

Productivity increases provide economic gains that then can be distributed to the members of the economy. As other segments grow as a portion of the economy the manufacturing productivity gains do not carry the same weight as they did when manufacturing made up a larger percentage of the economy. Achieving such productivity gains in other parts of the economy is a key to economic success.

Articles by James Womack

Wednesday, November 02, 2005

Lean Information Technology

Topic: Management Improvement

A new Lean Blog, Compound Thinking, focuses on Information Technology. It has started off with some interesting posts, including - Compound Thinking: Lean Manufacturing Principles -- Trust the Team:

If you aren't trusting your people, you are slowly but surely sapping their morale. Even worse, you are cutting yourself from the source of real ground-floor process innovation.

And Lean Manufacturing Practices -- Kaizan:

IT Departments need Kaizan events, new technology is coming at them faster than they can manage, processes aren't automated just because nobody has a free couple of hours, and things can get messy very quickly.

I agree. It is very easy for waste to be hidden in IT. I think it is more difficult to notice the inefficiencies in IT because much of the work is done in virtual space, not real space. I think that can make it more difficult to see the waste. Or perhaps I am just using that as an excuse.

IT people also can hack something to meet today's need and add it to the code base. It would normally be much more difficult to modify production machines. While this is an advantage (more flexibility) it often leads to sloppy systems. Instead of taking the time to design these properly something is created quickly, for today. If the code had a physical existence I think much of it would look like a rube Goldberg contraption.

Image from Rube Goldberg contest site

Monday, October 31, 2005

Bill Hunter and Peter Scholtes

Topic: Management Improvement

I have recently updated Peter Scholtes' web site (author of the Team Handbook and the Leader's Handbook) and created a new web site for my father: Bill Hunter - williamghunter.net. They were friends and colleagues.

I frequently receive kind words from people who knew my father. A recent note:

I just thought I'd let you know how much I enjoyed your dad's class as a grad student in 1979 at UW-Madison. I'm sure you've heard many comments like this, but I'll add one more. He was a delightful and entertaining prof who clearly loved his subject. He made an impression on me one day by asking us a question about the British comedy radio program, The Goon Show, which I had heard. I think I was the only member of the class who raised his hand. After that moment, I always felt a special bond with him, because I thought it was great that he appreciated the wacky humor of that show.

I received a wonderful education at UW and your dad was no small part of it.

I have added a comments section on the site to post such notes. If you have a comment to share please send me a message to post. Even if only my relatives and I enjoy the notes, I think they are wonderful, so please send them in.

Sunday, October 30, 2005

Manufacturing and the Economy

Topic: Macro Economics and Management Improvement

In Global Market, Iowa Manufacturers Fight for Survival:

The conventional wisdom has been that expanded trade would result in the United States losing low-pay, low-skilled manufacturing jobs, said David Swenson, an economic scientist at Iowa State University. But "a lot of the jobs that we have traditionally thought of as high value, high quality, high benefits are in trouble, too."

The conventional wisdom was that the rest of the world would not be able to compete with the United States for high wage, high value jobs. It turns out the rest of the world is much more able to compete for that work than was expected.

The highest value jobs can be done effectively out of the United States for a variety of reasons. Partially the conventional wisdom in the United States was based on a fantasy world created after World War II when the United States was the dominant economic power. Partially the success of economic (and other) policies of the United States during that period allowed the United States to flourish in the post war period (given the same starting point less effective policies would have lead to less success for the United States and created less of a sense that the natural state was one in which the United States was spectacularly wealthy compared to the rest of the world).

Partially the conventional wisdom was wrong because the wealth that exists in the world today has allowed for huge investments to be made amazingly quickly. That allowed changes to the macro economic environment faster than I can imagine any reasonable person would have expected in 1985. And partially the effectiveness of especially China (but also many other countries in Asia mainly) in improving their economy have been much more successful than could have been reasonably expected. Partially the very high wages paid, might just be too high, we will see. The success of multi-national companies in speeding up the adoption of effective management policies has also been important. Granted I believe the management practiced by most could be greatly improved but still...

I believe we can expect that there will be real competition for high value work from a wide number of countries. That is the reality of the world today. Countries that desire economic wealth are going to find that other countries want high value work also (and are not willing to seed a huge percentage of those jobs to the United States or anyone else). To retain and gain high value work all countries will have to compete with each other. Previous post on science and engineering jobs.

More from, In Global Market, Iowa Manufacturers Fight for Survival:

Two movements that are dramatically changing Iowa manufacturing floors are technology and lean manufacturing disciplines, such as Kaizen, a Japanese approach for continuous improvement.

With nearly 30 percent of the residents in Des Moines, Lee and Henry counties employed in manufacturing, said Hinkle, "it made sense to make southeast Iowa a lean stronghold."

I think we often talk as though manufacturing in the United States is not feasible. Yes, things are changing, and have been for several decades. But the United States is still the largest manufacturer in the world.

I had a great deal of difficulty finding statistics on this (any suggestions for good source of macro-economic statistics on manufacturing would be appreciated). Google and the others still have plenty of room to improve search results. From the WorldBank, I located manufacturing statistics from 2001 (using "value added" - the link to the details on what the figures mean on the page don't work - I would guess the figures are in constant dollars but I can't say for sure).

Country19902001% increase
United States1,040,6001,422,99939
Germany456,405385,923 -15
United Kingdom206,718220,4297

Summers conservatively estimates the company will implement 25,000 employee recommendations throughout its operations this year. The company has 3,800 Iowa employees, called members, with 11,000 worldwide, mostly in the United States.

"Those suggestions are driven by shop floor members who understand where the waste is in their jobs," he said.

Employees are trained in lean techniques and are "encouraged and rewarded to generate and implement improvement ideas."

Mead said about once a quarter, employees work on a lean project within their work area or in other plant operations.

A substantial determinate of where high paid manufacturing (and other) jobs will be is how effectively locations produce. By using lean manufacturing methods (and the like) and taping the brainpower of employees the odds of keeping such jobs in Iowa, and anywhere else is increased. Is it certain to work? No. But the odds of keeping such jobs without using such management improvement strategies is much worse.

The ratio of manufacturing output to total economic output is not declining much (see chart). Yet, Quality management, lean manufacturing, applied technology, technological innovation, etc. have increased productivity to such an extent that we are increasing production and decreasing employment. I could not find the statistics but my belief is that manufacturing employment has declined substantially globally.

Jobs are leaving the manufacturing sector everywhere. Again, I can't find a source now but my understanding is manufacturing employment in China is down more than manufacturing employment is down in the United States in the last 2 decades. How? Remember that China has radically altered their economy. What existed 20 years ago (and even 10 years ago) was employment at factories largely in name only - employees that had nothing to do. Part of that change is the vastly increased output shown above, another part is the reduction of staff at factories that now are managed to make a profit.

It is true (in my belief - and based on the statistics above and in the graphs) that the United States has been decreasing manufacturing employment. And it is also true other countries - notably: China, Korea and Mexico are increasing manufacturing output. However, I believe the there has been no increase (in fact I believe their has been a decrease) in manufacturing jobs worldwide. The impact of lower wages (in competitive countries), while a factor, is much less important than other factors in the decline of manufacturing jobs in the United States.

The way to create an economy that continues to provide good jobs is to apply the ideas of Deming, lean thinking, customer focus, statistical tools, systems thinking, etc.. We should realize that the United States was in a position from 1950-2000 that was abnormal and is not something that can be expected to return. To achieve economic success in the next 50 years will require doing what we did well last century well again, improving things we could get away with doing poorly and learning and applying new ideas (in management and elsewhere).

As I have stated before, as a county, the United States still has the advantage when looking at the likelihood of economic success in the future. But that advantage is much less than it was in 1950 or even 1970. The conventional wisdom was that the United States could move to "high value" work where we could continue to exist in the way we did in the middle of the last century.

Those who thought moving to high skill jobs was the way to protect economic gains, knew that it was only a temporary state. They implied we could take advantage of that time to become more effective and maintain a significant advantage over others. It turns a handful of countries have reached a very competitive state for even high skill jobs much quicker than most anyone expected.

The future is very bright for the world and for the United States. But the United States is going to have quite a few challengers for providing a location for high skill jobs. It will be very interesting to see what happens in the next 20-50 years.

Is the United States going to be the largest manufacturer in the world 20 years from now? I doubt it, but if you have to pick one country it has at least as much chance as any other (I would imagine today many would give the odds to China, and I would as well). What other country? Japan, I doubt it. Enough of Europe forming into a country, possible but unlikely.

So I would guess China #1 and USA #2 in manufacturing in the year 2025. Hardly a failure to be the second largest manufacturing country in the world. And there is plenty that could go wrong in China and cause it to slip and not catch the United States. But we have experienced amazingly quick macro economic changes recently, so 25 years might leave room for much more change than seems likely today.

Is the United States going to have the largest GDP? I believe so. What countries are likely to do well? That is not an easy question. China and India have done very well the last 10 years. Continuing that success for the next 25 years will not be easy. Again it will be interesting to see what develops.

I believe many factors will define what countries do well: educational system, health care system, existing economic wealth, freedom (economic, personal and political), lack of corruption, the rule of law, management, banking and securities system, innovation system, support for scientific innovation, providing opportunities for all citizens to contribute...

I would guess the USA [GDP growth 1980 to 1990, 1990 to 2003 3.6, 3.3], India [5.7, 5.9], China [10.3, 9.6], Singapore [6.7, 6.3], Thailand [7.6, 3.7], Korea [9.0, 5.5], Costa Rica [3.0, 4.8], United Kingdom [3.2, 2.7], Spain [3.1,2.8] and Mexico [1.1, 3.0] (I may be more hopeful in this pick than rational) will do well (as measured by GDP and increase in total wealth). Others that have a good chance: Malaysia [5.3, 5.9], Australia [3.4, 3.8], Canada [3.2, 3.3], Japan [3.9, 1.2], Vietnam [4.6, 7.5], Chile [4.2, 5.6], Brazil [2.7, 2.6], Egypt [5.4, 4.5], Uganda [2.9, 6.8] and many countries in Europe. Many others also have a chance but success is not going to be easy. The countries listed above will provide formidable competition. However, with proper planning and execution most countries have a chance for great success in the next 25 years, and all do looking 100 years into the future.

Friday, October 28, 2005

Management Training Program

Topic: Management Improvement

Fog Creek Software Management Training Program by Joel Spolsky:

Finally, when you're really really good, they let you hang around with Yussef on the ovens. Yussef was about 100 years old and so good at running the ovens it was scary. When Gabbi tried to show me how to solve the problem of bread sticking to the conveyer belts on the way out of the oven, he ran back and forth like a lunatic for ten minutes, turning knobs, pulling levers, redirecting heat, and burning a few hundred loaves while he struggled to get things under control.

But Yussef, facing the same problem, turned one tiny knob on a seemingly-unrelated chimney about one degree to the right. It made no sense, he couldn't explain why it worked, but it did: it solved the problem instantly and suddenly perfect loaves started popping out. It took me another couple of years to really understand the complex relationships between heat and humidity inside an 80 foot tunnel oven, but it would have taken ten more years before I could solve problems as well as Yussef did.

From the Lion of Lean (an interview with James Womack):
So I said to the Toyota executive, "You've only got two or three suppliers per category, and you never take bids. How do you know you aren't being ripped off?" So this guy, who was around 60, gives me an incredibly frosty look and says, "Because I know everything." Everything? "That's my job," he says.

Reading "Because I know everything" brings to mind an arrogant blowhard to many in America (I think). Probably because most who would say that, are arrogant blowhards. But when someone has worked (a Toyota executive or a baker) for 40+ years in the same area those words can have quite a different meaning than a 31 year old MBA working in this third industry. Managing with constancy of purpose and long term thinking can make a big difference.

Joel Spolsky runs a software company with a different vision than most owners or managers. I don't think he attempts to follow Deming or Lean Thinking or Ackoff. He has very interesting ideas on managing, that he developed himself, as far as I know.

Thus: how do we develop the next generation of managers? We don't really want to hire MBAs, because there's too much evidence that MBAs substitute book-learnin' for common sense or experience. We'd much rather hire someone who created and ran a profitable lemonade stand than someone who has taken two years of finance courses at Harvard, especially since the Harvard MBA is going to think he knows a lot more than he really does.

Our latest thinking is just to train a new generation of leaders from the ground up.

To that end, today we're launching an experimental new program, the Fog Creek Software Management Training Program.

I think this would be a great opportunity for the right person.

A sample of some of his management philosophy.

Hitting the High Notes:
For the last five years I've been testing that theory in the real world. The formula for the company I started with Michael Pryor in September, 2000 can be summarized in four steps:

Best Working Conditions Best Programmers Best Software Profit!
It's a pretty convenient formula, especially since our real goal in starting Fog Creek was to create a software company where we would want to work. I made the claim, in those days, that good working conditions (or, awkwardly, "building the company where the best software developers in the world would want to work") would lead to profits

Bionic Office:
The monthly rent for our offices, when fully occupied, will run about $700 per employee. The build-out was done on budget and paid for almost entirely by the landlord. I suspect that $700 per person is on the high side for software developers throughout the world, but if it means we can hire from the 99.9 percentile instead of the 99 percentile, it'll be worth it.