Sunday, January 30, 2005

Web Search Improvements

Topic: Internet - Improvement

I have been waiting for Google to provide a way around an obvious problem with their search results for a long time. They choose to provide results that do not display matching content when you click on the result link. Since this was such an obvious failure to meet the needs of web search customers I figured a solution would be quick.

After a time I decided I should tell them I don't want "results" that don't display the content when I click on the link results Google provides. So I suggested, I, and many others, would like a way of indicating we don't want those results returned to us. It has now been more than 6 months and still nothing. I get an increasing number of these bad results. Combined with the improvement great improvement of Yahoo and MSN searches I am now willing to give them a try as my primary search and see how they preform.

In this case, I am not referring to pages where the site owner has deceived Google by providing false content to Google's bot. For those cases, see improvement suggestion 2, below. What I am talking about are pages, such as:

Google search result link goes to this page which has no relevant content. Posted by Hello

Link to the page shown in the image.

Where Google, I have to believe, knows has the content not available from the search result they provide but hidden away behind free, or paid, registration. I can understand some people might want such items returned. I can't imagine people would choose that as the default option but even if Google wanted that to be the default option that would be fine with me as long as they provided a way for me to only get search results that returned links that linked to a page with the content Google found to match my search. It appears Yahoo! doesn't provide this option either. If there is a way to accomplish what I want that you know of please let me know.

Improvements I would like to see:
  1. Ability to restrict results so only those links that will display the content are returned.
  2. Ability to restrict sites from the search results in my preferences (Google doesn't seem to be able to restrict certain obvious spam names databases from results, so let me do so myself. It would be best if there could be filter lists that are maintained by various communities that I could choose to apply. I can imagine there are technical hurdles to overcome to make this a reality).
  3. Ability to restrict types of results by file type in my preference (such as power point or pdf files). I would like to be able to have more obvious indications when the file is one of those types. Again I can appreciate this might not be what everyone wants. I have no problem with the current default option remaining, I would just like the ability to set my preferences and have those used for my search results.
  4. Easier way to have results restricted to certain sites (including site lists). It would be nice the search engine could retain a list of sites I have used in the past and let me select from those. Also I would like to be able to select multiple sites. And I would like to have groups of sites (site lists - so I could just select, for example, the "management improvement" sites) and the search results would be filtered only for those have included in my list of management sites.
  5. With the ability to filter results list above, an appropriate interface to make such options easy to use on the search result page. The current preference page works ok, for its purpose of setting long term preferences. It is not very good for one time search changes and certainly would not work well for quickly manipulating the results based on the options shown above. I would imagine smart, talented people could design a toolbar that would meet this need well.

Saturday, January 29, 2005

Theory of Knowledge

Deming's Management System, as expressed in his book: The New Economics has four interdependent parts:
  • Appreciation for a System (systems thinking)
  • Knowledge about Variation (see: variation definition)
  • Theory of Knowledge
  • Psychology (the human element of management systems)
Quotes on the Theory of Knowledge portion from The New Economics by W. Edwards Deming.
  • "Management is Prediction. The theory of knowledge that management in any form is prediction" (Page 101)
  • "Knowledge is built upon theory... Rational prediction requires theory and build knowledge through systematic revision and comparison of theory based on comparison of prediction with observation." (Page 102).

It took me many years to appreciate the improtance of prediction and theory to aid in learning and improvement. When managing many fail to predict when attempting to test improvement ideas through what should be experiments (often they are just changes without verification the change produced a desired effect, any learning or study of the results of the change). Without prediction learning is much less (if there is any at all) than it would be with such prediction.

In addition, when it is understood that management is based on prediction then the impact of the other 3 areas of the system of profound knowledge are clearer.

By exploring the basis for the prediction one must understand the theory they are operating with to make the prediction. Most often managers fail to develop a theory that allows them to predict. They fail to predict the results of an attempt to improve (PDSA), they fail to analyze the results of that improvement experiment, they fail to learn about the system that they are managing (since they fail to predict and then learn) and therefore cannot refine their theory based on their learning. When failing to do these things it is a surprize that learning is very ineffective? And without learning how can effective improvement be expected?

With, even a fairly simple understanding of the theory of knowledge the effectiveness of management improvement efforts are greatly increased. This topic is difficult for most to understand, I recommend reading chapter four of the New Economics. And I recommend returning to that chapter periodically as you apply management improvement techniques and learn and grow as a manager.

More from the Curious Cat Management Glossary: Theory of Knowledge

Saturday, January 22, 2005

Designing a New Organization

Topic: Management

re: What about Designing New Organizations?

Guidance for "designing a new organisation and not for analysis of an existing one?" (edited)

I would add Russell Ackoff to the top of the list of those to consult. Start with his book Re-Creating the Corporation and continue to quite a few of his other books. After Ackoff, I would look to Deming and Senge. Other interesting folks would be Dee Hock, Brian Joiner, Peter Scholtes, Robert Rodin...

Few truly think about designing a new organization. Most people are interested in how to improve their existing organization. Therefore, it follows most people interesting in having an effect in the real world have focused on how to help those who are looking to be helped. Ackoff has done a huge amount of work in idealized design and thinking about the big ideas that can drive dramatic change. His ideas are exceptional. He even offers a plan for modeling the idealized organization and then a plan for how to transform the organization based on practical ideas that are feasible in the real world.

Deming's ideas are very difficult to fit into most existing organizations easily because they require so many changes in the traditional style of management. However in designing a new organization from scratch you can adopt many of the ideas from the beginning. Free, Perfect and Now, by Robert Rodin, is a great book showing the adoption of these ideas by a company. When the leader is convinced it is possible to transform an existing company.

For a manufacturing organization I would look to Lean ideas (Toyota and Womack). Lean thinking is, of course, valuable to any organization but especially so in manufacturing.

You can find more on the ideas of those I list above through the Curious Cat Management Improvement Library.

John Hunter

Track link

Thursday, January 20, 2005

Management Improvement Articles

Topic: Management - Library Additions

Recent additions to the Curious Cat Management Improvement Library include:

  • Creating Sustainable Competitive Advantage: The Toyota Philosophy and Its Effects by M. Reza Vaghefi
  • Designing Useful Metrics by Esther Derby
  • Transforming The Systems Movement by Russell L. Ackoff
  • Got Six Sigma on the Brain by Dirk Dusharme
  • On the Nature of Organization by Jamshid Gharajedaghi

Find links to these, and other new additions, on the Curious Cat Management Improvement New Articles Page or search for management improvement articles.

Tuesday, January 18, 2005

Price Discrimination in the Internet Age

Topic: Economics

Re: Boing Boing post - Why HP's region coding excuse is bogus

There is a simple method for large multi-national companies to use to protect against currency fluctuation. They can use foreign exchange futures to do so. Companies do this all the time (some also chose not to for their own business reasons). "Foreign Exchange is the largest of the global financial markets. Daily trading volume in the currency markets is estimated to be 1.1 US trillion dollars." - Smith Barney Citigroup. Some companies choose to speculate on the direction they believe exchange rates will go (either directly, or by not hedging when they believe rates will move in their favor and hedging when they predict doing so will benefit them).

In fact the United States government gives beneficial tax treatment (60% of profits are classified as long term capital gains, regardless of the holding period, thus reducing the taxes owed) to profits from "futures" trading. The reasoning is that creating a market for companies to hedge their risks is so important we must provide tax benefits to create a market for this activity. Some may think that the special tax advantages are more likely due to large payments from lobbyists to those who write the tax code than the merits of such tax law. In fact I may be one of them. Farmers often use futures contracts (on, for example, wheat or corn) in much the same way that companies can use future currency contracts to hedge their risks. That point is mentioned by the lobbyists, I would imagine.

The argument that you need to cripple products by geographic area to cope with currency fluctuations is false. It might be that a company wants to practice Price Discrimination
(definition from US Federal Trade Commission or from the Digital Economist) to charge more where they can get more and less where they can get less. In the view of such a company, the internet, and other factors, have made it increasingly easy for people to buy in the low cost region and resell the items in the region where the company wants to charge higher prices. If you want to keep practicing price descrimination as a company you have to erect barriers to the free trade of your products by your customers.

Reimporting drugs is another clear example where companies try to use price discrimination - to charge US consumers more than Canadian consumers. Drug companies have successfully created legal road blocks to those trying to get around the geographic price discrimination. However, since lately those responsible for enforcing those laws have not been very eager to do so you can imagine the drug companies would like a drug that only worked in the country it was purchased. Another example of price discrimination are the regional versions of Windows.

I happen to believe companies should have the right to practice price discrimination. And in fact they should have the right to make products that have replacement parts
that have been crippled to work only in products sold in specific countries. I would rather deal with companies that were trying to provide me more value not less. So I would be reluctant to buy from companies that practice such anti-consumer behavior. And luckily the internet and blogs are making it very difficult for companies to hind such practices. My guess is once attention is focused on such practices some companies will take advantage of such behavior by pledging "to do no evil." And those companies will gain customers. The process will be quite a bit more confusing in the real world but that is how things will play out in the long run.

Hedging Currency Flucuations:


Saturday, January 15, 2005

Operational Excellence

Topic: Management Improvement

re: Is Operational Excellence Dead?

In, the post "is Operational Excellence Dead?" the argument is made that operational excellence is dead as a differentiator of companies. "All of the emphasis on outsourcing to low labor cost countries seems to imply that organizations no longer consider their operations strategic." I would state that, in fact, the opposite is true.

Leading companies, for years, have focused on continual improvement. Toyota is the best known example. They drove the adoption of just in time inventory and then other lean practices. Dell, Southwest, Amazon and Walmart are further examples of companies that have focused on operational excellence.

Dell has continually improved their operational performance and has been growing dramatically (both by expanding the market and by taking market share from their competitors). Dell's advantage is almost solely in operational excellence. They are not know for product innovation or traditional customer service (compared to say IBM or Hewlett Packard). They have redefined customer expectations in a way that works very well for them. When Dell's competitors try to compete by combining forces (such as Hewlett Packard buying Compaq) they continued to lose market share. I would say they lost market share almost exclusively due to Dell's incredible focus on improving the performance of their operations.

Those companies that try to compete by outsourcing without management improvement will not be successful. There are situations where "outsourcing" would work well, for example, if a company had a competitive advantage in innovation and then they outsourced production to a company that focused on operational excellence in production (like Toyota, Dell or Solectron). This type of arrangement requires partnering with your suppliers in the way Dr. Deming taught Toyota in the 1950s.

Now many companies talk about partnering with their suppliers. The difference between those that are having great success and those that are fighting to stay alive is in the implementation of the concept. Saying the organization is focuses on new principles (partnering, lean, etc.) is not the same as applying those principles with the great success that Toyota does. That difference is huge and is driving many companies to outsource and try to dramatically cut costs. Reducing costs should be the outcome of improving efficiency.

Toyota is successful manufacturing in the USA. Dell is successful manufacturing in the USA. The key for those companies are managing effectively, not cutting costs. The focus in on lean principles, cutting all waste, never ending focus on how to make huge, or tiny gains in efficiency. Not on cutting costs for the sake of cutting costs. The difference may seem minor but the results are worlds apart.

I would agree that many companies don't understand the critical importance of management excellence. Rather than take the difficult path to lead real change in their organization they focus on simple cost cutting measures (though usually not cutting executive salaries which have grown dramatically and are excessive in the USA compared to the rest of the world). That won't work. You can't compete with companies like Amazon, Dell, Southwest, Toyota and Walmart without managing your company with every increasing effectiveness and efficiency.

Suggested reading (to improve the management of your organization):

Tuesday, January 11, 2005

USA Health Care Costs reach 15.3% of GDP - the highest percentage ever

Topics: Health Care and Economics

re: Health Care Spending In The United States Slows For The First Time In Seven Years

The Centers for Medicare and Medicaid Services (part of the United States Department of Health and Human Services) issued a report (the press release states that report will appear in the Jan/Feb edition of Health Affairs but does not provide a link so the link is my guess of where the report will appear) and a news release putting a positive spin on the data.

"Spending growth for prescription drugs decelerated significantly to 10.7 percent, down from 14.9 percent in 2002." So we only increased spending on prescription drugs by 10.7 percent? I guess that could be seen as positive? To me though increasing expenditures by 10.2 percent seems more like of a problem than a success, though I can't argue it is less of a problem than the year before. My last post was on prescription drug prices in the USA.

    “This is good news for the public and our health care system and is the result of changes designed to slow down the growth in spending,” said Health and Human Services Secretary Tommy G. Thompson. “But we have more to do before we can declare victory over rising health care costs.”

I would agree with the second sentence. Since health care costs once again rose much more quickly than the economy overall we certainly shouldn't declare victory over "rising health care costs." Stating it as though declaring victory were even close to an option seems like an odd choice.

And some fairly strait forward data: "Health expenditures in the United States grew 7.7 percent in 2003 to $1.7 trillion, down from a 9.3 percent growth rate in 2002. On a per capita basis, health spending increased by $353 to $5,670. Health spending accounted for 15.3 percent of Gross Domestic Product in 2003, outpacing growth in the overall economy by nearly 3 percentage points." As Dr. Deming noted decades ago, the United States economy was being severely hampered by excessive health care costs. Since then health care costs have taken an every increasing burden on the economy.

On a per capita basis $5,670, just on health care. 15.3% of GDP. Those are amazingly high figures. The median per capita GDP for a country (according to the CIA world fact book) is $5,600 (Cyprus). That is not the median income on earth, that would be lower. The fact book lists China with a per capita GDP of $5,000 and India with $2,900.

Saturday, January 08, 2005

Drug Prices in the USA

Topic: Health Care, Economics

re: Canada mulls end to drugs by mail order, by Colin McClell, Associated Press, 6 Jan 2005,

The discussion of restricting Americans from buying drugs from Canada highlights failures of the current system. Unfortunately the focus in not on health care or the best economic plan but rather monopolistic behavior and economic regulation that is politically motivated to support high drug prices within the United States.

Most articles on reimporting drugs to the USA will mention the idea that the United States FDA does not trust the drugs manufactured by American companies overseas. Why should Americans have to believe the contention of the United States FDA over Canada, Germany or Japan's drug regulators? If American's want to trust that the drugs sold in one of those countries by one of the largest drug companies in the World selling drugs is good enough for them why does the USA have to laws to prevent it? The argument that the drugs sold by these companies worldwide are dangerous seems like a poor argument to me.

Second there is the contention that without the ability to overcharge American's the drug companies won't invest in Research and Development. This is such a poor argument I can't believe people can make it without suffering a big blow to any credibility they had. Obviously drug development has a very cost (creating a high fixed cost) and often drug manufacture has a small marginal cost (though at times the marginal cost is also high). Right now the companies count on the American market to provide funds for much of the research, development, marketing and profits. Then they sell the drugs in other markets only looking to maximize profits looking at marginal costs. Obviously, if they no longer could count on excessive prices in the United States they would have to spread the fixed cost over the rest of the world. The argument that they won't invest in research and development without excessive costs in America is false. They would adjust their pricing structures around the world based on losing the cash cow of the American consumer. That should be obvious to anyone who even took one economics course.

Should the drug companies have the ability to use price descrimination. Probably. So if they want to say that people in Manhatten have to pay 5 times as much as those in Madison, Wisconsin that is their option, right? I don't have a problem with that, but, actually I am not sure they have that option. My guess is US laws would prevent this but I may be wrong.

Should the drug companies have the right to say if you buy the drug in Madison you can't sell it to anyone in Manhatten. This doesn't seem right to me. Now drugs have the complication of medical necessity, etc. so in order for a person in Manhatten to buy and use them they would have to comply with the laws the government has setup to regulate medical care. So whatever those medical requirements are would have to be met but arbitraty rules about pricing should not be in any way a part of that discussion. The ability to allow price descrimination is the trickiest part of this issue. I support the idea the drug companies should be allowed to use that tool. If the drug was developed from basic research funded by the American taxpayer, how should that be factored in? What about just favorable tax treatment the company may receive? More time needs to be spent on this facet of the health care system.

Should the drug company have the right ot only sell the amount they want in Madison at the low prices? Maybe. Should the drug company be able to limit the amount it sells to Canada. Probably.

So now "Canadian health officials are drafting a proposal to prevent Internet pharmacies from selling mail-order prescription drugs to U.S. consumers." Why would they do this? They are restricting the economic activity in their country. Are they doing it because they don't believe their drugs are safe as the United States FDA contends? I don't think so. Are they doing it because they fear their country will be punished by the drug company and their citizens will suffer health consequences of those actions by the drug companies? I doubt it. Are they fearful of political repercussions from the United States? Possibly, but I doubt it. I believe they fear the overall economic result of allowing free trade of medical drugs would be less beneficial than the current deals they have negotiated with the drug companies. So their economy would suffer more from lossing special deals the American drug companies offer in selling drugs to Canada then the economy gains from the trade.

Is Canada deciding not to sell drugs to United States citizens via the internet within their rights? I sure think so. It soes raise the quesiton why the Canadian politicians have managed to get American companies to give their citizens better deals than the American citizens recieve. It seems if you look at the money the American politicians take from drug companies it is pretty obvious why they setup rules that result in Americans having to pay much more for the same drugs manufactured by American companies than do the citizens or Canada, Germany, England, Japan, Australia, Mexico or pretty much anywhere on earth.

If the Canadian government decides to shut off a way United States citizens had found to take advantage of the better deal the Canadian government got Canadians than the United States government got their citizens that may be the function of the market (the free market is obviously not so free when you examine the issue of drug prices). The fact that Canada chooses to maximize the benefit for Canada, even if that means American consumers suffer, should not be seen as the Canadian government selling out. They are doing what they exist to do, provide their citizens the best results they can. Now, how you describe how the American goverment has created situation where their citizens have to pay much higher prices for drugs that American companies make that is a different story. In that case it does seem like something that could be described as selling out.

The last two sentances of the article by Colin McClell:

"Despite the Bush administration's support for a ban, importing cheaper drugs from Canada is popular with U.S. lawmakers of both parties and has considerable support in Congress. The House has passed a bill allowing reimportation, and lawmakers in both parties say that it would pass the Senate if Republican leaders would allow it to come up for a vote there.

While reimporting drugs is technically illegal, those laws are not enforced. Ten million illegal shipments of prescription drugs worth $1.4 billion entered the United States in 2003, about half of them from Canada."

Other Links:

Monday, January 03, 2005

Wikipedia and Anti - Elitism

Topic: Internet

re: recent post by by Larry Sanger, co-founder of Wikipedia: Why Wikipedia Must Jettison Its Anti-Elitism

Wikipedia is an awesome example of the power of the internet. Essentially it is a freeware, open source encyclopedia. The results are amazingly good, still it could be improved. Many have knocked the Wikipedia because they can't believe a project that allows anyone to edit the content could possibly work. I must admit I am amazed how well it does work. Larry's long post makes some great points about what needs to be improved.

He focuses on "the root problem: anti-elitism, or lack of respect for expertise." He also points out a serious problem: "So, for any person who can and wants to work politely with well-meaning, rational, reasonably well-informed people--which is to say, to be sure, most people working on Wikipedia--the constant fighting can be so off-putting as to drive them away from the project." I hope they can find a way to work on improving both these problems. His suggestion of a trusted source releasing "vetted versions of Wikipedia articles" sounds like a good one to me. In any event I hope some solution is found and Wikipedia continues to flourish rather than colapse under its own weight.

The Open Directory project was another useful open source freeware project that had a great begining but now has deteriorated to the point of insignificance. I think Wikipedia will be successful, the question is how successful. I hope Larry's ideas result in improvements.

Sunday, January 02, 2005

Digital Rights Management

Topics: Miscellaneous and Economics

From Cory sets DRM strawmen ablaze:

"For starters, any market-correction for DRM will surely involve informed customers making good purchase decisions about the DRM in their devices. That's what this debate is all about. The implicit, "Stop complaining and let the market sort it out" in these comments ignores the fact that complaints about DRM are vital to the market sorting it out."

This quote cuts to one of the critical issues in the current debate on digital rights management. I believe the market will most often reach the best solution. That does not mean regulators do not have a role to play, they do definitely have such a role. I tend to prefer limited regulation while relying on the market to reward the bestsolutions.

The idea that the marketplace works without debate and comment is fundamentally flawed. The way the marketplace will reach the best solution is through open and honest debate, competition and educated consumers. The emergence of world wide web and blogs do a great deal to make the market more efficient and effective. The invisible hand is more capable with more informed actors in the marketplace.

When consumers are ignorant they make decisions based on incomplete understanding of their interests the effect is to have the market's invisible hand reinforce the wrong behavior. This is a fundamental shortcoming in the market. The increase in customer knowledge will not only increase the individual's happiness but the overall performance of the economy.

The debate over digital rights management should continue (see
Cory responds to Wired Editor on DRM ). I must admit I am surprised at the playing field now. I would have thought less restrictive solutions would win out in the marketplace (I actually still think they will). Right now very restrictive solutions seem to be winning. My guess is that once consumers learn more about the current path, those consumers will search for options that give them better options. Then some producers will seek to fill those desires. Advocacy from parties other than those who seek to maximize their profits in selling digital content is a very good thing. Owners of digital content should be able to seek to maximize their profits but a market solution does not mean they alone dictate the terms of the solution.

For society the best possible result is a free exchange of ideas and education of the various players in the market. Then let those players vote with their decisions in the marketplace. My guess is people will prefer to have digital works with less restriction and will reward those that offer such products with purchases that would otherwise go to those with restrictive policies. However, if consumers are ignorant they won't know the limitations imposed on the digital content they believe they are buying (or the product they buy to manage their digital content that cedes what they would think of as their right to control the content on their device to others). Individual players can suffer, as the advantage they were able to gain by taking advantage of the ill informed is lost, but overall that is the best result for society.

One interesting option in the market now is the Creative Commons.