Monday, June 26, 2006

Employee Ownership

H.C. Miller workers to earn ownership by Richard Ryman.

I have always liked the idea of employee ownership. To me this can be a great help in creating a system where employees, owners, customers, suppliers work together. Alone an ESOP does little. But as part of a system of management it is something I think can be beneficial.

Employees of H.C. Miller Co. have learned to look at their company differently. And because they did, on July 31 they will become its owners.

The 120 or so employees of the 118-year-old company will implement an Employee Stock Ownership Plan. An ESOP is a retirement plan in which employees are assigned shares in the company annually. Those shares accumulate in a retirement account.

Employees shouldn't allow too much of their savings to be tied to the company (see Enron). Of course those ignoring this advice that worked for Microsoft, Walmart... in their early days did quite well. But the risk of your paycheck and too large a percentage of your savings being tied to the success of the same company is not wise.

Roberts said the company has used elements of several efficiency programs and under Hayes' oversight will adopt the Lean manufacturing process in the next year. Lean manufacturing leads to a more efficiently organized manufacturing process and allows employees to quickly make changes at the floor level.

Hopefully HC Miller can successfully adopt lean manufacturing methods. Thousands of similar small manufacturers are part of the reason the United States manufacturing output continues to rise (of course the additional Toyota production is a big factor).

Sunday, June 25, 2006

Universal Health Care in San Francisco

San Francisco's Latest Innovation: Universal Health Care by Laura Locke:

Starting in early 2007, every uninsured San Franciscan can seek comprehensive primary care at the city's public and private clinics and hospitals, including top research facilities like the University of California at San Francisco. Coverage includes lab work, prescriptions, X rays, hospitalization and surgery. Annual funding for the $203 million program will come from re-routed city funds (including $104 million that now goes toward uninsured care via emergency rooms and clinics), business contributions and individual enrollment fees, which will be income-adjusted.

This needs to be approved by the city council to go into effect. It is far from perfect but the health care system is broken and we need actual innovation to find workable solutions. The effects of the health care system on the economy are huge. Health care costs are a huge part of both losing jobs to other countries and eroding pay rates.

We need to experiment with ways to improve the health care system.

Thursday, June 22, 2006

Toyota IT for Kaizen

How Toyota Uses Information Technology (IT) for Kaizen by Jon Miller. He quotes Toyota's CIO from the Japanese article:

Part of my job as CIO is to take on these company-wide issues and use this data to make improvement suggestions when I have an opportunity to meet with the managing executives.

Of course, it requires more than me making suggestions for Toyota to make good use of IT. The departments who are the users of information technology must be motivated for IT use to spread. Fortunately, the departments who are users of information technology frequently contact me to ask "Can we use IT for this?"

Working in Information Technology myself I see many great uses for IT. I also see all sorts of poor attempts to try creating IT tool for quality (including lean) tools that work much better in there original state. I can also see why people make fun of IT: If Tech Companies Made Sudoku.

IT often does the opposite of lean management and makes things more complex, more prone to error, less effective, etc.. Often all in search of only one thing - cutting costs. For that people should not be faulted for being skeptical of IT solutions. However, that does not mean that IT cannot play a part in improvements. It can, just be careful.

I find it a good sign when the CIO office is helping people find solutions at the request of the users rather than dictating solutions from on high. Some of the dictating might be necessary to optimize the system of IT (some local sub optimization may be required for the overall good) but in my opinion this is used as an excuse far too often.

He also mentions:

If anyone out there knows of a grant to read Japanese literature and share summaries with English-speaking audiences, or some other scheme that would allow me to pay the bills e-mail me.

Please do, we can all benefit from his translations, like: Gemba Keiei by Taiichi Ohno.

Tuesday, June 20, 2006

See the Doctor Without Long Wait

Amazing Single Piece Flow MD Office by Mark Graban:

This doctor re-thought the entire patient process, from the perspective of a patient. He was inspired to do this after he had a lousy experience being a patient for another physician.

Imagine this sort of experience as a patient:

* You show up for your appointment and walk to the counter. You say "I'm here" and don't have to sign in or do anything.
* You are immediately walked to your exam room where an assistant takes basic information and enters it directly in their Electronic Health Record (EHR) system that's right there in front of you.
* On average, 63 seconds (SECONDS!) later, the MD comes in and sees you. The MD sees the information that the assistant took down so you don't have to repeat yourself. While talking, the MD takes notes directly into the EHR (while not really losing eye contact from you).

Now that is impressive. I can only hope for such treatment. I rarely have had to use our health care system. But the last time I did I left the ER because they seemed so unconcerned with patient care. I don't want to have to deal with our health care system any more than I want to deal with our airlines. I keep hoping IHI and others will get enough of the system in decent shape before I need to use it. I think that is a tall order. But articles like this give me some hope.

Lean Six Sigma - An Oxymoron?

Lean Six Sigma - An Oxymoron? by Mike Micklewright raises some interesting questions. Take a few minutes and read his article, it is definitely worth the time. And then take the time to think about some of the questions he raises.

I admit I am not convinced many using the term lean six sigma are intent on fusing the ideas from both areas: I think marketing might be the primary motive. However, I do believe both offer value. And I believe it is possible to adopt both within one management system. And both share many "quality management tools."

For more see Curious Cat six sigma portal and lean management portal.

Monday, June 19, 2006

Lean, Six Sigma and Innovation

Jeffrey Phillips brings up the question of how lean and six sigma work with innovation in his post: Lean on me. He raises many good questions. Let me share some thoughts on this topic here and later I will try to address this area more comprehensively.

Fast Cycle Change in Knowledge-Based Organizations by Ian Hau and Ford Calhoun is a good example of lean thinking, eliminating waste... in an innovation setting.
In, Turning Limitations into Innovation, Marissa Ann Mayer explains one of the systems improvements well:

Since only 1 in every 5 to 10 ideas work out, the strategy of constraining how quickly ideas must be proven allows us try out more ideas faster, increasing our odds of success.
In cases like these, the people working on it have spent so much time and are so personally invested that it's too painful to walk away. They often know the project is misguided, yet they see the effort through to the painful, unsuccessful end. That's why it's important to discover failure fast and abandon it quickly. A limited investment makes it easier to walk away and move on to something else that has a better chance of success.

This is a great example of applying management improvement ideas to innovation. You need to look at the system of innovation. Determine weaknesses in the system. Implement procedures to counteract those weakness. You also want to systemically support what is good, of course.

The PDSA cycle is a great tool for innovation, even for only for a portion of the innovation process. Other "lean" methods that support innovation: long term thinking, respect for people, constancy of purpose (shared vision), customer focus).

The tools (of quality, TQM, six sigma, lean thinking...) each have benefit. Those tools can be misapplied in relation to innovation. That would be an example of using the tools improperly, not an example that lean (or six sigma) doesn't work with innovation.

Can lean and Six Sigma concepts work in an area that almost demands that we work on items that can't really be quantified.

Yes, Deming knew you need to manage what can't be quantified and I believe lean thinkers do too (six sigma proponents might have more trouble with this but they can see this too).

DeBono, Hamel and Christensen have many good ideas on innovating effectively.

Also see:

Saturday, June 17, 2006

Curious Cat Science and Engineering Blog

We have updated the design of the Curious Cat Science and Engineering Blog. Please share your comments on the design: we plan on moving this blog to a similar design.

Friday, June 16, 2006

Health Care Crisis

Topic: Management Improvement

Probe finds nation's emergency care system at 'breaking point' by Lauran Neegaard:

It's a sobering symptom of how the nation's emergency-care system is overcrowded and overwhelmed, "at its breaking point," concludes an investigation by the Institute of Medicine.

The spate of similar articles reminded me of the recent post by Mark Graban: Stop calling it "ER Congestion". He states: "It's not an ER problem, it's a systemic hospital problem." I agree. The health care system is broken and has been for a long time. Symptoms like the huge cost of health care, medical errors, ER problems etc. are all related.

From the original article:

"It is the only medical care to which Americans have a legal right," noted Kellerman, adding that what constitutes an emergency is different to a doctor than to a desperate patient. Last week, he treated a woman who wound up in the ER after running out of some crucial medication and being turned away by four different clinics.

Most of the news stories touch on the systemic nature of the problems with such statements. So it is not that people are unaware of that truth but the importance of a systemic fix seems minimized.

What we need more of:

And less of:

Thursday, June 15, 2006

Thinking About the Future

Topic: Management Improvement, Economics, Systems Thinking

In Thinking About the Future Russ Ackoff does his usual great job of providing insightful ideas while not being afraid to be controversial. In this speech Dr. Ackoff discusses his thoughts on the issue of global development at the occasion of his receipt of the Tallberg Foundation / Swedbank Leadership Award:

So much time is currently spent in worrying about the future that the present is allowed to go to hell. Unless we correct some of the world's current systemic deficiencies now, the future is condemned to be as disappointing as the present.

My preoccupation is with where we would ideally like to be right now. Knowing this, we can act now so as constantly to reduce the gap between where we are and where we want to be. Then, to a large extent, the future is created by what we do now. Now is the only time in which we can act.

via: Thinking about the Future and Globalization

Wednesday, June 14, 2006

Lean National Health System

Topic: Management Improvement

A presentation today, Lean Thinking For the NHS, by Dan Jones is getting press coverage in England.

NHS should embrace lean times:

The improvements came through examining the patient's whole experience, and removing the sometimes-fatal delays in getting them into the operating theatre, such as creating a faster process for radiology and removing unnecessary paperwork.

These changes also lessen staff frustrations by allowing them to spend more time helping patients. Also, by cutting length of stay and complications, costs should also start to fall, although Mr Fillingham - former director of the NHS Modernisation Agency - said it will take several years for the savings to become substantial.

This is an example of focusing on improving the system which will then result in improved measures (cost savings for example). This systems approach contrasts with cutting costs by cutting every budget by 5% across the board which often fails. Without improvements in the system reducing budgets just reduces capability.

NHS 'should copy Tesco' to boost efficiency by Elsa McLaren (Times Online - UK):

"Every one organisation, public and private, has major problems with waste and inefficiency," she said. "The NHS can learn from the latest thinking as adopted by the Royal Navy, RAF, Tesco and Toyota."

Bolton Hospitals NHS Trust has been using the method and has seen a reduction of one third in death rates for hip operation patients. The trust has also reduced paperwork in trauma units by 42 per cent, and had a 50 per cent reduction in the amount of space needed by the pathology laboratory.

Making the NHS into a lean machine by Nick Triggle, BBC News.

More Kaizen

More Kaizen - Why Not Eleven?:

We also talk about lean production and Toyota methods and how far you have to go. He tells me about a course he did where the company took him out of work for a couple of days and sent him to another plant where they showed him how to work an assembly line station, then set him to come up with 5 improvements for the process before lunchtime.

When he delivered they said, what about another 5. Then it was come back in the morning with 10 more. When he delivered 10 they said, "why not 11?" Then he got it. Kaizen is not just taking millions of little steps, it is not just doing it because the boss says so, it is not even because you take pride in your work and you want to do the best job you can, its because you do everything with your customers and their needs in mind.

I really like how the idea of always looking to improve was presented here: Kaizen Means Thinking "Now Things are the Worst Ever":

In order to do kaizen and keep working towards becoming Lean, you need everyone to think "The current situation is the worst. I can't stand it. I need to make it better." This is a significant culture change for most of us.

It is difficult to do this in an organization that has not accepted lean principles. You have to be careful to not be seen as negative and just focusing on problems when so many others are trying to cover up problems and focus on what makes them look good (they have to think about their next performance appraisal after all).

Tuesday, June 13, 2006

Dell Falls Short

Good post by Mark Graban: Once Again, Dell is Not TPS:

Their factories are great examples of flow, raw material comes in one side, finished product comes out the other, with minimal WIP in between.

But, lean isn't just about reducing waste. The Toyota Production System is also about "respect for people," meaning your employees, suppliers, and customers. Dell definitely scores higher on "reducing waste" than they do on "respecting people."

Good points.

So here you have Wall Street telling Dell that it's bad business (in the short term) to provide good customer service. That explains a lot right there.

True, but don't give management a free pass just because they cave in to short term thinking. Management should know better and has a responsibility to do better. It is predictable that if management fails to setup an effective management system that they will fall victim to short term thinking. Still that doesn't mean they are not responsible for making decisions. They are the managers of the company not some analyst on Wall Street.


Monday, June 12, 2006

Manufacturing is Cool

The Society of Manufacturing Engineers brings us the web site: Maybe this is the answer to Bill Waddell post: We Don't Get No Respect :-)

From the manufacturing is cool site:
Video tapes and books full of additional information regarding the many interesting careers available in manufacturing engineering and technically oriented material.

Professionally prepared classroom programs and curriculum resources available to enhance your instructional capabilities.

Ways to help young people find career opportunities in manufacturing and engineering. Also refer our searchable database that shows college and universities that offer manufacturing programs, options, courses or labs. There is also a list of accredited programs and options in manufacturing engineering, engineering technology or industrial technology.

The site really does have some useful and interesting material (especially for teachers). Demonstrating the coolness of manufacturing might need a little work, but this is a start.

Saturday, June 10, 2006

The Cat and a Black Bear

Topic: cats

Tabby cat terror for black bear

A black bear picked the wrong yard for a jaunt, running into a territorial tabby who ran the furry beast up a tree - twice.

Jack, a 15-pound orange and white cat, keeps a close vigil on his property, often chasing small animals, but his owners and neighbors say his latest escapade was surprising.

"We used to joke, 'Jack's on duty,' never knowing he'd go after a bear,"

See larger photo - AP Photo by Suzanne Giovanetti

Clawless kitty chases bear up tree - read more on the story and see more photos.

In, How to get traffic for your blog, Seth Godin writes: "Don't write about your cat, your boyfriend or your kids." Good advice, in general. Of course he follows that up with: Write about your kids - a sentence later. You have to learn the rules and then learn when (and how) to break them.

Curious Cat Travels: Bear Warning sign (I will have to see about bring Jack on my hiking trips) - Bear at Yellowstone - Big Cats in Kenya

Management Advice Failures

Topic: Management Improvement

Management Advice: Which 90% is Crap? by Bob Sutton, Stanford University:

At first, I couldn't believe that someone as well-read as Hamel claimed an old idea was new and that he had invented it. But I eventually realized the problem wasn't Gary Hamel, or any other individual making claims of originality. Rather, his column reflected a prevailing practice in the business knowledge business. I asked two former Fortune columnists why "Hamel's Law" and similar claims that old ideas are brand new appear so often in the business press.

Both emphasized that you couldn't blame Hamel - that was just how things were done. Both writers even speculated that some Fortune editor probably had inserted the phrase, "Hamel's Law," to create the impression that the magazine publishes exciting new ideas. After all old news doesn't sell magazines!

I share this frustration with declaring old ideas new: Management Improvement', Better and Different, Quality, SPC and Your Career, Deming and Six Sigma, Management Lessons from Terry Ryan, Everybody Wants It, Toyota's Got It, Fashion-Incubator on Deming's Ideas and on and on.

Why does this matter? Two reasons, most importantly to me is that when we fail to value the best ideas, instead valuing the new ideas, we are not as effective as we could be. We often accept pale copies of good old ideas instead of going to the good old ideas - which will often lead to a much richer source of knowledge. When I compare copyrighted versions of management thinking to ideas from people like Ackoff, Deming, Ohno, Scholtes, McGreggor the depth and richness of those I admire is much greater than the packaged solutions, as I see it (and they are often more concerned with furthering the practice of management than further their brand). Second, it is often dishonest, or at least sloppy thinkers, that don't acknowledge the history of management ideas.

There is a huge body of research that shows they are ineffective, yet no one seems to remember these policies have failed over and over in the past.

Sloppy (or dishonest) thinking feeds this condition. Either people fail to learn (PDSA is a great way to encourage learning - predict the results of the improvement strategy, then measure the results and then study the results) or they just want to accept some easy fix today that they know won't work (which puts off trying to find a real fix until later). It is amazing to me how often we accept non-solutions. If someone objects that we have tried that "solution" and it didn't work they are often shut down with a version of: "don't be negative" or "I don't want to hear we tried that before and it didn't work" (we are different now) or "we need team players" or "if you are not part of the solution you are part of the problem"...

read the acceptance speeches given by Nobel Prize winners. I did this a few years ago. All the winners in economics, for example, carefully went through the ideas they borrowed, listed the scores of people who inspired them, and emphasized that their contribution was a logical extension and blend of existing work. Something is wrong with this picture the gurus claim breakthroughs, but the Nobel laureates do not.

Great point. Dr. Deming was constantly citing the sources of ideas he discussed. Maintaining academic and scientific integrity is not just a sign of honesty but I believe leads to better performance. When one markets that they are the source of new wisdom they have to try and separate themselves from the past and others. Over time they will do so not just in marketing but in their own thoughts. When one is trying to bring together great ideas they can continually learn from the past and present.

via: Required Reading For The Weekend

Some of my thoughts on good sources for management ideas: Management Improvement Leaders,
and Management Improvement Thought Leaders

Friday, June 09, 2006

If Tech Companies Made Sudoku

Topic: Management Improvement

A fun post as we head into the weekend: If Tech Companies Made Sudoku by Kathy Sierra

Frankly, we're a little baffled that your original design was so... simple. I'm sure we all recognize that our target market demands a much more media-rich, interactive, high-action experience. Love the whole grid thing, though.

The graphic on the original post is great. You can also read about an attempt to focus IT differently: The Declaration of Interdependance by Alistair Cockburn:

Lean manufacturing teaches us that having large inventories is inefficient. It also teaches us that the overall efficiency of a process improves as the batch size passed from stage to stage is reduced. Today this has become accepted in most (but not all) manufacturing circles, yet many people may be surprised that it also applies to software development.

Thursday, June 08, 2006

Tesco: Lean Provision

Topic: Management Improvement - Investing

Lean Provision Is Tesco's Secret Weapon in Battle with Wal-Mart:

Tesco's lean provision system combines point-of-sale data, cross-dock distribution centers, and frequent deliveries to many stores along "milk-runs" to stock the right items in a range of retail formats. These include Tesco Express convenience stores at gas stations and busy intersections; Tesco Metro (small supermarkets in cities); traditional Tesco supermarkets in cities and suburbs; Tesco Extra ("big box" superstores in suburbs); and for web shoppers.

Great stuff. In fact I would add Tesco to our marketocracy portfolio created as a result of our 10 stock for 10 years post. Why would, (not did)? Martketocracy won't process purchase request for Tesco. You can view Tesco on Google Finance but you can't add it to your portfolio.

Tesco is a retailer based in England that is expanding internationally - rapidly. They are moving into the United States in 2007. Warren Buffett picked up over $300 million worth of Tesco stock in March.

The quote above is taken from a Lean Enterprise institute news release. Why do companies repeatedly send out news releases and fail to (or delay) post them to their own web site? I am amazed how often this happens. It wasn't posted on LEI's site when I first saw the release but they have posted in now with additional details - good for them, what they have added it valuable. It would be better if they included a web page to link to, including the extra info (not just an adobe acrobat document, including the acrobat document is fine they just should have a web page to link to - now I have to just link to their main news page, which will work but not ideal).

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Wednesday, June 07, 2006

Microsoft CMMI

Topic: Management Improvement

Microsoft webcast on Capability Maturity Model Integration (CMMI is the process developed by the Software Engineering Institute that was heavily influenced by Quality Management) and the approach taken for continuous improvement - mapping to concepts like Six Sigma and Kaizen. Each webcast with David Anderson, is an hour long.

Program information: presentation to CMMI appraisers on the Microsoft Solutions Framework for CMMI Process Improvement.

Tag: -

Lean Beyond the Factory Floor

Topic: Management Improvement

Spreading the lean tonic:

One problem, says Michele Bonfiglioli, chief executive of Italian manufacturing consultancy firm Bonfiglioli Consulting, is that many manufacturers have a 'blind spot' when it comes to understanding just how non-lean and inefficient their administrative functions are. "Manufacturing is full of metrics: takt times, OEE and a host of others - but no one measures what goes on in the offices," he observes.

The focus on the whole organization is increasing moving to the forefront of discussions. While there are still huge gains to be made using lean manufacturing, the success of many efforts is leading to expanding the scope beyond the more limited early efforts. To me this is a consistent pattern.

Experts (in TQM, Deming's idea's, Six Sigma, BPR, Lean...) always stress the importance of involving not just others (when talking to management) but your (managers) work too. But pretty consistently management adopts new management ideas much more for others than they do themselves. And over time the talk of going beyond "factory floor" improvements becomes more common.

Fast Cycle Change in Knowledge-Based Organizations by Ian Hau and Ford Calhoun, Jun 1997 is a good example of lean thinking, eliminating waste... outside the factory floor. This is also an example of the reports I mentioned in the comments on the Kaizen research post from the Center for Quality and Productivity Improvement at the University of Wisconsin, Madison.

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Monday, June 05, 2006

Kaizen Event Research Project

Topic: Management Improvement

NSF Funded Kaizen Event Research Project

First, this research seeks to identify the most important factors influencing successful outcomes (both technical and social)...

The second objective investigates the sustainability of Kaizen events over time.
The research team has visited numerous organizations utilizing Kaizen events across
multiple areas. Leaders in some organizations acknowledge that some areas will quickly (within 6 months to one year) revert back to the pre-Kaizen performance levels. Yet other organizations appear successful in sustaining results, even improving them further over time. Thus, this research will seek to identify the most important factors influencing sustainability of outcomes.

There is an opportunity to have your organization studied - see the article for contact details. Companies involved in textile manufacturing, food processing, or other continuous manufacturing process industries are of special interest.

Description on NSF web site

The NSF Innovation and Organizational Change (IOC) program supports scientific research directed at advancing understanding of how individuals, groups and/or institutional arrangements contribute to functioning, effectiveness and innovation in organizations.

Saturday, June 03, 2006

Lean, Mean, Six Sigma Machines

Topic: Management Improvement

Lean, mean, Six Sigma machines by Tam Harbert:

Without exception, each company is healthier now than it was five years ago. Three of them have turned profitable, and the fourth - Celestica - is close to turning the corner... The question is how much credit for their progress goes to Lean Six [Sigma].

Yes that is indeed a good question. What management claims as the reason for results is not necessarily actually the reason (and this is true not just if they say forced ranking is good [which I disagree with] or lean thinking is good [which I agree with]).

A great difficulty in evaluating management concepts is that the complexity (including interaction) makes it very difficult to determine the results of specific management decisions (separating out the effects of one or several decisions from the hundreds that were made and outside influences, etc.). How much of the success of Google is due to the 20% "engineer time." Can you calculate the return? I don't think so. But you can make a judgment that it is a benefit.

A great quote from Out of the Crisis by W. Edwards Deming, page 121, states:

the most important figures that one needs for management are unknown or unknowable (Lloyd S. Nelson, director of statistical methods for the Nashua corporation), but successful management must nevertheless take account of them.

Another inconvenient truth the article mentions is that attempting to test management concepts across organizations is not easy. The repeatable conditions desired for testing a hypothesis are difficult to find between two organizations.

With their own jargon and complex frameworks, each methodology alone is hard to understand... Put them together and add each company's own unique recipe, and identifying the exact ingredients is next to impossible.

Successful management concepts are not "cookie cutter" implementations. There are general concepts that apply everywhere. And there are tools that can be used everywhere. But exactly what form the management system takes, if successful, depends on the organization. And the system of management will not be the same even if they have the same named program whether it be: TQM, Six Sigma, learning organization, BPR, MBO...

Exploring the ideas raised by this article is worthwhile. Just remember "the most important figures that one needs for management are unknown or unknowable, but successful management must nevertheless take account of them." And, just because you cannot accurately measure something does not mean you cannot manage it (or learn from it to help you improve your management).

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Thursday, June 01, 2006

Signs You Have a Great Job ... or Not

Signs you have a great job ... or not by Jeanne Sahadi

This article, while presenting an overly simplistic view in my opinion, actually provides some good reminders. The article focuses on 12 questions that seem to be the focus of a recent business book. And some of those questions provide good reminders to managers of things they should pay attention to, such as:
  • Do I know what's expected of me at work?

  • At work, do I have the opportunity to do what I do best every day?

  • In the last 7 days, have I received recognition or praise for doing good work?

  • Is there someone at work who encourages my development?

  • Does the mission/purpose of my company make me feel my job is important?
For me, this list is more valuable than most of these types of things you see in "pop management" articles. Maybe my mood (I played some good basketball today, which always puts me a good mood) is causing me to be overly positive, but I actually think this article is worth a few minutes to read and then some reflection.

I believe managers need to look to provide opportunities for the people that work with you. They need to make time for doing so (because it is something that often is neglected). If someone doesn't want new opportunities, that is fine, but don't accept that as a permanent state. Make sure you continue to offer opportunities, what people want can change. It is easy to focus on meeting goals (which you should be trying to eliminate from your management system but...) and fire fighting. Don't forget to help people grow.

This also relates to the question "do I have the opportunity to do what I do best every day." A manager must balance what people would like to do (and other long term system factors) and what is best for the company today. Sometimes the organization may need someone to work in an area where they are less skilled. That is fine. In that the manager is optimizing the system by sub-optimizing their performance: just don't forget that is what is being done.

And don't forgot for most people this can be stressful. So try to adjust the system so you don't over burden people for too long. When someone is learning a new skill they will often need to spend time developing (which mean they won't be doing what they do best). Again this is expected but managers, by and large, don't do enough to support development in my opinion.

Ok, moving past the potentially basketball induced rose colored view; while I find this article worth reading I still find the follow statement meaningless at best:

I asked Coffman what percentage of companies he thinks actually pass the 12-question test. His estimate: No more than 15 percent. But within a company, he said, individual departments may meet the test, even if the company overall doesn't.

This and other such statement seem to drive so much reporting. And, to me, they do nothing but provide vastly oversimplified views that provide no real value to managers trying to improve.

I also am extremely skeptical of statement like:

"We were searching for those special questions where the most engaged employees ... answered positively, and everyone else .... answered neutrally or negatively,"

I find that such statement seem to be made for every claimed new management strategy. And most of those strategies seem to offer very little of value. You will get all sorts of correlation in data if you look at enough data: the conclusions people draw from such correlations are often useless.

An example I remember is from Statistics for Experimenters (by George Box, William Hunter (my father) and Stu Hunter (not related): page 8 shows a graph of the number of storks and the population of Oldenburg. As the book says: "Although in this example few would be led to hypothesize that the increase in the number of storks caused the observed increase in population, investigators are sometimes guilty of this mistake in other contexts."

Wednesday, May 31, 2006

Gemba Keiei by Taiichi Ohno

Topic: Management Improvement, Toyota Production System, Lean Manufacturing

Jon Miller has been posting thoughts on chapters of Gemba Keiei by Taiichi Ohno for quite some time. His latest post in on chapter 23 (of 37): Producing at the Lowest Possible Cost. The series of posts provide great doses of management wisdom. As he said in the first post: "As I re-read this book in the original Japanese, I will summarize the nuggets of wisdom from each chapter in Mr. Ohno's book."

Some great examples, If You Are Wrong, Admit It:

If you fancy yourself a Lean thinker go ahead and test your beliefs the next time you think you are right. If you are wrong, admit it. Make Mr. Ohno proud.

Great idea. The PDSA is a great tool to help test your beliefs (when related to an idea for improvement). Make sure you predict and then test your prediction.

Wasted Motion is Not Work:

Toyota people think motion is work and Ohno struggled to convince people that this was wrong. Human motion is only work when you add your wits to what you are doing, says Ohno.

Toyota Made the Kanban System Possible:

The suppliers were included in the kanban system at the very end "to minimize confusion to our suppliers". Ohno gives an example of another Toyota manager who caused problems for a supplier who was forced onto a kanban system even before the Motomachi factory at Toyota had succeeded with kanban. Ohno makes a strong statement that you should not implement a kanban system with your suppliers before you have successfully implemented the kanban system in-house. This is advice that is seldom heeded today.


Tuesday, May 30, 2006

Lean Software Development

We have posted on the topic of Lean Software Development previously:

Lean Software Development: A Field Guide - the first 3 chapters of this new book are available online. Excellent, recommended for anyone interested in lean thinking ideas.

Lean Software Development: An Agile Toolkit for Software Development Managers by Mary Poppendieck and Tom Poppendieck, 2003.

Articles on lean programming by the Poppendieck's

David Carlton has an interesting post on this topic: lean software development.

I'm not sure what concrete effects it will have on my work in the short-term; for now, I'm going to continue reading about lean, waiting for concepts to sink in and crystallize. I imagine that I'll return to this book in a couple of years and find specific inspirations in it, and indeed that it will have subconsciously inspired me in the interim.

Software development can be extremely complicated and can benefit greatly from making problems visible - jidoka. Inventory is not the key to hiding problems in software development. It might be in the "production of software" but so much software is "produced" and distributed over the internet without producing inventory etc. that the production step is not the main source of problems and longer (in the past boxed software had the same inventory problems other industries experience today). Yet all of us using software have many experiences with the problems users have with software (often on a daily basis). Lean thinking has a great deal to offer for those involved in software development.

By the way, if you are interested in lean application development and are looking for a job in the Washington DC area see, job announcement for a programmer, and maybe we can work together - John Hunter.


Thursday, May 25, 2006

Improving Engineering Education

Topic: Management Improvement, Engineering Education

On our Science and Engineering blog I just posted on the Olin Engineering Education Experiment. It is a great story of doing things differently.

The Franklin W. Olin College of Engineering was founded with a donation of over $400 million and opened to students in 2002. All students get a full tuition scholarship. Interesting article: The Olin Experiment by Erico Guizzo gives an excellent overview of the different focus of the school:

Olin's aim is to flip over the traditional "theory first, practice later" model and make students plunge into hands-on engineering projects starting on day one. Instead of theory-heavy lectures, segregated disciplines, and individual efforts, Olin champions design exercises, interdisciplinary studies, and teamwork.

To some extent this is something a number of schools are attempting to do. One, of many examples - Princeton University: "At the same time, the center is improving students' technical education by exposing them to real engineering projects throughout their four years, through internships, entrepreneurial opportunities and multidisciplinary courses." - Princeton Center for Innovation in Engineering Education). The nature of Olin's methods do seem to be a qualitative different, not just a matter of degree.

In most traditional schools, students sit through separate calculus, physics, and chemistry lectures during the first two years and have only a few canned-type laboratories. Olin doesn't eliminate each and every "chalk and talk" lecture; some professors do teach that way. But Olin's curriculum, unlike conventional ones, tightly integrates the basic disciplines with practical projects.

This requires radically changing the normal university education model. To me this is definitely a different versus better (see last post) improvement effort. It will be interesting to see the success they achieve going forward. It almost makes me want to go back to school.

Building a Better Engineer by David Wessel:
"If they become another good engineering school, they will have failed," says Woodie Flowers, an MIT professor advising Olin. "The issue is to do it differently enough and to do it in way that will be exportable" to other colleges.

That goal increases dramatically the potential benefits. If they truly focus on not just doing a great job at their school but exporting good ideas to others the benefits of success will be multiplied.

Wednesday, May 24, 2006

Better and Different

Toyota: Better or Different?,Lean Blog commenting on Seth Godin's post

The answer, as I see it, is to be better and different (when necessary). In Seth's post he talks about challenging people to find not just better solutions but different solutions. That is fine, as long as people don't lose focus on being better. Neither one alone is adequate (at least not always). To achieve great success you must be both better and different. That is what Toyota does.

Frankly, if you have to choose one, just being better will work most of the time. The problem is (using an example from Deming, page 9 New Economics) when, for example, carburetors are eliminated by innovation (fuel injectors) no matter how well you make them you are out of business.

Often people mistake Deming's ideas as only about being better. He stressed not only continual improvement (Kaizen, incremental improvement, SPC) but also innovation. He stressed innovation both in the normal sense of innovating new products for customers and also innovation in managing the organization.

If innovation will be poorly executed (because your organization doesn't do things better - just differently) you can buy some time until others can adapt to the innovation, but that is all. Unless you also do things better you will not succeed for long.

I see so many examples of failing to practice obvious better methods: methods that have existed for decades. While, at times, the best outcome would result from finding a different way don't fail to make sensible improvements in the meantime. At least adopt the better methods that are known (doing so is fairly easy compared to inventing new ways of doing things) until different ways are adopted.

Toyota is a great example of doing both. So are Google and Apple. But doing things differently also means taking risks and Apple has suffered in the past. Doing things differently is great as long it is the right differently (which isn't always easy to judge).

Tuesday, May 23, 2006

Financial Education

Topic: Investing

"Financial education is a critical component of a robust and effective financial marketplace but it is not a panacea. Clear disclosures, wise regulation and vigorous enforcement are also essential to ensuring that financial service providers do not engage in unfair or deceptive practices," Bernanke said.

Outlining the various initiatives that the Fed already sponsors to boost public understanding of financial matters, Bernanke pledged to keep up the work.

The financial decisions we make have huge impacts on the quality of lives. This blog focus largely on management improvement: in such posts we often mention the importance of long term thinking and systems thinking. When planning our personal financial paths long term thinking and systems thinking (to optimize our long term financial well being given the options available in our individual situation) are necessary.

One advantage over attempting management improvement is when working on your financial plans you don't have to convince others to change: you have the ability to implement your personal financial plan.

Financial information:

Monday, May 22, 2006

Lean forward

Lean forward by Martin Ashcroft (on the recent lean conference by The Manufacturer magazine):

There is also a growing awareness that lean principles should not be confined to manufacturing operations, with almost nine out of ten recognizing their value throughout the entire organization. Action speaks louder than words, however, and manufacturers betrayed themselves somewhat in their answers to a later question about business initiatives, revealing that in practice, less than half had done anything about extending lean principles into business processes.

This seems exactly right. People agree lean should expand beyond the factor floor but actually doing so lags that belief. Still there is plenty of work to do both in getting companies to do apply the most obvious lean ideas as well as extending those companies that are already successfully applying lean concepts.

The most substantial success requires building upon the initial efforts. Truly becoming a lean organization is not something that can be done easily or quickly. And it can't happen unless management stays focused and continues to learn about lean concepts.


Wednesday, May 17, 2006

Problems Caused by Performance Appraisal

Topics: ,

I ran across a great article on the problems created by our common use of performance appraisal today: Unjust Deserts (pdf format) by Mary Poppendieck:

As Sue's team instinctively realized, ranking people for merit raises pits individual employees against each other and strongly discourages collaboration, a cornerstone of Agile practices.
There is no greater de-motivator than a reward system that is perceived to be unfair.

The article does a good job of explaining these, and several more, problems caused by performance appraisal. It also provides some good thoughts on how to manage effectively, including:

While monetary rewards can be a powerful driver of behavior, the motivation they provide is not sustainable. Once people have an adequate income, motivation comes from things such as achievement, growth, control over one's work, recognition, advancement, and a friendly working environment. No matter how good your evaluation and reward system may be, don't expect it to do much to drive stellar performance over the long term.

People are increasingly challenging the notion that we just have to live with performance appraisal systems. As usually, I will make my suggestion that chapter 9 of the Leader's Handbook offers great material on performing without appraisal (and the rest of the book is great too). More related resources:

Tuesday, May 16, 2006

The Customer Knows Best?

Topic: Management Improvement

The Customer Knows Best? Better Think Again by Anthony W. Ulwick

It's important to listen to customers - but not follow their words without skepticism. Ask them to design your next product and you're likely to miss the mark, suggests this Harvard Business Review excerpt.

Excellent point. Some management ideas are pretty easy and straight forward. But many management practices require knowledge and judgment to apply them successfully. Easy solutions may be desired, but, often you must choose between easy and effective (hint, I suggest effective is the better target).

Listening to customers is important but it is not sufficient. W. Edwards Deming made this point emphatically on page 7 of the New Economics:

Does the customer invent new product of service? The customer generates nothing. No customer asked for electric lights... No customer asked for photography... No customer asked for an automobile... No customer asked for an integrated circuit.

The article by Anthony Ulwick explores how to structure the communication with customers in order to develop products that will be successful. I agree with some of the points of the article. I think, like many such article, it leaps to conclusions that are not supported by the evidence presented.

The results of using the outcome-based methodology speak for themselves. Between 1994 and 1995, Cordis introduced 12 new angioplasty catheters and saw its market share in interventional cardiology grow from less than 1% to nearly 10% in the United States; market share approached 18% in Japan, 20% in Europe, and 30% in Canada. Net sales shot up 30%, and the company's $50 million cash position allowed it to reach into new markets.

No, results do not speak for themselves. In most cases there are many factors that impact the results. I see no reason to believe that this methodology was responsible for those results. It may provide an example of the paring of the use of this methodology with success. That may support an argument for the value of this method but that is as far as you can go without showing direct evidence of causation - which would require theory that could be tested.

Enron's CFO was the CFO of the year according to CFO magazine - as were WorldCom and Tyco's. People could assume the numbers at Enron proved what Enron was doing was correct. But it did not prove that. Until we start to evaluate data more accurately we will continue to mistakenly see proof where it does not exist.

Seth Godin recently posted an excellent note on customer focus: But the focus group loved it.

A properly run focus group is great. The purpose? To help you focus.

Not to find out if an idea is any good. Not to get the data you need to sell your boss on an idea.


Focus groups are very bad at that.

Customer focus is important but at times management must ignore the claims of customers. One of the jobs of management is to know which is needed at a given point.

Saturday, May 13, 2006

Invest for the Long Term

Invest Like a Simpleton [the broken link was removed] by Tim Beyers,

Ten years ago, Tom Gardner boldly picked 10 stocks to buy and hold for the next decade.
Even with a tough week in which Silicon Graphics filed for bankruptcy and Dell admitted its business is not at all like it used to be, the Simpleton Portfolio would have returned more than six times your money had you invested on day one. For context, consider this: Over the same period, the S&P 500 gained approximately 135%.

Quite a nice record. is an excellent web site worth reading for investing education (they do force you to provide an email address, which I think is a bad practice for web site usability, but the content on is worth putting up with the bother - just use the email address you have to deal with these types of hassles).

You can track the performance of a "virtual fund" based on my 10 stocks for 10 years (original post - apr 2005). I created the Sleepwell fund on marketocracy (this fund includes occasional adjustments - 4% turnover in the last year): Sleepwell investment results.

Investment links:

Friday, May 12, 2006

Shigeo Shingo's Influence on TPS

Topic: management improvement, ,

A very interesting article by Art Smalley based on an interview with Mr. Isao Kato: Shigeo Shingo's Influence on TPS. For those interested in the history of the Toyota Production System this article provides some excellent information.

Some background on Isao Kato:

As much as anyone alive Mr. Kato knows the history of TPS development from an insider's point of view from the 1950's forward. He also had working relationships with Mr. Ohno even more so with Mr. Shigeo Shingo (or Dr. Shingo as he is known in the west). One of the interview topics I discussed with Mr. Kato related to the historical role of Shigeo Shingo in the formulation of TPS inside Toyota Motor Company. Much to my surprise the role of Mr. Shingo and actual development of TPS according to Mr. Kato has been somewhat mistaken over the years especially in the U.S.

Mr. Isao Kato: By far the biggest area was helping us develop a course
that replaced the Job Methods (JM) part of TWI. Together we summarized Mr. Shingo's material into a training course that we called the “P-Course which stood for production and how to analyze a production process. As I mentioned he trained a couple thousand young engineers and managers over a twenty year period. His influence on these people and their subsequent ability to see problems and waste was quite large.

The article does convincingly argue those most responsible include the Toyoda's and then many others inside Toyota such as Ohno.

First the origin of the term JIT was coined by Kiichiro Toyoda in the 1930's and not by either Mr. Ohno or Mr. Shingo. Mr. Ohno experimented on machining lines in Toyota and arrived at a working model of TPS with replenishment pull and other techniques before Mr. Shingo arrived on the scene at Toyota.

Additionally the second pillar of TPS of Jidoka dates back to 1902 and the invention by Sakichi Toyoda of his automatic loom that stopped at the sign of a defect. Mr. Ohno came from the automatic loom factory part of Toyota and started separating man from machine and building in quality as soon as he transferred to Toyota's automotive company in 1945...

Thirdly the concept of "respect for workers" inherent in the system is a concept that comes more from the Toyoda family than any other source.

To me (though this may be more my view than the view of the article) the details provided make clear that many people participated in creating the Toyota Production System as we know it today. The article reinforces the role of the Toyoda's (which the recent focus on Ohno and Shingo has downplayed).

However the Toyota Production System as we know it today would exist with just the effort of any several people: not the workers (even Toyota's), not the senior leadership (the Toyoda's), not internal management experts (say Ohno), not engineers (trained by Ohno, Shingo and others), not consultants (say Deming and Shingo), not previous manufacturing experts (Henry Ford). Each group, and the remarkable people involved, participated in making TPS what it is today.

Art: How famous is Mr. Shingo in Japan?

Mr. Kato: Unfortunately not very much. I think it is analogous to the situation with Dr. Demming for example. In the U.S. for many years Demming was ignored and yet widely received in Japan. We invented a famous prize for him. In Shingo's case he is not well known in Japan especially compared to Mr. Ohno. But I believe that Mr. Shingo is somewhat famous in the U.S. and I heard there is even a prize his name.

Art Smalley includes a great deal of additional interesting information.


Thursday, May 11, 2006

Management: Geeks and Deming

Why Business Needs More Geeks by Robert May:

then along came Wall Street. Obsessed with quarterly profit increases and seeing them as disconnected from value creation, Wall Street encouraged businesses to think short-term. The things that led to value creation - things like innovation, continued learning, employee development, long-term focus - were replaced by pump-and-dump management styles.

There is a great deal of similarity between this article and Deming's ideas. Several of Deming's 14 obligation of management and 7 deadly diseases are noted in this quote, including: "Remove barriers that rob people of joy in their work" and the disease - "Emphasis on short term profits." Deming was a physicist so that may explain the similarity of this ideas to geek management culture.

Points from the article:

      "Geeks seek knowledge for it's own sake" - Deming's point 13 "Institute a vigorous program of education and self-improvement." Deming encouraged organizations supporting education of employees - even when unrelated to work in any direct way.

      "Geeks like to experiment" - many of Deming's ideas focus on this point, most obviously is the emphasis on PDSA

      "Geeks openly debate the merits of technical ideas" - again many of Deming's ideas focus on the importance of focusing on actual merits versus people's assumptions or organizational power struggles (though this point might be less direct than some of the others). Understanding variation (also see tampering) is an effort to get people to focus on merits versus arguing over misperceptions or less important details.

      "Geeks are concerned with doing good work just because" - Deming: "Remove barriers that rob people of joy in their work." Geeks have a strong tendency to hold onto this desire even in the face of Dilbert bosses - where many others give up (and even convince themselves they have no such desire - in my opinion as a coping mechanism). Deming (and I) believe everyone has this desire - though I believe many non-geeks have given up hope of having pride in their work.

      "Geeks are about results, not office politics" - I don't see any direct tie here, but the sentiment would support many of Deming's points about how management has lost its way, failing to focus on the important business needs.

More Deming on Management.
Previous Posts mentioning Deming.

Tuesday, May 09, 2006

Understanding Data

Topic: Management Improvement

Statistics Abuse and Me by Jay Mathews:

the Simpson's Paradox numbers. The national average for the SAT went up only 4 points between 1981 and 2005, but the average for whites went up 10 points, for blacks 21 points, for Asians 37 points, for Mexicans 15 points, for Puerto Ricans 23 points and for American Indians 18 points.

How can that be? Is it important? First, yes it is important. Effective use of data is an important part of management improvement. Emphasis the effective, not the data. Use of data by itself is not sufficient.

To be effective you need to learn to think about not what is printed on the page but what lies behind the numbers you see. The numbers are just proxies for the real situation. Look beyond the numbers you see to what they mean and understand how the numbers presented may not fully capture the important details you need to consider.

Ok back to how the SAT numbers could seem to go up fairly significantly for all the sub groups of the total but only a little bit for the total. This numerical quirk is known as Simpson's Paradox. If the proportions of the subgroups (Asians, American Indians...) change then the overall average is effected not just by the changes of the subgroup average SAT scores but the changes of the weighting of each subgroup (so if the overall average is less than even the lowest gain for a subgroup you know that the subgroup weighting must have increased for one or more of the subgroups with lower SAT scores).

Take care when you are make decision based on your understanding of data to avoid assumptions that may not be correct.

Monday, May 08, 2006

Respect for People

Topic: Management Improvement

A very thoughtful post, Respect for People on the Kaikaku blog raises some interesting questions. What does respect for people really mean?

Toyota empowers people: To stop the line - to stop every other worker from working - that is real respect and trust. To implement creative improvement ideas around their work area. They trust you to come up with the best idea to make your work easier and more interesting. You don't have to wait for management to tell you what to do. By asking people to solve problems and become problem solvers.

Those are indications of respect. The post also notes "Ohno was absolutely ruthless, employees and suppliers lived in fear of him." I would say that while Taiichi Ohno was truly remarkable that doesn't mean he did everything right. And he might well have failed to communicate in a way that conveyed respect for people. That doesn't mean doing so is good. It might mean that if you offer as much positive value as Ohno did people may be more forgiving of your weaknesses (I know that is my tendency).

The difference between respect and disrespect is not avoiding avoiding criticism. In fact often if you respect someone you can be much more direct and critical than you can with someone you treat as though they don't have the ability to listen to hard truths and improve. I think we often have so little respect for people we just avoid dealing with anything touchy because we don't want to risk they won't be able to react to the issues raised and will instead just react as if they have been personally attacked. It may also be that it is easier to train managers to behave in this way than in effectively dealing with though issues. But that is not training them to respect people it is your organization accepting you don't respect your people (managers and others) so just train people how to behave in a way that avoids difficult areas.

One way to communicate respect is when you are critical to criticize the behavior or action not the person. When you criticize a person's self instead of an action it is very likely to be taken poorly.

I don't feel I have the ability to present how I see in a way that is easy to follow. But I will try. It is possible to separate respect (which is the state of mind on the person [say management]), communicating respect (which is the ability, of say the manger, to communicate that respect [their state of mind] to others) and communication of content (say the message the manger wants to deliver).

Without respect one way to communicate content without making people feel they are not respected is to avoid any difficult areas and avoid being critical. Avoid confrontation. Speak in the passive voice and act as though difficult decisions are not choices but things imposed on us. It can see that there is respect because no disrespect is verbalized but in truth avoiding criticism is not the same thing as respect.

It is possible to communicate content in a way that is very critical and demanding and yet maintain respect for people. In America this is becoming more and more difficult because, it seems to me, we confuse respect with avoiding anything that might possibly be taken poorly by someone else. This complicates how you communicate respect (though not the actual feeling of respect itself).

Managers in the West normally tell people what to do and rarely ever ask them and listen to their ideas. Listening and empowering people to implement their own ideas are the key to real respect. And develops and educates them - they continually train you on the job and will pay for your college education.

Like so many seemingly simple ideas, "respect for people," is not nearly as simple as it may seem.

Saturday, May 06, 2006

Energy Future

Topic: economics, investing

Interesting chart from: The Oil Age Poster. There are all sorts of opinions on the future price of oil.

My view is based in the capitalist/market model - I believe that if it becomes obvious we are running out of oil the price will go up drastically. Those who own it will feel if you don't buy it today they will sell it to you for much more later. And those that want it don't have much choice (as the last several spikes in oil prices show - demand does not decline without enormous price increases).

Huge price increases will provide incentives to those in the market to innovate to find alternative ways to make money by providing usable energy sources. If the market, overall, chooses to look forward over a long period of time, then investment in alternatives will begin in earnest early and prices of oil will slowly rise. And as prices rise slowly new alternatives (including ways of reducing consumption) will slowly come into the market. Those alternatives will slowly substitute for oil as a smooth transition is made.

If markets actual were efficient and driven by looking far into the future and discounting cash flows to the present this slow and steady model is what would happen. The market can only be efficient if good long term predictions can be reflected in the market. If for example, there is proof we will run out of oil soon but those with the ability to effect the market did not understand this data the market can remain inefficient (the market can fail to reflect the information that is available in an efficient manner leaving room for those with the knowledge to gain above market returns on their investments).

On the other hand if there is no real knowledge (say with a chaotic system where it is impossible to predict far into the future) someone can still "predict" and they could be right by pure luck. A market failure to include that would not be inefficient there was no true prediction that an efficient market should have incorporated. In efficient market theory those with knowledge exert a sufficient impact on the market to make the market efficient.

Markets often take wild and crazy swings with little change in long term prospects which is only reason to question the validity of pure market efficiency. Also, short term pressures lead people to take action for short term benefits (say selling their oil today even if they believe they could sell it for much more 5 years later) instead of making rational long term economic decisions. In a case with a less than purely efficient and less than perfect knowledge of the future, the market will still work to provide alternative energy sources but it will be much more chaotic.

In this case, instead of many investors achieving reasonable ("market") returns as the market behaves rationally they will get huge returns if they are right and huge losses if they are wrong. Those that are right in investing in energy alternatives will make huge returns as the market as a whole waits to invest until the evidence is beyond question (instead of anticipating based on long term thinking and long term investing) and chaotic spikes occur. If that happens the early investors will find a ready market for their alternatives in the market and make a huge return before competitors can react. Or those early investors will lose huge percentages as they invest in alternatives and they lose as oil stays cheap.

Good luck figuring out what will happen. If you are right and invest with some intelligence you can make quite a bit of money (as you can see below, I invested some with the expectation that energy prices would increase).

Related Posts: