Are Deming’s 14 Points Still Valid?

Are Deming’s 14 Points Still Valid?

Researchers and practitioners in quality management continue to honor Deming’s valuable contributions today, and in fact, my recent bibliometric analysis of the Quality Management Journal (to be published in the January 2013 edition) indicates that Out of the Crisis has been the most central and authoritative resource influencing quality management research over the past two decades. ... But are Deming’s 14 Points still valid in the post-2008 economic era, where vibrant growth and globalization can no longer be expected to dominate the global economy?

Yes they are still valid. On points:

  #1 - I think this is definitely still needed and much underdeveloped today.
  #2 - Dr. Deming's "new philosophy" framework presented a new view of his management system; he found 14 points failed to convey the systemic nature. The points are fine, but the new view he presented captured what is still the best management system I know of.
  #4 - I don't think size matters. Personal relationships are easier but also super fragile, that person leaves and your system is broken. Establishing a culture that supports suppliers is harder but much more robust.
  #11 - I do. Good book Free, Perfect and Now by Rodin. This is a big deal to lots of committed Deming folks. I agree those that just use some of Deming's ideas without the system or really thinking of him much don't pay much attention. Lots of software development folks realize this strongly (they lose respect for "suits" that think try to dangle goals and quotas in front of people). Related: the problems with targets or goals, The Trouble with Incentives: They Work by Gipsie Ranney.

People Leave Jobs When Frustrated with the Results of the Management System and Their Manager

So people join organisations, and leave Top Leaders!

I participated in a Twitter exchange following the CIPD’s report – along the lines of who is the biggest problem – rubbish leaders, managers, HRDs or organisations?  But thinking it through, I would go for the leaders – as they have so much influence over the approach their line managers take.
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there are clearly a range of factors involved in exit decisions and an individual's line manager is certainly one of these. But I do agree with the researchers, and therefore disagree with Gallup, in that I believe it is the senior leadership which is increasingly the most important of these.

I think your focus on the nuance is where I would put my, granted non-expert, opinion.  I believe what you say about the big impact executives/leaders have in setting and maintaining the management system.  The direct boss I do think has a big impact.  But it is true that much of the direct boss' impact steams from the system - if they are not a good manager that is usually a system results.

It is rare that the organization does a great job of selecting and developing managers and your manager is lousy and you want to leave.  In broken systems (unfortunately many - which is why Dilbert connects with so many) often the direct supervisor becomes the focus of complaints but really they are largely at the mercy of the larger system.

Related: posts from my management blog on managing people - Practical Ways to Demonstrate Respect to Employees - Create a Climate for Joy in Work

The Right Culture Creates a Robust Management System That Delivers Over the Long Term

First, I don't agree with your claim on the only reason for companies to exist, I believe Deming had a better view (considering all the stakeholders).

But I do agree with the general premise: a "culture" isn't an aim.  The reason a culture matters is that it embodies a robust system that delivers the best results over the long term.  The problem of not having a good culture (but doing well today - reducing waste, gaining customers...) is that over and over we see these companies collapse.  The reason a "quality culture" matters is as a strategy to achieve an aim: long term success.

Comments on:  Quality Culture and Feelings
Related: Creating a Quality Culture - Posts on Creating a Management Culture

Rewards Don't Create the Employees You Want

Trying to motivate with carrots and sticks is a bad idea and should not be done.


"Motivation" is not something for a manager to give.  Often the organization saps employee's motivation so a manager can help by removing those bad practices.

Comments on:  The Rewards Edition
\ See more thoughts on managing motivation.

What is a Project Manager?

Response to What is a project manager?

Often PM role is to cope with weaknesses in the current management system.  While you might say just fixing the system is better I think that is often unrealistic.

I see the PM as someone shepherding the project which often means

  1) making sure the pieces proceed properly to meet deadlines (making sure they, or whoever should, make decisions on what to do if things need to be done).  I see the PM often making sure it happens but if the system has a good method that is working fine the PM just watches that.  So if there is good agile software development, the process is working and things are done in order no big surprises sitting around… then fine the PM doesn't have to worry.

   2) dealing with institutional issues so others can focus on doing their jobs.  If the software developers are frustrated with whatever phb action, the PM takes care of it somehow…  That kind of stuff.

   3) improving the system - again this is best done by setting up the system so others can.  This is a bit outside of the scope of the existing project.  The PM (to me) is also responsible for making the system for delivering projects good.  If something new is needed, look at putting it in place.  Develop people as part of this.  Again if management is doing their job this is happening.  Often management isn't though, then I think the PM should.  This is stepping a bit far from what most everyone else thinks though.

  4) coaching people and arranging coaching.  This is probably more for #3 than for meeting the current project needs, but it is also to meet the current project needs.

  5) protect people from blame and give people credit.  Again this is often just dealing with poor current management systems.  Blaming people is ineffective.  If there are failures figure out what is wrong with the system and improve.  When people are trying to blame others (which happens a lot) don't let that be done and instead focus the thoughts on how to improve.  In organizations where business managers run roughshod over others (developers, testers…) don't let them.  In that case communication goes through PM.  If the communication is good then it is better for the developers to communicate directly…

I see communication as part of #1.  It is important.  It becomes even more important as the organization fails at it.  That is often my view the PM is to see where there is weakness and deal with it.  Maybe it means getting more resources.  Maybe it is assuring better test coverage is included.  Maybe it means arguing this project needs to be scoped way down as it isn't a priority given the business needs…  This requires knowledge of the organization, business thinking, software development (for software projects) practices, coaching...

My whole way of think is very Deming based.  So I see improving the system as a big part of everyones role.  It isn't surprising I see it that way for a PM too.

To me the main PM roles are

 #1 manage the existing system to achieve the result for the project
 #2 improve the existing system

Coaching: Don't be Too Timid

Beginning to understand the power of coaching – seeing the connection to respect for people by Connor Shea

Coaching is less focused on specific content then it is on the person, and the relationship’s ability to empower the coachee to find capabilities and a self sufficiency they didn’t fully believe in or know they have. ... This process keeps the understanding, ownership of the problem, and ultimately the action, in the coachee’s hands – increasing their ability to solve the immediate problem and most importantly, future ones.

I think the "lean" world is in general too passive in coaching. There are plenty of times when you are coaching a specific skill (whether that is how to notice a problem in the operational definition [maybe just missing one altogether] that leads to bad data or how to create a flowchart...). The same thing is true for coaches teaching a big man a post move or how to improve free throw shooting.

I appreciate that very wise people can just ask the right questions and get the best results (I think this is really hard to do well and the reluctance to provide any judgement in coaching is often a much bigger problem than being too prescriptive).

I see this as the prevailing attitude in "lean" attempts: "this process keeps the understanding, ownership of the problem, and ultimately the action, in the coachee’s hands – increasing their ability to solve the immediate problem and most importantly, future ones." Doesn't that seem a bit like an artificial barrier in the system? Doesn't the system context include the coaches and support system for the organization as well as the individual? I don't think the most of the success or failure rests with the coachee. They are responsible. But, whatever the results, it is the whole system that succeeded or failed, not the coachee alone.

Related: Continual Feeding - Building a Great Workforce

Right in What Way?

The Tyranny of Being Right

It’s such an easy thing to fall into: the desire, the need, to be right. It creates huge divides between us, drives us to say and do things that cause others to either disengage or retaliate. Later, we may console ourselves with the satisfaction of winning but it’s pretty much a cold dinner left on a table that’s been deserted by friends. And if the friends are important and powerful enough, it can even turn out to be more like a last supper. The alternative is being wrong, of course, and that’s where I believe the problem lies. After all, if I am wrong, it can become a chink in the armor of my self-confidence and self-trust, and in the self-perceived, self-protected perfection of my reputation. One chink leads to another, you know, so that the possibility is all the armor might fall away and I’ll have to just stand there, both vulnerable and alone.

The way I look at it the "rightness" depends on the question.  Normally as we live the decisions we make don't really address only 1 question.  There is the question of what will be the least disruptive action.  There is the question of if it is fair to change the rules for an employee in mid stream.  There is the question of what should you spend your time on.  There is the question of what you should do to help yourself.  Etc.  You can be "right" on 1 question and that same action can be "wrong" or problematic or dangerous for another question.

Often standing for principle may be taken as doing the "right" thing.  Lets even say it is right when asking what is in the interests of the company.  But it is certainly common that doing so is the wrong thing for your career (or any of a number of other way of considering what to do).

I do definitely have the desire to be right. But I understand it isn't as simple as being right from one point of view. It is finding the right answer that optimizes to overall success on many different fronts. Sometimes the right answer is to accept that the wrong decision will be made in the meeting today, because the things necessary to get the right decision are not worth the cost.

Related: Long Term Thinking with Respect for People - We are Being Ruined by the Best Efforts of People Who are Doing the Wrong Thing

Are We A Few Heros or a Society

Drucker Institute tweet: "Does government tax policy “prevent and penalize” entrepreneurship? Weigh in!" On their post: Who Really Built This Blog Post?

President Obama, speaking to an audience last Friday, said the following: “Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business, you didn’t build that.” In response, Romney, highlighting the line “if you’ve got a business, you didn’t build that,” has called Obama’s words “insulting to every entrepreneur, every innovator in America.” To insinuate “that Steve Jobs didn’t build Apple, that Henry Ford didn’t build Ford Motor, that Papa John didn’t build Papa John’s Pizza,” Romney added, is “wrong.” ... What do you think: What’s the best way for the government to foster entrepreneurship?

I think far worse than any of the taxes is the extremely bad job that has been done with the health care system. Deming noted this as one of the 7 deadly diseases over 3 decades ago and it is in much worse shape today. Costing twice as much as other rich countries with no better results is bad. Since the costs are so large they are huge barriers to entrepreneurs.

Even worse for entrepreneurship though is the poorly designed system where 1 employees medical expenses can cause serious damage to small companies. And the poorly designed system that makes it difficult to get coverage for previous conditions - which greatly increase the cost (in risk) of changing jobs, starting your own new business…

The recent reforms did help some, but it is an extremely small step after 3 decades of failures and making things worse. There is so much more that needs to be done. The costs and uncertainty related to health care are likely the most critical problem for entrepreneurs. Another contender is liability costs (yet another one of the decades old deadly diseases). 

The next contender is the broken patent and copyright system (which I think of as one of the new deadly diseases - along with excessive executive pay). I would put all of these far ahead of tax system issues for entrepreneurs. The biggest thing government can do is fix the 3 deadly diseases I mentioned above. People like Jobs (and Wozniak), Henry Ford, Larry Page and Sergey Brin are extremely valuable to a society. They make great contributions. Thinking they are therefore the reason for Apple, Ford and Google's success is ludicrous. They contributed. They contributed a lot. Dump them in Mali when they were born and they would not have created those companies as adults.

Saying that society doesn't play a huge role is false (a failure to understand systems thinking). Saying governments role is the same as societies also shows a poor ability to reason. The good things that Jobs, Gates, Bezos... are related to government in some ways but are much much more related to the entirety of growing a business in the USA. Inside those companies many others helped make the organizations a success.

Certain individuals do have an amazing ability to create successful systems. Again they can't do it themselves. They need other people. Granted a few of these leaders are extremely special. 95% of CEO's are decent at their jobs (or even not that good at their jobs) but replacing them with any of hundreds of other people would make little difference. But those CEO's all think they are more like Steve Jobs - they are not.

Always-On: Trivial Urgency

I think the problem is in expectations of responsiveness. People focus on the trivial "urgent" instead of the important, as Covey said.

One of the issues I have with the complaints of "always on" is looking at my father. He was always on for his whole life and had no downside. He loved what he did. He thought about it when he was taking a shower, or walking to work or having friends over for dinner or raking leaves in the yard. It never was a matter of being burdened by work. He was a professor and consultant. I think it is a mistake to see the problem as always being on. Expectations of responsiveness to thee trivial urgent though I can see as a problem.

I think there is a difference between being also on and energized by your work (that is pretty much how I am, and my father was - I am working for myself, I can work whenever I want) and feeling burdened by being expected to be always on.

The problem is I keep reading about how thinking about work all the time is horrible for people. Well in my experience that isn't true (granted it is a small set of people). But it points to, I think, an issue that the "problem" is imprecisely defined and therefore inaccurate. I do think there is an issue expecting people to be available for trivially urgent matters.

Related: Carve Out Time to Think - Circle of Influence

Leadership: Taking Action When Others Are Unsure

When things go bad

Plan for the things you know can happen. Weather emergencies, hazmat spills, and fires come to mind. Rick Rescorla's plan for what Morgan Stanley workers should do if the World Trade Center was attacked, is one reason why that firm only lost six people out of almost three thousand on September 11, 2001. 

Include some thinking about how you will know what you're facing. While the Port Authority officials were broadcasting "stay put" messages, Rick decided that an attack was happening. He activated his plan, marching his company employees down the stairs, two by two.

I can't recall now, but I think there are studies that show people will be lulled into not acting when a group of people is around (who are also not taking action).  So something is introduced that if they were alone they would react (say leave the trade center, or investigate a seemingly risky piece of data).  But if there is a group people become more passive - thinking the non-action by others means they are over-reacting.  So they then don't react (thus re-inforcing everyone else decision not to act).

This is one of those times leadership really matters: someone not afraid to take action and potentially criticized for going against the consensus group decision to not act.

If immediately upon suggesting decisive action, people jump to support the idea it is likely they all would have done so alone but were intimidated by the non-acting group.  Either that or they respect the leader and decide to support them while not sure it is really needed.

Related: Leadership is the act of making others effective in achieving an aim - Leadership Leverage Points - quotes on leadership

Forced Rankings of Employees are Foolish

Dysfunctional Internal Competition at Microsoft: We've seen the enemy, and it is us! by Bob Sutton

This downside of forced-rankings is supported by a pretty big pile of research we review in both The Knowing-Doing Gap and Hard Facts, Good Boss, Bad Boss. The upshot is that when people are put in a position where they are rewarded for treating their co-worker as their enemy, all sorts of dysfunctions follow. Forced rankings are probably OK when there is never reason to cooperate...

Good thoughts as usual.

My thoughts are that forced ranking inside a company are bad (the golf example, I have no problem with).  Inside the company I want the people (even responsible for different territories) sharing information.  We want to constantly improve.  We want the truckers (or wherever else), wherever they are, sharing the things they are doing to make themselves more successful.  Then we want to spread what works (pilot testing them first, of course).

The system impacts are likely large.  The bottom 10% (discussion, in post, of GE firing the "bottom 10%" every year) is due how much to those people just getting lousy luck from the system.  A lot of it is, that is my bet.  I do agree you might discover some people just are not cut out for their current job.  Believing in respect for people, your first reaction should be fire.  First work with them, often that works, but sometimes not.  Then figure out where they could be useful.

The same lucky system effects are another reason forced rankings are silly.  If you insist on such a thing, just make it a lottery that everyone knows is a lottery (Dr. Deming suggested this - facetiously).  In case anyone really is thinking of this it is a stupid idea.  It is just less stupid than other forms of forced ranking.

Interestingly I here is post from 2006 where the new Microsoft HR chief state that forced ranking was eliminated due to widespread understanding of how destructive such a practice was.

In May, after barely a year as Microsoft’s human-resources chief, Lisa Brummel swept away “artifacts of the past,” starting with the widely disliked forced curve.

Related: Failed Practice: Forced Ranking (2005 post) - Performance Without Appraisal

Profit = Market Price - Actual Cost or Price = Cost + Desired Profit

Comments on Google Nexus Q – Made in the USA

I agree with

"Deserved Profit = Market Price – Actual Cost"
   not
"Price = Cost + Desired Profit."

But what I see glossed over by many lean folks when they present this is volume and the complexity involved.  The iPhone could sell 10,000 (say, or some number anyway) at $2,000 in addition to an carrier subsidy.  They can sell millions at a much lower price point.  Market price is a movable thing (depending on volume).

Also the 2nd formula is fine for deciding what products to build (theoretically - you have to be guessing at the values).  But it is totally fine to say we need a price of $350 for x product for us to decide to offer it.

The task is then to guess right.  If $350 is not going to work you give up - or more likely go back to the drawing board.  Can we make it better for just a bit more and then sell it for $400?  Can we re-engineer certain things and lower the price to $250 and even if that means we had to get rid of the ability to use wifi will that work in the market?

It definitely can be sensible to say we can't make x for less than $400 - we are not pricing it at $300.  It might mean we can only sell 10,000 instead of 30,000 if we priced it at $300.  But since at $300 we are losing $100 a unit high volume isn't great.

I think "If the market price for a device like this is $100, then you have to engineer the total product cost so it can be profitable at that price." is very well said.  Again volume is still a big issue.

Sometimes there are price cliff points - I can't imagine selling a tablet that isn't hugely better than the iPad on specs for more than the iPad price.  So above that level the volume may be miniscule.  But I think often there are not cliff points.

And the company does get to set the price.  The market then decides to buy or not, and buy in what numbers.  Apple would probably sell very few iPhones for $3,000 more than they cost today.  How many they would sell at $100 more or $100 less may change significantly but they would still be huge sellers at either of those prices.  So that "market sets the price" idea is not 100% accurate (I don't think anyway).  I do think the first formula is a better concept than the 2 formula.  But it is something that is maybe 80% accurate?  And the 2nd isn't totally worthless (it is just that it should be looked at more as a should we offer this product or not decision).

Pricing decisions also have big long term versus short term considerations.  Apple has started pricing many things in a way which makes it really hard for competitors to undercut them.  Apple, almost for sure could charge more for the laptops they sell and the iPad and iPhone.  But if they did they make it easier for a competitor to compete on price.  This pricing decision is an Apple decision not a market decision.  The market weighs in after Apple make the pricing decision.

But the price point for a kinda ok tablet at $199 - maybe will work?  Fire seems to be doing ok, for a pretty small, kinda lame, really cheap tablet.

Apple has done well create products for prices much above what people thought was market price.  It turned out people were willing to pay more for a great product.

You can notice that we are trying to sell this car for $35,000 and we are hardly selling any.  Ok, lets make it $30,000 and see what happens.

When setting what prices you will try to sell for, looking at your costs is a perfectly sensible thing to do.  Once the market tells you that you are off, you need to adapt to the market.  It isn't super easy though.  Often you can think the market failed to appreciate the value we offered because we messed up x feature and with y missing it was an issue and people will buy only black from Apple but they won't accept that from us (or whatever).  What we need to do is fix those mistakes.  The pricing given those mistakes the market sets below what we expected but that isn't really a pricing issue it is really a damaged offering issue.  Eventually mis-understanding pricing may become obvious, but it often isn't.

Anyway, my main point is just that the "market price" isn't some easy thing to know.  It isn't like looking up the freezing point of water.  I do agree with the "formula" I just think the way it is presented is often not as useful as it could be.

Why Do You Ask?

Why Do You Ask?

In order to develop problem-solvers, we need to help our mentees identify and acknowledge the problem and ultimately, solve the problem. This requires the mentee to think, to engage, and to take ownership.  The extract and tell method that is often employed by leaders doesn’t do any of that well.

Another useful reason for the question is to figure out the best response.  Often the guess about what the person is asking for is fine, but the truth is that often an answer really depends on what the person is after.  Why did car crash?  We usually don't want to know that momentum carried it into a spot occupied by something else - if even that is "correct."

Usually people don't think when they get a question: (thinking: why? well x, why x, well y, why y, well z, why z, well a, why a - ah that is basically the root cause)  then answer a, see what happened is x because of y because of z which was due to a.

Another example is if you ask where I want to go to lunch tomorrow my answer will be different if you are asking everyone (I can say my favorite choice) or if you are not sure and you know I know lots of places where should we all go to lunch tomorrow...  The purpose of the question is important.  Often we can guess it.  But often we also guess wrong.

Do We Really Need Management Consultants

Do we really need consultants?

Consultants need to assist Managers and Employees work together to Map out what their current processes are and draw out new innovative solutions which takes account of what is of real value to all internal and external customers. This is a "Lean approach" to consulting and is diametrically opposed to the "Audit approach" followed by many consultants.
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A skilled consultant can bring together cross functional teams to both discuss and resolve difficult even politically charged issues and problems within the organization. A skilled and experienced Lean consultant can also coach Managers and Employees as they seek to use Lean thinking, tools and methodology in their own work space. Good consultants facilitate and coach teams as they find their own solutions to problems they have identified themselves.

You said it exactly right. I would say most consultants now are very poorly used - maybe not using them would be better. But using consultants the right way (to coach leaders, to provide insight from the outside, to provide specific expertise) is very valuable if you get the right consultants.

I do think there is also a problem that many consultants now are focused on the wrong style (how to sell more consulting, spreadsheet management, not developing internal expertise, not having an understanding of variation or respect for people...).

Related: Management Consulting Failures - Toyota Production System, Lean Manufacturing... Consultants - Problems with Management and Business Books

Quick Mistake Proofing Ideas for Preventing Date Entry Error

I found a new failure mode for online bill pay. I had an electric bill due April 24. I mistakenly entered May 23 as the pay date 

So, by April 30, I had a late payment termination notice from the electric company. Kudos to them for the fast cycle time on getting those out. I paid the bill via credit card on their website. 

I’m not sure how to error proof “wrong date.” You?

It is easy to put in a filter that checks and then puts a big flash message:

  “The date you entered is after the due date. Are you sure you don’t want to put in a date prior to that...”

You can also make the data entry bias toward a on-time payment: require an extra step to go beyond the due date, default the value to be the due date... How you implement this would depend on the entry method.

It is really easy to do well if you are using calendar point and click – grey out all the post due date entries, if click on a greyed out entry, pop-up a message that says “that date is after the due date are you sure...” It gets less effective/cool if it is just text entry...

Even with text entry thought you can popup the message on submit of the form if the date is too late (so they enter the wrong date but you catch it before the action is completed).

You can also follow up with (using this method alone is better than nothing but it is pretty lame so I wouldn’t suggest it as the only method unless nothing else can be done reasonably) email saying “you entered a date after the due date in your last bill payment, if you don’t pay before that late fee…

Anyone what to hire me for a few minutes at a time to think of ways to make it harder to make an error just let me know. I don’t like processes that allow errors so have become fairly good and thinking up ways to make it harder pretty quickly :-)

Related: Mistake Proofing Deployment of Software Code - Improving Software Development with Automated Tests - Poka-Yoke Assembly

Customer Focus is Central to Lean Thinking

Agile UX vs Lean UX – How they’re different and why it matters for UX designers by Anders Ramsay

Good design is good design, regardless of if we are living in an Agile or Lean or [insert new term] universe. The only real difference when adopting these methods is in the How.
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So, while there certainly is a lot that UX designers can learn from Agile thinking on software delivery (such as to automate everything that can be automated), the real pay-off for UX practitioners is in the collaboration part.
...
Lean UX, on the other hand, is really a reference to Lean Startup a la Eric Ries (and Steve Blank, basically the godfather of Lean Startup, and creator of concepts like Customer Development and GOOBing), which extends Agile ideas to include methods for ensuring that there in fact is a market for the product you are doing such a good job designing and shipping early and often.

Lean is also very concerned with customer value. From that perspective usability is directly relevant and fits perfectly in the lean context. Lean focused on the ideas of usability for customers in the world of physical products. Usability of software fits with this perfectly.

The focus of reducing waste in lean context is to look at the "value stream" and eliminate what doesn't add value to the customer. The primacy of user is there (though some applying lean don't understand this).

Dr. Deming said the customer is the most important part of the production line. He understood the customer (end user) had to be the focus of your efforts to improve. Toyota took Deming's ideas and created the Toyota Production System (Shoichiro Toyoda, Honorary Chairman and director of Toyota: "There is not a day I don't think about what Dr. Deming meant to us. Deming is the core of our management.". Lean manufacturing is the name given to the practices of Toyota as Jim Womack and Dan Jones as they researched the company (and wrote The Machine That Changed the World.

Acknowledging Failure and Learning and Improving

The Importance of the Knowledge Distillery by Kevin Meyer

Failure is important. Teaching kids to learn from failure even more so. Maybe you're simply not cut out to be a dodge ball athlete. Best if you learn that early. Modern society generally moves in the same direction. Instead of trying to just create equal opportunity, there is a tendency to want to create equal outcomes - to cushion or even eliminate the impact of difference, or even failure.

Acknowledging failure is important.  We have created situation where success and failure are reduced (in seeking to reduce failure).  But we also just ignore failure when it happens.  Doing that doesn't eliminate failure it just eliminates the incentive to improve.

I completely agree our desire to avoid failure or even criticism is a big problem.

Related: Failure: Honda’s Secret to Success - Creating a Nation of Wimps

We often lower standards so that we avoid having to face failure.  I have failed plenty of times.  It isn't some horrible result.  Learn and more on.  Don't just pretend you don't fail because failure is seen as something to be stigmatized.  You will have more success by challenging your self, accepting and learning from failure than you will by avoiding challenges and failures at all costs.

Obviously depending on the consequences of failure you should adjust your strategies.  If the consequences are really bad then use strategies that are very unlikely to fail.

Shielding people from failure is a sign you don't respect them.  If I respect someone I know they can accept failure and I don't have to treat them like a little kid.

How to Grow Manufacturing in the USA

American factories, foreign lands: How can we keep our companies here?

Lower cost of labor is only part of a more complicated story. Apple, and other manufacturers, need flexible and responsive partners that can, and are willing to, react quickly to changing demands. This more nimble and cooperative supply chain is a valuable asset–a competitive advantage for manufacturers.
...
What can we do to keep even more companies from taking their manufacturing facilities abroad?

Lots of things can be done to improve the results of manufacturing in the USA.  First though we should realize the manufacturing results for the USA are really pretty good.

China's results are exceptional but the USA has done well.  Manufacturing jobs have decreased everywhere dramatically - the USA job losses (while current data is hard to get) are possibly than global manufacturing job losses.

The biggest thing that could be done to improve the manufacturing situation in the USA is significant fixes to the health care system.  The cost of support the broken USA system is enormous.  The second is to have managers of our organizations understand current management concepts like lean manufacturing and Deming's ideas.

They would then understand the weaknesses in spreadsheet thinking that lead to seeing outsourcing to cheap countries as the solution to all problems.  They would see the benefits of producing close to consumers (which also means in the case of some that manufacturing everything in the USA moving some production offshore - for offshore customers - may well make sense).

Putting the focus on improving the processes the company uses instead of just looking for a cheaper way to do what they do increases the desirability of the USA.  Currently (this will change) the USA has people better prepared to take on a leadership role in improvements.  By valuing the brainpower of your employees the desirability of locating in the USA is increased.  This is merely due to current practices around the globe, this advantage for the USA will change (Japan and Germany are very strong in this area as is much of Europe).

Related: Manufacturing Employment Data: USA, Japan, Germany, UK... 1990-2009

Great Companies to Work For and Invest In

What Are the Amazing Companies?

If I hear one more reference to Semco as an example of an amazing company, I’m going to scream. Really. And I’ve also heard the names of W.L. Gore, Whole Foods Market, and Southwest Airlines a few times too often. Can we move on with the good examples please?

I don't see why the same companies are so annoying to so many people. But you certainly are in the majority of people that share that attitude. People don't seem to say, jeez can't we get paste the ideas of Einstein, I am so tired of paying attention to what he said. Trader Joe's is pretty cool (private co, but the few shareholders I bet are doing well). Crutchfield is cool too. Cannon does lots of good stuff (maybe not for shareholders?). Netflix is good (a couple years ago maybe people didn't want to hear about them anymore, now that the press has been bashing them maybe it is ok, to acknowledge they are still pretty great). Have you heard of Apple? They do some cool stuff :-P Danaher does some good stuff (lean) - they are large but really quiet about lean, compared to some others. Ritz Carlton is one you used to hear about a lot but not so much anymore, I am pretty sure they are still good. Zappos seems pretty good (and their parent Amazon) - maybe they are too popular too? Google (too popular - too many people saying bad things now)? Another private one I hear good things about is SAS Software. Staying great is hard. I think companies like Toyota, Gore, Southwest Airlines... deserve lot and lots of attention. Related: What Companies are Practicing Deming Ideas - Trust Employees to Make Decisions - Build an Environment Where Intrinsic Motivation Flourishes

Examine the System, Don't Look to Blame a Person

Stress Solutions, Not Blame by Kevin Meyer

A couple years ago I told you how the organization had created a nonpunitive reporting system for air traffic controllers to report incidents. That led to a dramatic change, which might initially be seen as a scary negative but as most of us immediately realize is a huge positive:

New numbers released by the Federal Aviation Administration show reports of air-traffic errors have nearly doubled in three years. The number of reported incidents in 2007 was 1040, and that number rose to 1887 in 2010, an 81 percent increase. This cultural change in safety reporting has produced a wealth of information to help the FAA identify potential risks in the system and take swift action to address them.

The point of using in-process and process result measures on well functioning processes is often overlooked. You don't want to spend too many resources collecting data that has little value, but proper process measures are very useful and should be monitored. Also this helps when you decide to improve (or radically change something somewhat related) and can catch things (unintended consequences) very quickly. The point of understanding the data (in context) is critical. Brian Joiner did a very good job of emphasizing this idea I think. If you want to reduce complaints it is usually pretty easy to do so, by making it really hard to complain. When you really care about customer focus, understanding if complaints are up do to better processes to encourage complaints or because your service is lousy is critical. Related: Find the Root Cause Instead of the Person to Blame - Dr. Deming, 94% belongs to the system (responsibility of management) 6% special - European Blackout: Not Human Error (System Failures)

Expressing Your Concerns and Opinions Publicly

Former Company Bashing

But somehow it doesn't seem quite right for these high level folks to take vicious and very public parting shots at their former employers' leadership on the way out.  We all have our opinions.  Often they differ from those above us.  And sometimes the difference is severe enough to make us leave.  But you know what?  That's life.  Why can't we respectfully accept a difference of opinion and move on?    I suppose I'm naive, but this kind of public and one-sided bashing of a firm and of those entrusted to run it seems  needless and unproductive.

It seems to me that is exactly what is going on. Those companies are constantly pushing their position. I don't see anything wrong with former employees sharing their thoughts. Why is what they say considered "bashing." They are expressing their opinion. People can chose to pay attention to that person or not.  I hardly think one person's blog post is pushing around companies like Google and Goldman Sachs unfairly.  The only way there is any impact at all on those companies is if the comments resonate with the general public due to many other pieces of supporting evidence found elsewhere.  A crazy rant will not have any impact.  Expressing concerns about serious failures may have an impact.  Even then it is going to be pretty small.

Some people want followers that don't question authority. Leading high technology thinkers don't take kindly to the "follow authority" and don't question authority idea. Where this line is drawn varies, there is a certain amount of following that has to be done, and their is a point at which expressing a contrary opinion should be silenced.

In my experience the point at which contrary opinions are normally silenced is far too soon. I see nothing at all wrong with what these people said. I am very happy they did so. It is a very positive contribution to the discussion that should be taking place.

Finance people do see pretty comfortable with the model of shutting up, not ruffling feathers and cashing big checks. For that reason a Goldman Sachs former employee expressing their opinions that might make authority uncomfortable is a bit unusual.

I think silicon valley is perfectly comfortable with people expressing their opinions. And I think that is the right approach. If the person does take stupid parting shots they will damage their credibility. If they express sensible differences of opinion with the current practices of the company they left they will likely gain more respect than they lose.

Related:  Ignoring Unpleasant Truths is Often Encouraged - Taking What You Don’t Deserve, CEO Style - Respect for People

The Potential Benefits, Risks and Folly of Stretch Goals

Some excepts from, The Folly of "Stretch Goals", visit the link to see the full discussion:

Jon Miller: Stretch goals are fine, but gaming the system, sandbagging, achieving the stretch goals through heroic effort, etc. are bad because this is not sustainable. In terms of excessive risk taking, this is a question of the risk-reward calculus and the person’s degree of risk aversion. It doesn’t take a stretch goal to make Enron leaders cheat when their auditors are turning a blind eye. They stole because they could, not because a leader set stretch goals for them. If the governance around the goals are solid and the downside of risk are significant, people will pursue stretch goals in a way that is not destructive. ... 

Dan Markovitz: However, if you had the opportunity to make a HUGE bonus — millions or tens of millions of dollars — for achieving certain stretch sales targets in China, for example, you might be sorely tempted to act differently... 

Jon Miller: But my point was that cheating is not caused by stretch goals, it is caused by poor governance around the performance and rewards process... The more interesting question is why leaders continue to set up such systems. Are they stupid? Evil? Or do such systems produce results?

I think stretch goals are fine when people understand - they are giving scope to the effort. If I want breakthrough improvement quickly it may mean considering radical solutions. That can be helpful to shape people's vision. But there are risks. As Brian Joiner said there are 3 ways to improve figures ("results")

• distorting the system
• distorting the data
• improving the system (which tends to be more difficult though likely what is desired)

Improving the system is far more difficult than the first 2. Cheating can be encouraged by managers. Stretch goals can increase this encouragement. A culture that pushes the right values and discourages the wrong ones can discourage cheating. Understanding variation is very helpful (it both dramatical reduces silly reaction to variation - the fear of those silly reactions often cause people to cheat "distort the figures or system" ).

An understanding data is only a proxy for the real situation (the number is not real situation) is helpful as is understanding the arbitrary goal is essentially meaningless (it exists to give scope to efforts not to be met - 67.3% improvement when 75% improvement was the "goal" is not failure - an understanding of variation would assure this mistake was not made).

The problem is many organizations are ruled by spreadsheet managers that don't understand variation, are ruled by the tyranny of arbitrary targets (bonus and promotions)... In these situations goals do often become a big part of the reason for cheating. Stretch goals can help shape the effort. The risk (and much more common result, I think) is that they result in distortions of the system and data to achieve those results.

To answer Jon's question I think you can use goals and incentives to reach numerical targets. The risk, as Gipsie Ranny says is the organization may be ruined in the long term. But if the executives are fearful and have large enough incentives to achieve numerical targets they goals and targets can achieve the goal - but at a great cost, I believe. I believe they are more ignorant than evil (though some know the damage they are risking or causing).

A strong management system reduces much of the potential negative consequences of targets. A big problem is those organizations that most rely on targets are those that are least protected from the risks of using them.

Related: The Defect Black Market - Targets Distorting the System - The Problem with Targets

Toyota is Smart Enough to Stick with What Works, Right?

I don't believe Toyota is foolish enough to have "dramatically changed the way the company is managed." If so Toyota will suffer and the big 3 will be given their chance to dominate once again.

Akio Toyoda: Toyota's comeback kid paints the typical American magazine picture of radical CEO doing radical things to shake up company and general be heroic.  They don't seem to like to say, Toyota refocused on what has made it great for decades.  They updated a few things to deal with the current state of the company.  And they will continue to do use thee same great management concepts they did for the last 30 years for the next 30.  And American executives don't want to be seen that way - they want to be portrayed as heros.  Hopefully Akio Toyoda hasn't adopted that narcissistic tendency from his American peers.

I imagine (and hope) that it is just like all the stories talking about the Toyota crisis that wasn't.  The story of Toyota has been great management for 50 years.  They haven't been so foolish as to drop that at any other time.  I doubt Akio Toyoda is that foolish today.

Yes, Toyota needs to constantly question if they are failing to perform as they should, if they are slipping...  And they need to constantly improve not just the factory but the management processes.  Doing so is not dramatically changing, that is continuing what has been done.

American companies are so concerned with financial rewards and making themselves seem like heros they have to present everything as dramatic changes.  If Akio Toyoda has fallen to that American narcissistic disease Toyota's long term future is no better than any other car companies (and worse than Honda's).  But I don't think Toyota or Toyoda are that foolish.

As I said a few years ago, and still believe, Toyota's crisis was not a crisis.  Toyota did seem to slip a bit in trying to get away with shortcuts to quick results.  It was a fairly minor slip and all they needed to do was return to what had worked so well for decades.

Related: Toyota Stops Lines – Lots of Lines - Akio Toyoda’s Message Shows Real Leadership - Toyota Execution Not Close to Being Copied

Comment on the post from Jeff Liker:

I met with Akio Toyoda twice for a total of 4 hours and have been watching his actions closely. His philosophy is very simple:  "back to the basics of the Toyota Way."  That is all he says and all he does.  On the other hand he believes Toyota has become too bureaucratic and needs more regional autonomy and more entrepreneurial-like innovation.  In the Toyota Way 2001 they cite his Great, Great grandfather, Sakichi Toyoda, as saying: 'it is a big world out there, open the window."

So Akio Toyoda has taken actions to open up the company more to the outside world, including various partnerships, and a more intense focus on listening to the customer and innovating to stay ahead of the competition.  He also learned in the recall crisis that Toyota was slow to respond to media attacks and thus in some cases needs faster decision making leading which led to cutting the board of directors in half…. A good thing for Toyota in my view.

I do believe Toyota could do a better job of listening to the customer.  A big part of customer issues is the very customer unfriendly dealer process - pricing based on how foolish or lazy the customer is.  I doubt Toyota is willing to try and tackle this though.  It is easier to let the customer lose and keep the politicians happy.  Politicians are paid a great deal by dealers to create legal framework that makes it very hard for car companies to provide make customers value the top priority.  The dealers essentially pay politicians to allow dealers to prosper at the expense of customers; the business practices that close to noone would say are in citizen's interests.  Yes it is hard to deal with this.  Toyota has been doing what it can to accept the current system and reduce some of the negative impacts on customers.  But it is still the most obvious area of significant systemic failure to customers I believe.

I think the bureaucratic issues do need to be addressed.  And increasing the speed at which strategic/critical decisions get made is wise.  Opening up to the outside world is wise.  It is also dangerous if you start accepting the latest fads without thinking.  Obviously no-one intentionally does this.  But it happens a great deal.

Customer Un-service by Automakers

Why The ‘Check Engine’ Light Must Be Banned

all the average motorist sees is that little drawing of an engine bisected by a lightning bolt. And all that tells them is basically nothing. ... the state of things now is that your car actually could do more than just throw an error code at consumers. It contains an advanced system to diagnose itself, but the actual information from that diagnosis is not available to the car's owner; the average owner must pay a dealer or mechanic to provide him or her with the codes, and what those codes mean. This is absurd. Early on, when in-dash displays were rare, one could understand why cars didn't just display what codes were being thrown (though I think a little in-dash receipt-type printer would have been cool). But today's dash displays capable of displaying text, or at a minimum numerical codes, have been commonplace in cars for at least a decade.

Exactly right.

Which is why we need a federal mandate that bans the generic "check engine" light in new cars and instead requires, on dash, OBD-II codes and a basic description.

I can understand thinking this based on the extremely poor record of manufacturers. How is this not done already? Seems very similar to their fighting air bags for decades before adding them under federal mandate. And then finding out drivers like safety and advertising about their air bags. With such past evidence I can understand thinking the manufactures are too out of touch to improve without federal mandates. Toyota, Honda, Ford, Volvo... please do what would have been the right thing a decade ago and make your diagnostics useful for customers. Don't require us to suffer until we finally have to get the government to do what you should have done years ago. I suppose maybe two million sensors on a crash test dummy helps (as Lexus keeps spouting in ads). Though I must admit it sounds an awful lot like hype, rather than valuable engineering info. I can't imagine that more than 80% of your customers would care much more about useful information from the diagnostics in their car, than flashy dummies. I find it hard to believe you get valuable information about car design from that many censors. A higher number isn't better if it doesn't translate into better design. If it does, great, we still want to know what is wrong with our car. I would think some manufactures have already done the right thing, but I don't know who. Add comments, if you know. Related: Customer Focus and Internet Travel Search - Making Life Difficult for Customers - Good Customer Service Example