Managing the Organization as a System with Many Stakeholders

Comments on "Deming’s thinking is alive and well…in China! That's why those looking for evidence of Profound Knowledge in the US may be looking in the wrong place." (my response is to a discussion on The W. Edwards Deming Institute LinkedIn group - I can't link to the original comment because it is a private forum)


(Jack Ma) If you want to invest in us, we believe customer number one, employee number two, shareholder number three. If they don't want to buy that, that's fine. If they regret, they can sell us. 


(Lara Logan) In the U.S., the shareholder is usually first.


(Jack Ma:) Yeah. And I think they were wrong. The shareholder, good. I respect them. But they're the third. Because you've take care of the customer, take care of the employees, shareholder will be taken care of.“

Deming couldn't have said it better. And it illustrates why he often insisted that the CEO, who invited and introduced him to his staff, actually stay and listen.

The problems are real. But there is a significant minority of companies that don't accept the Wall Street conventions. There are very few companies that don't allow CEOs to steal from the corporate treasuries - through completely unjustifiable "pay" packages (but there are some - Berkshire Hathaway, Costco and I believe Bezos, Larry Page and Sergy Brin also don't behave like kleptocrats).

But I can't include Google and a company that doesn't let those with power take the companies gold, senior executives have taken ludicrous pay including past CEO Eric Schmidt. I must say I think Schmidt has done an excellent job at Google (the lame decisions by Larry Page only make it more obvious) but even so his pay was insane.

If you look at Google and Amazon they both also refuse to bow to the idea that their job is to please wall street analysts. A fair amount of the interest business companies in the last 15 years don't place much faith in wall street "wisdom."

Google from their start with their IPO didn't accept wall street dictates. They are actually moving to become much more conventional, ever since Larry Page became CEO. The new non-voting class stock they created GOOG (GOOGL is the stock that has actual ownership voting rights) could be seen as fighting wall street convention or could just be seen as founders greedily setting up the rules so they control no matter what.

Jeff Bezos is a former Wall Street analyst and knows the games and what matters. If your business NEEDS to get cash from Wall Street - raising equity or bonds you might have to listen some. Otherwise the talking heads regurgitating wall street dictates are entirely pointless. While Amazon has very little profit, the cash flow situation is much better (Bezos doesn't need to raise capital and therefore what wall street says just doesn't matter and he is smart enough to know that unlike the majority of CEOs that do as Wall Street wishes).

But even the companies that are doing some things very well (Google, Amazon, Apple...) have a very long way to go in learning about managing organizations. But those companies have some aspects of they are doing very well.

"At Berkshire, managers can focus on running their businesses: They are not subjected to meetings at headquarters nor financing worries nor Wall Street harassment."
- Warren Buffett

Related: Google is Diluting Shareholder Equity with Massive Issuing of New Shares - Amazon Innovation

The Management Culture Impacts How People Respond to Statements

> I still don’t really understand how “breach of protocol” could somehow be
> interpreted as “the nurse did it intentionally

Interpretation depends on logic and psychology. Fear and blame based cultures predispose people to think blame and take things as blame. Even when the words don't say that people take it that way.

This is one of the many reasons why the management system is so important. Even the exact same statement is taken very differently by people. In a good management system the statement 'breach of protocol" can be seen most employees as fine - an indication of yet again seeing a systemic issue and raising it to be dealt with. In a blame based management system it is taken as threatening and maybe even disrespectful.

Response to: Talking about Breaches of Ebola Protocol is NOT “Blaming Nurses”

Related: Creating a Culture that Values Continual Improvement - Building a Great Software Development Team

Ebola Spotlights Poor Health Care and Security Systems

response to: Ebola & Systems: Can We Do Better? Can We Learn? What Comes Next?

So how did this happen? Bad processes? Bad planning? THR had received Ebola information before Duncan arrived. But, they didn’t put the pieces together and they sent him home.

What’s your take on this situation? Can we get better at anticipating problems and improving workflows, processes, and systems in advance? Can we learn from each other to avoid having to all make the same mistakes? How can we better protect caregivers, first responders, and the public? Or are we just not very good at systems and processes… at being proactive?

There are many bad processes involved, sadly.

But the most serious to me, is we have unrealistic proposed processes for dealing with an epidemic. This is potentially catastrophic but I know of no serious efforts to find realistic strategies. I am sure there are plenty of smart people working on things in isolation. But I do not have confidence in the expectations of how well those processes will be followed.They seem very susceptible to likely failures - such as people breaking quarantine (the idea that you don't endanger society for your own whims is not held by enough people - and the government does a pitiful job of dealing with this year after year).

That the government is all of a sudden going to start following the scientifically prudent actions that, after ignoring them and participating in encouraging security theatre for years (moving towards decades now) is very questionable. You can't encourage society to ignore science for decades and then expect they will respect scientifically necessary processes when the failure to do so will be catastrophic (such as in a deadly epidemic). Maybe you will get lucky and society will, but that is a very risky gamble.

The huge amount of waste on security theater and trying to spy on everyone and classifying (gag orders, "national security letters…") their actions to hide them from public ridicule and disgust would be much better spent on things that will actually make us a safer society.

I don't think the answers are simple, but if we don't take seriously how critical it is to plan better to cope with epidemics we will be sorry. And the money in the billions is there to do so - all we have to do is stop spending money on the atrocious things the Department of Homeland "Security" is spending money on now.

There are risks that are real and large (include health care risks and terrorism risks). But with so much bad behavior by government that erodes any sensible confidence government is focused on the rights and safety of citizens creates a horrible climate for coping with real risks to society. Government that doesn't demonstrate honesty, openness, a respect for the law and the people is creating exactly the wrong climate to cope with real security risks.

The science seems pretty clear that ebola is not going to be a series epidemic in the USA. But something else may well do so and we are pitifully prepared to cope with it. We continue to increase the odds of such an event with very bad antibiotics practices and foolishly failing to take vaccines creating the perfect conditions for epidemics.

Thankfully certain aspects of our health care system make coping with disease like ebola a problem that can be dealt with effectively. But the systemic problems are huge and ill suited to a real large scale crisis. And the pitiful behavior of government over the last 10 years gives no indication they are focused on sensible security that will help citizens.

Even worse though is how poorly we (as a global society) dealt with the initial conditions in Africa as well as our continuing efforts now. We had poor processes in place. We didn't commit funds early enough. We got behind and are not doing enough now. Lots of people are taking heroic action in Africa but without good processes it isn't enough.





Additional comment I added on the original blog post in response to another comment.

What the USA's role should be in helping people outside the USA is indeed a tricky question.

Even if you take the position those in the USA don't believe other people are worth protecting (which I don't believe) just a purely selfish government with an understanding of science and epidemics understands the risks of external disease vectors.

Just like those failing to use vaccines create a risky health system that everyone suffers from when things go bad, ignoring disease until it strikes your body is a bad way to protect yourself.

Plus when rich countries like the USA show disregard for people living elsewhere that drastically increases terrorism risks. Coping with that by allowing frustration to grow feeding crazy people's use of terror and then trying to spend hundreds of billions on weapons and the like is a lousy strategy.

It isn't like this is some shocking idea. Pretty much everyone that studies this understands that link. In the Bush administration they talked a lot about it and did some things especially with Karen Hughes. But even forgetting any terrorism concerns or humanitarian feelings, allowing dangerous virus and bacteria to infect lots of people (anywhere in the globe) is hugely dangerous for rich countries health. It is just a hugely foolish (looking at it completely selfishly and even when doing that ignoring positive externalities of action and negative externalities of inaction) to stand by while dangerous epidemics grow.

I believe the first reason to act is because all people matter, not just those inside your border. But even for people that don't care about that the completely selfish reasoning means not acting is foolish. And an understanding of disease makes it obvious you need to act a long time ago. Yes after failing to act more sensibly for a decade or more we should have acted drastically a few months ago. But even that would have been too late. Though actually for Ebola from a 100% USA selfish perspective it might not be too late - because it is likely like to become a huge problem in the USA. But something similar easily could and we have failed to prepare (which in this instance means failed to make sure the larger global health system is much better able to cope).



2nd update, good video by John Green on the subject:

Change - Why are We So Slow

Response to: One thought before sleep… why is management changing so slowly?

Psychology. Why it is we hold to beliefs and habits without evidence is a hard question that probably takes several books worth of material to answer :-/

But it is true that change is most often very slow. It isn't only management. It is our psychology that then manifests itself everywhere, even the least likely of all places - science.

A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.

Max Planck

Ironically in management we often also seek the new new thing. So while great ideas take a long time to become common practice we stop looking at them fairly quickly because we decide they are old outdated ideas. Not a very effective strategy :-(

Related: Change is Necessary, But it has to be the Right Change - Change is Often Not Improvement - When the ideas have reached the level of habits you have changed.

Should You Consider a Career in Manufacturing?

My response to this question on LinkedIn

Your Career Advice for Generation Y Adam Zak the Lean Executive Recruiter. Expert helping CEOs & their senior HR leaders recruit the best Lean executives in America.

Imagine your closest friend asks: "My son wants to consider a career in manufacturing. Should I encourage him?" How would you respond? And why?

I don't think generation [whatever you chose] makes any difference.

I do think there is some wisdom in looking forward to see the career prospects if you head down a certain path. The guesses about the future are far from perfect but also far from useless if you have some sense in thinking about the future. The prospects for manufacturing seem perfectly fine to consider such a career in my opinion.

Really for nearly any career I suggest keeping a focus on constantly increasing your skill and ability. And I would rather focus on building up skills that are adaptable to a changing workplace as my prediction is things will continue to change a great deal. Becoming an expert in lean manufacturing is great because that will be valuable in the likely changes in the workplace. Working with technology is likely to continue to grow and grow so building you abilities in that area is great. Growing your ability to work with other people is transferable to any workplace.

Related: Signs You Have a Great Job … or Not - Joy in Work in the Quality Improvement Field - The Benefits of Blogging

Replying to Tweets Usefully

My response to: How can I reach out to Twitter users who have an immediate need for my services? I can see local tweets from great prospects but a reply would be spam.

I do not agree replies would automatically be spam.

I suggest you provide links to useful information. If you have a blog or web site that provides useful information that can also share that your services may be of value.

Certainly responding could be done in a spamming way. And that should not be done. But you can respond by being helpful. And rely on some of those seeing that you provide useful information wanting to learn more.

A measure of if you are providing useful replies see how often it is retweeted. I am very surprised how often mine are. I would guess it is over 50% of the time that I (@curiouscat_com) suggest a link would be useful they retweet it.

When I just send a reply without a link they are retweeted rarely. Also when I just post links to useful stuff I find those are retweeted much less often than my direct replies (I imagine if you have tens of thousands of active readers, not just "followers," this data would be less useful because everything you tweet someone retweets...

Another measure would be if people reply by saying you are sending them spam or wasting their time, etc. I have had 0 of these.

The combination of these results has led me to offer suggested links more often. I was nervous at first about people seeing it as spam. 90% of them are links to my blogs because those blog posts are what I know well enough to link so often (I also suggest other articles, blogs or products but less often).

Related: Your Online Presence and Social Networks for Managers - The Benefits of Blogging - Networking is Valuable But Difficult to Quantify

Evolutionary v. Revolutionary Management Improvement

My post on this topic goes live next week: Revolutionary Management Improvement May Be Needed But Most Management Change is Evolutionary.

My comments on other ASQ Influential Voices posts on the topic: Future of Quality: Evolutionary or Revolutionary?

I agree both have great value. Revolutionary management improvement is really hard though. Evolutionary management improvement is hard, and rare, enough. Revolutionary management improvement is very rare and while doing better in that way would help I am skeptical.

Technological change that benefits performance can provide great leaps. It can seem revolutionary but really just keeping the same management mindset and adopting a couple really useful tools or concepts is most likely evolutionary; and where so far most improvement benefit has come from in my opinion.

ASQ InfVoices – Quality Evolution and Revolution (QUALITRIX)

I do think both are needed. But I also think we exaggerate our revolutionary management changes - I just think it is really rare. We normally keep pretty much the same management system and tweak it will a couple new tools and maybe some new concepts.

The change provide using a few tools (PDSA, flowcharts, control charts) and concepts (mistake proofing, true customer focus) can be huge. But usually these big gains are evolutionary it seems to me. Most often the basic management system remains as it was.

Viva Quality! [the broken link was removed]

The consistent application of evolutionary change can result in revolutionary results (birds provide evidence we can see every day - they evolved from dinosaurs). Luckily, evolutionary management improvement takes less time than evolution in animals to provide revolutionary results. It still isn't quick. But another few decades of evolutionary management improvement may provide us revolutionary outcomes in the practice of management in the executive suite.

Growth of Quality: Revolutionary or Evolutionary? [the broken link was removed]

I agree with the idea that most change is evolutionary. The accumulation of evolutionary gains can result in revolutionary results over time. We still have quite a way to go to achieve revolutionary results in the practice of management, in my opinion.

The Future of Quality: Evolutionary or Revolutionary?

I like your thought that quality will be 80% evolutionary and 20% revolutionary and that 20% revolutionary quality will provide 80% impact to our society. I think that one of the tricks is these changes get muddled together. So that the interaction of lots of evolutionary improvement results in revolutionary practice. It wasn't any single revolutionary change that got us there but the results of the continued evolutionary progress.

That dramatic result for management can be seen in much the same way that dinosaurs evolved into birds. It didn't happen in one revolutionary change but at some point the result of continued evolution becomes revolutionary. But each step is often small and difficult to see as revolutionary.

---

Wordpress wouldn't let me post the last one as a comment as they claim "You do not own that identity." while I am actively logged into my open id account (what bozos). Wordpress have blocked me from making lots of comments over the years. Wordpress blogging software is great. Their commenting processes are horrible and I would suggest anyone relying on them validating people stop. They have had 5 years of failures I have seen, it is time to abandon them and use providers that don't consistently fail for years (for 5+ years Wordpress validation failure revolved around email signins an their messing up the gravatar merger now it has extended to open ID failures by Wordpress). The commenting solutions they offer are sensible in concept just pitiful in practice.

---

Related: Continual v. continuous improvement - Most of what claims to be management innovation amounts to declaring old ideas as new innovations

Publishers are Wrong and Amazon is More Wrong

Response to: On Amazon, Publishers, and Book Prices

In the question of who is right between Amazon and publishers I side with neither. In this specific issue, as far as I understand it, I think Amazon is more wrong.

I don't publish my book, Management Matters, on Amazon because they wouldn't let me sell it how I wanted. They want to add on all sorts of restrictions instead of just selling my book.

I do like being a customer of Amazon. But they are pretty obnoxious about being the seller of your books. They don't just want to provide a platform for users to buy your product or service. They want to control your business and how you do business if they are going to sell your product. Which seems absolutely crazy to me. But they have lots of customers they can direct to your door so I understand why people choose to let Amazon dictate the terms of how the seller will run their business in order to get access to those customers.

I also find the annoying ever increasing book prices to be stupid and counter to my interests (for my father's book, where I get royalties). I would rather sell more copies and get a lower cut per copy but the publisher relentlessly jacks up the price. As an author you can about maximizing your income and likely maximizing the spread of your ideas. The publisher cares about maximize their overall revenue (which isn't the same as maximizing one book's revenue) and also their bias it toward higher net profit per book even if that reduces the market for the book. The publisher also doesn't make it available electronically which is also annoying.

I am perfectly happy to avoid both publishers and Amazon as an author. I imagine that decision is much more difficult if you count on your earnings from your writing. I would be happy to make it available through Amazon if they just wanted to sell it not dictate how I chose to operate (LeanPub is a great platform for authors that allows you to control how you will behave and has cool features like letting you set a suggested retail price but also letting users decide what they want to pay).

These huge companies constantly change the rules and are not transparent about it, but other thing I very much dislike about Amazon is obnoxious DRM messing up customer's lives. Maybe they have changed to let authors not bother customers with DRM junk but I don't think that was the case last time I looked.

I also very much like letting users pay a lower prices, but Amazon wants to say if I want to experiment with this innovation I have to fix the price on Amazon at the lowest level. Like many stodgy bureaucracies they have reasons for their rules which make sense to the bureaucracy. I can see if you are not interested in innovation and experimentation as a stick in the mud bureaucracy that such rules make sense. But I am interested in innovation and experimentation and Amazon's bureaucratic mindset doesn't fit with that type of thinking. Which is a shame given how they like to see themselves.

I also want to let buyers get updated copies of the book. Amazon doesn't (or at least didn't when I looked) support this, which is fine. But it is another weakness of very old school thinking that doesn't seem to be keeping up with even 5 years old technology. Again lame for Amazon, thinking they are customer focused and innovative.

I agree the high prices on many ebooks are crazy and should go down. The publishers are being lame about that. I think forcing everything into arbitrary sales prices based on how many fingers we have is idiotic (Amazon's $9.99 rule). The publishers are wrong from keeping ebook prices so high. Amazon is more wrong about how they want to deal with that. I do believe Amazon should have the freedom to favor products that meet Amazon's desires so favoring books priced at $9.99 or something is within Amazon's rights. And choosing to stock less of books that are not in line with Amazon's desires is within their rights. Being super obnoxious about how far Amazon goes about things though can tip the balance into something being within their rights and reasonable behavior to being within their rights and unreasonable behavior. Amazon is past that already.

And it doesn't seem to me this is a mistake by Amazon. It is the manifestation of their view that they should control their suppliers business models. Amazon doesn't need to just change the decision here to be less unreasonable. They need to realize the idea that they should be determining their suppliers business models is a bad corporate policy and they should return to focusing on providing customer value and value to their suppliers. Work with suppliers to help them understand better ways to operate in the unfolding new ways or working but let those suppliers make their decisions about the business models they want without Amazon resorting to extremely obnoxious behavior if they don't chose to decide every detail the way Amazon wants them to.

Related: Leanpub Podcast on My Book, Management Matters: Building Enterprise Capability - Interviews about Management Matters - Innovative Thinking at Amazon: Paying Employees $5,000 to Quit - Poor Service from Amazon (2008)