Curious Cat Travels: Olympic and Mt. St. Helens

Topic: Travel

I have posted pictures from my recent trip to the Pacific Northwest: Olympic National Park photos and Mount Saint Helens National Volcanic Monument photos.

Previous travelogues include: Rocky Mountain National Park, Yellowstone National Park, Paris and Egypt.

Bezos on Lean Thinking

Topic: Management Improvement and Investing

10 Questions for Jeff Bezos, time.com via Lean Manufacturing Blog

Time: Here's a question you probably hear all the time: read any good books lately?
Bezos: [Laughs.] I read a book recently about Toyota's lean production methodology, which is very interesting

Jeff Bezos is the founder and CEO of Amazon.com. He really understand many quality management ideas: customer focus, long term thinking, process improvement, innovation. He also understands finance much better than most. I believe that knowledge is a large part of the reason he is not intimidated into going along with the short term thinking prevalent on Wall Street (as so many CEO's are). His huge ownership interest in Amazon and his decision to raise large amounts of cash for Amazon (by issuing bonds) during the tech boom, don't hurt either .

Amazon was one of the 10 companies selected in the 10 stocks for 10 years post. I created a Marketocracy portfolio to track that long term portfolio. The rules, at the time (for a Marketocracy portfolio), required more diversification so I added several stocks to the portfolio. I added positions in YHOO, MSFT, EMF, WMT, and BP. You can track the results of the Sleep Well portfolio.

You can also view results of another portfolio I have managed, through marketocracy, for several years: the Darvamore Fund. This fund is much more aggressive using the ideas of Darvas and Livermore as well as core positions that are selected for long term appreciation. Since the inception, in 2000, it has a annual rate of return 6.55% (655 basis points) higher than the S&P 500 index, as of today.

Peter F. Drucker Award for Nonprofit Innovation

Topic: Management Improvement

Peter F. Drucker Award for Nonprofit Innovation:

"“The purpose of the Peter F. Drucker Award for Nonprofit Innovation is to find the innovators, whether small or large, to recognize and celebrate their example, and to inspire others."”
Peter F. Drucker

In the years ahead, America's nonprofits will become even more important. As government retrenches, Americans will look increasingly to the nonprofits to tackle the problems of a fast-changing society. These challenges will demand innovation -- in services, and in nonprofit management. The purpose of the annual Peter F. Drucker Award for Nonprofit Innovation is to find the innovators, whether small or large; to recognize and celebrate their example; and, to inspire others.

Applications must be complete and received by the Drucker School no later than August 12, 2005. Read the details on eligibility and how to apply

Estate Tax Repeal

Topic: Economics - Estate Tax

The estate tax is the most capitalist tax that exists. Capitalism, which some seem to think is based on people inheriting assets from their relatives, is not. Capitalism is based on the concept that each person gets to receive rewards for their work.

Long before Adam Smith, noble rich passed on their wealth to their heirs. It was not Capitalist then and it is not Capitalist now.

Unfortunately many seem to have skipped economics in school and accepted the claim that Capitalism is about protecting the rich. They seem to believe it is a tenant of Capitalism that those that have the gold make the rules. That is in fact a risk that Capitalists must protect the economy from, not something Capitalist approve of. Those who believe in the wealth being passed from those who earn it to those who they like, believe not in Capitalism but in the state not taxing the idle rich but instead taxing those who don't have millions given to them. While many have come to believe that such idiocy is Capitalist, it is not. People should read the Wealth of Nations by Adam Smith to get a much clearer idea of what Capitalism is about than those in Washington DC have.

You have to have some taxes to run the government. The income tax is a poor tool, as it is a direct disincentives to positive economic activity. The best tax is one that doesn't take anything from someone who earned it. And that is exactly what the estate does, tax a portion of the millions someone is given.

The income tax, however, is the largest source of income and therefore it will not disappear. But if you are going to lower taxes, that is the tax you should lower not one on people being given millions of dollars. You might want to replace the income tax with a value added tax, but that is an issue for another day.

The idea that you would cut the estate tax when you have taxes like the social security tax and income tax is very poor economic thinking. The only reason to cut the estate tax would be if you collected more than enough money to run the government from the estate tax alone (you had already eliminated all other taxes).

It is a shame to see so many fall for the 1984 Orwellian doublespeak, where protecting the rich offspring of those who earned money is seen as Capitalist. Capitalism is about the free market and allowing the invisible hand of the market to direct resources. Capitalism is not about protecting the wealthy. It is a shame, but not surprising, to hear so many political leaders speak as though Captialism were intended to let those with the gold make the rules.

Adam Smith knew the wealthy would try to setup rules to distort the free market. One of the important roles of the Government was to protect the free market from collusion by the wealthy to distort the free market. The powerful trying to set rules where they, and their friends, benefit and those who don't have the power lose (are taxed), is new.

Marketplace (a great economics program on NPR) had two commentaries on the topic of estate taxes: Robert Reich and Steve Moore.

The idea that Capitalism is about letting someone not work a day in their life and live off the wealth of their ancestors annoys me. I think Capitalism is a great system for improving the living conditions of humanity. But such poor thinking by our politicians threatens to cause great harm. My favorite charity shows how Capitalism can improve lives. Trickle Up is a charity that helps the lowest income people worldwide take the first steps up out of poverty, by providing conditional seed capital, business training and relevant support services essential to the launch or expansion of a microenterprise. Thousands take that opportunity and change their lives and the lives around them.

I find it frustrating that we have political "leaders" that claim that taxing some of the millions of dollars a relative of some millionaire is giving them is anti-capitalist. That such claims are not ridiculed is infuriating.

• Estate Tax Myths, Washington Post Editorial, July 24 2005.
• 5 Big Myths About the Estate Tax, MSN Money
  

Myth No. 3: The tax can be avoided
Estate planning can reduce the tax bite. If you’re rich enough, however, your estate will eventually face taxes unless:

* You die in 2010, the one year in which the estate tax is scheduled to be totally repealed, or
* You give everything to charity, or
* You give everything to your spouse

Now, if it is a death tax, why, if you give the money to charity when you die there is no tax? Oh maybe, it isn't a death tax at all but instead a tax on those recieving millions from the person that earned it.

• Myths and Facts about the Estate Tax, United for a Fair Economy
• Rich Americans Back Inheritance Tax, BBC quoting Warren Buffett
  

Stretching Agile to fit CMMI Level 3

Topic: Management Improvement

Stretching Agile to fit CMMI Level 3 by David J. Anderson.

I highly recommend reading this article. My work happens to straddle both the management improvement and software development areas that this article covers. But, if you are interested in either area, this article offers some great material. And if you are interested in both, you are in for a treat.

At Microsoft, we've adopted the teachings of W. Edwards Deming and stretched our MSF for Agile Software Development method to fit the requirements for CMMI Level 3. The resultant MSF for CMMI Process Improvement is a highly iterative, adaptive planning method, light on documentation, and heavily automated through tooling.

Capability Maturity Model Integration (CMMI) is the process developed by the Software Engineering Institute (at Carnegie Mellon) that was heavily influenced by Quality Management. When I first ran across it (then called Capacity Maturity Model) in the mid 1990's, as I remember, I was struck that the model did a better job of integrating Quality Management ideas than most programs specifically calling themselves Quality programs.

I was also struck that it was extremely documentation heavy. It was developed for large, complicated, critical software system (for the Department of Defense). While the heavy documentation focus made sense for that type of development it seemed to require too much overhead for less complex software development efforts but still had lots of good ideas that smaller efforts could benefit from. And the ideas in David Anderson's paper show how to get the benefits of CCMI without the normal drawbacks (including importantly, as he mentions:

CMMI process implementations are often associated with conformance to plan, low trust environments, with command and control structures. These require a big design up front approach with auditing of conformance and by implication punishment for non-conformance.

As the paper mentions this is not necessary even though it is often the result of using CMMI.

This paper shows that it is wrong to associate these undesirable software engineering behaviors with the CMMI. It doesn't have to be that way.
By embracing the teachings of W. Edwards Deming and understanding their relationship to agile principles and practices, it is possible to develop a truly agile full life cycle process which meets the requirements for all 5 levels in the CMMI model. Specifically by using agile metrics such as velocity, cumulative flow and trends in open issues, we have designed planning and monitoring methods which embrace variation and allow for postponed, late commitment and adaptive iterative planning.

Online resources on Deming's ideas

Articles on Deming's ideas

Vice President Presents Baldrige Awards

Vice President Presents Baldrige Awards, press release from NIST (July 20, 2005).

The 2004 Baldrige Award for Quality recipients (links to case studeis):

The Bama Companies, Tulsa, Oklahoma (manufacturing category)

In its endless quest for improvement, Bama uses a battery of advanced strategies and tools, including the Bama Quality Management System, based on the quality improvement philosophies of W. Edwards Deming and the company’s own performance excellence model. The Bama Excellence System provides a framework for all decision-making. A Principle Centered Bama Culture, based on tenets developed by Stephen Covey, provides a context for creating and measuring excellence. Using Six Sigma methodologies since 2000, Bama has dramatically improved processes throughout the company. Total savings from Six Sigma improvements equates to over $17 million since 2001.

Texas Nameplate Company, Inc., Dallas, Texas (small business category) They also won an award in 1998.

Technology and training have led to dramatic improvements in production. Between 1998 and 2004, the incidence of product nonconformity with specifications, as a percentage of sales, dropped from 1.4 percent to about 0.5 percent, significantly lower than the Industry Week median (2 percent). In that same period, TNC reduced its quote response time from 6 hours to less than 2 hours, and it trimmed the length of its production cycle from 14 days to under 8 days.

Kenneth W. Monfort College of Business, Greeley, Colorado (education category)

MCB continually evaluates its performance and incorporates those evaluations into its short- and long-term planning cycles. The process includes use of Key Performance Indicators

Robert Wood Johnson University Hospital Hamilton, Hamilton, New Jersey (health care category)

Also with a focus on Excellence Through Service, the leadership team works within a system that links all management functions—from planning and implementing policies, new technologies, and new facilities through ongoing cycles of evaluation and improvement—with unhindered communications at all levels. Each Executive Management Team member, including the CEO, holds daily briefings that are designed to share key information with the staff and to answer questions. As a result, over the past four years, employee satisfaction with hospital leadership has
improved to almost 100 percent.
...
RWJ Hamilton has reduced its rates of mortality, hospital-acquired infections, and medication errors to among the lowest in the nation.

New Toyota CEO's Views

The Man Driving Toyota from Business Week:

Toyota has grown in the past few years, but [there's a risk] that a belief that the current status is satisfactory creeps into the minds of employees. That's what I'm worried about.

We should never be satisfied with the current status. In each division, function, or region, we still have numerous problems to cope with. We need to identify each one of those tasks or problems and fully recognize them and pursue the causes. This needs to be done by all the people working for Toyota.

I think, this echoes my recent comment on post, Is Quality Foolproof?, on the Vision Thing blog:

I think the instances of such failures are just a sign that even Toyota still has quite a bit to improve. I think this announcement likely is a result of common cause variation (it is the natural result of the current system). The natural result (of the system) is not that they have this particular failure, but that this recall is consistent with the % of vehicles that required a recall of this general character. I believe they are getting better over time but they still have a long way to go. With a result based on common cause you want to look at the entire system when designing an improvement plan not at the root cause of the seat belt issue. See Responding to Variation online and the book, Forth Generation Management, by Brian Joiner.

It is good to see the new Toyota CEO still believes they need to keep keenly focused on continuous improvement.

Simple, but true, point by the new CEO, Katsuaki Watanabe:

Management has to visit the shop floor and gain first-hand experience of what's taking place. We need to look at the manufacturing processes, listen to voices, and clearly recognize problems.

Agile Management

David Anderson publishes the Agile Management Blog, wrote the Agile Management for Software Engineering: Applying the Theory of Constraints for Business Results, and works for Microsoft. Robert Scoble, technical evangelist, also with Microsoft, has posted an online video interview with David Anderson on Microsoft's Chanel 9 online.

Quote by David Anderson, from the video: "My work focuses on applying the teachings of two management science gurus, one is Eli Goldratt and the other is W. Edwards Deming".

Take a look at the video and also the Agile Management Blog for all sorts of great posts on software development and management topics. Such as:

Trust is Essential to Agile:

Agile software development brought the idea of trust to the forefront. When there is trust, there is less waste, less extra work, less verification, less auditing, less paperwork, less meetings, less finger pointing, less blame-storming. Building trust between the engineering group and the customers is the first goal for any agile manager. Equally building trust with and amongst the engineering team is also essential.

No More Quality Initiatives

That's why in MSF for CMMI(R) Process Improvement, I've included daily standup meetings to surface issues and monitor and manage risks, eliminate special cause variation and make it everyone's business to do so. That's why we're dropping conformance to plan and conformance to specification in favor of conformance to process and focus on variation reduction. That's why we're encouraging a bottom up, empowered team, consensus model. That allows decentralized decisions to be made quickly. The way to institutionalize continuous improvement across an organization is to make it everyone's business, every day!

The video and blog post provide great ideas on how to apply Deming and Goldratt's ideas from someone who is applying them to improve the performance of the organization.