Dr. W. Edwards Deming

Strategic plans are for dinosaurs

Strategic planning makes some fatal assumptions:
1. The future can be predicted.
2. We correctly perceive our current situation.
3. The people in the plan will act appropriately.
4. We will have time to act before we are overrun by events.
5. The problem(s) we are solving will last long enough for our solution(s) to still be relevant.

Sorry to burst everyone's bubble. But, the current economic condition is chaos. There is a bullet out there with your company's name on it. You will be dead before you hit the ground.

The best thing you can do is to transform your organization so it can be agile enough to innovate in every coming moment. Lean your current operations? Sorry, everybody else is doing that, too. No advantage there. Innovate with your products or services? Get started now. Innovate with your business model? Sorry, most board rooms won't let that happen. And, who has the courage to innovate their management model?

Most organizations do not have the culture, structure or lack thereof to transform. Fear needs to be driven out of the organization. Yet, often it is the basis of management. People will not take risks when they are punished for failure.

Go read Gary Hamel's The Future of Management and W. Edwards Deming's The New Economics.

If you are not already in a forward thinking company that will question its theory of management, business or product strategies, then your days of employment are numbered. There is a competitor out there that will, and they want your customers. The fact that you are inside a large beast just means it will take longer to die. On the other hand, it will provide a rich feast.

One Standard and Proven Framework?

This post is from a comment I made in LinkedIn in a discussion. Within a day I found that other discussions came to the same issue and so I started linking back to it. Finally, in anticipation, I decided to post it here so I could link back to this. As introdution, let me say that the issue was about trying to find the best method to use for process improvement. Below are my comments.

I don't think there is one standard and proven Business Process Improvement Framework that works in all situations. DMAIC works top-down for a while in industrial settings. DFSS is useful for design efforts and DOE for complex situations. Lean works bottom-up for many physical processes and is now being applied to office operations. In IT people often jump to Agile adoption as a cure for their problems.

These might work, they might not. Unless one has a good grasp of the situation and the people and problems involved there is little hope. Dr. W. Edwards Deming did provide us with a lens to do this. His System of Profound Knowledge provides a framework with which to see.

It's components are 1) appreciation for a system, 2) knowledge about variation, 3) theory of knowledge, and 4) psychology. "One need not be eminent in any part nor in all four parts in order to understand it and to apply it." says Dr. Deming on page 93 of "The New Economics". I heartily recommend this book to all practitioners of process improvement.

I have seen many efforts operate their framework without awareness and application of this SoPK. They run into all sorts of trouble. Without appreciation of a system they build or maintain stovepipe organizations with their sub-optimization. Without knowledge of variation they chase errant data points and invent local solutions that have no chance of fixing system-wide problems.

Lacking any simple theory of knowledge they follow false measures into nonsensical decisions. Without applying simple psychology they invent crazy incentive systems that only work in the short term and then corrupt long term behaviors with unintended consequences.

Understand the situation more correctly and be able to experiment. Then choose a program. All the methods today seem based on Deming's Plan-Do-Study-Act. But, since you will need upper management approval, pick a popular one and follow its paperwork model. But, use SoPK to make sure it works. That's my method.

GM Chairman Seeks Focus on Quality

The Friday, November 20, 2009 Wall Street Journal had a report by this title by Sharon Terlep. It seems that Chairman Edward Whitacre was disappointed in findings by Consumers Reports of GM vehicle reliability and value. His solution was to call the 200 people who took advantage of a 60-day money-back guarantee offer and find out why they returned their cars. I believe it is folly to look at such an extreme set of data, especially without an understanding of variation.

Mark Reuss, the one charged with this task was recently promoted to head North American operations. Mark Phelan, in his article in the December 5th Detroit News incredulously remarked that the move "...echoes the leadership structure that served GM well for decades: a finance expert as CEO, with an engineer at his right hand."

Mr. Phelan must simply have had his chart upside down all these years. How else could he not notice the decades of decline during which GM literally ran into the ground. Reversing his chart might also reverse his recommendation. Maybe what is needed is an engineer at the helm with a finance expert at his right hand.

The engineer might understand the importance of quality and long-term thinking.

Balance Score Card

To All,

Hi everyone, I hope you are doing fine. I would like to share with you the New Top Management Evaluation Tool. Below is an example of a personal balance score card that every salary and hourly employee in the company will need to fill in every month from now on, and it will be compared to the initial Goal. This is the result of many hours of thinking and discussion  at the strategic planning event.

Are we going on the right direction? What will Dr. Deming think about this tool?

Measure

Unit

P01

P02

P03

P04

P05

P06

P07

P08

P09

P10

P11

P12

FY08

YTD

Goal

Scrap

$/unit

$1.29

$1.15

Savings

$/period

NA

500

C

Think Customer Survey

scale/sem

NA

80

FPY

%/period

95.17%

96%

Up Time

%/period

97.50%

98%

I

Projects Implemented

%/period

NA

80%

CA's closed

%/period

NA

90%

Overtime

hr/pers/W

NA

13

5S's score at Engineering

score/per

NA

85%

Implemented BIPs

BIP/per

NA

2

A

Completed CIPs

CIP/ per

0

0.083

EDP on  time Personal Evaluation

% OT/qtr

100%

100%

Improving Trend

Some improvement points,

Not improving,

but not overall positive trend

negative trend

Let me know your comments.

Regards,

Enrique Barco | Supplier Quality Engineer | Tecnologías de Flujo
Emerson Process Management | Miguel de Cervantes 111 | Chihuahua | Chih | 31109 | MEXICO
T +52 614 429 7175   
Jesus-Enrique.Barco@Emerson.com 

The Meaning of Innovation

Dictionaries tend to define innovation as the creation of something new. When spoken by CEOs and business managers, I don't believe this is what they have in mind. I believe they are talking about cost cutting. A recent news item crystallized this issue for me.

Dell Computers is getting rid of 8,000 jobs in Texas. "While reductions in headcount are always difficult for a company, we know these actions are critical to our ability to deliver unprecedented value to our customers now and in the future," said Michael Dell in a statement. They say they have too many employees. I say, they have too few customers.

In a past forum, he also said "It's all about speed, learning, and coming up with product innovation, services innovations faster." No hint of job cuts here. Unfortunately, true innovation might challenge Dell’s business model. But, few businesses today would dare to tamper with their business model. A past incident makes folly such reverent protection.

I needed a new laptop. I owned a Dell and, for travel, an extra transformer. My suggestion to buy another Dell, so I could reuse it was met with laughter by my coworkers. Some months before, they had been at a conference. All had Dell laptops and one transformer burned out and became useless. In panic, the others found that their transformers were not compatible. They did not have matching plug designs. Dell's business model forced buyers to buy new transformers along with their new laptops.

Neither is Dell alone in such innovation fraud. Hewlett-Packard does the same with cartridges for their printers. Each new model requires a new, incompatible ink or toner cartridge. All printer manufacturers have the same business model. I can imagine that some model changes are ONLY to make old cartridges incompatible, and their inventories unusable. That office supply commercial rings true. The one with people standing around a store employee calling out cartridge numbers. Waiting, like in a lottery, for their number to come up.

Imagine what the outcome had been if my coworkers had found they had compatible transformers. Every new laptop would be a Dell. As it turned out, they said they would never buy another Dell. What a wonderful business model. Sell an extra transformer; lose out on selling many more laptops. Such wisdom smacks of the manufacturing story. The one where the plant manager admits that he loses a bit on each product sold. But, figures he will make it up on volume.

CEOs scream for innovation, and it is right under their noses. It is innovation that helps CUSTOMERS. I think that is the true meaning of innovation. Helping customers.