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  • Jeff Bezos on Lean Thinking (2005)

    I read a book recently about Toyota’s lean production methodology, which is very interesting

  • Estate Tax Repeal is a Very Bad Idea

    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.

    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.

  • New Toyota CEO’s Views (2005)

    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.

  • Fast Company Interview: Jeff Immelt

    My guess would be that what lead to this quote is not a lack of understanding that managers need the same qualities today they needed 10 years ago but the compulsion to feed the media frenzy for some incredible new insight. It just isn’t sexy to say “we need the same leadership qualities we needed in the past.” Deming stressed the importance of these “new” qualities he states more than 50 years ago and I think most decent managers have know you need to “know why we’re doing them”

    ...

    Customer focus and innovation would also be at the top of the list of important issues and were 10 years ago and will be 20 years from now. What is important for management does not change much.

    occasionally innovation is so dramatic it drastically changes the practice of management, two examples:
    1) the use of information technology
    2) the whole quality movement [Deming’s ideasSPC, Toyota/Lean, Six Sigma

  • Management is Prediction

    I believe Deming’s thoughts about prediction are most effectively put into action using the PDSA cycle. Specifically, you must predict the results in the planning phase (prior to piloting improvements). I find that this is rarely done. I don’t think the form of that prediction is critical (narrative with loose numerical guesses, precise numerical prediction…). The critical issue is making the prediction, then comparing the results to that prediction and then figuring out how your original understanding can be improved based on the new data.

    Learning will not only be about the specific case being examined, but also, over time, learning about your tendencies in prediction. 

  • Managing Fear

    A good article on this topic is, Managing Fear by Gerald Suarez (who I worked with for several years). There are also 3 videos on this topic by Dr. Suarez, available from Management Wisdom, the producers of the Deming Library videos. I must admit I didn’t really understand the effects of fear and anxiety on performance until hearing Dr. Suarez speak on the topic many years ago.

  • Could Toyota Fix GM

    Yes, Toyota could fix GM. Even the right leaders and managers, within GM, could fix GM but it is a huge long term job and it would be harder to do it internally because you will have to do it while competing with Toyota. Also they have some difficult issues to deal with since their previous managers did not tihnk of the long term (20-50 years out from the decisions they were making in the 70s though 90s).

    I wouldn’t buy GM if I were Toyota, though. Why bother. Just grow Toyota, it is working very well so far. It makes sense to buy if you need to grow quickly to gain critical mass, or you will lose the opportunity to grow early in a fast moving market. High tech companies (like Cisco and Intel) often do well buying other companies – but just as often high tech companies make more mistakes buying than is justified by the successes.

  • Millennium Development Goals

    I agree it would be greatly beneficial if the method to reach those goals included a measurement system that provided good outcome and process measures (not just activity measures like spend so many billion dollars). And those measures were used to help determine what was working well and what was not. And then resources were focused where they had been effectively used and where they were not changes were made. The PDSA method should be used to test out potential good ideas on a small scale and then measure the success and invest in things that work and don’t invest in cases when results are bad. The failure to focus on results, and basing development efforts on all sorts of ill conceived considerations, is a large part of the reason many of the problems are as bad as they are now.

    I think there is hope for progress in the attempts to improve the situation for people worldwide. However, it will not be easy. A great first step would be to hold accountable those leading the effort (the United Nations, individual countries [most especially the security council, etc.). If we could even get to the point where the progress was visible and failures were an embarrassment to those in power, then we will increase the odds of success. But I doubt failing to reach the outcome measures will be seen as a problem that must be addressed and fixed, instead of explained away.

  • Toyota as Homebuilder

    many organizations don’t apply many concepts that have been proven effective for decades. So I hope Toyota gets into any business that continues to provide lousy value to the consumer (at least those where that consumer is me). I wish they would create their own credit card (they offer Toyota branded Visa and MasterCard credit cards now, in Japan), provide high speed internet service and run an airline.

    Toyota is probably too smart to try and run an airline in the US (only Southwest seems to be able to that profitably).

    ...

    On the Toyota web site they list the following areas of non-automotive Toyota business: financial services, information and communications, marine and most surprisingly Biotechnology and Afforestation. Toyota states: “Biotechnology may seem far removed from the auto industry. It is, however, closely related to automaking in the context that they are both aiming to achieve a sustainable society, and their close relationship can be seen in the new Raum, launched in May 2003, which uses parts made from bioplastics.”

  • Targets Distorting the System

    I still remember Dr. Brian Joiner speaking about process improvement and the role of data well over a decade ago. He spoke of 3 ways to improve the figures: distort the data, distort the system and improve the system. Improving the system is the most difficult.

  • Dilbert and Deming

    Dilbert can show the silliness that is common place in many workplaces, as just that – silly. Point 10 of Deming’s 14 points called on management to eliminate slogans.

    ...

    The text works well for me, but I think Dilbert provides a great service in pointing out the same idea that such slogans are silly and even harmful in a way many others find more accessible.

  • SEC chief quotes Deming

    Security and Exchange Chairman William H. Donaldson:

    This approach will, ultimately, better serve investors, and it will also gradually temper the pressures on some corporate executives to fudge the numbers. It would behoove us all to remember the words of W. Edwards Deming: “People with targets, and jobs dependent on meeting them, will probably meet the targets – even if they have to destroy the enterprise to do it.”
  • Google: Good Service not Arbitrage (2005)

    Google, to use a internet bubble phrase, is doing a good job monetizing eyeballs. However, that is not arbitrage it is just doing a good job of maximizing revenue and profits. Yes Google is able to make money because they are paid more by advertisers than it costs them to deliver what the advertisers want. But I don’t see how that is more like arbitrage than Toyota selling a car for more than it costs them to make the car.

  • Traffic Congestion and a Non-Solution

    For decades traffic congestion has been a problem in American cities and one that has continued to get worse. The typical proposed solution is to increase the number of roads. The theory behind this solution is not normally stated but, I believe, it amounts to: “if we build more roads then the system will have more capacity which has to decrease congestion.” Unfortunately this theory fails to take into account the past data on the increasing capacity of roads “solution.”

    ...

    Ackoff’s solution does require actually changing the system. That is not easy to accomplish. However, if the desire is to reduce congestion the solution is not likely to be to just keep doing what we have been doing (given that it isn’t working). Building more and more capacity doesn’t seem to achieve the desired results.

  • 10 stocks for 10 years

    The 10 stocks I came up with are (closing price on 22 April 2005 – % of portofilo invested):

    • Templeton Dragon Fund (TDF – 16.40 – 16%) – a closed end mutual fund investing in China, Hong Kong, Taiwan, Singapore… This one doesn’t fit the criteria but does a great job of filling out the portfolio in my opinion.
    • Dell (DELL – 36.43 – 12%)
    • Toyota (TM – 72.42 – 12%)
    • Google (GOOG – 215.81 – 12%)
    • Pfizer (PFE – 27.22 – 8%)
    • Amazon (AMZN – 33.04 – 8%) They are only just starting to generate cash but I like their prospects.

    ...

    ["I should have picked Apple instead of Dell but even with that mistake the fund did very well - I did add Apple in 2010" John, Oct 2017]