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- No Excessive Senior Executive Pay at Toyota
Toyota’s 32 top executives received just over $12 million in salaries in the 12 months ended March. Lets see Toyota made something like $13,000,000,000 in profits. With the top 32 executives getting about $20,000,000 that is .15% of earnings. Even if there are some other benefits not included in the total that .15% figure for the top 32 executives doesn’t really compare to ludicrous pay of many CEOs in the USA.
- Factfulness – The Importance of Critical Thinking
I have come to see a willingness to value critical thinking, even when it means forcing the organization to address tough issues, as one the differences between organizations that succeed in applying management improvement methods and those that fail. In many organizations that fail, more weight given to making things easy for your bosses versus continual improvement in providing value to customers (which often requires challenging existing processes, beliefs and power structures in the organization).
Challenging the status quo is difficult and most organizations prefer to maintain a culture that takes an easier path. Management improvement often requires a willingness to encourage challenges to the status quo. The importance of challenging the status quo in your organization and in your own thinking is under appreciated.
- Parfrey’s Glen, Wisconsin
Parfrey’s Glen is about an hour outside of Madison next to the Ice Age National Scenic Trail. The trail covers over 1,200 miles throughout Wisconsin.
- Leading The Transformation Process
Transformation starts with the individual but as they change they can run into organizational barriers and resistance to change. Similarly if the organization institutes changes without helping people change their own understanding and views those people resist the changes in the organization.
Deming’s management system provides a view of the organization as a system, including the people in that organization, and ideas for how to manage the transformation as an integrated system. The interactions between the components of the system and people must be considered and managed to transform. And those interactions continually change as the overall system evolves. - Design the Management System with an Appreciation of Confirmation Bias
To create strong organizations we must create management systems using an appreciation of psychology. We must understand that people have tendencies that must be addressed by designing a management system built to take advantage of the strengths those people bring and mitigate the risks of the weaknesses (such as confirmation bias) that those people also bring.
One way to do this is to seek out voices in your organization that question and challenge accepted positions...
- Shared Principles for Managing People Engaged in Diverse Tasks
...I do agree that the system within which people are operating determines how they must be managed. There are definitely features of software development that are significantly different than manufacturing scalpels or basketballs or tables. As there is a difference between a surgical team in an operating room, road construction, mining, editing books, investment banking, manufacturing industrial robots, researching new drugs, manufacturing drugs, teaching in a university, maintaining plane engines, coaching an athletic team...
I see universal principles of management (respect for people, customer focus, continual improvement...) that cross all different human enterprises. How those principles should be manifest in a particular situations depend on the work being done, the management system that is in place, the individual people involved, the specific focus of the effort right now... The way those principles are manifest will look very different in all the varied types of organizations we create and the different work and processes used within those organizations....
- Leading Quality: Some Practical Approaches to the Managers New Job
Throughout the talk Peter emphasis the importance of viewing the organization as a system and using the knowledge from that view to inform how the organization is lead, managed and how people are able to work. With a systems view it is possible to appreciate how many individual factors interact to impact how successful an organization can be and how those factors interact with each other.
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Peter Scholtes:
We need to define what our customers get from us, not in terms of the product that we sell or the service that we offer, but in terms of capability that they acquire from us.
- Real Estate Investing: Amazon’s Regional Office in Arlington, Virginia
Amazon announced they are opening major new offices in Arlington, Virginia and New York City [Amazon has sinced decided not to go ahead with the NYC plans]. Each site will hold 25,000 new Amazon employees at an average salary above $150,000...
The direct impact of Amazon’s employees renting and buying in and around Arlington is not going to be very strong for a couple years... But investors already can plan for a strong future demand from Amazon and all the activity that Amazon’s growing presence will contribute to.
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Unlike the stock market where such a predicable strong investment future would drive prices up say 30-50% immediately, in real estate it is much more likely for the gains to be spread out over the long term.
If prices in housing increase in Arlington it is more likely they would increase say 10% in the first year and then an extra 3% (above what the increase would have been without Amazon’s move) each of the next 10 years. From a long term investors perspective this provides a great possibility for buying now (even after the news) and not having to pay a huge premium.
- Rethinking Statistics for Quality Control with George Box
George Box shared a presentation on Rethinking Statistics for Quality Control at the 2008 Deming Institute Conference in Madison, Wisconsin.
In the presentation George discusses how to look at data from a process. He mentions why it was so important to understand what Shewhart understood about process data: the order of the data is extremely important; which is why run charts and control (process behavior) charts are plotted in time order...
- Understanding and Using Data: Waffle House Example
...The Waffle House closure data is based on actually closing based existing conditions while warnings and evacuation recommendations are based on predictions about the weather and the impacts those will have on locations. The warnings are necessarily predictions (to be useful for the whole community they need lead times to take action) where the Waffle House has more flexibility and the organization has managed their system to be more capable of adapting to harsh conditions. There is a real similarity with designing a agile software development process that is able to be more flexible and react quicker than old "waterfall" style organizations that have to predict far in advance and adapt slowly as conditions change...
- My Willing Worker Award
Data very similar to that provided by the Red Bed Experiment is used everyday in businesses to reward and punish people. Data is used to blame those who fall short of expectations and reward those who have good numbers. In the Red Bead Experiment we know the numbers are not a sensible measure of value provided by the employee. But in our organizations we accept numbers that are just as unrelated to the value provided by the employe to rate and reward employees.
There is a powerful need to improve the numeracy (literacy with numbers) in our organizations. It isn’t a matter of complex math. The concepts are fairly simple…
- ACA Healthcare Subsidy – Why Earning $100 More Could Cost You $5,000 or More
One of the benefits of the USA Affordable Healthcare Act (ACA) is that health insurance costs are subsidized for those earning less than 400% of poverty level income. The way that this has been designed you could get $5,000 (or more, or less) in subsidies if you earn just below the 400% level and $0 if you earn just above.
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60 year old in Virginia - earning $48,200 would receive $7,073 in subsidies (60% of the cost*). Earning $48,300 would mean receiving $0 in subsidies (for this and also examples, the examples shown are for a single individual, you can use the tool to try different scenarios).
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The subsidy levels for those with very high health insurance costs (especially those over 50 years old, or with a family) are very large. If you are close to the subsidy cutoff level the costs of going over can be huge, costing you $5,000 or even over $10,000 just by making an extra $100.
- An Inverted Yield Curve Predicts Recessions in the USA
The chart shows the 10 year yield minus the 2 year yield. So when the value falls below 0 that means the 2 year yield is higher. Each time that happened, since 1988, a recession has followed (the grey shaded areas in the chart).
Do note that there were very small inversions in 1998 and 2006 that did not result in a recession in the near term. Also note that in every case the yield curve was no longer inverted by the time a recession actually started.
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- Backyard Wildlife: Red-tailed Hawk
I see red-tailed hawks in my backyard occasionally. This one has a squirrel on a high tree branch in my backyard. The video shows it fly away.
When I hear a murder of crows squawking loudly I often can spot a red-tailed hawk (or perhaps some other hawks) near my yard.
- Change Management – Post Change Evaluation and Action
...it is always critical to include process checks to evaluate if the improvement works as intended. It is amazing how often changes are adopted without any process to evaluate the effectiveness of the change. This leads to many problems and creates conditions where the rate of improvement is very slow.
The rate of improvement is increased by improving how the organization improves. Monitoring the impact of changes is needed for this reason (to learn what is working well systemically and what weaknesses exist in how the organization is improving) as well as to make sure each change does actually improve results as expected.
