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  • 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...

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  • 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.

    ...

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  • 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.

    ...

    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.

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  • 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...

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  • 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...

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  • 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…

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  • Borobudur Temple in Java, Indonesia

    Borobudur is an amazing Buddhist temple built in the 9th century. 

    Borobudur is among my favorite travel destinations. I have been lucky enough to visit many wonderful places and Borobudur stands out even with strong competition.

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  • 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.

    ...

    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).

    ...

    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.

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  • 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.

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  • 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. 

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  • Effective Change Management Strategies and Tactics

    Create systems focused on continual improvement with built in checks for frequent assessment, reflection and adjustment to the changes the organization attempts to make.  This effort should be iterative. 

    Building the capacity of the organization to successfully adopt improvements will directly aid change efforts and also will build confidence that efforts to change are worthwhile and not, as with so many organizations, just busy work.

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  • Peter Scholtes on Teams and Viewing the Organization as a System

    Peter includes a description of the creation of the “organization chart” (which Peter calls “train wreck management”) that we are all familiar with today; it was created in the Whistler report on a Western Railroad accident in 1841.

    Almost a direct quote from the Whistler report: “so when something goes wrong we know who was derelict in his duty.” The premise behind the traditional organizational chart is that systems are ok (if we indeed recognize that there are such things as systems) things are ok if everyone would do his or her job. The cause of problems is dereliction of duty.

    ...

    This is an absolutely great presentation: I highly recommend it (as I highly recommend Peter’s book: The Leader’s Handbook).

    Without understanding a systems view of an organization you can’t understand whats at the heart of the quality movement and therefore everything else you do, management interventions, ways of relating to people, will reflect more likely the old philosophy rather than the new one.


    Points like this are very true but difficult to understand until you come to view organizations as systems.

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  • 10 Stocks for 10 Years (2018 version)

    The 10 stocks I selected for this 2nd version are (closing price on 22 April 2005 – % of portofilo invested):

    • Tencent (TCEHY) – $43 and 15% (using the USA ADR). A phenomenal company with incredible global prospects for the long term. As the stock price has been hampered by concerns about China it has great potential for appreciation from the current price.
    • Alibaba (BABA) – $175 and 15% (using USA ADR). Another phenomenal company with incredible global prospects that has performed poorly this year due to China concerns.
    • Alphabet (GOOGL) – $1,254 and 11% (in the original 2005 portfolio the price was $216 and it started at 12% of the portfolio. The prospects are great long term, the stock price reflects that so it isn’t cheap but over the long term I expect it to do very well).
    • Apple (AAPL) – $225 and 11% (I added Apple to the original 10 for 10 portfolio in 2010. The biggest mistake in the original portfolio was leaving off Apple, I considered it but chose not to include it. It has been my largest stock holding for years. It has been very cheap even just a few years ago, though today I think the price is much more reasonable so it isn’t the great bargin it has been. Still the long term prospects are great.)
    • Abbvie (ABBV) – $97 and 10% (I added Abbive to the original portfolio in 2014. I would select a couple other healthcare stocks in a real invested portfolio for balance but Abbvie is the company I am most comfortable with so I include it here.)
    • Toyota (TM) $125 and 9%

    ...

    continue reading: 10 Stocks for 10 Years (2018 version)

  • Iterative Customer Focus

    Like many of Deming’s ideas the idea of iterative customer focus can seem too simple to be very powerful. But in fact that idea is extremely powerful. Those familiar with agile software development can see the idea of delivering working software quickly and iterating based on actual customer use illustrated in Dr. Deming’s “new way” iterative cycle shown in his paper published in 1952.

    The importance of learning about non-users is something that still today is often overlooked...

    I have written about importance of customer focus to Deming’s ideas in several previous blog posts, including: Customer Focus with a Deming PerspectiveUser Gemba and the most important customer focus is on the end users.

    continue reading: Iterative Customer Focus