Posts selected fromManagement Blog - Engineering Blog - Investing Blog and other blogs
- Toyota Homes
I still am surprised Toyota isn’t doing more with mass transit but they obviously know more than me. Toyota partner robots are a good strategic vision in my opinion.
Could Toyota’s efforts beyond automobiles create problems over the long term? Yes. But Toyota’s solid management system is built with the knowledge that change is inevitable (Toyota’s Early History – Toyota was a loom maker before moving into the automobile industry). If Toyota wants to prosper in the future it needs to contoinue to grow and adapt and take risks.
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- Quality and Innovation
I really don’t understand how people can talk about innovation as if it were some new discovery. Yes I understand we can bring a different focus to innovation. We can reconfigure management structures to encourage and support innovation. That is good. And new ideas are being developed, but the innovation fad is silly. And accepting the notion that this innovation stuff is some new idea will make managers less effective than if they understand the past.
New Economics by W. Edwards Deming, published in 1992, page 7:
Does the customer invent new product of service? The customer generates nothing. No customer asked for electric lights… No customer asked for photography… No customer asked for an automobile… No customer asked for an integrated circuit.
Innovation has long been important to those interested in management improvement.
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- Six Sigma Theory?
An interesting paper exploring what six sigma means and what it mean that what it means depends on who you ask. The ideas explored provide good information for most management improvement programs as most share common tools and concepts but vary significantly between implementations.
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- TQM for the Water Business
Deming did not like the term TQM. It was not defined, so each person using it meant something different. And the faddish nature of the term drew a large number of “hacks” (consultants who spoke with authority but without knowledge). Seeing the term TQM used now  however, I find refreshing. To use the term TQM you must go against the temptation to talk only about the current fad (learning organizations, reengineering, balanced scorecard, six sigma, lean…). This author defines what he means by TQM...
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- CEO Flight Attendant
This getting out and seeing work in action is exposed a great deal, including a lean management concept, Genchi Genbutsu – to go to see the problem in situ (not just reading a report about it).
The success of many management practices is more a matter of how the practice is done than if it is done. Also the success depends on the rest of the management system. Practices cannot just be copied. But you can learn from what others find useful and figure out how that idea would work within your organization.
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- Trust: Respect for People
Management then vowed that this (layoffs in 1950) would be the first and last time such an event would come to pass at Toyota, and, in a gesture of respect to former employees, Kiichiro resigned from his position as president of the company.
A bit different than laying off tens of thousands of workers and then taking huge bonuses [the broken link was removed]. And in case you don’t know, I think Toyota’s approach is more honorable and what should be aimed for (I wouldn’t say the president always should resign but it should be a significant admission of failure).
Does this mean no workers ever come into conflict with Toyota management? No. But Toyota’s respect for workers is qualitatively different than that of most companies.
Related: Bad Management Results in Layoffs
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- American Manufacturing Successes
- Gas Tax (2006)
Gross Domestic Product would decline by $6.5 billion per year, in real terms, from 2005 to 2014. In other words, this $131 billion in government revenues would shrink the economy by $65.5 billion.
There would be, on average, 37,000 fewer job opportunities each year. That works out to one lost job for every $351,000 in new taxes, which is equal to 11 years of work at average yearly wages.
Sure sounds bad. This quote was written in 2004 opposing a 5.45 cent increase in the gas tax. Of course gas price have gone up more than 10 times that amount [at the time I wrote this post in 2006]. Those increased prices have the same negative impact of a tax increase but the increased prices paid go to foreign producers and the oil companies instead of the taxpayers. We would have been better off increasing the gas tax 50 cents a gallon and cutting the huge deficit instead of accepting such arguments.
Opposing gas taxes because someone has to pay them, while raising the debt which hurts everyone that will have to fund those debts is not a sensible plan. Voting against pork spending so you don't need to raise gas tax or pass on you unpaid obligations to the future is fine. Or deciding you would rather tax income than gas is another perfectly fine choice. There are good reasons to tax gas but the decision to prefer taxing income to taxing gas use is certainly a fair choice. Saying you are against taxes while increasing spending on the other hand is just dishonest.
continue reading: Gas Tax (2006)
- Is Innovation Needed to Keep Manufacturing in the USA?
There is no ace in the hole. If countries want to keep manufacturing jobs they are going to have to do lots of things right. No country has such an advantage they can expect to rely on their country being more innovative (or offering cheaper labor, or their citizens working harder or…) than all the other countries in the world.
Innovation has been an advatage for the USA. It should continue to be an advantage for the USA but many other countries will innovate very well (Japan, Germany, China, Korea, Singapore, England…). The USA has many assets: transportation infrastructure, banking, rule of law, educated and skilled workforce, huge market, decent tax laws, engineering education… The key will be to keep focusing on the whole system (and fix things like huge budget deficient, huge current account deficit, excessive health care costs, excessive executive pay…).
I also believe a key competitive advantage will be in applying management improvement concepts such as lean manufacturing.
continue reading: Is Innovation Needed to Keep Manufacturing in the USA?
- Our Policy is to Stick Our Heads in the Sand
The failure to adapt to a changing world (the internet is here to stay folks) is amazing. Most companies would benefit from just adapting to the changing world without elaborate innovation plans. Innovation is great, but challenging. Don’t ignore the possible improvements short of innovation.
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- Innovation Example: Farecast (2006)
Farecast provides data and analysis to those looking to purchase airplane tickets. The graph above shows ticket prices for tickets between Boston and Washington DC over the last 60 days. I have thought for quite some time I need better data to make the best purchase decisions. Farecast seems like a great fit.
The airlines attempt to maximize their profit by changing ticket prices. This pricing model is different than most pricing options I face, normally the price is pretty much set: with the possibility of sale prices.
continue reading: Innovation Example: Farecast (2006)
- Employee Ownership
I have always liked the idea of employee ownership. To me this can be a great help in creating a system where employees, owners, customers, suppliers work together. Alone an Employee Stock Ownership Plan (ESOP) does little. But as part of a system of management it is something I think can be beneficial.
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- New Look American Manufacturing
Many factors determine whether the USA will continue to lead the world in manufacturing. The USA has to continue to support a dynamic economic system, maintain a transportation system, improve the health care system, improve the educational system, maintain the rule of law, reduce excessive legal costs, improve the management of manufacturers etc.. Each country has to work on these and other systems to stay competitive globally.
Excessive regulation compared to what countries – China, India, Germany, Japan? If you are talking about environmental regulation, the USA has more than China less than Germany or Japan. If you are talking about permits to get things done I think the National Association of Manufacturers (NAM) needs to go try to do business in Japan, China, India, Thailand, Mexico… and see how easy it is to navigate the undocumented processes.
And does NAM think the USA is good at nothing? Don’t manufacturers here benefit from being the USA? What cost advantages does that give them? I think being a manufacturer in the USA offers huge advantages as well as some challenges. The prospects are good.
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- Toyota IT for Kaizen
IT often does the opposite of lean management and makes things more complex, more prone to error, less effective, etc.. Often all in search of only one thing – cutting costs. For that people should not be faulted for being skeptical of IT solutions. However, that does not mean that IT cannot play a part in improvements. It can, just be careful.
I find it a good sign when the CIO office is helping people find solutions at the request of the users rather than dictating solutions from on high. Some of the dictating might be necessary to optimize the system of IT (some local sub optimization may be required for the overall good) but in my opinion this is used as an excuse far too often.
Related: The Edge-case Excuse (a post I wrote more recently on the topic of error prone IT solutions)
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- More on Obscene CEO Pay
Unfortunately this reverse robin hood (steal from the workers, stock holder, customers…) and give to the CEO tale continues. Hopefully someday soon we can at least turn the momentum in the right direction (stopping these incredibly excessive “pay” packages). Even then it will take quite a deal of reducing these ridiculous “pay” packages to reach some sense of decency.
continue reading: More on Obscene CEO Pay