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Posts selected fromManagement Blog - Engineering Blog - Investing Blog and other blogs

• IT Outsourcing to India Slowing (2006)

  Outsourcing IT makes a lot of sense but it is complex to do well. The first rush of outsourcing was just an attempt to save money by moving work to sites where the workers could be paid less. This is classic economics and the economic theory has worked well. Capitalists moved work to where the competitive advantage was. The economic reaction was what you would expect – Indian IT wages raised drastically and other costs of doing business have continued to rise (much higher turnover as the opportunities that workers had expanded they jump from one job to another).

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• The Future for Investors

  The subtitle captures the basic theme of the book. Investing in the boring old stocks that people are not excited about is what have performed best.

  His basic advise is still to buy the broadest market index fund (such as the Vanguard Total Stock Market Index Fund [the broken link was removed]). He also concludes with the advice that those returns have been beaten historically by focusing on stocks with high dividend yields and low price earnings ratios.

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• Usability Failures

  I guess if you operationally define “nothing wrong” as a failure to work as the manufacturer intended that would be true. But is that what really matters? What is the number of defects that should be counted?

  The design of the phone is broken if 63% of the returns work as intended and customers still think they are broken. You might argue that the instructions are bad, but really shouldn’t people just be able to use the phone if it is designed well?

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• New Rules for Management? No!

  “New” rule: “The customer is king.”
  Yes. GE would have said the same thing. Shareholders rule as the old rule? Yeah they still seem to. Few companies today, 10 years ago, 50 years ago… understand that there are many stakeholders – all of which the organization should benefit: customers, stock holders, suppliers, workers, the community… I see no evidence there has been any shift in thinking.

  “New” rule: “Look out, not in.”
  What kind of rule is that? It is pretty obvious you need to do both. I find it incredible the amount of time that is taken trying to show “new” ideas that amount to absolutely nothing. See comments on: Fast Company Interview: Jeff Immelt.

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• The Exciting Life of Industrial Statisticians

  All of this provides great new opportunities for industrial statisticians to serve as statistical leaders-a term popularized by the late and great Ed Deming (see Hahn and Hoerl, 1998). Statistical leaders engage principally in leveraging statistical concepts and thinking (see Hoerl, Hooper, Jacobs and Lucas , 1993), and focus their activities on mentoring and supporting the most business-vital and technically challenging problems dealing with getting the right data, and converting such data into actionable information.

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• Reducing Waste - Zero Waste to Landfill

  A great improvement strategy. Determine what you are trying to do. Understand the system. Set up process measures that measure that system. Improve the system and track the results. Repeat. Maintain focus over the long term. Result: success.

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• Supplier Development Article

  people are scared to talk about any other aims than profit. Deming didn’t have such a problem. Toyota doesn’t have such a problem.Google doesn’t have such a problem [the broken link was removed].

  Others need to learn that there are multiple aims for organizations not just profits but providing good jobs, serving customers, aiding community… Learn from the leaders – talking as though the only purpose of the organization is to make profit is counterproductive.

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• Origins of the Toyota Production System

  Our focus should be on improving our understanding of management.  It seems to me the discussion has been beneficial thus far.  I would also admit that this is probably of interest to a small sub set of those interested in lean manufacturing.  That is fine.  I do believe there is no benefit for discussions to degrade into negative attacks but when the discussion is mainly sharing views, information and ways of looking at the historical record I find it can be very interesting.

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• How Google Works

  Google was driven from the beginning by engineers that sought to do what was best. Since those engineers were the founders of the company and still run the company Google has been able to keep the focus not on what is accepted as conventional wisdom but what actually works best. Google understands when you experiment things might not work out. Google’s solution is to experiement quickly and fail early (turn the pdsa cycle quickly). That is something every organization can apply.

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• 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 [2006] 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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