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- 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.”
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- 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.
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- 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.
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- 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.
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- 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.”
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- 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.
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- 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]
continue reading: 10 stocks for 10 years
- Performance without Appraisal
In the short article Performance Without Appraisal: What to do Instead of Performance Appraisals, Peter wrote:
Dr. Deming said of Performance Appraisals, “Stop doing them and things will get better.” He was correct. Many organizations, however, wonder what to do instead.
For those that do require “some alternative” Peter included some good ideas in The Leader’s Handbook(see chapter 9 “Performance without Appraisal pages 293 to 368). This chapter has excellent material for any manager.
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- Who Influences My Management Improvement Thinking?
- Statistics for Experimenters – Second Edition
Complete with applications covering the physical, engineering, biological, and social sciences, Statistics for Experimenters is designed for individuals who must use statistical approaches to conduct an experiment, but do not necessarily have formal training in statistics. Experimenters need only a basic understanding of mathematics to master all the statistical methods presented. This text is an essential reference for all researchers and is a highly recommended course book for undergraduate and graduate students.
This updates the classic text by George Box, William Hunter (my father) and Stu Hunter.
continue reading: Statistics for Experimenters – Second Edition
- Control Charts in Health Care
The point of using a control chart, and many of the management improvement tools, are to improve the efficiency and effectiveness of resources spent improving. The trick is not really to improve (that is pretty easy) the trick is to improve quickly and effectively (and in a competitive marketplace to improve more quickly than competitors). Where improvement resources are targeted is critical. In deciding which improvement options to explore it is important to understand the impact on the outcome (in this case the health of the patient).
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- Theory of Knowledge
When managing many fail to predict when attempting to test improvement ideas through what should be experiments (often they are just changes without verification the change produced a desired effect, any learning or study of the results of the change). Without prediction learning is much less (if there is any at all) than it would be with such prediction.
With, even a fairly simple understanding of the theory of knowledge the effectiveness of management improvement efforts are greatly increased. This topic is difficult for most to understand, I recommend reading chapter four of the New Economics.
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- Designing a New Organization
Ackoff has done a huge amount of work in idealized design and thinking about the big ideas that can drive dramatic change. His ideas are exceptional. He even offers a plan for modeling the idealized organization and then a plan for how to transform the organization based on practical ideas that are feasible in the real world.
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- Price Discrimination in the Internet Age
The argument that you need to cripple products by geographic area to cope with currency fluctuations is false. It might be that a company wants to practice Price Discrimination to charge more where they can get more and less where they can get less. In the view of such a company, the internet, and other factors, have made it increasingly easy for people to buy in the low cost region and resell the items in the region where the company wants to charge higher prices. If you want to keep practicing price descrimination as a company you have to erect barriers to the free trade of your products by your customers.
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- Operational Excellence
Saying the organization is focuses on new principles (partnering, lean, etc.) is not the same as applying those principles with the great success that Toyota does. That difference is huge and is driving many companies to outsource and try to dramatically cut costs. Reducing costs should be the outcome of improving efficiency.
Toyota is successful manufacturing in the USA.
I would agree that many companies don’t understand the critical importance of management excellence. Rather than take the difficult path to lead real change in their organization they focus on simple cost cutting measures (though usually not cutting executive salaries which have grown dramatically and are excessive in the USA compared to the rest of the world). That won’t work.
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