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

• Our Energy Future (2006)

  Huge price increases will provide incentives to those in the market to innovate to find alternative ways to make money by providing usable energy sources. If the market, overall, chooses to look forward over a long period of time, then investment in alternatives will begin in earnest early and prices of oil will slowly rise. And as prices rise slowly new alternatives (including ways of reducing consumption) will slowly come into the market. Those alternatives will slowly substitute for oil as a smooth transition is made.

  If markets actual were efficient and driven by looking far into the future and discounting cash flows to the present this slow and steady model is what would happen. The market can only be efficient if good long term predictions can be reflected in the market.

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• Find the Root Cause Instead of the Person to Blame

  Why did they make that error? Why did the process let them make that error? When you follow the why chain a couple more steps you can find root causes that will allow you to find a much more effective solution. You can then pilot (PDSA) an improvement strategy that doesn’t just amount to “Do a better job Joe” or “that is it Joe we are replacing you with Mary.” Neither of those strategies turns out to be very effective.

  But investigating a bit more to find a root cause can result in finding solutions that improve the performance of all the workers. 

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• Airline Quality (or Rather, Lack Thereof)

  I flew JetBlue Airways last week. The help at the counter was polite and friendly. While this is only one data point (and hardly a “high bar” to meet) it contrasts with most of my flying experience (in my experience Southwest has a good likelihood of providing good service but few other airlines do). It would be nice if more airlines could be like Southwest...

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• Most Meetings are Muda

  Have the PM email the list of resolved and new action items to all the participants.

  This is an important step missed far too often. Doing so helps make sure that everyone leaving the meeting has the same understanding of what has been decided: in addition to reviewing new assignments I would suggest review all significant decisions made. Far too often, people have very different ideas on what happened in previous meetings.

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• Why are you afraid of process?

  Process management is necessary for management improvement. That is true in manufacturing, service, government, research and any other environment. The way process management will be done must be modified to be effective. I believe people react negatively to the concept because they see process as the “rules” such as when the explanation for poor service is given as “that is our policy.” Don’t mix up those excuses with proper process management and improvement strategies.

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• Stop Demotivating Employees

  Douglas McGregor explored this topic well in 1960. He explained theory X management (managers believe the workers will do only what they are forced, coerced into doing) and theory Y management (managers believe the workers want to do a good job and the managers job is to help them do so) in his excellent book: The Human Side Of Enterprise.

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• Blogging is Good for You

  Blogs are a valuable tools for individuals (or small firms).  They allow for focused marketing that allows you to make a good impression by sharing your thoughts. Marketing is often one of the most difficult parts of making a successful career as a consultant.

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• Toyota in the US Economy

  From Toyota’s web site: Toyota Manufacturing in the USA: by 2008, Toyota will have the annual capacity to build 1.81 million cars and trucks, 1.44 million engines, and 600,000 automatic transmissions in North America.

  The company’s direct employment in North America is more than 38,000 and direct investment is nearly $16.8 billion with annual purchasing of parts, materials, goods and services from North American suppliers totaling an additional $26 billion.

  [In 2016 Toyota manufactured 2,450,000 vehicles in the USA, Toyota promotes a fake number for employees counting many non-employees, employees of suppliers etc., so you can't view the accurate data on their site in 2017 - in 2006 they did post an honest number].

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• Quality and Costs

  Deming explained that increasing quality decreases costs. Page 3 of Out of the Crisis: Improve Quality –> Costs decrease because of less rework, fewer mistakes, fewer delays…

  Like most models this does not explain everything. Achieving some quality desires does cost more. And the article examines how to look at the issue of cost reduction in health care, where the view that higher quality costs more persists to a larger extent than elsewhere. There is significant room in health care for adopting improvement that will improve quality and reduce costs because the systems are so poorly designed they are both increasing costs and decreasing quality over what could be achieved.

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• China’s Manufacturing Economy

  The constant mention of the eroding manufacturing sector on the USA I believe leads many to think it is shrinking and small. Yet output continues to increase and the share of worldwide manufacturing output is holding steady. China is gaining substantial ground but the Chinese increase has largely come from Japan and Europe. To me this understanding is important because of my felling about the misperceptions of many.

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• Dell, Reddit and Customer Focus (2006)

  I think most of Dell's users do not notice what Dell is doing, exactly. Reddit readers, however, by and large, do, which is one thing that makes reading Reddit fun. I find Reddit's users can point out, not just problems, but the systemic causes of those problems (so they vote up the links that do exactly this).

  Most customers might not see the chain leading to their frustration but the do know they don't like that the computer is slow and they have to wade through all sorts of software (much of which they don't need or want). I think the author was exactly right that the source of the problem is Dell's monetary incentive is to get paid to add more and more stuff not to give the users what they need.

  ...

  Mainly I think these critical looks at practices are fun reading, but there is also a management issue to understand.  There are many smart people who know how to voice their opinion (and the internet can connect that voice to large numbers of people).   In this day and age, if you think your imperial halo with protect you from the masses you had better hope none of these people get a look at what you offer.  If you are figuratively naked, they will see, and they will shout that fact from the mountain top.

  continue reading: Dell, Reddit and Customer Focus (2006)
• PBS Documentary: Improving Hospitals

  This rare good news documentary reports on a surprising solution to escalating costs, unnecessary deaths and waste in America’s hospitals. Doctors and nurses tell how they did their best, working overtime, while hospital conditions worsened. They were delighted to learn a new way to improve patient care dramatically and reduce unnecessary deaths, suffering, errors, infections and costs without additional resources or government regulations.

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• Manufacturing Jobs Data: USA and China

  10-20% of manufacturing jobs disappeared worldwide from 1995 to 2002. China lost between 17% and 34% of theirmanufacturing jobs and the USA lost 11.4% of theirs.

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• Lean Manufacturing Success

  Not only is this a nice story but it is one small example of the good people working at GM and Ford. The problem is not the individual workers it is management. It is too bad that those companies, that did take great strides in the 1980 and early 1990s to improve (starting with Deming’s Management ideas) let those efforts fade away.

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• Problems with Bonuses

  Commission pay and bonus often set up a conflict between what is in the interest of the company and the employee. They lead to bunching of orders around quarterly quotas, deadlines and competitions. They lead salespeople to think their job is to sell whatever pays them the most not to assist the customer.

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