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

• Poka-Yoke Assembly

  Poka-Yoke (mistake-proofing) is one of my favorite ideas. I just love the idea of not only making something that works well but making something that is difficult to use misuse or use in a way that leads to problems, waste and disappointment.

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• The 70 Percent Solution

  Google CEO Eric Schmidt:

  We spend 70 percent of our time on core search and ads. We spend 20 percent on adjacent businesses, ones related to the core businesses in some interesting way. Examples of that would be Google News, Google Earth, and Google Local. And then 10 percent of our time should be on things that are truly new. An example there would be the Wi-Fi initiative.

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• Peter Drucker Opinion Essays from the Wall Street Journal

  Is Executive Pay Excessive? In 1977, Peter Drucker's answer was, no. As pay did become excessive, Drucker became a prominent voice against the unjust pay of CEO’s.
  

  Economically, [the] few very large executive salaries are quite unimportant. Socially, they do enormous damage. They are highly visible and highly publicized. And they are therefore taken as typical, rather than as the extreme exceptions they are.

  In 1977, he was mainly worried about “the public” rising against excessive executive pay when there was no systemic problem. He didn’t seem to foresee the problem of other CEO’s believing they were entitled to such unjust pay and creating the crisis of leadership this caused later in his career. Of course the entitlement culture was not a widely held view at that point.

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• Innovate or "Play it Safe: to Avoid Risk

  There are many reasons why avoiding risks is smart and should be encouraged. But when avoiding risks stifles innovation the risks to the organization are huge.

  Playing it safe isn't always safe. In rapidly changing markets (which are quite common lately) "playing it safe" is often riskier than "taking chances" on new ideas.

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• Data Based Decision Making at Google and Elsewhere (2005)

  Google has done a fantastic job of using data to make decisions. In fact so much so, that some think they may go overboard trying to find an algorithm for everything.

  I believe you can’t measure everything that is important. I also believe in most organizations the amount of stuff you can’t measure usefully and realistically is quite a bit higher than it is for Google. Having highly intelligent, skilled and experienced people who can derive complex formulas effectively does greatly expand the effective use of measurements.

  Still there are limits, and those limits are much lower for most organizations that have neither, thousands of phd level mathematicians, rocket scientists, software engineers etc. nor a anything approaching Google’s percentage of such people.

  Still I think we will benefit from the innovation that will continue to take place at Google. The are making great strides in using data to inform their decision making process.

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• Performance of People: Does Performance Appraisal Help?

  Why can’t performance be numerically rated and ranked? It can’t be defined operationally, it can’t be measured with any degree of precision, it can’t be separated from other effects, and it is destined to vary over time in any case. Any one of these factors present significant (if not insurmountable) problems itself. Combined the problems create an impossible barrier.

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• Google: Ten Golden Rules (2005)

  The suits inside Google don’t fare much better than the outside pros. Several current and former insiders say there’s a caste system, in which business types are second-class citizens to Google’s valued code jockeys. They argue that it could prove to be a big challenge in the future as Google seeks to maintain its growth.

  Google really is doing things differently. One way you see it is that some of those used to being the most powerful players complain that they don’t get respect at Google, at Google the engineers rule. Um, maybe they shouldn’t complain too loud, maybe the reason Google is doing better is they focus on the Gemba (where value is added to the customer).

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• Poor Management Harms USA Manufactures (2005)

  The global competition in manufacturing is intense. But America is still the largest manufacturer in the world and managers should not be allowed escape responsibility for their failure to manage effectively with claims that manufacturing in the USA cannot compete. The biggest change needed is an improvement in management. Other things would also help greatly, such as improving the health care system.

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• Excessive Executive Pay

  The excesses are so great now they will either force companies to:

  1. take huge risks to justify such pay and then go bankrupt when such risks fail (and some will succeed making it appear, to some, that the pay was deserved rather than just the random chance of taking a large risk and getting lucky).
  2. make it impossible to compete with companies that don’t allow such excesses and slowly go out of business to those companies that don’t act so irresponsibly
  3. hope that competitors adopt your bad practice of excessive pay (this does have potential as most people are corrupted by power, even across cultural boundaries). However, my expectation is the competitive forces of capitalism going forward are going to make such a hope unrealistic. People will see the opportunity provided by such poor management and compete with them.

  As long as the pay packages were merely large, and didn’t effect the ability of a company to prosper that could continue (slicing up the benefits between the stakeholders is not an exact science). The excesses recently have become so obscene as to become unsustainable.

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• Landscaping Firm Applying Deming's Management Ideas

  Each Brickman branch operates with a standard production model that the company developed in the late 1970s with consultant and renowned statistician W. Edwards Deming... Scott Brickman said the model emphasizes continuous improvements in communication with its nearly 10,000 commercial customers and education and cultivation of its employees to learn and advance within the company.

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• Toyota Manufacturing Powerhouse

  Unusual among automakers, “they don’t hide a lot,” Coventry said. “It’s like going to the Super Bowl and having the opposite side throw their playbook on the table. It’s as if they feel they can still beat you on the field.”

  Toyota has greatly advanced management practice worldwide through their actions.

  In a reflection of Toyota’s team-oriented approach, its executive pay is paltry by U.S. standards. Analyst Ron Tadross at Banc of America Securities estimates the total annual compensation of Toyota’s CEO at under $1 million – about as much as a vice president at GM or Ford Motor Co. makes in a good year.

  The executive pay crisis in America is a symptom of the failure of American management to understand their role. Executives are part of the system and have acted shamefully in allowing obscene pay for a few while claiming they must force others to suffer (due to “the market”).

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• Management Improvement Flavors

  Some tools are much more common in one program, even if they are not limited to one program (such as Design of Experiments used heavily in six sigma). But design of experiments existed long before six sigma and was used by sensible people to improve for decades before six sigma.

  The biggest difference I see in the programs is the overall aim. And that overall aim affects everything else. I happen to be a fan of Deming’s ideas. Most of these programs take a great deal from Deming’s ideas. I believe Lean is closest to Deming’s ideas (which makes sense as Lean is essentially the Toyota Production System TPS).

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• Google: Experiment Quickly and Often

  this is basically piloting changes on a small scale, analyzing the results and repeating that quickly. Quick, frequent experimentation with iteration is a tactic all organizations would benefit from.

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• Innovation and Research and Development

  Innovation can be related to productivity improvement or it can be completely unrelated. A company could innovate with an ideas like the remote control for televisions (or microlending or air bags). That innovation may not contribute in any way to manufacturing televisions more productively.
  
  Other innovation may be related to improving the productivity alone and add no additional functionality to the customer. Many innovations will provide a combination of both benefits. Both innovation and productivity improvement are important.

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• The Economist on Drucker

  In the late 1990s he turned into one of America’s leading critics of soaring executive pay, warning that “in the next economic downturn, there will be an outbreak of bitterness and contempt for the super-corporate chieftains who pay themselves millions.”

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