Posts selected fromManagement Blog - Engineering Blog - Investing Blog and other blogs - The Management System is the Key
I think too often people (in relation to management ideas) demand that things be made more simple than is possible to adequately understand the systems involved. This of course leads to problems. A huge value provided by people like Russell Ackoff is their ability to help explain what is needed in fairly simple terms. Still understanding how these ideas are being expressed in our management systems and how to apply the concepts to our management systems is still a challenge.
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I think one of the big differences between the best lean efforts and the others is the increased value placed on deeper understanding and thinking systemically. continue reading: The Management System is the Key - The Quality of the Entire Customer Experience
 Product quality, in many ways, has been raised in the last few decades and this naturally results in raised expectations. This pattern was well known in the 1960s (and before). Kano’s theory of customer satisfactionexpressed how new features moved from being “delighters” for customers initially and eventually became minimum expectations (you gain no credit for delivering them but will upset customers if you fail).
It is also true that raising the overall customer experience is more difficult than raising product quality (due to the nature of the systems that deliver the results in each case).
I do think there is truth to the idea that customers have raised expectations for businesses to improve the entire experience. Customers are less willing to accept excuses about how the provider is not responsible for various aspects of the experience... continue reading: The Quality of the Entire Customer Experience - Critical Thinking is Needed to Counter Propaganda
That Russians used propaganda and misinformation to attempt to get voters to vote for Trump is important. But the main thing that should have prevented those attempts is sensible critical thinking. The best defense against propaganda is critical thinking and transparency. If the population is trained and accepts being lead to conclusions with obvious propaganda it doesn't matter if you shut off one path for propaganda, others will emerge.
What you need to do is create an expectation of reasoned debate. Sadly the USA has done a very poor job of this. We have allowed politicians get away with obviously false claims. We have promoted not critical thinking but the unthinking following of propaganda.
Until we greatly increase the respect for critical thought and debate we are in trouble. It doesn't matter much what form those seeking to use propaganda use to manipulate people what matters is how susceptible a large number of people are to propaganda.
continue reading: Critical Thinking is Needed to Counter Propaganda - USA Household Debt Jumps to Record $13.15 Trillion
 The Federal Reserve Bank of New York’s Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit, which reported that total household debt increased by $193 billion (1.5%) to $13.15 trillion in the fourth quarter of 2017. This report marks the fifth consecutive year of positive annual household debt growth. There were increases in mortgage, student, auto, and credit card debt (increasing by 1.6%, 1.5%, 0.7% and 3.2% respectively) and another modest decline in home equity line of credit (HELOC) balances (decreasing by 0.9%).
Outstanding consumer debt balances by type: $8.88 trillion (mortgage), $1.38 trillion (student loans), $1.22 trillion (auto), $834 billion (credit card), $444 (HELOC). continue reading: USA Household Debt Jumps to Record $13.15 Trillion - Avoiding Difficult Problems
Coping with this issue (of avoiding unpleasant, systemic and long term rather than acute problems) is one of the things that separates great corporate culture from decent or bad corporate culture.
If there are fairly obvious or fairly easy improvements those would likely be acted on. There are, rarely, but still sometimes, instances where those vocal or politically powerful individuals who would lose out in a fairly obvious improvement will prevent action.
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I am not convinced there are not ways to improve the situation. And I am pretty confident it is important enough to try. And I believe (though I might be wrong) with a concerted effort of knowledgable people improvements that would make a big difference in the quality of life could be achieved. I am not so certain those people involved in leading the effort would be seen in great lights though even if they "succeed." People are much more likely to remember negative consequences to them personally, even if they gain much more than they lost overall. continue reading: Avoiding Difficult Problems - The New Age of Robots and What it Means for Jobs
 Industrial robots are the most advanced application of robots in business today but they are still far from plug and play solutions. They require skilled experts to have them work effectively; but the capabilities and usability have greatly increased over the last 20 years. Respect for people (and all that entails about the management system) is an important part of creating a management system to have the most success integrating robots.
The ability of us to create technological solutions to accomplish tasks that required people has exploded in the last 20 years and will continue to. Lawyers are finding much of what they do can be done by a computer. Much, doesn’t mean all, obviously. Search and rescue in disaster areas is another task that robots are playing an increasing role in; and the use of robots will likely continue to grow quickly. Technology is taking over many aspects of medical care that were not long ago seen as requiring highly trained and experience medical professionals (reading scans, diagnosing illness…).
I think many of these advances are moving so quickly that we are not properly thinking about the long term future of our organizations. The disruption these changes will take will be difficult to predict and plan for.
... continue reading: The New Age of Robots and What it Means for Jobs - “Explaining” Random Variation
When I was a reporter covering Cisco Systems Inc. in the late 1990s, it was my job to talk to several analysts a day to find out the latest bit of news that might move the networking company’s share price.
If the stock moved more than 2% on any uptick in volume, I had to write a story explaining why. After dealing with that every day for about three years, I realized the overwhelming majority of analysts had no better clue than I did about what was moving Cisco’s stock.
The “explanations” you hear from media often are just as useless as horoscopes. A bunch of meaningless words presented in the hopes you don’t realize they are empty words.
The talking heads (and writers) need to say something. It would be much more useful if they took the time to do some research and put in some thought but they seem to be driven by the need to fill space instead of the need to inform. continue reading: “Explaining” Random Variation - Applying Deming’s Management Ideas at the Great Plains Coca Cola Bottling Company
The difficulty in changing is often mostly about our psychology (not the technical difficulty of operating under changed systems and processes after making adjustments to adapt to take advantage of new opportunities).
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Results matter but within a context of the process. If I double profits by wagering all the cash we can borrow on the roulette wheel that result isn’t a sign that we are doing much better. Using data wisely requires understanding what the data tells you and what it does not tell you. continue reading: Applying Deming’s Management Ideas at the Great Plains Coca Cola Bottling Company - ACA Healthcare Subsidy – Why Earning $100 More Could Cost You $5,000 or More
One of the benefits of the USA Affordable Healthcare Act (ACA) is that health insurance costs are subsidized for those earning less than 400% of poverty level income. The way that this has been designed you could get $5,000 (or more, or less) in subsidies if you earn just below the 400% level and $0 if you earn just above.
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60 year old in Virginia - earning $48,200 would receive $7,073 in subsidies (60% of the cost*). Earning $48,300 would mean receiving $0 in subsidies (for this and also examples, the examples shown are for a single individual, you can use the tool to try different scenarios).
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The subsidy levels for those with very high health insurance costs (especially those over 50 years old, or with a family) are very large. If you are close to the subsidy cutoff level the costs of going over can be huge, costing you $5,000 or even over $10,000 just by making an extra $100. continue reading: ACA Healthcare Subsidy – Why Earning $100 More Could Cost You $5,000 or More - Understanding and Misunderstanding Variation
... one of the central aspects of Deming’s ideas on management: that we need to view the organization as a system. It is not as simple as adopting a couple practices and getting the same results another organization gets from those same practices. The interactions between the existing organization and the new practices will be different. This makes management challenging but it also makes our jobs of improving management continually interesting and full of opportunities to learn. continue reading: Understanding and Misunderstanding Variation - Advice for Managers Who are Just Starting Out
 - Applying Quality as a Business Strategy at Hallmark Building Supplies
Hallmark Building Supplies has profit sharing for all and doesn’t do annual performance appraisal. They attempt to let the market dictate pay and take pay out of the performance discussions. To manage performance they seek to “coach while the game is going on” (and mentioned the importance of people being receptive to coaching). Cooperation between sales people has increased since they eliminated commissions.
Everyone is trained on the purpose statement, it is not just something that hangs on the wall. We use it to make decisions on a regular basis.
continue reading: Applying Quality as a Business Strategy at Hallmark Building Supplies - Toyota’s Newest Humanoid Partner Robot
 T-HR3 reflects Toyota’s broad-based exploration of how advanced technologies can help to meet people’s unique mobility needs. T-HR3 represents an evolution from previous generation instrument-playing humanoid robots, which were created to test the precise positioning of joints and pre-programmed movements, to a platform with capabilities that can safely assist humans in a variety of settings, such as the home, medical facilities, construction sites, disaster-stricken areas and even outer space. continue reading: Toyota’s Newest Humanoid Partner Robot - Standardization With a Systems View Allows Creativity to Flourish
 We all benefit from standardization every day. We can plug our devices into a wall outlet and power them. We can get a replacement battery and have it work as expected. We can type on the keyboard without thinking because the keys are the same on each keyboard. We can connect to a new wifi network with our phone or laptop. We can buy a replacement pipe for our sink and install it.
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One of the objections I hear to adopting standardization is that doing so takes away our ability to be creative. This is not the case. Dr. Deming’s quote does a good job of explaining this. Standardization allows us to create systems that are reliable and effective. Within that system there should be a great deal of flexibility to apply creative ideas.
It is true organizations often impose rigid rules that restrict creativity. If standardization is responsible for part of this result then the process by which standards are created and continually improved needs to be examined. A management system needs to continually improve and part of that is continually evaluating how management concepts (such as standardization) are being applied.
continue reading: Standardization With a Systems View Allows Creativity to Flourish - Using Annuities as Part of a Retirement Plan
 Annuities have a bad reputation, with a history that makes that bad reputation sensible. The main problem is the high costs (and often hidden costs) of many annuity products. Combine with large sales incentives this has led to annuities being abused by sales people and financial companies while providing poor returns to investors.
However the attributes of annuities fit a specific part of a retirement plan very well.
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The best roll for an annuity in retirement planning in my opinion is to serve as a protection against longevity. The longer you live the more risk you have of outliving your investment savings. Life annuities have the benefit of continuing for as long as you live. continue reading: Using Annuities as Part of a Retirement Plan
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