Posts selected fromManagement Blog - Engineering Blog - Investing Blog and other blogs - Drug Prices in the USA
There is the contention that without the ability to overcharge American’s the drug companies won’t invest in Research and Development. This is such a poor argument I can’t believe people can make it without suffering a big blow to any credibility they had. Obviously drug development has a very high cost (creating a high fixed cost) and often drug manufacture has a small marginal cost (though at times the marginal cost is also high). Right now the companies count on the American market to provide funds for much of the research, development, marketing and profits. Then they sell the drugs in other markets only looking to maximize profits looking at marginal costs. Obviously, if they no longer could count on excessive prices in the United States they would have to spread the fixed cost over the rest of the world. The argument that they won’t invest in research and development without excessive costs in America is false. They would adjust their pricing structures around the world based on losing the cash cow of the American consumer. That should be obvious to anyone who even took one economics course. continue reading: Drug Prices in the USA - 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. continue reading: Price Discrimination in the Internet Age - Good Customer Service Example
I received my camera and I could not open the battery compartment: which was quite frustrating. I tried following the instructions but I couldn’t get it to open. So I tried calling Canon and I got a person on the phone within 30 seconds continue reading: Good Customer Service Example - 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 - 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. continue reading: Targets Distorting the System - Could Toyota Fix GM
Yes, Toyota could fix GM. Even the right leaders and managers, within GM, could fix GM but it is a huge long term job and it would be harder to do it internally because you will have to do it while competing with Toyota. Also they have some difficult issues to deal with since their previous managers did not tihnk of the long term (20-50 years out from the decisions they were making in the 70s though 90s).
I wouldn’t buy GM if I were Toyota, though. Why bother. Just grow Toyota, it is working very well so far. It makes sense to buy if you need to grow quickly to gain critical mass, or you will lose the opportunity to grow early in a fast moving market. High tech companies (like Cisco and Intel) often do well buying other companies – but just as often high tech companies make more mistakes buying than is justified by the successes. continue reading: Could Toyota Fix GM - Fast Company Interview: Jeff Immelt
My guess would be that what lead to this quote is not a lack of understanding that managers need the same qualities today they needed 10 years ago but the compulsion to feed the media frenzy for some incredible new insight. It just isn’t sexy to say “we need the same leadership qualities we needed in the past.” Deming stressed the importance of these “new” qualities he states more than 50 years ago and I think most decent managers have know you need to “know why we’re doing them”
...
Customer focus and innovation would also be at the top of the list of important issues and were 10 years ago and will be 20 years from now. What is important for management does not change much.
occasionally innovation is so dramatic it drastically changes the practice of management, two examples:
1) the use of information technology
2) the whole quality movement [Deming’s ideas, SPC, Toyota/Lean, Six Sigma… continue reading: Fast Company Interview: Jeff Immelt - Deming’s Ideas at Markey’s Audio Visual
Mark Miller, General Manager, Markey’s Audio Visual spoke on Markey’s experience adopting Deming’s ideas.
- Markey’s needs to anticipate the changing needs of customers and anticipate those needs
- Unknown and unknowable – not really unknown just un-measurable (again taught to all employees)
- Gemba – where the real work gets done (the customer interaction – he stressed time and again that the key to their success was Markey’s employees interaction with customers – Markey’s aims to provide the best customer experience the customer has with any company)
- Break down barriers between departments – Markeys doesn’t charge internally. Indianapolis looses money – they own the high end equipment used by the other offices.
- Intrinsic motivation v. Extrinsic motivation – he has the chart from page 122 of New Economics in Deming’s handwriting on his wall.
continue reading: Deming’s Ideas at Markey’s Audio Visual - W. Edwards Deming’s Seven Deadly Diseases
Seven Deadly Diseases
- Lack of constancy of purpose
- Emphasis on short term profits (Overreaction to short term variation is harmful to long term success. With such focus on relatively unimportant short term results focus on constancy of purpose is next to impossible.)
- Evaluation of performance, merit rating or annual review (see: Performance Without Appraisal: What to do Instead of Performance Appraisals by Peter Scholtes).
- Mobility of top management (too much turnover causes numerous problems)
- Managing by use of visible figures, with little of no consideration of figures that are unknown or unknowable.
continue reading: W. Edwards Deming’s Seven Deadly Diseases - Customer Service is Important
My experience did not give me the impression they were focused much on what was important to me as a customers. The service I received seemed to be what I would expect from a company very focused on the idea that the objective of the company is to increase profits at the expense of everyone else. Two models of organization provide a very different customer experience. One that sees customers as fools to be fleeced seems common among USA arilines, health care providers, cable companies, large banks, car dealers and phone companies. The idea that organizations exists to provide customers value and the company takes a profit for providing that value sadly seem rare in the USA (though some organizations behave this way: Trader Joe's, many credit unions, many small restaurants and Apple (though some may disagree with me placing them here). continue reading: Customer Service is Important - Managing the Supplier Relationship, at Ford and Elsewhere
Ford said they were committed to the Deming philosophy in the 1980’s and 1990’s. Donald Petersen, former CEO of Ford Motor Company, was one of those included in the Deming Library Tapes.
Nothing has changed from 1990 to today [October 2005] that explains why Ford saying they are going to deal with suppliers differently now should work any better then such statements 15 years ago. Until they acknowledge what problems in their management system have caused them to fail to use sensible management practices that have been well know for decades I see no reason to believe their claims that they will behave differently this time. continue reading: Managing the Supplier Relationship, at Ford and Elsewhere - Innovation and the Creative Commons
Creative Commons is a license that lets the creators of intellectual property clearly define how that property may be used by others. Partially this license is a reaction to the poor way copyright law is being viewed today (see links below).
Partially it is tool that gives creators a way to provide for more interaction with their ideas. And this interaction is a great way to market, in the right circumstances. More managers should be thinking about how their organizations can use this tool to improve performance. continue reading: Innovation and the Creative Commons - Statistical Techniques for Quality
As six sigma has taken the business world by storm in the past 15 years, many organizations have focused on acquiring and implementing the DMAIC methodology with performance benchmarks defined by “sigma levels”. However, after perhaps proclaiming the “six sigma organization” label for the company, it is important for the business leaders to look beyond immediate concerns, i.e. those issues embodied in black belt projects, and adopt holistic and forward-looking perspectives in seriously advancing organizational interests.
continue reading: Statistical Techniques for Quality - The Dramatic Spread of Lean Thinking
Life indeed will be better for all of us with the improvement of management. The benefits of economic success are large. Good jobs are desired everywhere: USA, India, Germany, Singapore… Those jobs provide positive externalities that create a reinforcing loop of improving conditions.
There are many important factors (education, investment, political stability, rule of law…) to economic success. Effective management is among the factors that can provide dramatic increases in the standard of living of a country or community. continue reading: The Dramatic Spread of Lean Thinking - Measuring and Managing Performance in Organizations
measure [parameter] in the hopes of improving [goal]
When dysfunction occurs, the values of [parameter] go up comfortingly, but the values of [goal] get worse. Dysfunction often occurs. continue reading: Measuring and Managing Performance in Organizations
|
