Blog posts on evidence based management

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

• Lean Government

  I was one of the founding board members on the ASQ Public Sector Network (now the ASQ Government Division). I also, created and have maintained the Public Sector Continuous Improvement web site for a decade (some additional details on my background).

  There have been many great efforts in the government, but still so much more needs to be done. 

   Here are articles exploring what has been done:

  • Doing More With Less in the Public Sector: A Progress Report from Madison, Wisconsin

  continue reading: Lean Government
• 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
• Seven Leadership Leverage Points

  IHI has the courage to say one of the 3 sources for there hypothesis as “Hunches, Intuition, and Collective Experience.” While attempting to base plans on data and not hunches is good. Often you must make decisions without data. It is why Dr. Deming was so concerned with mobility of top management: that mobility means many managers don’t really understand what they are managing. Lean thinkers understand the value of having managers with deep knowledge of the areas they manage.

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• Why Fix the Escalator?

  I think we all (including me) have to be careful when we make judgments of those we respect or find wanting. It seems our judgments often have more to do with our opinion of the person or company, than the specific behavior we believe we are judging. At times this is wise, I believe, but you should remember the basis for your opinion.

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• Government Lean Six Sigma

  Once the political decision has been made to eradicate polio then that desire can be carried out – and politics really has little impact. Other examples are not as simple. A political decision to eliminate AIDS runs into political controversies in selecting the best strategies to accomplish the goal.

  A desire to eliminate hunger, poverty or homelessness run into differing opinions on how those problems should be addressed. I can’t imagine any politician against the elimination of those problems. However, many politicians will be against various tactics to accomplish those goals.

  Political decisions have management components but arguing about the poor management effectiveness of political decisions is a bit too advanced for our current capability, I believe. It seems silly for a government to subsidize mansions being built in hazardous areas where insurers would not insure construction, but for political reasons it continues. It seems silly to have the political leadership prohibit the government from negotiating lower drug costs from suppliers, but they do.

  continue reading: Government Lean Six Sigma
• 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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• 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.

  continue reading: Excessive Executive Pay
• 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.

  continue reading: Data Based Decision Making at Google and Elsewhere (2005)
• Workplace Management by Taiichi Ohno

  Ohno focused a great deal on the faulty perceptions derived from cost accounting thinking. He discussed the importance of not letting your understanding be clouded by thinking with the accounting mindset.

  If you insist on blindly calculating individual costs and waste time insisting that this is profitable of that is not profitable, you will just increase the cost of your low volume products. For this reason there are many cases in this world where companies will discontinue car models that are actually profitable, but are money losers according to their calculations. Likewise, there are cases where companies sell a lot of model that they think is profitable but in fact are only increasing their loses.

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• Using Design of Experiments

  Design of Experiments can seem complicated but at the core it is fairly simple and powerful. By applying the proper techniques it allows you to gage the effect of several variables and, very importantly, the interactions of those variables with a small number of experiments (or tests or pilots).

  George Box is a wonderful author (and friend) who can write for mangers who are not knowledgeable about statistics and statisticians. Statistics for Discovery does a good job of explaining how organizations should use experiments to improve.

  continue reading: Using Design of Experiments
• Lean National Health System

  This is an example of focusing on improving the system which will then result in improved measures (cost savings for example). This systems approach contrasts with cutting costs by cutting every budget by 5% across the board which often fails. Without improvements in the system reducing budgets just reduces capability.

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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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• 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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• Understanding Data

  Effective use of data is an important part of management improvement. Emphasis is needed on “effective”; data misuse is rampant and creates problems. Use of data by itself is not sufficient.

  To be effective you need to learn to think about not what is printed on the page but what lies behind the numbers you see. The numbers are just proxies for the real situation.

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• The Customer Knows Best?

  Some management ideas are pretty easy and straight forward. But many management practices require knowledge and judgment to apply them successfully. Easy solutions may be desired, but, often you must choose between easy and effective (hint, I suggest effective is the better target).

  Listening to customers is important but it is not sufficient.

  ...

  People could assume the numbers at Enron proved what Enron was doing was correct. But it did not prove that. Until we start to evaluate data more accurately we will continue to mistakenly see proof where it does not exist.

  continue reading: The Customer Knows Best?