Posts selected fromManagement Blog - Engineering Blog - Investing Blog and other blogs - The Purpose of an Organization
W. Edwards Deming described the purpose of an organization in New Economics, on page 51, as:
The aim proposed here for any organization is for everybody to gain – stockholders, employees, suppliers, customers, community, the environment – over the long term. continue reading: The Purpose of an Organization - 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 - 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 - 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. continue reading: Seven Leadership Leverage Points - Malcolm Gladwell and Synchronicity
- 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 - 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.”
continue reading: The Economist on Drucker - Superior Customer Experiences Start with Respect for Employees
Oakley found that there is a direct link between employee satisfaction and customer satisfaction, and between customer satisfaction and improved financial performance. Employee satisfaction is a key antecedent to employee engagement. He also found that organizations with engaged employees have customers who use their products more, and increased customer usage leads to higher levels of customer satisfaction.
This is not a zero-sum game. Good managers grow the pie so all the stakeholders can get more benefit (customers, investors, employees…). continue reading: Superior Customer Experiences Start with Respect for Employees - Fear Remains a Toyota Motivator
First, don’t let the title fool you, this is not an indication Toyota is going against Deming’s obligation of management to “Drive out fear and build trust so that everyone can work effectively”.
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Rather than being drawn to improve it is most often stated as being scared that if we don’t we will have to pay for failing to improve. Thus the reference to fear. continue reading: Fear Remains a Toyota Motivator - 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. continue reading: Innovate or "Play it Safe: to Avoid Risk - 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.
continue reading: The 70 Percent Solution - Quality, SPC and Your Career
Success is not as easy as we might hope. Just discovering the ideas of Deming or Toyota or Ackoff is not enough. The great ideas don’t, by themselves, convince managers to try a new way of managing. There is a great deal of education needed for most organizations to get to the point where they realize they could improve by applying “old” ideas such as: control charts, lean thinking, spc, not tampering… continue reading: Quality, SPC and Your Career - Management Improvement Leaders
- Russell Ackoff – frankly I find it difficult to imagine a list management thought leader list, not including his name. Organizational development, systems thinking, management improvement, planning, policy deployment, learning.
- George Box: statistics, design of experiments, finding solutions (problem solving, process improvement), learning, management improvement
continue reading: Management Improvement Leaders - Innovation at Toyota in Developing the Prius
By the end of 1993 the development team had determined that higher oil prices and a growing middle class around the world would require the new car to be both roomy and fuel-efficient. Other than that, they were given no guidance. “I was trying to come up with the future direction of the company,” says Watanabe, who headed corporate planning at the time. “I didn’t have a very specific idea about the vehicle.”
Investing in innovation is risky. If successful, the benefits can build a competitive advantage that is difficult for others to eliminate. However, others will try and if you fail to execute as well in the future those benefits can disappear quickly. Toyota shows few signs of letting others catch up though.
continue reading: Innovation at Toyota in Developing the Prius - Six Sigma Won’t Fix Bad Management?
Like most management concepts how it is applied varies tremendously. If one just uses some tools that are part of the “Six Sigma tool kit” (mostly tools from TQM and the like) then you might improve bad management only marginally.
But if you read the work of Roger Hoerl, Soren Bisgaard, Forrest Breyfogle III… and learn and apply what they talk about as Six Sigma you will definitely have to address bad management practices. Their Six Sigma is definitely a management improvement system (you can’t apply their concepts of Six Sigma without fixing many bad management practices). continue reading: Six Sigma Won’t Fix Bad Management?
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