Blog posts on long term thinking

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

• Bad Management Results in Layoffs

  Layoffs are a failure of management.  If the company has not been executing a long term strategy to respect people and manage the system to continually improve, manage for the long term, working with suppliers... it might be they have created an impossibly failed organization that cannot succeed in its current form.  And so yes it might be possible that layoffs are required.

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  At exactly what point some layoffs are necessary and how much other stakeholders are squeezed to avoid layoffs is not simple to answer (just as employees are squeezed to avoid suffering by other stakeholders).  I think to have any pretense of good management systems while resorting to layoffs management must say what specific failures lead to the situation and what has been done to fix the system so such failures will not re-occur.  Those explanations should seem to be among the best applications of 5 why, root cause analysis, systems thinking, planning... that you have seen.  Layoffs should be seen as about the most compelling evidence of failed management.  Therefore explanations attempting to justify the layoffs have as high a barrier to overcome as any proposed improvement to the organization/system.

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• 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.

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• Factfulness – An Extremely Valuable Book

  Data is extremely valuable in helping us make decisions and evaluating the effectiveness of policy. However it is critical to be careful. It is very easy to focus on meeting targets that seem sensible – increasing the number of hospital beds – but that lead to less effective policy.

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  The book relentlessly points out the great progress that has been made globally over the last 50 years and how that progress continues today and looks to be set to continue in the future. We have plenty of areas to work on improving but we should be aware of how much progress we have been making. As he points out frequently he has continually seen huge underestimation of the economic conditions in the world today. This book does a great job of presenting the real success we have achieved and the progress we can look forward to in the future.

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• Personal Finance Considerations for Going into Debt for Education

  I think taking on debt for education is a sensible financial decision. But the level of the debt that is sensible must be considered.

  When I went to college (too long ago) it was expensive, but not nearly as expensive as it is now (in the USA at least – I am not as familiar with the costs outside the USA other than knowing in many places that university education costs are very reasonable).

  I don’t have any hard cutoff where I think taking on debt no longer makes sense. But I do think I would include cost as a major factor when deciding what college to attend if I were facing that decision today.

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  As I have said before the reason to chose a career is because that is the work you love, but in choosing between several possible careers it may be sensible to consider the likely economic results. And in choosing how much to spend on your education considering your future earnings is wise.

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• What Loss Will a Business Suffer Due to a Dissatisfied Customer?

  You can’t know how much a dissatisfied customer will cost your business in the long run. You can make statistical judgements about how costly dissatisfied customers are to a business but those are loaded with many guesses. They can give a general indication of the magnitude of the costs but they are largely guesses, not something you can measure.

  Sometimes a business largely gets away poor quality for a long time. The customer doesn’t change behavior, doesn’t complain to others and doesn’t punish the company in the long term. But you never know when one small failure will cause the luck to run out and turn a customer against the business and costing it dearly.

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• Respect for People – Understanding Psychology

  I see building improvement capacity of the organization, which largely means building the capacity of the people, as an extremely important focus of improvement efforts. It is, at times, important to slow down the pace of change to ensure that people can adopt and incorporate the new concepts fully. If not, the improvements tend to only take effect on the surface.

  Improvements in results are important but it is also critical to have management improvement concepts adopted as the natural way of doing business.

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• The Importance of Management Improvement

  If organizations just adopt management improvement practices I firmly believe customer service, financial performance and employee satisfaction could be improved. This was a big part of the reason I started to use the internet to share management improvement ideas back in 1996 (plus I find management improvement interesting).

  On the note of making a difference in people’s lives. I have had far more people tell me how my father (Bill Hunter) made a huge difference in their lives than ever tell me anything like that about myself...

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• Creating an Integrated Life Where Work Adds to Life

  ... I realize doing this to the extent he did is very difficult. But growing up with it I learned that the idea that you could design the whole life (including everything) to maximize life.  And that it may well be that extra effort at work rather than detracting from the rest of life enhances it. For me the key is to focus on maximizing the whole and within that realizing sometimes there are tradeoff (essentially a zero sum game) but there may well be times when you can design the system of your life to find win win solutions.

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• How to Lead From Any Level In the Organization

  Similar to helping other people grow their careers is the idea of helping other people to solve their problems. Again, this starts with a clear understanding of your sphere of influence. It determines what strategies you can pursue, and building your sphere of influence should be part of your decision making process.

  What it comes down to is proving yourself in this way—and doing so consistently. “It isn’t some secret sauce. Prove yourself to be valuable and you will gain influence. Help people solve their problems. They will be inclined to listen to your ideas. And helping people to solve their problems doesn't mean you are giving them the answer. It may mean you asking empowering questions.

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• Toyota Mirai – Hydrogen Fuel Cell Electric Car

  I am curious, even skeptical, about the potential for hydrogen fuel cell versus battery passenger cars. I do respect Toyota and so am wondering if they do indeed see something that most others are missing.

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  I do think hydrogen fuel cells may provide a better option for larger vehicles (maybe even shipping), but I have done next to no research on this so I may be wrong.

  It seem unlikely to me that hydrogen fuel cell passenger cars are going to make it but I would be happy to be wrong. Perhaps the advantages will overcome what seem to me to be challenges that are going to prevent them from being successful. I am confused about how committed to this strategy Toyota is (which makes me question my belief that hydrogen fuel cell passenger cars are not going to be successful).

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• 2007 has been a difficult year for Toyota

  I find the quote “2007 has been a difficult year for Toyota” found in The Dings and Dents of Toyota a bit amusing. Toyota has had some problems as the article notes like product recalls and losing a handful of employees to Ford and Chrysler. They are about even with GM in worldwide sales and posted a profit of nearly $14 Billion (I believe maybe 20 companies have ever earned that much in any year) in the year ending March 2007 and continue to make huge profits this year (Toyota reported their best quarter ever in August). With difficulty like this who needs success:-)

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• IT Talent Shortage, or Management Failure?

  ... the main problem is poor management.

  So what should managers do? Read the Curious Cat Management Blog and follow the advise in our previous posts, including: Stop Demotivating Employees (IT employees are especially disdainful of pointy haired boss actions that others tolerate more easily) – Signs You Have a Great Job … or Not – Joy in Work for IT – hiring silicon valley style...

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• Creating Jobs

  Job losses are the result of poor management – one of the core principle of lean thinking, Deming’s thoughts… is respect for people (providing good jobs, no layoffs, etc.). It is obvious that productivity continues to improve, which is a great thing. Management must manage that, and other matters, successfully. When management fails employees pay with their jobs (and very unfortunately senior management just pay themselves more and more).

  The way to create jobs is to follow Deming’s chain reaction of systemic improvement.

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• Using Customer Feedback to Drive Continual Improvement

  That impact of creating systems that continually improve the value provided to customers is still very much under appreciated. The Deming Chain Reaction is such a powerful concept that allows us to create more value and reduce costs over the long term.

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  Long term thinking with an appreciation for systems allows managers to focus on improving value over the long term while many of their competitors focus on reducing current costs no matter how much damage they do to their customers and the long term success of their business.

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• Management Advice from Warren Buffet

  Charlie and I look for companies that have a) a business we understand; b) favorable long-term economics; c) able and trustworthy management; and d) a sensible price tag. We like to buy the whole business or, if management is our partner, at least 80%
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  A truly great business must have an enduring “moat” that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business “castle” that is earning high returns.

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