Tsana Associates: Business

Fri, 30 Nov 2007 07:42:56 GMT

I have a number of "Toyota is struggling" articles in the backlog to work through. Maybe I'll dump the rest of those later in a single post. This was a good article from BusinessWeek (actually a weekly publication, unlike IndustryWeek), thanks to Mike T. for sending it my way.

Is Toyota sitting idly by? Not at all, they are stepping up training:

"...management has launched a slew of education initiatives, and even uses a business school in Tokyo to teach Toyota to be, well, more like Toyota. "We are making every effort not to lose our DNA," says Shigeru Hayakawa, president of Toyota Motor North America."

The hypergrowth is a challenge, to be sure:

"And in the past three years, Toyota has hired 40,000 workers new to the company's culture. "It isn't an immediate problem; it's like a metabolic disease you don't know you have before it's too late," says Tatsuo Yoshida, an analyst at UBS in Tokyo."

When I was at Dell, we were growing at 30 to 35% a year, which was a frantic pace to keep up, in terms of building new factories and hiring new people. I came on board in 1999, just after the company had starting hiring lots of experienced managers from other companies. which compared to the go-go culture of Dell, that was like hiring GM people into Toyota. Not necessarily the same culture and that led to some culture clashes, with those who had been brought up in the Dell system and the new people who didn't want some of those "old company" cultures seeping in.

Nothing against GM people, lots of talented, hardworking people there... so what does Toyota do when they hire an experience GM leader? Send them to training!

"When Steve St. Angelo was hired from General Motors in 2005, the executive immediately found himself back on the assembly line for several weeks. It didn't matter that he had spent almost 10 years at a plant in Fremont, Calif., jointly owned by GM and Toyota, where the Toyota Way has been alive and well for decades. The company figured an outsider hired to a management jobâo[per thou]a rarity at Toyotaâo[per thou]would need schooling in the basics. "They assumed I knew nothing about Toyota's production system," says St. Angelo, who in June was promoted to North American manufacturing boss."

I don't remember Dell having any formal "this is our culture" training.

Does it seem, to anyone, that Toyota is standing still, not trying furiously to improve, even though everyone anoints them the #1 and the leader? "Continuous improvement in the pursuit of perfection," that's the phrase right? Not "continuous improvement until you're #1 and then rest on your laurels." That attitude is probably the toughest aspect of the Toyota Way culture for other companies to copy, don't you think?

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[Lean Blog]

Tue, 27 Nov 2007 11:35:15 GMT

PFI 'forcing public service cuts'. Some councils are cutting services because private firms are exploiting a Treasury scheme to push up prices, MPs say. [BBC News | UK | UK Edition]

Wed, 21 Nov 2007 08:42:03 GMT

Fascinating Article on Bad Decision-Making by the Israeli Defense Force.

Check-out this insightful article that we posted over at our website Evidence-Based Management. As Jeff Pfeffer puts it so well:

"We have just posted an amazing article by an Israeli professor that has some fascinating material on how things went so wrong for the Israeli army in its recent struggles in Lebanon. The article highlights the importance of assumptions, mental models, and mind sets as crucial to making better and better informed decisions."

The article is by Raanan Lipshitz and here is the abstract:

"This paper argues that the Israel Defense Force (I.D.F.) failure in the second Lebanon war can be partly attributed to commanders mindless and insufficiently critical decision making processes at the individual, group and organizational levels, or the platoon/tactical, division/operational and GHQ/strategic levels. Four cases are analyzed. The first three cases confirm the proposition during planning and opening stages of the war. The fourth case tests confirms its validity during the war's second, ground campaign phase. The paper presents an inclusive psychological conceptualization of decision making that is radically different from the calculative conceptualization that underlies mainstream decision research. The descriptive and prescriptive implications of the paper's findings and the model that it presents generalize beyond the second Lebanon War and Military Decision Making to decision making in business and the conduct of decision research."

[Bob Sutton]

Wed, 21 Nov 2007 08:39:03 GMT

Northern Rock shares fall again. Shares in troubled bank Northern Rock fall by up to 25% as uncertainty about a buyout continues. [BBC News | UK | UK Edition]

Thu, 08 Nov 2007 08:40:58 GMT

Automotive Overproduction Comparison. How GM Handles a Hit: Build Fewer - WSJ.com

The WSJ had an article today about how GM is trying to avoid overproduction of hot new vehicles (like the Buick Enclave) so that they don't have to dump inventory to rental fleets or resort to using incentives and discounts to move metal. Both of those practices harm resale value, which is one buying point for many customers.

I read recently how Toyota's goal is to build one car less than customer demand, always keeping that in balance.

So how does Toyota compare to the "Detroit Three" in terms of inventory levels and avoiding overproduction? This graphic from the article tells quite a story.

Toyota has half the inventory of GM, Ford, and Chrysler, not just in total numbers, but in adjusted "inventory per market share point." Toyota carries fewer days of inventory than their competitors, clearly.

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[Lean Blog]

Tue, 23 Oct 2007 08:17:39 GMT

The Seventh Flow

Those of you who are familiar with Shingijutsu’s materials and teaching (or at least familiar with Nakao-san’s version of things) have heard of “The Seven Flows.” As a brief overview for everyone else, the original version, and my interpretations are:

The flow of people.
The flow of information.
The flow of raw materials (incoming materials).
The flow of sub-assemblies (work-in-process).
The flow of finished goods (outgoing materials).
The flow of machines.
The flow of engineering. (The subject of this post.)

A common explanation of “the flow of engineering” is “the footprints of the engineer on the shop floor.” I suppose that is nice-sounding at a philosophical level, but it doesn’t do anything for me because I still didn’t get what it looks like (unless we make engineers walk through wet paint before going to the work area).

Common interpretations are to point to all of the great gadgets, gizmos and devices that it does take an engineer (or at least someone with an engineer’s mindset, if not the formal training) to design and produce.

I think that misses the point.

All of those gizmos and gadgets should be there as countermeasures to real, actual problems that have either been encountered or were anticipated and prevented. But that is not a “flow.” It is a result.

My “put” here is that “The Flow Of Engineering” is better expressed as “The Flow of Problem Solving.”

When a problem is encountered in the work flow, what is the process to:

Detect that there even is a problem. (”A deviation from the standard”)
Stop trying to continue to blindly execute the same process as though there was no problem.
Fix or correct the problem to restore (at a minimum) safety and protect downstream from any quality issues.
Determine why it happened in the first place, and apply an effective countermeasure against the root cause.

If you do not see plain, clear, and convincing evidence that this is happening as you walk through or observe your work areas, then frankly, it probably isn’t happening.

Other evidence that it isn’t happening:

People working around or improvising “to get the job done.”
If you have andons, they are never pulled, or they go off quickly every time.
No line stops. (Yes, this is a very, very bad thing.)

At the cultural and human-interaction level:

Leaders saying things like “Don’t just bring me the problem, bring a solution!” or belittling people for bring up “small problems” instead of just handling them.
People who bring up problems being branded as “complainers.”
A system where any line stop results in overtime.
No simple, on/off signal to call for assistance. No immediate response.
- If initially getting help requires knowing who to phone, and making a long explanation before anyone else shows up, that ain’t it.
“Escalation” as something the customer (or customer process) does when the supplying organization doesn’t respond. Escalation must be automatic and based on elapsed-time-without-resolution.

Go look. How is your “Flow of Problem Solving?

- Mark [The Lean Thinker]

Fri, 12 Oct 2007 07:42:03 GMT

Getting A Plant Tour

A couple of days ago I wrote about how to host a tour. Here are some thoughts on how to get one. As always, I’d love to hear your comments and experiences.

Don’t expect your hosts to change your “cement heads.” I have had requests from groups who wanted to send their “resistant managers” to our factory so we can show them things that will change their minds. Doesn’t work. Sorry, that is your job. My experience is that people who don’t want to see the benefits will always find all of the things that are “unique” about their circumstance, and special case reasons why the other place is doing so much better.

Go to learn, not to look. In my last post I made reference to “industrial tourists.” Those are groups that are more interested in the layout and clever gizmos than in the thinking behind them. They are, at best, looking for ideas and your technical solutions to their problems. Copying others’ solutions is not thinking.

Going to learn is a different attitude. When you look at a layout, or other technical solution, ask yourself this: “What problem does that solve?” How does it save time? How does it remove variation from the process? What did the operation look like before they did that? Force yourself to think in four dimensions. Not just what you see now, but what it would have looked like in the past. WHY did they do this?

Although many people think lean manufacturing is counter-intuitive, I think that with this line of thinking you will find it actually is just common-sense solutions to the problems that everyone has, every day.

Nobody is perfect. Even a Toyota plant has obvious issues. If you end up fault-finding, you will miss the good stuff. I was touring a Toyota plant with a group a couple of years ago and it had obviously slipped. This is old news, and one of the reasons for their internal back-to-basics approach. But two things came to light: The rich visual controls made it easy for total strangers on the 1 hour tour to SEE the difference between “what should be” and “what is.” Wow. Try that in YOUR factory. And, reading the news stories, it was a problem they were taking very seriously and doing something about it vs. not noticing the deterioration and just letting things go.

Every plant has issues. Some have great material flow and pull systems, but only average problem solving. Others have a great technical base for home-grown tools, fixtures and machines. A few have great problem solving (They seem to be doing better than others.) Take in what is working, and what is holding them back. What would be the next problem they are working on?

Pay attention to the people. People are the system. How do they interact with the physical artifacts (layout, machines, etc.) An operation that has their stuff together will have people who are obviously comfortable with the pace of work. It will be obvious they get support when there are problems.

Don’t ask too many questions. What? Aren’t you there to learn? Yes. But try to learn with your eyes first. Even if you are moving, “stand in the chalk circle” and see the problems and the solutions. Sharpen your observation skills before you take the tour. Practice in your own plant. When I am hosting visitors and we have the time, my response to a question is to show them where to look for their answer, then ask them what they saw.

If allowed, make sketches. Most operations will have a prohibition against photographs. Even if they allow photos, however, you will capture much more if you stand and sketch what you see. You don’t have to produce a work of art. The purpose is to force your eye to pay attention to the small details. You will see much more through the eyes of the artist than you will through a camera.

Remember they are in the business of production, not consulting.
“Be a good guest” and remember that everybody there has a real job.

Edit 5 Sept: And Jon Miller correctly pointed out something I missed:

Give Back. You will bring “fresh eyes” to their environment and see things they do not. Everyone suffers from a degree of blindness to the familiar. If you are really going to see and learn, you will gain insights that can help your hosts in their own improvements. Ask them the questions that will help them see what you see.

- Mark [The Lean Thinker]

Fri, 05 Oct 2007 07:33:08 GMT

Why Rewarding People for Failure Makes Sense: Paying "Kill Fees" for Bad Projects.

The notion that companies ought to reward people for failure and punish them for success is, at best, a dangerous half-truth. A high failure rate is a hallmark of innovation. Whether we are talking about products, new companies, or new business processes, there is little evidence that aiming to reduce failure rates is a useful strategy.

U.C. Davis Professor Dean Keith Simonton, who has spent much of his career doing long-term quantitative studies of creative genius, has concluded that a high failure rate is a hallmark of creative geniuses -- he concludes that the most creative people -- scientists, composers, artists, authors, and on and on -- have the greatest number of failures because they do the most stuff. And he can find little evidence that creative geniuses have a higher success rate than their more ordinary counterparts; they just take more swings at the ball. Check out his book Origins for Genius , perhaps the most complete review of research on the subject.

The upshot of all this is that the most creative people -- and companies -- don't have lower failure rates, they fail faster and cheaper, and perhaps learn more from their setbacks, than their competitors. One of the biggest impediments to faster and cheaper failures is that once people have made a public commitment to some course of action and have devoted a lot of time and energy to it, they become convinced that what they are doing valuable independently of the facts. My colleague and friend Barry Staw at the Haas Business School has devoted much of his career to studying this process of "escalating commitment to a failing course of action." Barry shows through a host of experiments, field studies, and case studies that such irrational devotion can be extremely destructive and remarkably hard to stop once it starts.

One antidote to such misguided commitment is provide people incentives for pulling the plug as early as possible on failing projects. Merck, the giant pharmaceutical firm, is doing a host of things to improve their innovation process these days, and following Staw's research, Peter Kim, the new head of R&D has instituted what they call "kill fees"" at Merck, paying out serious dollars to scientists who pull the plug on failing projects. As BusinessWeek reported:

'An inability to admit failure leads to inefficiencies. A scientist may spend months and tens of thousands of dollars studying a compound, hoping for a result he or she knows likely won't come, rather than pitching in on a project with a better chance of turning into a viable drug. So Kim is promising stock options to scientists who bail out on losing projects. It's not the loss per se that's being rewarded but the decision to accept failure and move on. "You can't change the truth. You can only delay how long it takes to find it out," Kim says. "If you're a good scientist, you want to spend your time and the company's money on something that's going to lead to success."'

If you blend together research suggesting that failing faster rather than failing less often is essential to innovation, that an action orientation is essential to innovation, as well as research suggesting that so-called experts aren't very good at guessing which new ideas will succeed and fail, you can see why I proposed in "Weird Ideas That Work" that creativity is sparked when organizations "reward success and failure, punish inaction." It may sound really weird, but in addition to the evidence that supports it, Merck seems to be doing it. And so do a lot of other creative organizations.

When I really want to get executives upset, I sometimes propose that they reward failure MORE than success when they are managing creative work. I am not sure if I believe it is a good idea, but having the discussion can be pretty interesting.

[Bob Sutton]

Tue, 02 Oct 2007 13:28:47 GMT

Trouble in iPhone paradise. Only three months into the iPhone era, it's clear the starry-eyed part of the relationship with Apple and iPhone owners is coming to a close, and the real part of the marriage is settling in. What would Dr. Phil do? [CNET News.com]

Thu, 27 Sep 2007 07:42:23 GMT

Booz Gets Lean (without knowing it). by Dan Markovitz

The latest issue of Strategy+Business, Booz Allen Hamilton's business journal, features an article on cost cutting. Ordinarily, simple cost cutting flies in the face of real lean, but in this case, the authors' recommendations incorporate an important lean principle, rather than defaulting to "L.A.M.E."

The authors argue that cost-cutting through layoffs and budget cutting will ultimately fail unless the three strands of the "organization's DNA" -- information, decision rights, and motivators -- are also involved. This is welcome change from the standard approach to cost-reduction of layoffs, outsourcing, and assorted (and predictable) "belt-tightening" measures.

Briefly, "information" means distributing throughout the firm the necessary information about internal costs of shared services such as IT, manufacturing, or distribution:

Information is power, and with real transparency on the price of goods and services, the law of supply and demand can take hold. Companies can allocate services by forcing departments to make decisions on the basis of fixed prices for services or by open, competitive bidding between internal and external service providers.

Nothing particularly lean about this point. But it's certainly worth making, since all-too-often people have no idea of the internal economics of the organization.

"Decision rights" is the authors' fancy term for decision-making authority, and in this article, they raise an idea very much in keeping with lean: that this authority should be delegated to the people in the "gemba" (the Japanese term referring to the "actual place" where work is done), since not only do they have the best understanding of the processes involved, they can actually make the decisions more efficiently:

The happy medium requires senior managers to push decision rights further down the org chart while carefully monitoring the decisions their direct reports make. That expands the senior managerâo[dot accent]s span of control and ensures a more efficient decision-making process based on local knowledge. And given good information, those decision makers become more efficient, lowering the cost of the decision-making process itself.

Finally, the authors argue that "motivators" -- incentives such as promotions and salary increases -- be used wisely. They contend that standard vertical promotions

accomplish little more than adding layers of management and creating a cadre of highly paid individual performers with little real managerial responsibility.

Instead, they propose the adoption of "lateral promotions,"

which confer more responsibility and higher salary without a move up the management ladder. Such moves serve not only to put the brakes on the build-up of excess management layers but also to open up the channels of communication, thanks to the increased movement of managers from department to department.

This idea, too, isn't explicitly mentioned in the Toyota Production System. But the concept of a lateral promotion and the resulting benefit of keeping overhead to a minimum is what Matt May would call an "elegant solution," and is very much in keeping with the spirit of lean.

So hats off to the authors: without even knowing it, they hit upon some key tenets of lean: respect for workers in the gemba by enabling them to make critical decisions, and avoiding unnecessary buildup of the turgid hierarchy that chokes so many organizations.

[Lean Blog]

Fri, 21 Sep 2007 13:00:34 GMT

Worst. Employee Handbook. Ever.. FTD.de - Business English - Business English - I've found the worst employee handbook ever

The title of this post comes with apologies to Comic Book Guy. This post isn't about Lean or even about manufacturing, but as much as we talk about leadership here, I can't resist linking to this funny Financial Times column about a very unintentionally funny "motivational handbook" from the accountants at Deloitte. This is making the email rounds and we can all hope our leadership would rely on books like this, regardless of us being in manufacturing, healthcare, consulting, or any other industry.

Deloitte's new CEO, Jim Quigley, sent out a book to all employees called "Your Little Blue Book of Strategy." The Financial Times columnist starts by comparing it to Chairman Mao's Little Red Book and it gets better (or sadder) from here). I've said before, as have others, that many large businesses are really Soviet in nature and maybe this is another example, the corporate brainwashing that's involved.

You have to read the whole thing, the whole column, straight through. Me quoting it won't do it justice. Hurry, since the FT article was restricted to subscribers, but I found that the English language version of the German FT was still available (I hope that's a loophole that's not closed soon).

I guess the moral of the story is to not trying leading through platitudes, empty phrases, and photocopied handbooks? What might Deming say? Substitute Leadership?

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[Lean Blog]

Tue, 18 Sep 2007 16:23:01 GMT

Why Management is Not a Profession.

The business section the Sunday New York Times had an interesting article on value of the MBA degree, called Hedge Funds and Private Equity Alter Career Calculus. The article told stories about people who went into these fields and got rich without ever getting an MBA. This article continues a series debate that has been raging in both academia and general media outlets about the value of the MBA in recent years.

My Stanford colleague Jeff Pfeffer created a lot of excitement about this topic a few years back when he (along with Christina Fong) published an article called The End of Business Schools? Less Success Than Meets The Eye. I provide a link to the article, as there is a lot in it --and in classic Pfeffer fashion -- note that although most people in the debate rely only on stories, The End of Business Schools provides research to support many of the claims. Pfeffer and Fong touch on many nuances of MBA education, but two findings and the related inferences, really got a lot of play in major media outlets:

1. Unless you go to business school in the top 10 or so, getting an MBA reduces your lifetime income because, you don't make more money when you get out, and you have lost two years in workforce. So if you can't get into a top school, you might be better off just skipping business school -- assuming the main reason you are going is to get a better paying job.

2. If you do go to a top business school, there is no relationship between your grades and how much money you end-up making. The main financial value of going to business school seems to be that you enter an elite network, not what you are taught in the classes. (Business school professors really hate this one, as it means that those students who do as little work in classes as possible, and devote all their time to networking, are acting in economically rational ways).

And as I have written here before, there is a related argument that not finishing school is the best path to wealth and fame too (Indeed, much like the MBAs that Pfeffer and Fong write about, many Stanford dropouts such as the guys who started Google and Yahoo! were able --and smart -- to dropout because the elite network they entered at Stanford enabled them to launch their companies, and they didn't need to learn more stuff in their classes to get rich).

The controversy about MBA education will keep swirling, which Pfeffer loves. He was once was described (I paraphrase) by MIT Professor John Van Maanen as being attracted to controversy "like a bear to honey." And Jeff can be very hard to argue with because he relies primarily on facts and logic to support his assertions.

BUT in all this debate -- including in the recent New York Times article -- about the "value" of degrees there is something that is rarely said that reveals a lot about the MBA degree in particular and management in general. I am also stealing this from Pfeffer, although I think I first heard it from Harvard Business School's Rakesh Kahruna. The discussion about the "value" of the MBA always seems to end -- no matter where it starts and no matter what nuances are discussed by Pfeffer and others -- with a focus on how much money it puts (or doesn't put) in the recipient's pocket.

There is remarkably little conversation about whether it teaches people to do a better job of helping and serving clients, employees, or anyone else. Yet sociologists will tell you that a defining feature of a profession is that members are trained and socialized to put their client's interests AHEAD of their own. That is what lawyers and doctors promise to do before they start to practice, for example.

In contrast, the societal message -- and it is often quite explicit -- is that the most effective managers take as much money as possible for themselves from their clients. There isn't even the pretense of putting other's needs ahead of your own in most talk about management education. Look at your cell phone or credit card contract if you don't believe me, or think about what it means to succeed in a hedge fund or private equity firm -- it is all about managers taking as much for themselves as possible, and leaving clients (and in some cases employees) with as little as possible. The people who run these firms will protest, but look at the financial structure.

So, although management is craft that I respect a great deal, and is one that is remarkably difficult to learn and practice, it isn't right to call it a profession as clients seem to be viewed and treated as people you "extract value from" so you can get richer, not as people whose interests should be put ahead of your own.

Indeed, one cynic once suggested to me that if managers took an oath, rather than something like 'first do no harm," it would be something like "Take as much as you can from as many customers as you can without driving them into the arms of your competitors."

P.S. Another interesting perspective on the value of the MBA degree comes from Henry Mintzberg. Check out his fascinating (if a bit ponderous) Managers Not MBAs, which argues that MBA education is largely wasted on people who have never managed before, but that it can be quite valuable for people who have years of management experience, as they have a much better idea of what lessons they can take away to practice their craft.

I think that Mintzberg takes this argument a bit too far as I do think that management education can help rookies do a better job. But Mintzberg's point rings true based on my (anecdotal) experience. I've found that the more experienced the group of managers that I teach, the more that they appreciate -- and work to apply -- the "softer" stuff that I teach on innovation, turning knowledge into action, building a civilized workplace and so on. Inexperienced managers tend to believe that they are smarter than all those dumb leaders they study, or a lot smarter than any boss they have ever had, and they don't need such soft stuff. But once they spend a few years trying to manage people, they realize that -- like ice skating or making a movie -- doing it well is a lot harder than it looks!

[Bob Sutton]

Tue, 11 Sep 2007 09:52:15 GMT

Buy-to-let alive and well. Business & money: Investors continue to pile into property market in spite of rising interest rates. [Guardian Unlimited home | Guardian Unlimited]

Tue, 11 Sep 2007 08:05:25 GMT

PPG to offer TPS programs at NACE - Automotive Body Repair - Home Page.

PPG to offer TPS programs at NACE
Automotive Body Repair - Home Page - 14 hours ago
[base "]Business is changing hands within the Collision Industry today based upon shop performance in areas including quality, cycle time and cost of operations,[per thou] says Berkey. "It is becoming more common within the collision industry to reference Lean Six Sigma and Theory of Constraints in the context of improving collision center process performance. We are proud of the fact that we have been developing and implementing programs that provide shops a practical and proven approach to improving performance based upon principles of Lean Six Sigma for the past four years. To date over 300 participants have graduated our week-long Green Belt Training program and we would like to share the success stories of our customers at NACE."

["theory of constraints" - Google News]

Fri, 07 Sep 2007 07:26:00 GMT

Chrysler Hires a Top Toyota Executive. James E. Press has been lured away from Toyota as Chrysler transforms itself as a private company. By NICK BUNKLEY. [NYT > Home Page]

Fri, 07 Sep 2007 07:24:25 GMT

Duct Taping the Dreamliner. Flightblogger: Temporary Fasteners Causing Major Problems for 787 Program

Ok, so Boeing isn't using duct tape in their efforts to cobble together the first Dreamliner plane. But, this blog report I've linked to says they were using:

"... over-the-counter parts and prevented assembly teams from being able to document the location of these temporary fasteners on the first 787."

Why wouldn't you want to follow the Lean concept of "building it right the first time?" Boeing proclaims to be a "Lean" company, although that has been fiercely debated here and on other blogs. It seems like management might have been pushing people to hit a deadline for rolling out the first plane (a ceremonial event, right?).

Remember what Deming said about mandating quotas and targets. Does this rob people of their joy in work? Does it rob them of their right to feel good about doing quality work?

As a result of supply chain problems, the proper fasteners weren't available. To this simpleton, it seems like you might 1) delay the plane build and 2) fix the supply chain. But no, there's too much money at stake to admit a delay or a problem (of course, how much money is involved with the liability of "forgetting" to replace a temporary part with a real one?).

"Flightblogger has learned that many of the temporary fasteners, which were painted red and installed in place of flightworthy parts, were purchased from run-of-the-mill chain hardware stores, including Home Depot and Ace Hardware."

Look at all of the extra non-value added work this has created as a result:

"As a result, Boeing must now comb through the aircraft to locate, document and replace all of the temporary fasteners to prevent a single non-flightworthy fastener from flying."

They're going to be inspecting in quality, eh? Do you trust that they will find every single fastener with 100% certainty?

Quality is also impacted even if all of the temporary fasteners are replaced:

"The second is the challenge in physically replacing the parts. âo[ogonek]Composite only like fasteners installed once,âo? according to one source working directly with the aircraft.

When it came time to install flightworthy fasteners, the removal of the temporary fasteners damaged some of the composite parts of the aircraft causing time-consuming repair."

So which executives are getting their bonuses because the first plane was, technically speaking, rolled out on time??

Am I being too cynical? Somebody who knows more about airplane manufacturing, please chime in. I'm just a frequent passenger and stuff like this sure worries me. How should we view this from a Lean perspective? Click "comments" to participate.

Update: The first flight is going to be delayed, partly due to the fastener issues. MSNBC story.

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[Lean Blog]

Tue, 04 Sep 2007 08:10:18 GMT

Former Gillette CEO Jim Kilts: "Never Hire a Prick".

There is an interesting video clip of an interview on CNN.com with former Gillette CEO, Jim Kilts. The interviewer quotes some familiar advice in Kilts' new book, Doing What Matters. Kilts argues that one of the practices that fueled Gillette's success during the years he led the company was "Never Hire a Prick, Even a Smart One." And, indeed, Kilts has an impressive track record, having led turnarounds at both Nabisco and Gillette. Kilts talks about how "prick" are smug self promoters and are destructive to the organization, and him it is essential to avoid hiring them or to drive them out of a company. As he says, they can get short-term results, but they break down people and organizations over the long haul. I prefer the word "asshole" because it applies to both men and women, but it appears that Mr. Kilts is talking about more or less the same thing. So I will add him to the list of leaders and places that use the no asshole rule -- which I think I will start calling The No Asshole Rule Honor Roll!

P.S. I just ordered the book and will write a little review of it after I've read it. He sounds like a great leader, but I am somewhat concerned about the huge payoff that Mr. Kilts is enjoying for selling Gillette to Procter & Gamble -- although I do have soft spot in my heart for P&G as (starting with CEO A.G. Lafley) they are one of the most civilized companies I know and are also deeply committed to innovation.

[Bob Sutton]

Tue, 04 Sep 2007 08:05:06 GMT

Performance Management Looks Ahead While Job Ratings Look Back, Report Says . With about 16 months left in office, the Bush administration is not giving up on pay for performance. And federal unions and many employees are not giving in to the administration. By Stephen Barr. [washingtonpost.com - Business]

Wed, 29 Aug 2007 14:41:54 GMT

Evidence-Based Management Doesn't Mean Just Quantitative Evidence. Mydear friend and co-author Jeff Pfeffer and I have started a series of interesting conversations about what we might study next. We've been doing a little brainstorming and constructive argument. As part of this adventure, we've been talking about the impact of our last book on evidence-based management and what evidence-based management means. One of the themes that we keep returning to is our concern that managers and the business press seem to automatically assume that quantitative evidence is always the best evidence. This point especially came home a in recent Wall Street Journal article by Scott Thrum called 'Now Its Business By Data, But Numbers Can't Tell The Future.' Scott talks about how quantitative data have helped companies including Yahoo!, Google, and Harrah's gain competitive advantage, and talks about our book Hard Facts and Tom Davenport's Competing on Analytics, with the implication seeming to be - 'based on stories from PG and Google' that evidence-based analysis is useful for making short-term tweaks, but not for seeing the future or making big breakthroughs. I think that this perspective is partly right, although quantitative evidence can also lead to huge changes in organizational strategy (e.g., consider one hard fact: The huge numbers of baby boomers retiring in the next decade, now that is something that shaking a lot of organizational strategies). But there is an implication in this article and others that I find especially disturbing: The message seems to be that evidence-based management means management by quantitative data. I reject that thought, and have always believed that there are times when qualitative data are more powerful, valid, and useful for guiding action than quantitative data. I will likely touch on this point more in future posts, but to get things started, there are three times when I believe that qualitative data are essential. 1. When you don't know what to count. Unstructured observation of people at work, open-ended conversation, and other so-called ethnographic methods are especially useful when you don't know, for example, what matters most to customers, employees, or a company. Just hanging around and watching can have a huge effect. I am reminded of something that happened years ago at HP. Senior management was concerned that people weren't buying their PCs, so instead of just reading marketing reports, they each went out and tried to by an HP at a local computer store. I remember then CFO Bob Wyman telling us that it was one thing to hear that consumers weren't impressed with HP PCs, and quite another to have a salesperson suggest that ought to buy something other than an HP because they were a poor value. HP is now the leader in the PC business, and although I am sure this one little experience wasn't the main cause, it did help senior executives get a more complete understanding of what elements of customer experience they might start counting. 2. When you can count it, but it doesn't stick As Chip and Dan Heath conclude in Made to Stick, statistics show that people are swayed by stories , not statistics. So this means that even if you have good quantitative data to back your decisions, your decision will be harder to sell if you don't have some compelling stories and images to go with it. So, to take the case of Procter & Gamble, they have had quantitative evidence for many years that the 'in-store' experience of encountering a P&G product has a huge effect (beyond advertising, prior brand loyalty and so on), but the message really sunk in when folks for the Institute for the Future simply took CEO A.G. Lafley and his team shopping a few years back. This experience, in combination with work done with IDEO and P&G's fantastic head of design, Claudia Kotchka, have helped P&G develop a deeper understanding of their customer experiences 'and to tell better stories' than could have happened through quantitative evidence alone. And it has led them to focus greater effort on designing the experience of encountering the product on the shelves -- not just packaging, but also where and how the products are displayed, and also, they've learned the importance of educating store employees about their products.

As another example, our d.school students did a project about a year ago on ways that large financial institutions alienate young college grads who want to start saving money. Look at the desk to the left, which came with a banker in a three piece suit. The students who went to talk to that banker were all under 25 years old and were dressed in shorts t-shirts, but most had lucrative job offers [base ']Äì which meant that they would be making more that that banker in a few months. The setting and the banker were so stiff that the idea of putting their money in his bank seemed like a bad idea to the students [base ']Äì they found it intimidating and they felt as if they couldn[base ']Äôt trust the banker or institution. The picture of that desk (and the guy in the three piece suit, not shown here) is much [base ']Äòsticker[base ']Äù than any survey finding that young people hesitate to put money a bank or investment fund.

3. When What You Can Count Doesn[base ']Äôt Count. Researchers are always looking for things that are easy to count, so they can get numbers that are amenable to statistical analysis. There are times when these numbers do matter. Sales, numbers of defects, and so on can be valuable. But in the hunt for and obsession with what can be counted, the most important evidence is sometimes overlooked. As Einstein said, [base ']ÄúNot everything that counts can be counted, and not everything that can be counted counts.[base ']Äù

The best example I[base ']Äôve ever seen of the limits of quantitative data [base ']Äì and virtues of story telling stories and qualitative experience [base ']Äì is found in on page 3 of John Steinback[base ']Äôs 1941 classic [base ']ÄúThe Log from the Sea of Cortez,[base ']Äù a book about marine collecting expedition that he went on with his dear friend Ed Ricketts. I first heard about this from Karl Weick, and have repeated it in many contexts [base ']Äì it is one of those paragraphs that every manager and researcher in every field can benefit from:

The Mexican Sierra has [base ']ÄúXVII-15-IX[base ']Äù spines on the dorsal fin. These can be easily counted. But if the sierra strikes hard so that our hands are burned, if the fish sounds and nearly escapes and finally comes over the rail, his colors pulsing and his tail beating the air, a whole new relational reality comes into being [base ']Äì an entity which is more than the sum of the fish plus the fisherman. The only way to count the spines of the Sierra unaffected by this second relational reality is to sit in a laboratory, open an evil smelling jar, remove a stiff colorless fish from the formalin solution, count the spines, and write the truth "D.XVII-15-IX." There you have recorded a reality that cannot be assailed -- probably the least important reality concerning either the fish or yourself.

It is good to know what you are doing. The man with the pickled fish has set down one truth and has recorded in his experience many lies. The fish is not that color, that texture, that dead, nor does he smell that way.

Again, I am not rejecting quantitative evidence, it is essential in many settings. But qualitative evidence has great virtues as well, for spurring hypotheses, emotions, and for enabling us to [base ']Äúsee[base ']Äù truths that aren[base ']Äôt easily counted. I love that line [base ']ÄúThe man with the pickled fish has set down one truth and has recorded in his experience many lies.[base ']Äù

This post is meant to get conversation started. When is quantitative evidence especially valuable? And when does it lead people to record apparent [base ']Äì even unassailable -- truths that mask many lies and dangerous half-truths?

[Bob Sutton]

Do you have a dysfunctional workplace?

Mon, 20 Aug 2007 18:42:39 GMT

Does your boss act out and throw tantrums like a spoiled child? Does your company ship most of its product the last 24 hours of the quarter? Are you afraid to bring up certain hot-button issues in meetings for fear of being humiliated? Do you spend more time covering your ass than you do sitting on it? Is your company in a perpetual state of limbo because nobody can make a decision? Does your company's mission statement change weekly? These are all signs of a dysfunctional workplace. But don't fret; you're not alone. In fact, an entire lexicon has grown up around dysfunctional corporate behavior. See if you can recognize some of the issues that drive you and your co-workers nuts... More

Andon Lights Make Us Look Lean

Fri, 17 Aug 2007 11:40:49 GMT

After visiting and working at numerous manufacturing plants across the United States this past year, I have come to the conclusion that we really don[base ']t know how to use an andon light properly, much less know why we should use them. In most cases, the lights are pointed out as one of the indicators that the plant does know about lean and practices lean principles. In these same plants, I see other things. I have seen andon lights turned on and stay green all shift long regardless of multiple problems occurring. (Could it be possible the management yelled about the line stops and flashing lights so much that everybody is now afraid to pull the cord?)

Fri, 17 Aug 2007 07:33:29 GMT

They Breed Like Rabbits.

As I mentioned in my last post, the magazine Value Rich did a kind of review and summary of The No Asshole Rule with a series of cartoons summarizing a main point for each chapter. One of the main ideas on the book -- taken both from research on emotional contagion and from research on bullying and interpersonal aggression -- is that acting like a demeaning jerk isn't just a personality characteristic that some people have and others don't. There is a lot of evidence that, when any of us are around nasty people, we -- without realizing it -- start mimicking their nastiness, and suffer from asshole poisoning as well. That is why one of the last points of the book is "assholes are us" and also why the organization or group that you choose to work with can have a huge effect on whether you behave like an asshole -- or a decent human-being.

Above is their cartoon captioned, "The Implication is that they breed like rabbits."

[Bob Sutton]

Chrysler and the Innovation Basement

Thu, 09 Aug 2007 08:01:48 GMT

Nardelli is an outsider who promises to bring fresh thinking as well as management discipline to the ailing automaker (see BusinessWeek.com, 8/7/07, "Chrysler's New 'Tough-as-Nails' CEO"). But as a command-and-control executive, weaned on Six Sigma, Nardelli isn't the obvious leader for a company whose future depends on innovation.

Wed, 08 Aug 2007 07:40:47 GMT

Virgin sell-off hit by debt crisis. Business & money: Cable operator Virgin Media becomes latest corporate casualty of global stock market turmoil. By Fiona Walsh, business editor. [Guardian Unlimited]

Thu, 02 Aug 2007 12:56:20 GMT

UK interest rates kept on hold. The Bank of England's rate-setters decide to keep the cost of borrowing unchanged at 5.75%. [BBC News | News Front Page | UK Edition]