Alfred Sloan's Memoir VII: The Milford Proving Ground
Interestingly, Alfred Sloan has very little to say in
My Years with General Motors about production line workers. On the other hand, he gives lots of attention to GM's managers, engineers, stylists, and dealers.
(click to enlarge)
GM's Milford MI Proving Ground
(gadgetopia.com)For the engineers, one of the biggest steps forward was the creation of the General Motors Proving Ground in Milford MI. As Sloan explains in Chapter 14,
The most important step we took to standardize and improve test procedures was the establishment in 1924 of the General Motors Proving Ground, the first of its kind in the automobile industry. The thought was that we would have a large area, properly protected, and entirely closed to the public. It would be provided with roads of various types representing all the various demands on the motorcar from the standpoints of high speed, hills of various grades, smooth roads, rough roads, ability of a car to move through water — which is frequently required in severe storms — and the like. There we would be able to prove out our cars under controlled conditions both before and after production and we could also make comprehensive tests on competitive cars.
... Michigan is rather flat, and at first we had difficulty locating an area of sufficient size that would give us all the various grades we needed. However, almost every foot of the United States has been measured topographically, and the record was available in Washington. We went to Washington and from the Geological Survey maps available there we determined a location that appeared to fulfill our needs. Then the general executives and engineers of the various divisions and myself spent a day at the prospective site. We walked all over the place, ate a picnic lunch under the trees, and finally came to the conclusion that that particular area of 1125 acres — now 4010 acres — at Milford, Michigan, would meet the requirements we had in mind.
[. . .]
The land was surveyed; the straightaways were laid out so that we could check the effects of different winds on speed; a track was built and banked so that it was reasonably safe to operate cars at speeds up to 100 miles an hour or more. Engineering buildings were erected, so that indoor tests could be made in correlation with outdoor tests. Headquarters and facilities were provided for the corporation's engineers. Separate engineering headquarters and garage facilities were eventually provided for the staffs of the engineering departments of the various divisions, so that they could preserve their divisional autonomy in testing. Chevrolet, for example, could do its own testing if desired, in addition to that being done by the corporation. A clubhouse was erected that provided sleeping quarters, dining facilities, and the like for those attached to the Proving Ground operations, since the Proving Ground itself was a considerable number of miles from any town where commissary facilities were available.
In those days I used to spend a day and a night, sometimes longer, at the Proving Ground every other week. I would go over the engineering of General Motors' cars and competitive cars. I would examine what was being done in the way of testing future products. The Proving Ground thus afforded my associates and myself a wonderful opportunity to find out what was going on in the automobile industry from the engineering point of view. To the original Proving Ground we have since added a special, desert proving ground at Mesa, Arizona [replaced in 2009 by a facility in Yuma], and a station to test cars in mountain driving and a garage and shop facility to service our test cars at Manitou Springs (Pike's Peak), Colorado [closed in 1999].
[pp. 253-255,
1990 edition]
###Labels: Documentation, Management practices, Quality
Alfred Sloan's Memoir V: Autos in the Olden Days
There are precious few people with firsthand experience of driving cars from the early years of the automobile era. In Chapter 12 of
My Years with General Motors, Alfred Sloan reminds his readers of what mass-produced autos c. 1920 were like:
1920 Chevrolet 490 Touring Car
(www.howstuffworks.com)Today's driver, of course, would find the typical car of 1920 completely unsatisfactory. It had a four-cylinder engine whose crankshaft and associated connecting rods and pistons were inherently unbalanced. Ordinarily this car had two-wheel brakes with braking confined to the rear wheels; it had no independent springing of the front wheels; it had a sliding-gear transmission, and an engine of low power. It vibrated and often shimmied; it veered and sometimes skidded when the brakes were applied; it rode hard and rough; the clutch grabbed; the gears often clashed in the shifting, and, owing to the low power available, they always had to be shifted on hills of substantial gradient. But the car usually got somewhere and back; fortunately it was unable to go fast or far enough for many of its deficiencies to become serious drawbacks. It was roughly adapted to its environment — and its major parts were reasonably adapted to each other, at however low a level of integration and efficiency.
[p. 220,
1990 edition]
###Labels: Innovation, Quality
Impact of Quality of Management Practices on Firm Performance
As a follow-on to my last
two posts, I want to call attention to a piece of experimental
research (pdf) conducted by
Nicholas Bloom and several colleagues that provides evidence in support of the hypothesis that the quality of management practices significantly influences firm performance.
Bloom
et al. summarize their work (which is due to continue through April) as follows:
We run a field experiment on large Indian textile firms to evaluate the causal impact of management on performance. To generate changes in management we provide management consulting to a set of randomly chosen treatment plants, and compare their performance to a set of control plants. We find that improved management practices led to significantly higher efficiency and quality, and lower inventory levels, substantially increasing plants’ productivity and profitability. Firms also transferred these improved management practices from their treated plants to other plants within their group. Since firms adopted and replicated these apparently profitable management practices this raises the question of why these were not adopted previously? Our results suggest that informational barriers are important in explaining this lack of adoption, with modern management practices a type of technology that diffuses slowly between firms. These Indian firms were either unaware of many modern management practices, or did not have the know how to implement them.
The photo below, one of several included in the
preliminary draft (pdf) of the authors' paper currently available on the internet, illustrates quite concretely the degree of operational slack crying out for systematic management attention.
The parts store at one of the Indian textile plants included in the sample Bloom et al. are studying
("Management Matters: Evidence from India" [pdf])Takeaway: This research supports the proposition that it is effective to teach managers specific lean manufacturing practices that help optimize factory operations, inventory control, quality control, human resources, planning, and sales and order management.
###Labels: Coaching, India, Management practices, Productivity, Quality
The Reality of Cultural Change in an Organization
John Shook, an industrial anthropologist who worked with the
NUMMI joint venture of Toyota and General Motors from its inception, has written an illuminating
article about cultural change at the NUMMI factory in Fremont CA. The article appears in the Winter 2010 issue of the
MIT Sloan Management Review.
Shook's model of cultural change is a close cousin of that put forward by
Edgar Schein, an emeritus Sloan professor who specializes in organizational development. The Shook and Schein models are diagrammed in the graphic below.
(click to enlarge)
(MIT Sloan Management Review, Winter 2010)The arrows in the graphic represent old and new thinking concerning the process of cultural change.
The traditional view, represented by the upward arrows, is that you start by getting people to change their thinking about how it's proper to behave, and they then proceed to make the desired behavioral changes. The Schein/Shook view, represented by the downward arrows, is that you start by getting people to change their behavior and, in due course they adjust their thinking about what sort of behavior is appropriate.
- In Schein's model, the initial step is to change "cultural artifacts" — "the observable data of an organization, which include what people do and how they behave." This leads to a change in people's values and attitudes and, ultimately, to a change in the "pattern of shared basic assumptions ... that has worked well enough to be considered valid and therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to [solving] problems."1
- In Shook's very similar model, managers initiate the process of cultural change by defining the actions and behaviors they desire, providing training, and designing the work processes that are necessary to reinforce those behaviors. This leads to a change in people's values and attitudes and, ultimately, to a change in organizational culture.
Shook describes how NUMMI's adoption of Toyota's system of requiring workers to immediately address any problem, even if that means stopping the production line until the problem is fixed, quickly produced a new culture of employee concern for quality. Previously, the factory had been plagued by worker-management friction and high absenteeism, and quality had been notoriously poor.
In Shook's view,
What changed the culture at NUMMI wasn’t an abstract notion of “employee involvement” or “a learning organization” or even “culture” at all. What changed the culture was giving employees the means by which they could successfully do their jobs. It was communicating clearly to employees what their jobs were and providing the training and tools to enable them to perform those jobs successfully.
The key take-away Shook offers at the conclusion of his article is that the "tools of the Toyota Production System are all designed around making it easy to learn from mistakes. Making it easy to learn from mistakes means changing our attitude toward them," i.e. skipping the finger-pointing and instead nurturing a culture of alert problem solving by empowered amployees.
__________
1 Edgar Schein, "Organizational Culture and Leadership" (1993) in
Classics of Organization Theory, Jay Shafritz and J. Steven Ott (eds.) (Harcourt College Publishers, 2001), pp. 373-374.
###Labels: Management practices, Organizational culture, Productivity, Quality, Respect
"The Great Influenza" V: Washing Up
There is a little parable in
The Great Influenza: The Story of the Deadliest Pandemic in History, by
John M. Barry, that I particularly like:
… a young graduate student entered a laboratory and saw a renowned Harvard professor at the sink washing glassware while his technician was performing a complex task at the workbench. The student asked him why the technician was not washing the glassware. “Because,” the professor replied, “I always do the most important part of the experiment and in this experiment the most important thing is the cleanliness of the glassware.” [pp. 286-287]
###Labels: Coaching, Expertise, Humor, Professionalism, Quality
Structured Radiology Reports
The subject of electronic medical records (EMR) is much in the news nowadays, and I know from one recent project I worked on just how complicated implementing a new or upgraded system is for a hospital. (I haven't had any direct experience with getting EMR up and running in a medical practice, but I have no doubt that the complexity and resource demands are daunting.)
The payoff from adopting a well-designed EMR system is also substantial, including as it does, more rapid. complete, and accurate communication among providers; better support of diagnosis and treatment planning; and reduced treatment errors. This is not to overlook caveats relating to privacy, security, and lack of standardization. It's simply to say that medicine needs to keep moving in the direction that other types of enterprises have gone, namely, taking advantage of the power of well-managed IT to increase productivity and quality.
(click to enlarge)
An example of a structured radiology report
(StructuRad)As just one concrete example, I'd cite what is happening in the field of radiology. For some years now, radiologists have been moving toward use of computer-based
structured reporting. A 2009
special report (pdf) from the Radiology Reporting Committee of the Radiological Society of North America (RSNA)
1 explains:
Construed narrowly, structured reporting means the use of predefined formats and terms to create reports; in this sense, structured reports are those based on templates or checklists. In a broader sense, however, structured reporting can integrate additional information collected during the imaging procedure, such as clinical data, technical parameters, measurements, annotations, and key images.
Not only does structured reporting help communicate findings clearly, but it also makes the information in reports searchable, which can assist with research, teaching and clinical quality improvement. Structured reports also help with regulatory and billing compliance. Finally, as the RSNA report notes:
Because information in a structured report adheres to predefined format and vocabulary, it is easier to integrate that informtion with generalized knowledge-based resources. Thus, one can more easily integrate structured reporting process with clinical guidelines, collaborative staging tools, educational resources, and decision support.
To stay apprised of developments in structured radiology reporting, you can follow the RSNA
Reporting Wiki.
__________
1 The RSNA's definition of professionalism was the subject of yesterday's
post.
###Labels: Communication, Documentation, Quality
Continously Strengthening Patient Safety Procedures
Paul Levy, the President and CEO of
Beth Israel Deaconess Medical Center in Boston, maintains a blog he calls "
Running a Hospital." One of today's posts reproduces a
write-up by two employees describing how overdosing a patient was avoided, and further, how the root cause of the near overdose was identified and corrected.
As you can see from reading the post, Beth Israel extracted two main lessons from the near-miss:
- Even though an automated medication dispensing machine reduces the risk of mistakes in administering meds, it is still necessary for a human being at the bedside to doublecheck that the medication picked by the machine is correct.
- When a near-miss occurs, all interested parties must be notified so that unwitting repetition of the problem is forestalled. Beth Israel has a safety reporting system into which personnel are expected to enter the details of all adverse incidents. Those monitoring the incidents can then see any trends that suggest a systematic weakness that needs to be fixed.
Since hospitals, like the military, are literally dealing with issues of life-and-death, they have strong incentives to consciously and consistently implement effective operating practices. Thus, the best hospitals serve as good models for any organization looking for specific ways to strengthen its own culture of excellence.
PS. You can watch a
video to hear Levy talking at a 2007 conference in the Netherlands about how to run a hospital, how to use new media, and reasons for an executive to blog.
###Labels: Documentation, Innovation, Learning organization, Organizational culture, Quality, Web 2.0
Xavier de Souza Briggs on "Getting Things Implemented"
If you want a compact, rich introduction to the issues organizations must manage in order to devise and implement strategies that produce valuable outcomes, you will be well-served by working through the materials
Xavier de Souza Briggs put together for a week-long course he delivered this January, just before taking a two-year leave from his MIT faculty appointment in urban studies and planning, to become
Associate Director for General Government Programs at the US Office of Management and Budget.
"
Getting Things Implemented: Strategy, People, Performance, and Leadership," geared to students of community planning, met for five sessions. The topics covered were:
- Creating public value, and
The craft of political management
(negotiation and coalition building)
Basic questions that need to be addressed: "What is worth implementing [What produces value?] and why? How does one go from concept to capacity and then 'production'? ... How to get things done responsibly and ethically when decisions cannot simply be imposed, downward and in a straightforward way, in a hierarchy?" Briggs emphasizes, "We want to be able to distinguish strong ideas, weakly implemented from bad ideas. These distinctions are often not easy to make — but are hugely important for the support we can build for good ideas."
- Developing and changing organizational strategy
Here Briggs is talking about devising the means for accomplishing the organization's agreed mission. "The overall [strategic] challenge (and opportunity) is a powerful alignment: Lining up the value-creating idea with what the environment will support and what the organization (or team or alliance) is actually capable of producing." A key lesson: "There's no substitute for organized capacity, beyond any charismatic, smart, or otherwise talented individual."
- Strategic collaboration
(partnerships and alliances), and
Performance management
Some key lessons about collaboration: "Effective collaboration often demands that implementers play a wide variety of roles well (strategic, operational, mobilization-focused, etc.)." "Collaboratives evolve through stages, navigated jointly: agreeing on a problem, developing strategy, implementing ('co-producing' change)." "Collaboratives can have wider ripple effects (political participation, policy reform, etc.)."
The key lesson about performance management: "Systems of performance measures and rules and incentives coupled with them ('management') should align with broader strategies."
- Core elements of operating capacity:
organizational structure (e.g., by function, by customer segment), operational processes (mapped so as to highlight, e.g., bottlenecks), human resources
Key lessons: Organizational restructuring "invites resistance, requires political capital, proof of concept, supportive coalitions, etc." "Strategic human resource management addresses flows ([employee] entry, development, exit) and targets (motivation, reward, performance)."
- Thinking like an implementer, and
Leadership (especially, leading change)
A key lesson: An effective implementer recognizes implementation issues (e.g., lack of funding, lack of operating capacity, opportunities for delivering more value, etc.) and develops skill in generating strategic options for addressing the issues.
Some core leadership concepts: exercising leadership vs. exercising authority; technical challenges (well-defined problems with known solutions) vs. adaptive challenges (fuzzy problems, unknown solutions); leadership styles; the need for a repertoire of various elements of emotional intelligence. Exercising leadership "is particularly important for motivating adaptation and risk taking, and thus deep change, in how implementation systems work."
Please note that the above outline greatly condenses and simplifies what Briggs teaches. To get a fuller account of the principles he espouses, you can download pdf files of his lecture notes and study questions
here. Briggs's materials are a model of accessibility and practical expertise, structured in a way that requires students to think about the assigned readings (including a number of case studies) in critical fashion.
Each section of the course (generally, two sections per session) ends with a summary of take-away lessons. For example the first lesson from the first session is that "having a goal is not the same as having a clear, actionable value proposition." A related lesson is that "Effective implementers must often help to define
ends (value propositions), not just political or operational
means."
The course concluded with a take-home exam which, in keeping with the rest of Briggs's materials, places the emphasis squarely on critical thinking and intelligent application of the concepts covered in the class ("value creation, political management, organizational strategy, collaboration, performance management, organizational design and process redesign, human resource management"). Briggs emphasizes quality, not quantity, in students' responses to the seven "word problems" he sets, as you can see by reading through his
instructions for the exam and the
sample solutions he provides (pdf files).
###Labels: Classroom training, Collaboration, Critical thinking, Leadership, Management practices, Organizational culture, Quality, Strategy, Teaching
Not-so-Secret Secrets
I read "
Business Secrets of the Trappists," a four-part essay Forbes.com published April 14-17, with the idea that it might really reveal some valuable insights of a novel sort.
No such luck. The author,
August Turak, "an entrepreneur, consultant, writer and speaker who divides his time between New York City and his farm in North Carolina," cites these seven gems of wisdom gleaned from time spent at
Mepkin Abbey, a Trappist monastery in South Carolina:
- Have a worthy mission, and help employees make the connection between day-to-day decisions and mission accomplishment.
- Focus selflessly on the mission, i.e., cultivate an organizational culture in which employees are motivated to pursue mission accomplishment, as opposed to giving priority to individual interests and engaging in turf battles.
- Commit to excellence.
- Maintain the high ethical standards.
- Have faith that following your principles will result in a successful business through good times and bad — because your approach to doing business is such that all parties (your organization, your clients, your suppliers) benefit.
- Build relations of trust with others. By consistently putting the organizational mission and the interests of others ahead of your own, you make yourself more persuasive in internal discussions and external negotiations.
- Have a specified method (e.g., the Rule of St. Benedict) for putting your principles consistently into practice. Give focused attention to ensuring employees embrace the values and attitudes necessary for long-term success in accomplishing the organizational mission.
It is unfortunate that Turak, like all too many business writers, places great weight on platitudes and on analogies that beg the question of how exactly to apply the principles being canonized. (As just one example of the problem with Turak's analogizing of secular business to that of Mepkin Abbey, I'd mention that the monks follow a rule of silence, something quite at odds with the way a secular business operates.)
Please understand that I am in no way quarreling with the monks' style of living and working, nor with their manner of bearing witness to the values Turak describes. My concern is that Turak hasn't accomplished much by endorsing widely accepted values. What's needed is to do the additional work of investigating how to effectively put these values into practice in particular secular situations.
This is where the case method, combined with complementary quantitative research, actually contributes to knowledge of effective management practice. In particular, I would argue that the "Have faith" principle (#5) is one that requires detailed elucidation in order to be useful to a business firm faced with the need to turn an adequate profit in order to remain viable.
###Labels: Business acumen, Management practices, Organizational culture, Quality
Implementing Electronic Health Records
My own experience, as a patient, with electronic health records (EHR) here in Massachusetts has been positive, which inclines me to think that the push to expand use of EHR is, generally speaking, well-advised. However, it is essential to understand that implementing EHR effectively is a multi-faceted proposition.
As Julia Adler-Milstein, a doctoral student at Harvard Business School, explains in a brief
article in the April 2009 issue of the
Harvard Business Review, introduction of an EHR system at a healthcare organization must be accompanied by organizational changes:
- increased individual decision-making authority
- comprehensive training
- flattened hierarchy
- more use of skilled workers
- decentralized teams
- incentives for team performance
Adler-Milstein argues, "Such changes present a huge challenge in health care, where workers are trained for and expected to fill specific roles." But she also points to the experience of
Geisinger Health System in Pennsylvania as evidence that it is possible to meet the challenge. She explains:
After adopting an EHR system, Geisinger ... gave nurses additional authority to respond to medical issues they saw cropping up in the patients' records and made better use of their skills by automating mundane tasks. The organization also created financial incentives for team performance, particularly in areas such as diabetes care, and developed an extensive training curriculum that included close observation of physicians as they used the system.
For a fuller description of Geisinger's innovation strategy, you can look at an article published last year by Geisinger's chief technology and innovation officer, Geisinger's CEO, and the president of the Commonwealth Fund, which provided funding for the study: "
Continuous Innovation in Health Care: Implications of the Geisinger Experience" (
Health Affairs, Vol. 27, No. 5 (Sept-Oct 2008), pp. 1235-1245).
1__________
1 If you have trouble accessing the
Health Affairs article, you can read a
summary at the Commonwealth Fund website.
###Labels: Collaboration, Decision-making, Documentation, Innovation, Quality, Rewards and recognition, Strategy, Systems thinking
Goals Need Success Criteria
Universia-Knowledge@Wharton, the Spanish-Portuguese segment of Knowledge@Wharton, published an article today that seems overwrought in cautioning organizations about the pitfalls associated with making goal-setting central to performance management.
In "'
Goals Gone Wild': How Goal Setting Can Lead to Disaster," we read about "the hazards of setting goals":
In pursuit of such mandates, employees will ignore sound business practices, risk the company's reputation and violate ethical standards.
I believe such unacceptable consequences of goal-setting are generally due to a falure to qualify goals by defining criteria that specify what successful achievement of each goal requires. Employees need to understand that
how goals are achieved will be taken into account in assessing whether the goal achievement is truly successful. For instance, in the article's opening example, the story of the ill-designed Ford Pinto, whose fuel tank was vulnerable to catching fire in a rear-end collision, it seems that Ford neglected to require engineers to include proper attention to safety in the design criteria.
The Universia-Knowledge@Wharton article summarizes a
paper (pdf) by
Maurice Schweitzer (Wharton),
Lisa D. Ordóñez (Eller College of Management at the University of Arizona),
Adam D. Galinsky (Kellogg School of Management at Northwestern University), and
Max H. Bazerman (Harvard Business School) (SOGB).
1In fairness, I must note that SOGB point to the need to monitor performance as employees pursue assigned goals, and that they base their reasoning in part on the fact that such monitoring is frequently quite difficult. Nonetheless, I would argue that SOGB overstate the degree of unmanageable risk in setting specific goals for employees to meet.
As summarized in the Universia-Knowledge@Wharton article, there are four problems SOGB emphasize as likely to accompany goal-setting:
- "Goals that are too specific often lead employees to develop such a narrow focus that they fail to recognize obvious problems unrelated to the target." I say that there is no reason for management to let employees overlook problems related to other desiderata.
SOGB also discuss the problem of setting too many goals, so that employees pick and choose in a manner that does not match organizational priorities. The counterpoint here is that managers need to clarify priorities and coach employees on gauging their efforts to match priorities.
- Time horizons for goals that are (1) too short, meaning long-term considerations are largely ignored, or (2) too long, meaning employees slack off if they manage to meet a goal in advance of the deadline they've been given. I say (1) success criteria should include optimizing the combination of short-term and long-term considerations, and (2) there is no reason not to plan for special rewards and recognition — and a revised goal/timeframe — to ensure employee productivity is maintained when the initial deadline for a goal proves longer than necessary. (I'd also note that the example of New York cab drivers electing to knock off early on rainy days — because they can meet their own, self-set goals for the daily total of fares earlier than on clear days — is not actually relevant to an analysis of employee response to goals set by management.2)
- "Workers with highly specific and ambitious targets will engage in risky practices in order to meet them." Again, it seems evident that success criteria should include requirements for appropriate risk management.
- "Unethical behavior is one of the more obvious pitfalls of overly ambitious goal setting ..." Success criteria requiring adherence to ethical standards, with compliance monitored, are a sine qua non in any respectable organization.
The last two items are aspects of the general issue of perverse incentives. Mitigating perverse incentives involves not only setting appropriate success criteria, but also directly adjusting the structure of incentives to reward desired behavior and not reward behavior that undercuts organizational values.
Where SOGB are on firm ground is their caution concerning undercutting employees'
intrinsic motivation by overemphasizing financial rewards. Also well-taken are SOGB's observations that employees will "lose their focus on learning new skills in favor of using tried-and-true methods to meet their quotas," and that "[setting] targets for individual workers can create a culture of competition in which workers tend to shun teamwork in problem solving." But even here I'd say that astute definition of both the goals and the success criteria can mitigate the danger of perverse employee behavior.
In their paper, SOGB discuss two other problems they associate with overuse of goal-setting to motivate employees.
There is the issue of "goal-induced reductions in
self-efficacy" that can occur when employees achieve a good result that nonetheless falls short of a stretch goal they were aiming for. This "can be highly dettrimental because perceptions of self-efficacy are a key predictor of task engagement, commitment, and effort." I say that effective leaders will take action in such a situation to acknowledge that employees have done a good job that has moved the organization forward; the stretch goal was overly ambitious, so no one is in trouble for falling short.
Another problem is the difficulty of tailoring goals to match individuals' particular strengths without creating perceptions of unfairness. Managing this issue is a matter of managerial judgment — that takes employee input into consideration — allied with persuasive communication. If an employee is still disgruntled after a manager has heard him/her out, responded with any goal adjustments that may be appropriate, and explained the rationale for the final determination of more or less disparate individual goals, it is fair to point out that the employee may need to find a position that better matches his/her job preferences.
For me the bottom line is that, while SOGB have done well in articulating the issues associated with making goal-setting a central element in performance management, especially in a complex setting, I believe, based on my own observation of companies intelligently implementing performance management systems, that attaching success criteria to all goal statements, providing constructive coaching, and exercising appropriate managerial oversight makes establishing goals for individual employees a crucial part of maximizing odds of mission accomplishment.
__________
1 The link takes you to the working paper version of the Schweitzer
et al. article. The published version is in
Academy of Management Perspectives, Vol. 23, No. 1 (February 2009).
2 SOGB adopt the view, "If NYC taxi drivers used a longer time horizon (perhaps weekly or monthly), kept track of indicators of increased demand (e.g., rain or special events), and ignored their typical daily goal, they could increase their overall wages, decrease the overall time they spend working, and improve the welfare of drenched New Yorkers." True, and perhaps cab drivers should be reminded of this fact regularly to make sure it hasn't slipped their minds. All the same, we're talking about utility here so, ultimately, it's up to the cabbies themselves to decide how they want to spend their time.
###Labels: Employee performance management, Management practices, Motivation, Negotiation, Organizational culture, Quality, Rewards and recognition, Risk management, Systems thinking
A China Hand Offers Advice on QC and Negotiation
To get a detailed idea of what vendors who outsource production to China have to know, you can do worse than reading David Dayton's
Silk Road International Blog.
Dayton is the owner and manager of Silk Road International, "an international procurement and project management company that helps clients find the right factories in Asia and coordinates and supervises production, logistics and quality control." He has been based in Asia for over fifteen years.
The particular posts that drew me in have to do with
quality control and
negotiation with Chinese suppliers.
The most recent
post opens with some cautions concerning personal safety in factory cities beset by rising unemployment, and then goes on to provide level-headed advice concerning how to maintain quality control standards in the face of a culture of bribes and all-too-human excuse-mongering.
Excellent (aside from the typos) posts on negotiation date back to last year. In May, Dayton compiled a list of
ten negotiation tips for striking deals with suppliers and getting those deals fulfilled. To give you the flavor of Dayton's style, here's tip #4:
Anger is a good as saying you’re gone. Because competition is so fierce in China, and because there are so many other options out there, angry emails, arguments and blow ups, unless carefully managed, tell the factory that you’ve moved on (why else would you burn personal bridges?).
A few months later, in September, Dayton provides insight on how to interpret and respond to such factory statements as "We did our best" and "This is good enough for the Japanese." He sums up his views on how to handle these and other negotiating tactics from the Chinese side of the discussion by noting:
As I’m constantly reminding my project managers, negotiations isn’t about what you want as much as it’s about understanding where the other party is coming from and what they can actually do for you. Understanding what options are realistic for your supplier is a valuable starting point in discussing how you’ll get what you expect (or at least what you can accept).
Dayton then sends you on to an
article he wrote in 2007 that has thirty-one further pearls of wisdom about how to negotiate with Chinese suppliers.
###Labels: Asia, Negotiation, Quality
Laughter is the Best Medicine XXII: Taibbi on Friedman
Speaking up in support of logic and effective writing,
Matt Taibbi takes on two of Tom Friedman's books . . .
Hot, Flat, and Crowded (Published in September 2008)
The World is Flat (published in 2005, subsequently updated and expanded)
###Labels: Asia, Critical thinking, Expertise, Humor, India, Journalism, Persuasion, Professionalism, Quality
Getting Results at Nonprofit Organizations
As a follow-on to
recent posts dealing with nonprofit organizations, I'd mention the recommendations Jeffrey Bradach, Thomas Tierney, and Nan Stone have published in the December 2008 issue of the
Harvard Business Review. Bradach, Tierney, and Stone (BTS) are all associated with the
Bridgespan Group, a nonprofit consultancy that provides strategy advice to other nonprofit organizations.
In "
Delivering on the Promise of Nonprofits," BTS discuss four interrelated questions that they would have any nonprofit organization work through in iterative fashion in order to determine exactly how the organization will carry out its mission:
- Which results will we hold ourselves accountable for?
What is the intended impact of our work? Who are the beneficiaries we are targeting, and what benefits will we provide? When the organization has to make tradeoffs in deciding where to allocate resources, referring to the intended impact you have defined will provide steadying guidance.
- How will we achieve the results we're aiming for?
Your stakeholders need to understand the rationale for your organization's strategic decisions, so you need an explicit theory of change that spells out your beliefs and assumptions concerning how the programs and services you offer will achieve your organization's intended impact.
- What will results really cost, and how can we fund them?
You need to carefully assess total costs of current programs, including an appropriate share of organization overhead allocated to each program. Then appropriate sources of finding must be identified. Each program's effect on the organization's overall financial health must be understood, so that funding and strategies can be better aligned.
- How do we build the organization we need to deliver results?
The organization needs to give focused attention to creating better processes, building leadership capacity, and ensuring that needed people and infrastructure are in place (as opposed to succumbing to funder pressure to minimize overhead).
Leadership capacity gets a culminating mention in the BTS article because nonprofits to a large degree are outside the discipline of markets to which for-profit organizations are subject. Therefore, the discipline in a non-profit's direction-setting and operations must come from its executive director, who "shoulders the heavy burden of engaging key stakeholders in a rigorous consensus-building process in which all parties contront the fundamental questions [listed above] — and fully embrace the subsequent answers."
###Labels: Decision-making, Leadership, Learning organization, Productivity, Quality, Strategy
Creating Maximum Value Requires System Thinking
In the Fall 2008 issue of the
MIT Sloan Management Review,
Maxim Sytch, a lecturer at Northwestern University's Kellogg School of Management, and
Ranjay Gulati, a professor at the Harvard Business School, provide an
overview of their research on the relationship between the mutual dependence of a supplier and a manufacturer, and the firms' business performance.
1The key finding is that it is a mistake to think, as many do, that
value appropriation is the only relevant process. I.e., it is
not the case that the way in which the supplier and manufacturer divvy up the value they create is determined entirely by their degree of
dependence asymmetry — "how much more (or less) one company is dependent on its business partner than vice versa."
Sytch and Gulati hypothesized that
joint dependence — "the extent to which two companies mutually depend on each other" — was also important. In other words, in reaching their decision on dividing up the value they create, the manufacturer and supplier would factor in the potential for increasing the total value. Using data from the automotive industry (Ford and Chrysler, to be specific), Sytch and Gulati found clear support for this hypothesis.
By deliberately building a relationship that involves both joint action in such areas as design, cost control, and quality improvement, and also the sharing of detailed, accurate, and timely information, manufacturer and supplier are able to enhance the performance of the procurement relationship. Performance is measured by such factors as price competitiveness, product quality, product innovation, and defect rate.
The bottom line: Managers should think systematically about dependence in interorganizational relationships. Because there are benefits to mutual dependence, "striving to maximize power in a buyer-supplier relaitonship can have a negative impact on a company's performance."
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1 The text of the published version of Sytch and Gulati's research is
here. This version provides a full explanation of the research methodology.
###Labels: Collaboration, Negotiation, Quality, Systems thinking
Laughter is the Best Medicine XXI: IQ Trainwrecks
If you're looking for some instructive amusement, you can try browsing at
IQ Trainwrecks, which bills itself as "A Website Dedicated to Information/Data Quality Disasters from Around the World." IQ Trainwrecks is maintained by members of the
International Association for Information & Data Quality (IAIDQ).
IAIDQ define
Information Quality as “meeting or exceeding ‘information customer’ expectations”. As for
an IQ trainwreck, that's defined as "a problem that affects real people in the real world that has, at its heart, poor quality information or a failure to manage the quality of information."
Here's a sample of what you'll find at the IQ Trainwrecks website:
"A little while ago we shared the story of the Irish Rail train that left the platform at the correct time but somehow forgot 300 passengers, and left with just one visually impaired passenger.
"From a reliable source we have recently learned of the findings of the investigation into what happened. It is a salutory lesson in the importance of processes, and the importance of controls and checks on processes.
"The normal practice for the Irish Rail service is for passengers requiring assistance in boarding to be boarded last. Due to some minor operational issues on the platform that evening, it seems that a controller took the decision to have the visually impaired passenger boarded before the other passengers — reversing the normal run of the process.
"The guard on the train, having satisfied himself that the visually impaired passenger had been boarded safely, proceeded to give the signal for the train to leave — on the assumption that if the last passenger had boarded it was time to go. It would seem that at no time did the presence of 300 people on the platform and the absence of people on the train register with the guard or the controller, so the train left.
"A simple process short-cut, taken for a doubtless sound operational reason, gave information to the guard which, in his view of the process, meant it was time to go. At the risk of a bad pun we could say that ‘tunnel’ vision set in. Any number of small checks (such as a random check on carriages to see if there were any people in them) might have prevented the embarrassing problem.
"The 300 passengers were accommodated on a different train which made an unscheduled stop on its route to connect with a special shuttle service that was laid on to bring the passengers to their destination. Efficient scrap and rework.
"Our source also informs us that the revenue control ticket check statistics for the train that left the passengers behind showed 100% compliance that evening."###Labels: Humor, Quality
Execution-as-Learning
"Execution-as-learning" is Amy Edmondson's prescription for how to pursue long-term business success in a knowledge-based organization.
Edmondson, a professor of leadership and management at Harvard Business School, provides a summary of her research on how to maintain high performance in knowledge-based organizations in "
The Competitive Imperative of Learning," published in the July-August 2008 issue of the
Harvard Business Review.
The first exhibit in the article summarizes the differences between
execution-as-learning and
execution-as-efficiency, the latter being the approach to performance that dominated management practice in the heyday of mass production. Edmondson cites seven salient contrasts, listed below (slightly edited), with each execution-as-learning practice in
bold, and the corresponding execution-as-efficiency practice in normal type.
- Leaders set direction and articulate the mission.
vs. Leaders provide answers.
- Employees (usually in teams) discover answers.
vs. Employees follow directions.
- Tentative work processes are set up as a starting point.
vs. Optimal work processes are designed and set up in advance.
- Work processes keep developing; small changes — experiments and improvements — are a way of life.
vs. New work processes are developed infrequently; implementing change is a huge undertaking.
- Feedback is always two-way: The boss gives feedback in the form of coaching and advice; team members give feedback about what they're learning from doing the (ever-changing) work.
vs. Feedback is typically one-way (from boss to employee) and corrective.
- Problem solving is constantly needed, so valuable information is provided to guide employees' judgment.
vs. Problem solving is rarely required; judgment is not expected; employees ask managers when they're unsure.
- The organization avoids creating an atmosphere of fear because such an environment cripples the learning process: It inhibits experimentation, lowers awareness of options, and discourages people from sharing and analyzing insights, questions, and problems.
vs. Fear (of the boss or of consequences) is often part of the work environment and generally does not appreciably harm the quality of execution; it may even motivate effort and attentiveness in those facing an otherwise dull task.
As suggested by the final item in the above list, an essential prerequisite for having employees speak up with their ideas, questions, and concerns is
psychological safety — "ensuring that no one is penalized if they ask for help or admit a mistake." Managers signal that it is safe to speak up by acknowledging that they don't have all the answers, and by asking questions that clearly aim to elicit employee contributions.
Edmondson presents a four-step process for carrying out the execution-as-learning approach:
- As a starting point, provide process guidelines based on best practices. Then allow employees to deviate from the guidelines, and update them with improvements, whenever the employees' judgment and learning indicate that doing so is appropriate.
- Provide tools that enable employees to collaborate in real time. Examples of such tools are IT systems geared to the employees' information needs, forums that enable networks to develop and members to interact, and training in teamwork skills.
- Collect process data (not just outcome data). These data enable the organization to keep track of what works and what doesn't.
- Institutionalize disciplined reflection. This means periodically analyzing process and outcome data to identify any process updates and improvements that are in order.
Edmondson's article is a model of practical advice clearly expressed, well worth attention from anyone in a knowledge-based organization.
###Labels: Collaboration, Innovation, Learning organization, Management practices, Organizational culture, Quality
Advice on Designing Good Spreadsheets
I came upon a reference in a trade publication to a short paper offering advice on best practice in designing spreadsheets, and checked it out. Unfortunately, the write-up in question, while conceptually sound, was not user-friendly and violated some best-practice principles itself (e.g., with respect to properly labeling spreadsheets).
So I followed some additional leads for practical guidance on designing spreadsheets and came upon a 2005
paper (pdf) by Philip L. Bewig, a St. Louis CPA. (I found the reference and link to the paper at the
website of the European Spreadsheet Risks Interest Group.)
"How Do You Know Your Spreadsheet is Right? Principles, Techniques and Practice of Spreadsheet Style" is a treasure trove, well worth reading in its entirety (only 12 pages, not counting endnotes) if you have
any responsibility for preparing spreadsheets.
Some items Bewig discusses may be more technical than your work with spreadsheets requires, but by going through the whole article, you will be alerted to issues you need to be aware of, and you will set yourself up for gradually increasing your spreadsheet skills.
###Labels: Business acumen, Documentation, Quality, Risk management
Coolidge's Thoughts on Newspapers
Did you know that Calvin Coolidge's famous assertion that "the chief business of the American people is business" came in a speech to the American Society of Newspaper Editors (ANSE)? I didn't until today.
Below are
excerpts from the 1925 speech, as posted at the ASNE website. Note that Coolidge follows his statement about "the chief business of the American people" with the caveat that "Of course, the accumulation of wealth cannot be justified as the chief end of existence."
The relationship between governments and the press has always been recognized as a matter of large importance. Wherever despotism abounds, the sources of public information are the first to be brought under its control. Wherever the cause of liberty is making its way, one of its highest accomplishments is the guarantee of the freedom of the press. It has always been realized ... that truth and freedom are inseparable. ...
Our American newspapers serve a double purpose. They bring knowledge and information to their readers, and at the same time they play a most important part in connection with the business interests of the community, both through their news and advertising departments.
Probably there is no rule of your profession to which you gentlemen are more devoted than that which prescribes that the editorial and the business policies of the paper are to be conducted by strictly separate departments. Editorial policy and news policy must not be influenced by business consideration; business policies must not be affected by editorial programs. ...
When I have contemplated these adjustments of business and editorial policy, it has always seemed to me that American newspapers are peculiarly representative of the practical idealism of our country. ...
Some people feel concerned about the commercialism of the press. They note that great newspapers are great business enterprises earning large profits and controlled by men of wealth. So they fear that in such control the press may tend to support the private interests of those who own the papers, rather than the general interest of the whole people.
It seems to me, however, that the real test is not whether the newspapers are controlled by men of wealth, but whether they are sincerely trying to serve the public interests. There will be little occasion for worry about who owns a newspaper, so long as its attitudes on public questions are such as to promote the general welfare. A press which is actuated by the purpose of genuine usefulness to the public interest can never be too strong financially, so long as its strength is used for the support of popular government.
There does not seem to be cause for alarm in the dual relationship of the press to the public, whereby it is on one side a purveyor of information and opinion and on the other side a purely business enterprise.
Rather, it is probable that a press which maintains an intimate touch with the business currents of the nation, is likely to be more reliable than it would be if it were a stranger to these influences. After all, the chief business of the American people is business. They are profoundly concerned with producing, buying, selling, investing and prospering in the world. I am strongly of the opinion that the great majority of people will always find these the moving impulses of our life. ...
Of course, the accumulation of wealth cannot be justified as the chief end of existence. But we are compelled to recognize it as a means to well-nigh every desirable achievement. So long as wealth is made the means and not the end, we need not greatly fear it...
So I think there is little cause for the fear that our journalism, merely because it is prosperous, is likely to betray us. But it calls for additional effort to avoid even the appearance of the evil of selfishness. In every worthy profession, of course, there will always be a minority who will appeal to the baser instinct. There always have been, probably always will be, some who will feel that their own temporary interest may be furthered by betraying the interest of others. ...
The power of the spirit always prevails over the power of the flesh. These furnish us no justification for interfering with the freedom of the press, because all freedom, though it sometimes tends towards excesses, bears within it those remedies which will finally effect a cure for its own disorders.
American newspapers have seemed to me to be particularly representative of this practical idealism of our people. Therefore, I feel secure in saying that they are the best newspapers in he world. I believe that they print more real news and more reliable and characteristic news than any other newspapers. I believe their editorial opinions are less colored in influence by mere partisanship or selfish interest than are those of any other country. Moreover, I believe that our American press is more independent, more reliable and less partisan today than at any other time in its history. I believe this of our press, precisely as I believe it of those who manage our public affairs. Both are cleaner, finer, less influenced by improper considerations, than ever before. ...
It is only those who do not understand our people, who believe that our national life is entirely absorbed by material motives. We make no concealment of the fact that we want wealth, but there are many other things that we want much more. We want peace and honor, and that charity which is so strong an element of all civilization.
The chief ideal of the American people is idealism. I cannot repeat too often that America is a nation of idealists. That is the only motive to which they ever give any strong and lasting reaction. No newspaper can be a success which fails to appeal to that element of our national life. It is in this direction that the public press can lend its strongest support to our government. I could not truly criticize the vast importance of the counting room, but my ultimate faith I would place in the high idealism of the editorial room of the American newspaper. ###Labels: Journalism, Quality
Checklists as a Quality Tool
Highly recommended: "
The Checklist," by
Atul Gawande, in the December 10, 2007 issue of the
New Yorker.
Gawande addresses the question of what to do when expertise is not enough to maximize successful treatment of hospital patients. In other words, after providing all kinds of training to medical professionals, right up to the most advanced level, what else can you do?
Dr. Peter Pronovost of
Johns Hopkins came up with the idea of using checklists to force consistent application of best practice in basics like preventing
central line infections. With a checklist, one is no longer entirely dependent on memory during delivery of treatment in the inherently complicated context of caring for patients. Gawande's article details the highly positive results that hospitals adopting the checklist approach in critical care have achieved — far fewer infections, fewer deaths, and substantial dollar savings.
1An example of a hospital checklist used to help minimize central line infections is shown below.
(click to enlarge)
Source: www.ntinewsonline.orgGawande explains the two main benefits of Pronovost's checklists:
First, they helped with memory recall, especially with mundane matters that are easily overlooked in patients undergoing more drastic events. ... A second effect was to make explicit the minimum, expected steps in complex processes. Pronovost was surprised to discover how often even experienced personnel failed to grasp the importance of certain precautions. ... Checklists established a higher standard of baseline performance.
A key element in implementing use of checklists is having senior hospital executives visit the hospital units in question at least monthly to "hear people's complaints, and help them solve problems."
__________
1 " An Intervention to Decrease Catheter-Related Bloodstream Infections in the ICU," by P. Pronovost, D. Needham, S. Berenholtz, D. Sinopoli, H. Chu, S. Cosgrove,
et al. (
New England Journal of Medicine, Vol. 355, December 2006, pp. 2725-2732). See also "Erratum: An Intervention to Decrease Catheter-Related Bloodstream Infections in the ICU" (
New England Journal of Medicine, Vol. 356, June 2007, p. 2660).
You can read about the temporary disruption of data collection in a Michigan implementation of checklists in two reports in the
Baltimore Sun, one in
January of this year, and the other in
February.
###Labels: Expertise, Management practices, Organizational culture, Professionalism, Quality, Risk management
