Three Sigma Systems

As is clear in his notorious 14-points, Dr. W. E. Deming was adamantly opposed to the use of motivational incentives by management. He saw goals, targets, performance evaluations, and pay-for-performance schemes as destroyers of the system of people. He said the correct function of management is to “remove obstacles to joy and pride in workmanship”. I have suggested that the very ideas suggested by motivational theory might be best abandoned. My suggestion is one of those ideas that I think of as bordering on the edge of chaos. It challenges conventional thinking and pushes our thinking envelope.

In this post I use an engineering analogy to explain how the idea of motivation may lead us in the wrong direction.

Note: For the sake of continuity, I have created a new category called “Motivation” that gathers my blog posts on the subject so that readers can look back at previous entries on the subject.

I am a great fan of John McPhee, who writes a good deal about the contradictions produced by the hubris of technologists who push buttons, pull levers, drive bulldozers, and otherwise bully our environment by “motivating” it to fit our needs and desires. The following analogy was inspired by the essays included in his book, “The Control of Nature“, which I commend to your attention.

Analogical argument in favor of repurposing organizational management

Imagine that there two engineers who have been tasked to come up with a plan for getting water to a location called B from its current location called A.

Remove obstacles to the flow

Engineer 1 is an ambitious fellow. He draws up a plan to move the water in a straight line by motivating it up and over mountains using pumps and siphons. He argues in favor of his plan by saying that by “motivating” the water he can direct it along the shortest and most reliable path to point B.

Engineer 2 is an older and wiser fellow. He proposes a much longer path that follows a gravity line from A to B. His plan does not require pumps or siphons. He argues that, by understanding the behavior of water, he can gently channel it to point B. He has no need to “motivate” the water. He only needs to understand how it behaves and REMOVE OBSTACLES to the flow.

The designs of both engineers will likely achieve the target outcome (RFP specs) in the short run but, keeping in mind that neither will be perfect,  which theory — to motivate the water or to let water’s inherent behavior do the work — will set in motion the fewest contradictions (problems) in the longer run?

Of course, people are not water. People flow uphill!

In my post, “Forward Thinking about Leadership” I proposed a set of questions that come to mind when we begin thinking about leadership as part of a system rather than as a set of personality attributes assignable to individuals. Here are some thoughts about possible answers to the first question. (I would very much like to hear other people’s thoughts on this subject as well.)

If we were actually capable of independent action, there would be no need for leadership. I would do my thing, and you would do yours. Life would be a random walk of every-man-for-himself. But in the course of our lives, we are never independent actors. We are inexorably woven into a set of collaborative relations consisting of family, friends, workplace, community, nation, and world.

As an extreme-case mind experiment, try to imagine an action you have taken or might take that is in some way, not systematically interconnected with the actions of others.

In 2004 I crossed several thousand miles of ocean as a solo sailor. At first blush, it seems that this qualifies as independent action. Not really. My course was set for some distant safe harbor, built and inhabited by others. My boat and all the tools on my boat were the embodiment of designs envisioned and realized by others. The  navigation charts I used and books I read were ongoing conversations with others. Even my brief periods of sleep were punctuated by dreams populated with imagined others.

My solo sailing venture entailed a system of action in which I served as both leader and follower. In leading, I made decisions about where and when to go. As a follower, I was led by the designers of  my boat, equipment, charts and guides, and the wisdom of the many others who had shaped my knowledge and understanding of seafaring. I was never alone. I was always leading and following. My seemingly self-aimed actions were led by the system of tools and knowledge that I had acquired from others in the course of a lifetime of sailing.

One conclusion to be drawn from this example is that leading and following are always present in every human enterprise. You simply can’t escape it.

So what is the part we call leading? Read more…

This past weekend, I happened upon a blog entry by Ron Pereira on his LSS Academy site, entitled Level 5 Leadership. The Level 5 reference is from a bestselling business book called “Good to Great“, by Jim Collins. Ron posed the following question:

“So, it seems the two primary characteristics of the Level 5 Leader are straight forward – be humble while holding fast to the path you feel is best for the organization no matter how difficult it may be. I’d like to turn it over to you, are in 100% agreement with this leadership style? Do you think Level 5 Leadership is essential for a company to succeed?”

Since Ron posed the question, I answered, if somewhat tactlessly, ”Complete nonsense! Such claptrap is worse than useless, it is harmful.”

(Read Ron’s original post and my comments here.)

Those who know me say that I have have a real knack for subtlety — NOT! When its comes to discussions of leadership, I am fed up with the disastrous nonsense that is routinely peddled as authoritative science in business literature. “Good to Great” is just another example of this sort of nonsense.

The distinctly American cult of personality has produced a nation in which great leadership and great followership have all but disappeared amdist an anarchy of petty, self-interested, rabble  With pseudo-science of this sort, it is no surprise that the U.S., supposedly the master of innovation and enterprise, is fast degenerating into a third rate economic power that is systematically substituting  money churning con-artistry for the hard work of creating great products and services that help to make peoples’ lives better. Read more…

Matthew Stewart has written a truth-telling expose in which he explains that the high priests of business management, the MBAs, consultants, and other shamans, have no clothes! In a monumental act of misdirection he, or maybe his editors, choose to title his book, ”The Management Myth: Why the experts keep getting it wrong“. The title of this blog entry would have been more apt.

The Management Myth

Let me begin by saying that this blog entry is not a review of Stewart’s book, mainly because I haven’t read it! But I have read and reread his article in the June 2006 issue of The Atlantic, entitled more succinctly, “The Management Myth“, and if that article, which you can read online, is representative of the book, then I can recommend the book without hesitation. If its book reviews you want, try Jill Lepore’s in the October 12 issue of the New Yorker, “Not so Fast” and Andrew O’Connell’s in the August 13th, 2009 Harvard Business Review, “Why Business Theories are a Waste of Time“.

Now, on to the matters at hand.

Read more…

W. E. Deming was clear in his 14-points that he was adamantly opposed to the use of performance appraisal systems and the use of deferential rewards and punishments given on the basis of goals and targets . But the use of these techniques remains ubiquitous in our business practices despite evidence of the fallacy of these methods that has recently come to public attention in the form of the globally disastrous outcomes produced by bonus systems in the the financial industry. Even Obama has stepped into this trap with his advocacy of pay for performance teacher appraisals.

Why does this approach persist in the face of the evidence that it produces disastrous outcomes and what is the alternative?

Motivation

I think the evidence against the use of performance appraisal and differential motivators is simply invisible to those who are hopelessly mired in  the assumptions promulgated by a theory of organizational and individual psychology. Try as people may, they cannot shake the common sense “logic” that the self-interested will of every individual participating in an organizational enterprise must be bent to the will of the organization by the administration of rewards and punishments, and that it is the principal job of management to do this bending, person by person, appraisal by appraisal.

The assumption behind this view is that we can understand what motivates individuals and act on the basis of that understanding to reliably produce predictable behavioral outcomes among individuals. If you think about this, it is exactly the same logic that an operator uses in controlling a piece of machinery.

In other words, “If” I understand the machine, read the dials, and push the right buttons, it will do pretty much what I want it to do.

Read more…

I woke up this morning and made my way out the front door to pick up the daily newspaper on my driveway. Near my front gate, an Orb spider was weaving a wonderfully symmetrical web across my path. I stopped for a while to watch it at work. After spinning a run, it would laboriously ascend to a perch on a thread of its own construction and then, in a series of acrobatic drops, sweep a new strand of silk along the arc of its emerging work of functional art. After a few minutes, I grabbed a stick and swept away the web that was blocking my path to the newspaper. The spider dropped, then swung away in the breeze. I proceeded along my way, confident in the knowledge that the spider would begin building its web anew, and hopeful that it would choose a new location that would no longer block my path to news of the day.

"Oh what a tangled web we weave." (Click to visit site with web construction video)

What causes the spider to weave its webs? Does it require some special motivation? Does the spider anticipate some future gain? Does it weave its web out of some fear of future dangers? These questions are silly. The spider weaves webs because spiders and their web-weaving physiology and behavior have come into being over the eons through a process of natural selection. Spiders weave webs because their webs have worked over the ages of spiders becoming spiders.

I have described human beings as first and foremost, enterprising creatures who swim upstream against the tides of entropy with aims and intentions that can be powerfully harnessed using aiming and the definition of mission. Our enterprising nature is why we weave our webs, not out of spider silk, but out of symbols that become woven into an ever-emerging web of knowledge. To be human is to laboriously expend energy to ascend from the unpredictable chaos of the world toward a more predictable, orderly, and valuable world of our own creation.

Read more…

Many of the businesses I have visited have produced what they call a “Mission Statement”. These are typically pledges of goodness that come to be displayed prominently on a wall plagues and Web pages. Most are assertions of commitment to customers, quality, and and service, and all are inevitably festooned with meaningless superlatives like “best”, “world class”, “highest”, and “most”.

When I ask managers, workers, and even customers, about the meaning, believability, and usefulness of these pretty words, most reply, with a wink and a nod, that they are basically window dressing and have little with the business of business. Basically on par with Hallmark greeting card sentimentality, the reality of the workaday world soon makes it clear to all, that their sentiments as no more than “wouldn’t be nice if…?”

As is so often the case, the failure to understand theory renders the most powerful of tools, into useless decoration. Worse yet, the job that needs to be done remains undone.

Read more…

In business, we become habituated to thinking that is too abbreviated. We fall into a mind-set that our enterprise is about financial profit and rivet our attention on doing whatever it takes to maximize the bottom line. Of  course, some enterprises really are about nothing more than the bottom line. For example, many but not all bank robbers are in the profit business and their enterprises reflect straightforward theory and to-the-point methodology: “Your money or your life”.

( Come to think of it, we put bank robbers in jail if we can catch them, don’t we?)

But most business ventures do not fall into the same category as bank robbery. In most cases, profits are incidental to the value a business creates in the form of product and service. If your business does this very well, you, your employees, and your customers will profit. If your business does this poorly, everyone loses.

To overcome the problems that result from habitual thinking, it is important that you carefully consider the nature of the business enterprise, or any enterprise for that matter. If you do this, you will force your mind to attend to the issues that really matter with regard to the long term success and sustainability of your enterprise.

Read more…

On this blog I have devoted a great deal of time to the abstraction of theory. In my “Methods of Enterprise” posts, I will be departing from this indulgence and in order to offer some specific methodologies for improving an enterprise.

There are many specific methods that an enterprising organization can use to improve the efficacy of their efforts. Fans of Dr. W. E. Deming often have favorites. Some people focus on the use of statistical methods and control charts. Others want to displace performance evaluations and incentives. And still others look to employ Lean methods to improve the efficiency of processes.

The problem that is typically encountered comes from the fact that none of these methods can stand alone. Instead, they must be employed as part and parcel of and overall strategy that is based in comprehensive theory of enterprise.¹

Nevertheless, in a discussion of methods, we have to start somewhere and I can think of no better place to begin than with the methodology of “aiming”. I will try to keep this discussion of aiming in the context of an overall theory of enterprise.

Deming and Aiming

The importance of aiming has been consistently misunderstood, and is often skipped by enterprise leadership because it is seen as being too fluffy, too imprecise, and not directly related to the “bottom line”. But Dr. W. E. Deming regarded aiming as a method of the utmost importance, placing it in the prominent position of Point 1 in his famous “14 Points“.

Deming also said, “A system has an aim” and it is by way of aiming the system that an enterprise can realize what he called a “constancy of purpose” that is the essential component of “continuous improvement”

In other words, if you are going to create and drive a system of enterprise, you must assert the aims of that system or you will not be able to create the constancy of purpose necessary to improve continuously.

So let’s be clear. In Dr. W. E. Deming’s view, aiming was neither trivial nor optional.

Below I explain the concept of aiming in the context of a theory by which enterprising organizations innovate and improve by creating new knowledge. Then I give an example of how U.S. automakers failed because they did not understand the process of aiming.

Read more…

While the muse is with me, I am frantically putting together a new book entitled “The Ascent: Riding the Brink of Chaos”. It’s a book intended for leaders of, and participants in, enterprising organizations that want to systematically undertake continuous improvement by driving a process of knowledge creation. I hope to publish an abbreviated on-line version soon.

The opening quote is this:

You cannot always stay on the summits. You have to come down again… So what’s the point?

Only this:

What is above knows what is below, what is below does not know what is above. While climbing, take note of all the difficulties along your path. During the descent, you will no longer see them, but you will know that they are there if you have observed carefully.

There is an art to finding your way in the lower regions by the memory of what you have seen when you were higher up. When you can no longer see, you can at least still know.

Rene Daumal, “Mount Analogue”

“There is no substitute for knowledge.“
Dr. W. E. Deming

In 1997, television journalist Clare Crawford-Mason, gave a speech to the Deming Institute in which she discussed the philosophical discoveries she made since her interviews with Dr. W. E. Deming in the documentary, “If Japan Can, Why Can’t We“. She began,

” I met Dr. Deming in his basement in 1979, interviewed him there several times, understood nothing of what he said except the statement, ‘I taught the Japanese to work smarter not harder.’ However, I recognized that he was a prophet ignored in his homeland and knew that this was a story and reported it with Lloyd Dobyns in “If Japan Can,Why Can’t We?” the NBC White Paper in l980.”

Clare’s far reaching speech was new reading to me but her discussion of the “philosophical” implications of Deming’s work was right on target. It has been many years since I read Gurdjieff and Ouspensky. I recall being much impressed by their writings, though I regarded them at the time as a bit too mystical for my taste.

Deming’s work represents a theory of knowledge which he came to by way of wrestling with the problems of variation’s ubiquity. This theory of knowledge can be readily translated as a theory of the emergence and structure of human consciousness. Over the years I have found many avenues of approach to this subject in the literature of both science and philosophy. I assume that Deming also found similar sources. What is clear is the work of the arch Pragmatist, C. I. Lewis, figured prominently in the thinking of Deming’s mentor, Walter Shewhart and by extension, I conclude the same was true for Deming.

My blog features a sticky post in which I make an all-too-clumsy effort at explaining in lay terms, how control chart theory is based in a theory of human consciousness (http://www.3sigma.com/whats-so-special-about-3-sigma/ ). I continue to work on it.

In a nutshell, a theory of knowledge (or consciousness if you prefer) speaks to the nature of knowing—it’s potential and its limits. Gurdjieff and Ouspensky tackled this subject with ideas about other forms of knowing. Deming’s other form of knowing was “statistical” and he carefully avoided anything that rang of mysticism. I fall into the Deming camp in this regard.

Systems thinking comes down to developing methods and instincts for hearing the voice of the process, or if you will, the voice of the system. This is the opposite of the reduction that has become the common sense of by-the-numbers and just-the-facts thinking in Western enterprise. Simply put, reduction destroys the object of study. Systems thinking preserves the interacting whole so that we can hear its heat beat, breathing, meaning, and other vital signs. Hearing and understanding the voice is the means by which the intractable interactions that define a system can be brought within the grasp of the naturally reductive mind. Prediction improves. Decisions become more efficacious. Doors to understanding open continually.

Without leadership that understands this way of seeing and understanding, our future remains determined by the fundamental flaws of scientistic reductionism. This was why Deming said, “How could they know?” Without this understanding, they can’t even ask the right questions.

The role of leader is and must be a part of any system of enterprise—any collaborative effort applied to raising the value of inputs into outputs of greater value—and the role of leader only has meaning and can only be understood in the context of followership.

Although the role of leader is commonly designated by an organizational chart, that chart cannot make a leader. Within organizations the sociometric relations between leaders and followers are often at odds with the formal organizational chart and this phenomenon gives rise to many organizational problems. Giving a person the title of leader, the differential salary of a leader, and the power to lord over the fate of others, does nothing to make them leaders.

Followers make people leaders and leaders always emerge. When emergent leaders go away—when the head of some enterprise is for any reason, lopped off—enterprising groups always grow a new head. This is rooted in the tribe’s genetic wisdom. Organizations that mistake org chart titles for leadership are bound to suffer the non-alignment of effort that emerges from shadow organization.

Leadership cannot be understood on the basis of mystical personality traits nor styles of interaction. Correlation studies of what kinds of people and what styles of interaction are characteristic of “effective” leaders are meaningless. Effective leaders exhibit the gamut of physical and psychological traits.

Leadership is a necessary function of human enterprise. Abundant studies in many settings demonstrate that in the absence of leadership, all enterprising collaboration collapses—Entropy rules.

The tasks of leadership can be understood functionally. These processes can and should be learned and mastered by everyone even though not everyone can act as leader because the shape of the relations between leadership and followership is pyramidal. When everyone understands the role of leader in relation to the role of followers, the pool of potential new leaders among followers is better prepared and followers are better equipped to understand the optimal relation between followership and leadership.

The core functions of leadership in relationship to followership are:

* Clarify, codify, communicate and continually renew a set of aims to which followership can subscribe. Alignment of purpose is the pointy end of the enterprise.

* By every and all means, predict the future insofar as it applies to the aims of the enterprise in order to validate those aims and assess the risks associated with moving forward.

* Assume the responsibility and risk associated with the allocation of human and material resources to the system of enterprise in a manner that is consistent with leadership’s best, though always imperfect, understanding of future dangers and potential gains for all enterprise members.

* In concert with followership, invest the system of enterprise with methods that minimize risk to followers (who have no power to act on the system as a whole) so that they can operate and continuously improve the system with a minimum of fear.

The leader’s job is to hone the pointy end of the enterprise so that it can move forward with respect to its aims in the most effective manner possible. Leadership’s job is to bear the brunt of the risks inherent in moving forward by mastering the art of prediction. This requires a profound understanding of the nature of systems and variation.

A wise enterprise will invest in all its members, an understanding of the process of leading because to expect people to follow without teaching them what it means to lead is as useless as explaining an archer’s bow without explaining the arrow.

This summarizes a systems view of leadership and leaders who grasp the nature of their responsibilities and develop methods consistent with those responsibilities will do better at leading the system of enterprise of which they are a PART.

President Barack Obama is currently touting the benefits of pay-for-performance compensation for teachers. Someone needs to slap him upside the head. Get ahold of yourself Barack!

As W. E. Deming often said, “By what measure?”

Pay for performance always creates perverse incentives for the simple reason that it is impossible to maximize one measure, or even some limited set of measures, without destroying the system. We can define dereliction of duty in some gross terms, but we cannot define excellence.

Pay-for-performance in the financial sector resulted in paying outrageous bonuses to wiz-kids and executives who did whatever it took to maximize profits. To our everlasting shame, they acted accordingly by producing profits…AT ANY COST TO THE SYSTEM! Now the world is paying the price for pay-for-performance. Should we do the same in the education of our children?

Barack, what measures will you use to evaluate the performance of teachers?

• If you use student test scores, teachers will teach students how to beat tests.
• If you use peer evaluations, teachers will butter up their colleagues.
• If you use student evaluations, teachers will soft peddle students.
• If you use parent evaluations, teachers will pander to the parents.
• If you use administrator evaluations, teachers will grovel before administrators.

A school is a system. A well led school will be one in which everyone understands the job to be done and methods for getting that job done. The school’s greatest asset will be the diversity of individuals who contribute to the overall success of the mission. Some will rank better by one measure. Some by another. When mission and methods are clear, teachers will teach. Everyone in the system will do their very best. Why would they do otherwise?

As has been the case with our financial industry, paying teachers for performance will guarantee disaster by maximizing the outcomes we measure, and destroying the system overall. Instead of pay-for-performance, substitute leadership that understands the educational mission and methods, and leads the system of students, teachers, administrators, and community in an educational enterprise that produces diverse, competent, and innovative citizens who can tackle the challenges of the 21st Century.

PS – Also consider how this applies to pay-for-performance in the health care sector!

In the summer of my first year as an undergraduate student I worked at a Coca Cola bottling plant. It was fascinating to observe the hourly workers’ ability to dope out the bottling line and self-organize. Management routinely “adjusted” the conveyor speeds in order to pace production. Workers responded to these changes in many ways. During higher speed runs, some worker would routinely nudge a bottle just so and it would tip and jam the line, causing all the bottles following it to fall. The sound of the line crashing was always a welcome respite from the repetitive drudgery of the midnight shift. The sound of klaxons and breaking glass marked these moments of relief, during which the smiling hourly workers got a 20 minute break from the routine. No words were ever spoken. No plots were hatched. These “accidents” were simply a part of the system.

During my graduate studies, I worked summers as a ladleman at a steel plant. It was a quick way to build my bank account for the coming year. The steel making process was organized around teams—crane operators, ladle operators, pour operators, furnace operators, casting guys, and the gang foreman. Team performance was measured by the number and weight of “heats” completed during a shift. The highest performing teams received bonus pay each month.

All of the teams were pretty aggressive. A critical path process was ladle preparation–one of my jobs. Each ladle had to be prepared by molding sand into the base as a release agent for the slag that remained after a pour. The sand was molded wet. Once the ladle was lined, it was cooked under a huge burner to remove all moisture from the sand-water mixture. If tiniest amount of moisture remained in a ladle, the pour of molten steel would overlay the wet spot and produce a steam explosion that would cause the molten steel to explode out of the ladle. For this reason, a ladleman only poured from ladles he himself had built.

The process of drying a ladle was always fuzzy. How much moisture was in the sand mixture? How humid was the work environment? How did the wind affect the drying burners? The only answer back in those days was, the longer under the burner, the safer the ladle.

Read more…

PDSA = HAMMER
PROBLEM SOLVING = SAW

PDSA is a method that drives forward by constructing new knowledge. It begins with theory. Corrective action is a problem solving method that a is reactive, rear view mirror process. The method begins with something deemed “wrong”.

The first is a method of discovery. The second is a method that tries to shove the world back into some box we have created.

These methods differ in aim, structure, and efficacy. Both methods have their place in a tool kit. A hammer is good for nailing things together. A saw is good for cutting things apart.

Confusing a hammer with a saw tends to mess things up.