Three Sigma Systems

It is no secret that by any measure, the quality, safety, and reliability of Toyota’s products have out-shined American automotive products for many years. Nevertheless, for reasons that are not too difficult to understand, the cracks in the armor of Toyota’s phenomenal quality have been pried open in a manner that has brought Toyota’s imperfections into the spotlight. Rather than comparing the quality and safety of Toyota products with those of US automakers, or seeking to minimize Toyota’s failures in any way, head-man Toyoda of Toyota takes absolute and unequivocal responsibility for the flaws in his products and the terrible consequences of those flaws.

Watch Toyoda’s apology before the United States Congress. Then watch the leaders of the U. S. automakers testify before that same body. Compare Toyoda’s words and demeanor with those of U.S. leaders, who utter not one word of personal regret or contrition for having driven their companies into collapse, wrecking havoc on the lives of countless workers and customers. Then decide for yourself who demonstrates greater strength in purpose, responsibility, and honor. Who would you trust?

PS – For those who have studied W. E. Deming, note Toyoda’s reference to workers and continuous improvement.

Here’s a current events tie-in with my “Secret of Success” post.

From SailWorld.com:

There is little doubt that the many Court actions over the 33rd America’s Cup have been a major turn-off for the sport and sailing fans generally.

In a couple of days the sport will see a sailing match of the likes that has never been seen before and probably will never see again. Two of the highest performance yachts will square off against each other in a fascinating contest, conducted under the bare minimum of sailing rules.

Money is no object

Two of the world’s most “successful” guys are in the midst of a protracted battle royal that will culminate 25 miles off the coast of Valencia, Spain, when one or the other cheats his way to two out of three meaningless wins in the 33rd America’s Cup sailing regatta.

My Bay Area neighbor, “successful” self-made Larry Ellison, the 66 year old founder and CEO of Oracle and 9th richest man in the world, is spitting, scratching, and yowling in his fight with 44 year-old Ernesto Bertarelli, the European aristocrat who ranks as the 52nd richest in the world by virtue of the bio-tech empire he inherited

It’s interesting, and very sad , to watch these two going at it, but the lessons to be learned, as I suggested in my previous post, the secret of “successful” people is their aim to manipulate the system to their personal advantage rather than improve the system so that everyone can win. Read more…

This post is a bit rocky and I have vacillated between whether to delete or not-to-delete. Since my blogging policy is to never delete (”The moving hand having writ, moves on..”), I will let it stand but I ask that you please read the comments accompanying this post, which may or may not help matters. If you use my secret of success, be aware  that I make no warranty, express or implied, that your results will be any better than those realized through random chance. Special thanks to John Dowd for thinking on this.

Today I am going to tell you the secret of success. When I say success, I mean the process of acquiring wealth, power, and influence that exceeds by orders of magnitude, that of mere mortals. Successful people are the top dogs that dominate the crowd and, because of their domination, they are often described as “leaders”, though that attribution is debatable. They are the corporate executives, politicians, financiers, gamblers, pundits and preachers who seem to end up running the show wherever the show is being run.

Over the course of my 30 year career as a business consultant I have rubbed shoulders with quite a few successful people. For most of that time, my relationship with these individuals was, as they say, strictly business. My knowledge of them was limited to the workplace. Although no one who knows me would ever accuse me of being obsequious, my relation with power tended to be one  in which I tolerated and even cultivated, a foggy subservience to those who retained me and signed my paychecks. To put it quite bluntly, my job was to give advice, but never to the extent that the advice given would  jeopardize my survival. I reasoned, as a favorite professor advised  many years ago, you can’t influence the system if you are cast out from that system. You also can’t pay the rent. Read more…

When lawyer Dan Pink tackles the subject of motivation, he does what lawyers are apt to do. He gets the details right but almost everything else wrong.

The problem is that Pink continues to work from a fallaciously reductive theoretical foundation. Because of this, the techniques he suggests are correct, but the explanation he provides is upside down. This leads him to incorrectly dichotomize motivation into “extrinsic” and “intrinsic”. He is not alone in making this disastrous error. Read more…

In today’s NY Times business section:

TOKYO — …Toyota’s problems mounted in North America with the announcement of a halt to sales and manufacturing of the bulk of its cars.

As a sailor, I find many parallels between the enterprise of sailing small boats on big oceans and the business of doing business. In making our way at sea the crew, which is comprised all who are aboard, share a set of aims and a system for realizing those aims—their boat, their methods, and their ability to work together. Seamanship represents the whole of their theory, skill, and methods for voyaging.

In sailing, heaving to  is a way of slowing a sail boat’s forward progress, fixing the helm and foresail position so that the boat doesn’t have to be actively steered.

When I teach others to sail, I teach that even though crossing oceans under sail is a most practical endeavor, the dictates of well-formed theory is the key to survival. This is called seamanship. What seems expedient in moments of adversity must always meet some test of a broader understanding of the titanic forces that are beyond a crew’s control. When theory and practice are challenged at a fundamental level—when the best course of action cannot be determined with reasonable certainty—-the crew must, if at all possible, heave-to.

The idea of heaving-to does not come easily to our ambitious animal spirits. In situations of adversity we are prone to reaction rather than reflection. But actions taken on the basis of faulty understanding are more apt to make things worse, which prompts more action, which makes things worse, and so on. As Dr. W. E. Deming explained, if we start reacting to individual data points when it is our system itself that is producing unwanted variation (lack of predictability) then we are “off to the Milky Way”.

Toyota, the Japanese automaker, calls their seamanship, “The Toyota Way” and that body of theory is now being put to the test. Superficially, they have a problem with a sticking gas pedal on their popular Camrys and Corollas and superficially the problem and solution are all too familiar: Do a recall. Engineer a solution. Fix the gas pedals. But it appears that Toyota sees the problem in a broader light. The crew regard the gas pedal problem as a symptom of a larger challenge to their system. That larger challenge includes the titanic economic forces that are raging in the world today that have loosed a chaos of increasing unpredictability and undermined their assumptions that have become too tidy.

“By chasing numbers, they (Toyota) were becoming seriously outstretched,” said Masahiro Fukuda, manager of research at Fourin, a global automotive research company based in Nagoya, Japan. “Many of us weren’t surprised over the big recalls; we were more surprised that it took Toyota so long.”

“Toyota’s president, Akio Toyoda, has himself berated the company for excessive confidence, which he said had set the company up for a painful fall in the global economic crisis.”

“But Mr. Fukuda said he saw Toyota’s decision to suspend sales as a typical Toyota move. “At a Toyota factory line, when something goes wrong, they stop the whole line.” he said. “Now Toyota is doing the same thing, at the company level. That’s the Toyota way.”

Is Toyota’s shutdown merely a damage control tactic or does it reflect genuine seamanship? By shutting down their manufacturing and sales operations, it appears that Toyota is putting their money where their mouth is.

In an Op Ed piece in today’s NY Times, “Between God and a Hard Place”, James Wood makes some interesting observations about the earthquake in Haiti and God. He calls to our attention two invocations that are particularly notable—one is from Pat Robertson and the other from Barack Obama.

Pat Robertson took to his lectern to opine that the devastation wrought on the people of Haiti  was God’s retribution for the deal they cut with the Devil when overthrowing French rule. Crass but consistent, given Robertson’s observations about hurricane Katrina and legalized abortion.

Barack Obama also took to the podium to comment on the earthquake and aftermath in Haiti, and he too invoked God, saying,  “we stand in solidarity with our neighbors to the south, knowing that but for the grace of God, there we go.”

Wood’s excuses Obama for implying that we stand ahead of the Haitians in God’s good grace, suggesting that Obama was merely parroting an oft used phrase. I don’t think so.

I remember when, back in 1966, I met Joan Baez—actually had lunch with her. Nice lady. In one of her songs, I don’t remember which, she emended the saying “There but for the grace of God, go I” to “There but for fortune, go I”. I must say, blind luck rings truer.

The meaning of the phrase with “God” at its center is not difficult to divine. Baez saw this clearly. I suspect Obama is smart enough to know what he is saying as well, but he opts for “God”, either as a political expedient or worse yet, a matter of personal faith, In either case, God help us.

In the “Small Business” section of today’s New York Times is an article entitled, “7 Businesses That Did  Not Survive”  detailing the case histories of some small businesses that failed during 2009.

As a long-time consultant to business and now, a SCORE volunteer, I have seen plenty of small business failures. In retrospect, the owners of failed businesses can always come up with a list of reasons for their failure, but in the final analysis, it all boils down to the same thing. In the language of mountain climbing, they overextended their lead.

When you are climbing a mountain, you make some predictions about how things will go as you ascend and then commit to some level of acceptable risk. As you lead the way upward, you place some points of protection, called belay points, in the rock and clip in a climbing rope. While you are always looking to move upward, the prospect of unpredictable adversity guides your every action. As leader you are always asking, “What if”, and you make every effort to guard against future events that cannot be known with certainty.

As leader, if you take a fall it will be, roughly speaking, twice the distance from your last point of prediction. If your lead is overextended, your fall will be so violent that it will tear your protection point from the rock. Long falls usually result in serious injury or death.

In climbing and in business, the one thing we can be certain of is that things go up and things go down. The science and art of business involves learning how to ascend AND descend without getting killed.

“Go for it” is not enough. In my experience no one teaches small business entrepreneurs methods for predicting and managing risk. Come to think of it, the leaders of our biggest banks don’t get it either! They solve the problem by getting some other poor suckers to run the lead for them. It’s called BAILOUT.

Last night I listened to his speech very closely and I am convinced that there’s a hidden objective in Obama’s plan. That objective is to be obtained by diversion, indirection, subterfuge, and surprise. Let me tell you why this must be so!

Surely the 18-month deployment of 30,000 more soldiers to the vast and unconquerable deserts and mountains of the region called Afghanistan, is a feint deigned to draw attention away from the real thrust of Obama’s plan. No informed observer could actually believe that the varied tribes of Afghanistan can be brought to heel under some fanciful national military constituted and led by Kabul’s latest warlord, Mr. Karsi. This hasn’t come to pass in thousands of years and it will not be brought about  in decades, much less 18 months. At best, Kabul can become the capital of Kabul.

Nor could anyone take seriously, the idea that an occupying force of 100,000 American cowboys can  hope to seize and secure territory in a region where cities and and borders are no more than punctuation marks in the vast  and ancient narratives of  the essentially nomadic-warrior peoples of Afghanistan. Yankee go home! Now you see them. Now you don’t.

OMG! At face value, Obama’s announced “plan” is just too silly to be taken seriously by any informed observer.

Being an ardent Obama admirer, I have concluded that he has committed even more national wealth and more young lives to a hopeless diversionary battle because he and his advisors have  a hidden plan. I have figured it out.

Now keep this to yourself. We don’t want to blow the secret plan.

The real plan is to ensconce a small force of diggers into the border regions between Afghanistan and Pakistan. These diggers will use the 18-months provided by the above-ground diversionary action to construct a tunnel to Islamabad. Led by a Tom Cruise-like mission impossible guy, the “impossible” team will locate Pakistan’s underground nuclear arsenal and neutralize their atomic bombs, so that when the Pakistani government falls before a temporarily constituted coalition of Taliban fighters, the weapons will be entirely impotent. Once Pakistan is defanged, we can bring home our soldiers who have not been killed and get back to fighting over important matters such as healthcare in America.

Way to go, Obama!

Please, tell me I’ve got this right!

How is it that we come to accept as natural, wage differentials in which some few human beings receive 200% to 400% more compensation for their labors than most others? In the past, the “Divine Righs” of kings was sufficient explanation. Today, we are told the difference is merit-based.  People who are paid 400% more, work 400% harder or are 400% smarter. In some way, they are our betters — the “best of the best”. The.Guardian.co.uk quotes Lord Griffiths, vice-chairman of Goldman Sachs International as saying “The British public should “tolerate the inequality as a way to achieve greater prosperity for all”, He must mean that if we tolerate 400% inequality, we will realize 400% more prosperity. Get up close and personal with your “betters” here: “Pay at the Top“.

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!

Over this morning’s coffee my wife, Monica, and I discussed my penchant for infuriating people. She told me that the root cause of this problem is that in conversation, others perceive in me, an insufferable arrogance. It struck me that she was probably right. Although I do not feel that I am arrogant, my assertive approach in conversation does seem to affect people that way. Our conversation got me thinking about Ron Pereira’s post on the subject of “humility” as a key characteristic of effective leaders. In my recent posts on leadership, I suggest that study of the personality traits of leaders is not a useful path toward the improvement of leadership, but I can’t help but wonder if I could become more effective in my enterprises if I were to somehow improve my approach in conversation in order to convey less arrogance and more humility.

Since you can’t get anywhere if you don’t know where you’re going, I decided that my first question should be, what do we mean by the concept of “humility”?

Humility and Humiliation - Two Sides of the Same Coin?

As usual, Merriam-Webster’s Online Dictionary goes roundabout, saying that humility is the “quality or state of being humble”. Following Webster’s lead, I looked up “humble” and found that it is defined as meaning:

1 : not proud or haughty : not arrogant or assertive
2 : reflecting, expressing, or offered in a spirit of deference or submission <a humble apology>
3 : ranking low in a hierarchy or scale : insignificant, unpretentious b : not costly or luxurious <a humble contraption>

Having already learned from my wife that in conversation, I convey an assertiveness and arrogance that creates problems, I realized that I would need to search more deeply .

The wonderful Online Etymology Dictionary informed me that the word humility can be traced back to circa 1315, from O.Fr. humilité, from L. humilitatem (nom. humilitas) “lowness, insignificance,” in Church L. “meekness,” from humilis “humble.” Read more…

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…

In an effort to get my feet back on the ground…

I recently decided to volunteer as a SCORE consultant to small business enterprises. This is basically doing what I have been doing for 30 years, but without the pay checks. I am hoping that this will provide me with the opportunity to get back down to the nitty-gritty of enterprise methods.

“If you can’t describe what you are doing as a process, you don’t know what you’re doing.” W. E. Deming

Speaking of knowing what you’re doing…

In a run of interesting articles (see my blog entry, “Risky Business“) “The New Yorker” has struck a resonant chord again, this time with the October 12th, 2009 article, “The  Secret Cycle”*  by Nick Paumgarten. (However unlikely, I can’t help but wonder if he read my my blog entry on the same subject.)

* Sadly, Paumgarten’s article can only be read (online or off) if you are a New Yorker subscriber. It is excellent and I recommend reading it if you can.

Paumgarten explores the numerological business-cycle theory of financial guru, Martin Armstrong. Armstrong dreamed up his theory by staring at patterns in financial data.— sort of like seeing cuddly animals in the shapes of clouds. Armstrong sees a financial cycle of 8.6 years and deduces that this cycle is a function of the universal constant PI, which he explains, is the “Geometry of time itself”.

Armstrong managed to parlay his theory into a financial consulting business that paid him as much as $10,000 per hour and, according to the U.S. government, a decidedly non-cyclical Ponzi scheme that defrauded investors out of more than a billion dollars. He sold “cycles” but invested in “pyramids”! He continues his good works from a prison camp at Fort Dix.

I offered up my thoughts on the subject of business cycles in my post, “Business Cycles – The Greatest Con Never Told“. The upshot is that cyclists pray on a trick of the human mind — to see meaning in patterns whether meaningful or not. The predators among us lie in wait, relying on our habitual thinking to make us easy prey. Enterprising and innovative minds understand that the patterns we see are not “out there”. Patterns are of our own making, and if we so choose, we can construct them in creatively useful ways. This idea lies at the core of Walter Shewhart’s concept of process behavior and the utility of 3-sigma.

And speaking of ambushes and enterprises…

At this very moment, our leader, Obama, is in the thick of the Afghanistan conundrum. I am following this story with great interest because, and I repeat myself pridefully, I was there before most people knew the place even existed. My brilliant cyber-colleague and friend, Greg Nixon, read my “Tom Cruise in Afghanistan” blog entry and suggested I read Steven Pressfield’s historical war novel, “The Afghan Campaign“. As always, I did as instructed.

As art, the book is a disaster — the dialog is almost unbearable. But the main point of the story strikes the right chords. If you can’t beat ‘em with your game, join ‘em in their own game.

Obama’s problem is figuring out to whom he, or proxy Tom Cruise, should propose marriage. Where is Roxana of Bactria when you need her?