Three Sigma Systems

Obama’s Turn at the Helm

The storm has been brewing for a long, long, time. Fantasies of uncontested empire have been steering our ship of state into perilous waters for many years. Like Ahab, the captain of the hapless Pequod, our captains of the past three decades have been obsessed with the white whale of easy money and irresponsible power. They turned a blind eye and steered a course that ignored the most basic principles of good seamanship. Despite glooming skies and a rising swell, they failed to make the course adjustments that might have saved us the misery a thousand miles ago. Now we’re in the thick of it and in for a serious blow.

If Obama is elected come November 4th, he must wrest the helm from the current administration on November 5th and swing the ship of state hard over onto a new tack. Though he won’t officially become captain until 2009, there is no time to wait. Clear the decks of political cargo and batten down. It’s time to pipe all hands on deck!

There’s no guarantee, but with a steadfast captain and willing crew, we may yet avoid a fatal broach as we bring her about to run amid the tempest.

"Sailors, with their built in sense of order, service and discipline, should really be running the world."

- Nicholas Monsarrat

The Naked Underbelly of Free Market-ism

During a recent Daily Show interview (10/16/08) , John Stewart asks Robert Reich, former Secretary of Labor, about the destination of the $750 billion dollars allocated by congress to save our economy. Reich gave two answers, both were simple and to the point.

1. The "official" line, is the money is necessary to reinvigorate banking institutions so that they can restore the system to "normal" operation.

2. The second and real answer is that the money is destined to go to the pockets of bankers and finacers in order to make them feel better about lending the immense wealth that they are currently hording, lest that wealth be diminished.

In short, the money doesn’t go to institutions, it goes to wealthy market manipulators so that they can refill their churns.

via videosift.com

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Preserving Free Markets

In today’s bailout announcement, President George Bush proclaimed that the taxpayer funded purchase of equity in insolvent banks is, "…not intended to take over the free market, but to preserve it."

In other words, taxpayers will foot the bill to return the American economic system to the status quo of the rampant and unfettered market forces that brought us the so-called "crisis" in the first place.

Do you feel better now?

Stampede!

The past few weeks mark the biggest churn in the history of the stock markets. First investors were stampeded to sell, sell, sell, resulting in a decline of 2400 points. Now they’re stampeded to buy. A run up of almost 1000 points. The game is afoot.

Churn, churn, churn. Brokerage houses are making money going both ways. The big guys are drooling as they jocky for position to harvest their trillion dollar windfall from the taxpayer. The rest of the herd are fighting each other to get in line for their own slaughter.

Clearly, even those who understand history are still doomed to repeat it. The logic of the unfettered marketplace is not difficult to undertand. In the long run, it always shakes out as a pyramid game. The markets rely on one truism. In the immortal words of P. T. Barnum, "There’s a sucker born every minute".

Note: A stampede is an act of mass impulse among herd animals or a crowd of people in which the herd collectively begins running irrationally toward or away from some stimulus.

Financial Crisis not a Mystery - Churning your Money

Recent news of the imminent collapse of the US financial system is providing plenty of grist for economic pundits. On both sides of the political spectrum, the story being woven is about incredibly complex financial instruments that “even CEO’s didn’t understand”. Like earthquakes, hurricanes, and wildfires, the picture is one of unfathomable and unforeseeable machinations of the free market. The implication is that current events are all a part of the natural cycles of business. Today’s crisis, they say is the mother of all cycles… and unpredictable hundred year flood. God works in mysterious ways.

If you believe that bunk, I have a bridge to sell you!

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Transformation Strategies

It’s true that most kings are hardened in their ways and unwilling to change, though I have met a few… very few…who were genuinely good kings—wise, willing, and filled with caring.

Individual traits, inculcated, acquired, and habituated over the course of a person’s lifetime (their psychology) are often barriers to transforming how a person understands the world. Systemic barriers created by the characteristics of our method of enterprise will ALWAYS confound transformation until we change that system, irrespective of an individual’s understanding and desire for change.

What approaches are available for a teacher/mentor to go about initiating a transformation of people’s understanding of how the world works?

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Obstacles to Deming’s Transformation

Mencius (Meng Tse) said, “Don’t suspect that the king lacks wisdom. Even in the case of the things that grow most easily in the world, they would never grow up if they were exposed to sunshine for one day and then to cold for ten days. It is seldom that I have an audience with him, and when I leave, others who expose him to cold arrive. Even if what I say to him is taking root, what good does it do?”

Quote Posted by Bill Scherkenbach on the DEN List

As is true for most on the DEN list, I think Deming offered more than a glimmer of sunshine in an otherwise darkening world. From both theoretical and methodological standpoints, I believe his ideas were fundamentally valid, though there may be a bit of utopianism in there. As a consultant, I have had to confront the business leader’s “realities”. I have learned that even the wisest of Kings are unable to surmount some of the barriers. How would you answer their “hard” questions?

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Motivators

W. E. Deming used to begin his seminars with a commentary on the fallacy of extrinsic motivators. He would ask the question, “Is money a motivator?” then proceeded to answer, “It is not!”

The same applies to all forms of extrinsic motivation.

Dale, a professional educator, wrote:

There is some conflicting research concerning the relationship with rewards and intrinsic motivation. Marzano’s meta-analysis “Classrooms Instruction That Works” concludes that praise and rewards for easy tasks or just completing a tasks may lower intrinsic motivation.
Rewards are most effective when they are contingent on the attainment performance and may enhance intrinsic motivation.

The problem with the research to which Dale refers is that the researcher begins with the all-to-common assumption that individual students are motivated in predictable and useful ways by differential rewards and punishments. The researcher only asks the question; under what circumstances are the rewards and punishments most effective? The researcher begs the question and perpetuates the fallacy that differential rewards and punishments are integral to the successful education of students.

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Profound Elephants

You cannot understand any one element of Deming’s System of Profound Knowledge (SoPK) without understanding the others. Each is a theoretical perspective—a point of view—used in the final analysis, to understand the same world.

Each of the proverbial five blind men touched one part of the elephant and reported his conclusion about the beast to the Caliph. All was confusion and contradiction. Nothing was gained. Had the blind men collaborated and integrated their understanding, they would have been able to characterize the great animal in more useful ways.

Parts is parts but elephants aren’t parts, they are living, breathing, trumpeting, lumbering biological systems. We might say that each is an example of the System of Profound Elephants.

Space Odyssey

I am generally pessimistic about the ability of Western audiences to understand Deming’s message but I am sometimes heartened when I encounter artistic works of one form or another, that demonstrate at some level, an understanding of the principles underlying Deming’s theoretical vision. When this happens, I think to myself that this way of seeing and understanding must be more accessible than I thought.

Stanley Kubrick’s cinematic realization of Arthur C.Clarks science fiction novel affected me greatly. Both are clearly treatises on human knowing. Man, the toolmaker, extends the reach of his reductive mind to it’s useful limits, and is then driven over the brink of those limits into a new way of knowing.

In these speculative stories, the transformation was portrayed as traumatic and even somewhat apocalyptic. W. E. Deming’s vision of statistical thinking paralleled this transformational idea, though he envisioned a gentler and more systematic odyssey.