Why Crisis Is the New Profit Center

(Today’s guest commentary is from our friend V.R., a management consultant who incidentally was a student of ours before the term “Hidden Pivot” was coined.  Some may find his essay heavy going at times, but the reward for bearing with it, as your editor has found, is that you will have a better understanding of why complex systems, most particularly political and economic, fail.  Not all of them do, for sure, and V. elucidates the factors that can make the differenceRA)

Process Management appeals to companies that recognize its value.  Essentially, it is a scientific approach to managing  because, like all science, it is based on empirical measurement.  As we have learned in life, there are many ways of measuring things, and the less concrete they are, the more we dither over them and risk bringing progress to a halt.  This is especially true of politics, where hyper-emotional debate very often obscures the underlying issues.  In the corporate world, the ability of a firm to sustain and grow its business is related to its ability to stay on course despite changes in personnel,  market conditions and on stormy seas.  Carnegie Mellon institute is a leader in defining the software development process.  They created something called the Capability Maturity Model, or CMM, which uses a 0-5 scale to determine how well software companies use best practices to ensure the sustainable quality of their product or service. This ties directly to the sustainable efficiency of their profit-making efforts.  For example, a company rated “zero” uses ad hoc, shoot-from-the-hip means to accomplish things more than a level-5 company, and uses more subjective means of ‘measuring.’  This leads to less concrete operating methods, poor perceptions and an inconsistency of approaches.  Level-zero companies also waste effort developing their capabilities because they oversimplify the demands of success and learn that the hard way.  Then, they promptly forget what was learned when a new CEO arrives and wipes the slate clean; or, people quit and take the know-how with them.

A visual metaphor for the savings and loan debacle?

Look at the list of companies that were started in the last 50 years and see who’s left, and you have a good picture of who’s who in process management.  The short list would be, for example, the companies Warren Buffet invests in, because these companies, despite the changing nature of the complexities that confront them, can deal with change and sustain a pattern of success without the help of a super-star CEO, or of a workforce whose dedication is based on possible IPO success.  Once some of those companies reach the payoff level, the people in them move on to other enterprises, taking with them the DNA of what made the original company successful.  ISO 9000 is an international standard of process management with many dimensions, but having audited a company against such a standard, I find it surprising how low the operational standards are of some companies with good reputations.  Some of them fail when they deviate from the habits of that made them successful.  The electronics darling Lucent, an investment portfolio superstar of the 1990’s, sold its last operations to Alcatel within a decade.  One reason the company vanished was its inability to recognize the cost of complexity.  It’s one thing to add another gadget, system, process, protocol, rule or law, but another to manage a growing pile of them.  Constant re-evaluation – call it corporate soul-searching – must continually sort out what can be sustained from what must go.

The DNA of Success

What separates the successful from the unsuccessful is having a foundation of systematic process and systemic awareness to operate from.  They form the concrete floor on which you can build businesses that will weather an economic tornado.  By defining and honing the elements of success, and by not losing the ‘memory’ of the process and of lessons learned, a business (or a government , or even a person, for that matter) can sustain a level of success that will always elude ad hoc management styles; companies run by superstars who are distant from the workforce; tiger-teams of MBAs assembled to address systemic problems that arise along the way; and companies that lose the DNA of success when their employees desert them. The lesser companies think they are operating ‘lean and mean’ by ignoring good process, but they’re really operating in knee-jerk fashion.  To quote an upper manager at a major software company, “I like a good crisis — it gets your mind focused.” That in a nutshell is the strategy of ignoring the management of complexity, which in turn produces crisis after crisis.  By the way, that leading software giant rated a “zero” on the CMM model.  Having worked there myself, I can attest that the irritation over why their software worked so poorly went away on the realization that the product was a perfect portrait of their own internal processes:  disconnected, unaware of self, high on hype and low on consistency and awareness of the obvious inconsistencies.

Our government operates on the lowest level of process management, which is why sharp people like Brooke Burke who raised the flag in the 90’s on how the derivatives market is poised for a fall, get pushed aside by the likes of superstars like Greenspan and Co., and how the unmanaged complexity of systems not well understood endsA up blowing up into the debacles of the savings and loan meltdown of the early 90’s, the internet bubble of the late 90’s, the foreign policy failures leading to Iraq and Afghanistan, Globalization of Corporate capitalism, the shoddy loan bubble (aka ‘housing bubble’) and the predicted derivatives bubble which have all collectively brought the country’s economy, and the much vaunted ‘Global Capitalism’ to its knees.  Well, lets be clear on that last point, the capitalists were only on their knees long enough to borrow $700B and then resume their flagrant self serving ways by investing American money everywhere but America, and assigning the paying of their bonuses to the yet unborn depositors in their banks.  Slave owners finally found a way to reach into the future. On this new ‘capital crisis’ system, it’s the American taxpayers – past present and future – that will remain on their knees as long as ‘management’ excludes measurement, good process-formation and maintenance within “our” own government.

Managerial Crime Spree

Aiding this crime spree of apparent poor management is the same thing that keeps process management out of American companies and government.  The Chinese describe the word ‘crisis’ as ‘opportunity’ so we could say that the unmanaged complexity inherent in poorly managed systems actually creates the ripe opportunities which have made the owners of capital quite Chinese in nature.  This is pretty funny, considering how the plunderers used ‘real’ Chinese labor to keep American wages low by creating competition between American and Chinese workers, and reducing the competition between Capitalists and American workers for the profit of their labors.  An immigration policy that excludes the best and brightest Europeans from immigrating but gives millions of low wage workers a ‘get into America free’ card has the same result.  That’s why “we” let them in: to maintain pressure on our wages to keep costs to capitalists down.  To expand on this thought, a good crisis keeps the ‘system’ of plunder intact.  That helps explain why so many systems the United States had in place to measure our activity or maintain our gains were pushed aside by each succeeding bought-and-paid-for government ‘administration’.  Thus, the FDA approves Vioxx, which then kills 50,000, and then class action lawsuits spring up like topsy.  Indeed, the massive increase in government jobs over $100k says the plundering of America by government, but also by the corporations who “own” the politicians and the political process, will continue.  Keeping the election process wide open to big money ensures that this destructive and dysfunctional dynamic will only get worse.  Using Howard Hughes’ method of doing business – i.e., paying off both sides before the election — makes getting one’s way a given.

So complexity has a cost, and if its not managed properly, it will eventually cause the breakdown of systems unable to preserve their gains via sound, collective-process management.  The recent elections reminded us once again that substantive issues will always take a back seat to mudslinging by the corporate party’s two-headed proxy.  However elections turn out, we can rest assured of zero net gains in the overall capabilities which would make our country and economy strong.  Like the drug companies that elevate a simple human trait like ‘shyness’ into a disease with a slick name like “Social Anxiety Disorder,” and then make millions selling Prozac derivatives, there is too much money to be made for the owners and investors in ‘the new capitalism’ for anything like ‘order’ to grab a foothold; for if it were otherwise, the ability to gin-up another crisis to the level needed for an ‘investment’ from the public would be compromised.  Thus, as powerful as the means are to improve things, the guys pulling the strings and their political lackeys can rig the odds against a collective success, keeping us mired in a crisis-based world forever.  Amidst the complexity and calamity, the Kansas City shuffle remains the primary profit mechanism: you look this way, they go that way.

Japan, for Example

The largest case-in-point illustrating this ongoing conundrum is the rise and fall of the Japanese economy in the 1900’s.  The inventors of process management, two Americans named Demming and Juran, came to the fore in WWII, and their process management techniques contributed heavily to the amazing growth of American industrial capability which, arguably, won the war.  After the war, these specialists couldn’t find a job.  Post-war America no longer needed efficiency because they wiped out their industrial competition by making bombs instead.  Faced with the task of rebuilding a wrecked economy from the ground up, the Japanese found these two men irresistible.  They were brought to Japan, and their techniques were learned and refined until America was ‘surprised’ by Japan’s ability to make cars, stereos and every industrial product of higher and higher quality while simultaneously dropping the price till they had no competition.  Today, the world leader in process management is Toyota, not GM — and TPS, or Toyota Process System, is what you learn in business school now.  Those methods are the standard.  The Japanese then took their gains and parlayed them into a real-estate bubble that popped and brought their economy to a standstill for 20 years.  And here’s a similar story from our own back yard:   For America, the spoils of war included Nazi Germany’s rocket scientists. Asked how they had developed those amazing V-rockets, there came the response: “We learned it all from the American physicist Robert Goddard, whom you ignored the whole time”.  These same scientists put America on the moon 25 years later.

Six Sigma Revolution

The means exist, the work force is are capable of learning how to apply them, and better companies are using them on a lower level to increase manufacturing yields.  Six Sigma was the latest spin on this science, created by Motorola and endorsed by Jack Welch of GE.   In the bigger picture, however, the ‘cost of complexity’ and the neglect of process management leads to downfall and crisis. But in a political economy  where these problems have become a lever for strangling capitalism, and for putting us deeper in debt, it makes for a grim picture.  We wind up weakening the polity when we trust the government to keep its distance from the capitalists it is in fact sleeping with.

Sadly, the capitalist’s most useful tool is American’s total acceptance of the irony of their situation.  This is not the generation that harnessed a muscular democratic process to rid itself of Nixon; rather, it is the generation that in the middle of financial crisis sits idly by as their paid-for President ‘lends’ their hard-earned dollars to pay bonuses to failed capitalists; sends their children and tax dollars to an undefined war while collecting a Nobel peace prize; allows congress to give itself a raise in the middle of a depression;  and fixes the health care crisis of millions who can’t afford it by forcing them to buy it anyway and pay a fine if they don’t.  Of course, these are all “corporate decisions.”

So who’s going to solve our crisis?  Certainly not those who engineer and profit from it.  Welcome to the false reality bubble.  Where are the signs of  a collective uprising?  Don’t look for it on the Tele-Vice device, the number one tool of conditioning our thinking to be less resistant to the creation of crisis after crisis and solutions of further dilutions of truth.

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  • vin November 12, 2010, 10:58 am

    Brooksley Born it is the correct name. Too many Brookes born to this tale…

  • TM November 12, 2010, 4:22 am

    Don’t sell Brooksley Born short in the looks department, as this photo from 1964 attests:
    http://gallery.pictopia.com/wpost/photo/xt-mt-25-title_16271130/

  • fallingman November 12, 2010, 2:07 am

    Brooke Burke is indeed a model and a whole helluva lot harder to ignore than Brooksley Born. I’ll bet she could even get the likes of Robert Rubin, the bloodless destroyer of worlds, to show some interest in her. Ms. Born had no such luck. Now, if Ms. Burke just had a plan for taming the derivatives market, it’d all be good.

  • vin November 11, 2010, 10:19 pm

    !!! Good one. That would be Brook Shields. Brooke Burke was a model of professionalism. This Brooke tried to shield us from the obvious lack of oversight and management inherent in the derivatives markets. There was an excellent PBS special detailing how this thoughtful Princetonian who was deep into the banking business and one of the first women to advance so far in her career their and in the government, raised the flag over and over but Greenspan and his cohorts shut her down. They eventually got rid of her and her recommendations for putting controls in place. Think of the similar situation of Katrina battering Louisiana and Federal helicopters observing the Levee’s and only declaring the emergency after irreversable damage was underway, ensuring a giant FEMA ‘bailout’ that was looted left and right. Crisis means opportunity.

  • RTS November 11, 2010, 8:35 pm

    Isn’t Brooke Burke a professional model?

  • John Wilson November 11, 2010, 5:08 pm

    Great piece. Very well written.
    The only way to stop the crisis in the U.S. is for the ones who realize what is going on, to drop out – stop supporting the sham.
    Move to another country, become self reliant and not purchase anything in the U.S. Let the bloodsuckers feed on themselves.
    Many opportunities lie outside the U.S.
    It is going to get worse before it gets better – you want to stick around and see it?
    Leave while you still have a chance to take your money with you.
    Cheers

    • mario cavolo November 11, 2010, 5:20 pm

      The corporate exodus has begun John. At a recent CEO breakfast I attended this past week hosted by Edelman PR it was noted that the numbers of corporate folk in America who are asking to be posted overseas in Asia where the action is skyrocketing…

    • Steve November 11, 2010, 11:17 pm

      Sounds like the Mexican, and other illegal’s plan. Run suckers run. The Mexican will not stand and fight for his Nation. He just runs for the door, and the better welfare state. I don’t believe there is going to be anywhere to run. If its no worth defending, then by all means leave.

  • mario cavolo November 11, 2010, 3:13 pm

    …Note gents: the inflation problem here NOW is finally in the headlines as here NOW rather than the media’s use of “inflation may/could be a concern/problem if…” deception language which has been going on for the past year…here in China/Asia it is really, really bad…

    Related note: I’m smelling economic topping / retail overcapacity on this side, I don’t say that often from my POV as you all know. It might be time to bow to economic reality. Yes the rich have plenty but the retail corporate earnings and retail SME’s are going to have a rough year ahead I suspect. A new top of the line lux shopping complex on the Huangpu river waterfront here in Shanghai called Cool Docks, tenants are starving…on top of the inflation pressures too…mark the day, the first red flag I’m reporting from China…this gap is going to get ugly though not sure how its going to play out yet, let’s see how the next 3 month’s holiday season plays…Here that’s the period from Christmas thru Chinese New Year through mid February…

    No one’s going to be able to six sigma out of this one.

    Cheers, Mario

    • Robert November 11, 2010, 6:20 pm

      “No one’s going to be able to six sigma out of this one.”

      – You said a mouthful there, Brother…

    • PhotoRadarScam November 12, 2010, 1:59 am

      Actually, 6S would lead you to the cause of the current mess – fiat currency and over-spending. It would be up to those using the tools to implement the solutions – a gold standard and spending cuts – properly. But who needs 6S when we already know the solution?

    • joe November 12, 2010, 4:06 am

      I was waiting for someone to mention the core problem.

      the cause of the current mess – fiat currency and over-spending.

    • vin November 12, 2010, 11:02 am

      Fiat Currency and overspending are definately the core problem. Core solutions are the reversal of those, but there’s too much money to be sucked out through bipartisan distraction and wrangling to stop the looting.

  • DonF November 11, 2010, 2:37 pm

    The power elite knows that for the governed masses to raise any objections: They would need to be outraged. They would need someone with enough charisma to gather a following. They would need enough education to understand just the type of thing that VR is expressing. Every outrageous event is white-washed, turned inside out, and re-fed as something good for us.

    Facebook, football, TV are just a few of the “calming devices” that take the necessary outrage out of the radicalization equation. Soon people will be totally focused on getting their next meal. THAT may be just the radicalizing device needed to wake up the sleeping masses from the government induced hypnotic trance we live and breathe all around us.

    Few of us grasp that unless we are millionaires now, we will soon be sick and dying from malnutrition and lack of affordable health care.

    We are threatened daily with atrocities by the legislative, executive, and judicial branches gone astray from our purposely deteriorated system of checks and balances. What event will turn the tide and force the people to find the guts to set things straight?

    I feel like someone with all my worldly possessions, calmly, powerlessly, getting on the deportation train to “who knows where!” Is there a paradise to escape to? Argentina? Costa Rica? The optimism of my youth has left me. I can’t make myself jump out of the frying pan!

  • donniemac November 11, 2010, 1:53 pm

    As someone who was trying to get a manufacturing plant to implement a TQM system and was disciple of Dr. Demming from back in the mid 70s, I was at the forefront of the process management movement. Ihe total lack of moral convictions and working knowledge from the management team was simply amazing. Ben’s criticism of Martin’s statement of something as elemental as knowledge of evolution is at the root of our national problem. It is not those who chose not to know, but those who chose to know and know not that is the problem. The ability of people to be completely unwilling to accept a plausible explanation and to turn anything into a conspiracy shows a total lack of empathy and general trust for their fellow man, as well as a level of ignorance that is mindboggleing. This manifests itself with the birthers, the group that is “investigating” Trig’s birth, the democrats taking it on the chin for being un-American because they criticize military adventures, republicans being criticized for wanting to kill grandma because they have some ideas to address SSI and the aging of our population, and those who chose to deny global warming when all you have to do is look at what is happening to glaciers and the polar ice caps. And I could go on and on. The changing of words to mean something other than traditional meanings is another example of the ignorance and, to a degree, moral weakness shown by people. Enhanced interrogation when you mean torture, police action in place of military war, global warming becoming synonymous with a pollution problem, etc. Again, I could go on and on.
    So what we have, and not unique to the US, is a system that stumbles from one crisis to another, blowing off hot air and steam, giving lip service to the latest buzz words, and generally not at all interested in following a discipline that requires making the correct tough decisions and having the where with all to know what is needed to follow a good process management system. What I experienced is a morally bankrupt system that was flat dumb. If I was given an extra year of life for every time I had to stop an engineering change that was legally indefensible, I would live to be 200. I watched material review boards of defective material make their decision based solely on the bottom line and then those same management types would shift the blame to low level engineers when that decision blew up in their face. And I have no reason to not to believe that for the bulk of decisions made in other places, the same crap was going on.
    How this is all going to end is beyond my ability to see in the future. But I do know that this is probably no different that what went on for most of the modern era and somehow, by the grace of God (I am an atheist-LOL), we manage to muddle through.
    So, to end with one of my favorite quotes, and I think has been quoted before on these pages, from the immortal Walt Kelly and Pogo – “We have met the enemy and he is us”
    By the way, that quote is from a notoriously conservative cartoonist for the first Earth Day.

    • Benjamin November 11, 2010, 7:51 pm

      donniemac,

      “Ben’s criticism of Martin’s statement of something as elemental as knowledge of evolution is at the root of our national problem. The ability of people to be completely unwilling to accept a plausible explanation and to turn anything into a conspiracy shows a total lack of empathy and general trust for their fellow man, as well as a level of ignorance that is mindboggleing.”

      First, my apologies to V.R., Rick, and forum readers for having started this discussion over the otherwise exquisitely written article. I orginally felt that the whole evolution point made by Martin Snell was perfectly illustrative of what the article was not about. It was meant for discussion, not for slamming or challenging. ie That ignorance of something has it’s place, and should not be held in contempt, for it is an efficient way for humanity to manage itself. However, it’s gotten past the point of rational and contextual discussion. I would let it die there, but the above quoted comment is so incredibly hypocritical that I had to give it one last word…

      If anything I said was conspiracy, then maybe it’s not me wearing the tinfoil hat.

      Funny thing, too, is for all that self-proclaimed smarter people claim to be better than people who “dumb down” through watching football and going to church… it makes much better sense to argue football and the bible. At least one’s virtue and the outcome of games have a relevance to one’s lifetime. Evolution, on the other hand, has no bearing on anyone’s 100 lifetimes, let alone one.

      And that’s coming from a LaVeyan Satanist who isn’t fond of football at all, and was once, long ago, mocked and slammed by a Christian friend for writing in support of evolution.

      It’s no conspiracy, it’s the simple truth. Knowledge and acceptance of evolution matters that little. What matters is that one has the liberty to choose (why do you attack liberty, donniemac, in saying choice is a problem?), and that just because someone doesn’t choose the same as you should neither marginalize them nor place the weight of blame for the world’s troubles upon their shoulders.

      Or do I “again” completley misunderstand what empathy and trust are?

    • donniemac November 13, 2010, 7:29 am

      Ben, I went back and read your post that I made reference to, and I probably should have worded my comment a little different. My point is that I am seeing a level of ignorance about simple and common knowledge that is ,basically, written in stone. I am also seeing a rush to judgement on one’s political opposition that is just plain rude, to the point where there is nothing in a person’s life cannot be twisted into a political nightmare. We have moved from the truly profane of Kennedy’s dalliances to the joke of Obama’s birth certificate and Pallin’s youngest child. So what is a proper political point has become, through that lack of empathy and knowledge I talked about, political points that are really a farce. So I expect to have a discussion with someone who has some level of knowledge of how things work, what motivates others, and who have some empathy for their fellow man. If that makes me an elitist, so be it. But I do not know how to communicate with people who flat believe things that are not true. And I sure do not think that any economy can function properly with as many misinformed, and basically ignorant to the point of being functional illiterates, citizens as we seem to have among us now.
      So knowing that the theory of evolution is really a fact is important, because it is one of the building blocks of knowledge. As far as your comment on my feelings about liberty, all I can say that the freedom to chose to be ignorant causes one to be bound by different type of chain that binds as tightly as political chains. And that is a type of liberty that I want no part of.

  • Rich November 11, 2010, 10:55 am

    Great article VR in relating it to current events and what’s behind corporate government broken markets. Friend from CM invented Prospector AI Expert System and Wealth Agorithms that became Templeton Oxford work.
    Rick, totally impressed by your shorts here…

  • Vin November 11, 2010, 10:19 am

    > Benjamin: this is the conundrum of our times. I’d go with letting the TV go for your own peace of mind and do those meaningful increments you can. Regarding the era before, I have lived before the widespread use of computers and have many friends who did and agree that the world worked better, without comparison. The real danger is the blur between our own thinking and that of electronic media, when it and our own consciousness overlap for about 8 hours a day, which is what the Kaiser Family Foundation study on electronic media deduced as the typical exposure for youths. That’s more time in ‘cyberspace’ than ‘realspace’. So getting rid of the TV won’t change the world but it will your own. 😉

  • Vin November 11, 2010, 7:52 am

    …error on last comment… computer chips DONT double by themselves, its the power of process management done right.

    • Bradley November 11, 2010, 5:24 pm

      Whew! After reading that computer chips were inventing faster computer chips by themselves, I was thinking that I was even more dumbed down than I thought I was. Guess I’ll go back to watching TV now…

  • Waynoo November 11, 2010, 7:50 am

    Americans are by simple definition:

    1) distracted- by sports, TV, and small issue AM radio
    talk show host

    2) docile-poor food choices and lifestlye, too much TV

    3) dumbed down- all the crap that is fed to them via you guessed it

    THROW AWAY YOUR TELE FOR GOOD.

    • Benjamin November 11, 2010, 8:54 am

      The problem is not food and TV. It’s simple definitions, bland and tired criticisms, and other thoughtless aspirations. See my post to Martin. Kill and let kill. It’s everywhere today.

      I’m also remdined of one line Mr/Mrs V.R. said, concerning…

      “The lesser companies think they are operating ‘lean and mean’ by ignoring good process, but they’re really operating in knee-jerk fashion.”

      So if I throw out my TV right now this very minute, purely as a matter of reacting to the world’s problems… What has changed? What will change? And have we not been in that era before? Was it so much greater without?

      Or should I not concern myself with such bothersome and difficult questions, and just do it for my own good?

    • joe November 12, 2010, 4:01 am

      Was it so much greater without?

      Having removed the TV and cable bill, I can say the abundant free time has driven me to engage my neighbors and to volunteer in my community.

      Removing the TV gave me free time to interact with others and volunteer my time.

  • Vin November 11, 2010, 7:50 am

    @Snell > bulls-eye! My greatest fear is that the minority of people who know what’s going on is no match for the dumbed-down majority that makes these shenanigens possible by the immorality of the truly knowing. Simplemindedness is at crisis level. Computer chips double in power every 18 months (“moore’s law”) by themselves. Its the concerted effort of process management at the highest level of functioning that produces those gains, as well as hard drives that get bigger and cheaper at the same time. Are there enough people with brains left to enable a process-based solution that improves our education 10% in 10 years? We’re pouring every dollar into making machines to replace people smarter…. guess who’s capital is being used to do it… it was the corporations, but now by extension, its the people’s money now undoing the peoples power.

  • dan November 11, 2010, 6:31 am

    Your experience unfortunately was not legit. i’ve seen fakes too but as a practitioner since 1996 and successfully deploying it now at Kraft, i’d have to say that there are many significant real results and many other companies have simply incorporated the good practices into the way business is run.. the way it should be. My first project while at GE years ago netted an easy 1 million plus in yearly savings by simply fixing the process. The government is sadly beyond hope for any simplification initiatives. the only successful 6s programs are the ones where the top are driving it…. and imo no politician has yet to step forward with political courage to implement programs that will systematically eliminate what the Japanese refer to as MUDA……Waste!

    • PhotoRadarScam November 12, 2010, 1:57 am

      This issue IMO is whether or not a knowledgeable and empowered workforce would have a) identified the solution on their own and b) proceeded to implement it. My view is that if you have the right corporate environment and good employees and managers, they should be doing these things on their own naturally. Now if you want to operate your business like a fearful dictatorship with high turnover and scarce resources, then your only hope of improvement is by shoving CMM, 6S and other things down your employee’s throats.

    • vin November 12, 2010, 11:11 am

      Good point both! Yes, the gov’t isn’t going to eliminate waste as that is its profit center… and ENGINE! So we don’t need 6sig as much as simple lean mfg. techniques there… but again, waste is their smokescreen for stealing.

      To the other point: yes again. Shoving a process system down the pipe is a sure loser, since the org needs it from the ground up, not top down. Over-sophisticated things like 6sig are a waste in a company that can’t even produce an org chart, a list of projects or address book, as is typical of most companies. Lean Mfg. again is the best place to start and to engage everyone in the process formation and evolvement work.

  • Benjamin November 11, 2010, 6:21 am

    While there’s been many a great article posted at Rick’s Picks, this one by V.R. is on a whole different level. Deeply illustrative and very thought provoking. I was riveted, to the very end!

  • PhotoRadarScam November 11, 2010, 5:40 am

    To add to my story, what’s even funnier now in retrospect is how much they insisted at the time (~8 years ago) that 6S wasn’t a fad and it was here to stay – and now it’s hardly mentioned.

    • Vin November 11, 2010, 7:13 am

      Good point! the process management world lacked the ‘zing’ of the ‘shoot from the hip’ buzzwordology of the MBA crowd (management by acronyms) so 6-sigma was the name rallied around to keep the ball rolling. Previous incarnations of buzz-worthy process tools were TQM in the 80’s – total quality mangement – and ‘Re-engineering’ in the 90’s. Its the amplification and simplification phase of these that kind of kill them. Process management isn’t a panacea, but system of evolving (measure, improve, re-measure) that has more objectivity than the ‘Buzz-method-du-Jour’ that’s more typical.

  • PhotoRadarScam November 11, 2010, 5:34 am

    I worked for a company that used CMM. I’m not convinced that the overhead of running a level 5 company is worth it, but you definitely want to be at least a 3 which is what I believe we were. There was supposedly a goal to get us to 5, but management lost interest in that because they started shipping jobs overseas. Supposedly the foreign site is rated level 5, but you wouldn’t know it from the work they produce or how they produce it. US management gave up on getting the US sites to level 5, presumably because of cost.

    Then the company jumped on the 6 Sigma bandwagon. It’s best applied in manufacturing, but works poorly in engineering and development, but this company tried to apply it to EVERYTHING. They say when you have hammer, everything looks like a nail. The ironic thing was that you could use 6S to justify just about anything, and you can use 6S to criticize some of their latest policies – if you had the balls. They made us all do 6S projects, but it seemed like everyone knew what project they wanted to do and then used the 6S “tools” to justify doing the project (you can make statistics show just about whatever you want).

    The bottom line is that there is no substitute for good managers and management. I believe these tools are to facilitate the interchangeability of personnel and to make up for poor managers. A good manager intimately knows his department’s processes and and can identify and proactively works to ‘fix’ process problems, and employs cross-training liberally. Of course, that’s if the corporate environment allows him to do this. A lot of the 6S projects done were ‘no-brainer’ projects that should have been done years ago, it was only with the corporate mandate of doing a 6S project that these projects got done.

    What was even more laughable was how the management focused on cost savings obtained so they could pat themselves on the back, where each project was forced to estimate cost savings. Of course, most of the cost savings were theoretical and unprovable, just like the BO’s job creation numbers. Many times the ‘cost savings’ were the result of moving work or responsibility somewhere else (i.e., creative accounting).

    • Vin November 11, 2010, 7:08 am

      Excellent comments and really right on… process management, to be really effective, needs to be distributed throughout the company, not left to the ‘managers’ or ‘process’ departments, all which have agendas that conflict with overall success. While Motorolla invented 6 sigma, they went overboard on using it in manufacturing but missed the big picture in what customers wanted. 6sig is only useful when a process can be mapped, but its buzzword-worthiness turned it into a panacea that didn’t work.

    • Robert November 11, 2010, 6:16 pm

      5 stars for PRS…

      I’ve also existed in the CMM/Six Sigma Universe for the past 15 years.

      I can categorically state that the greatest lesson I’ve learned as a Black Belt Engineer is that the CMM and other process methods are most sound when applied and maintained on a microcosmic level- that is: the closer I get to the core business need, the more likely I am to encapsulate and deliver on the underlying opportunity.

      Process begins failing when the layers of analysis begin to distort the original objective.

      The responsibility to achieve rests with the individual- the process is secondary, and the best marriage of both is when the process is organized to the task at hand, using fundamental guidelines like the CMM to form the framework for the plan of attack.

      I hear from many quarters that organized process philosphies like CMM and Six Sigma run contrary to Lean Engineering, but my experience has demonstrated the exact opposite. However, defining a process sequece with the intention that any problem or opportunity can be plugged into it and the best solution will come out the other end is a fool’s errand- That’s why I’ve seen a lot of process-centric companies (Motorola most notably) get hacked to pieces when the market shifts even a small percentage of a degree. Process does not define opportunity- intuition does, and process at a macro level often marginalizes intuition (as the examples above about the Germans emulating Goddard and the Japanese using the US’s best models to best the US)

      -When the student bests his master, the world becomes a better place for everyone- except for the Master.

      In the larger context of how a process change is necessary to re-invent the world economy- the first step is defining the money of the new system. This important first step can NOT be avoided.

      Value is subjective to the tastes of the individual- always has been, always will be. Any attempt to denominate value on a global scale will forever be another fool’s errand.

      GREAT COMMENTARY V.R…!

      Although, when you stated: “which is why sharp people like Brooke Burke who raised the flag in the 90’s on how the derivatives market is poised for a fall, get pushed aside by the likes of superstars like Greenspan and Co ”

      -I think you were actually referring to Brooksley Borne, and not Brooke Burke (who is a swimsuit model :))

    • vin November 12, 2010, 11:07 am

      I think you are correct and I’m putting myself of remedial media watch for the error! … I suppose that’s part of what goes into catchy names and why.

  • Martin Snell November 11, 2010, 4:39 am

    Uhm … the problems are even worse.

    This is the nation where
    … a President (Reagan) tore solar panels off the White House roof.
    … where half the people think evolution is not true
    … where 2/3 of young people can’t find Iraq on a map
    … where 1/4 of people doubt Obama was born in the US
    … where a President (Bush 2) thought you can have guns and butter (Iraq war, Afghanistan war, and tax cuts), and no one seems to object (for 7 years)
    … where people protest against big government by shouting “keep your hands off my Medicare”.

    I could go on and on, but the point should be clear. Not only is complexity a problem, so too is simplicity. Is it any wonder that disaster capitalism works?

    The most prized freedom today seems to be the freedom to be ignorant. And that does not bode well for the future. For those with brains and without morals or ethics it is like stealing candy from a baby.

    • Benjamin November 11, 2010, 8:35 am

      Concerning the knowledge and acceptance of evolution… What of it (for cryin’ out loud)? It would be a tremendous waste of limited resources to increase that understanding in the population to such levels as 50% or more. Same for auto mechanics, for that matter. Owe that to natural law. Like it or not, the freedom of individuals to choose ignorances is not just some comfort or fancy undertaken by folks simply to get on Martin’s nerves. It is as much a nessecity as it is natural. If half the population were to wake up tomorrow knowing nothing but brain surgery or the bible, we will have realized the fatality of either side of utopia.

      But in this day and age of excesses, it is a sin to not know and accept everything, and unspeakably hellish to dare say one does not care (out of having better and more important things to do). Live and let live is kill and let kill, the lines and signs of every roadway painted over.

    • mario cavolo November 11, 2010, 12:02 pm

      Perchance Martin and Benjamin have gotten together to find the singular subject which would send Mario into an intellectual and spiritual tizzy?

      Evolution? Give me a break. You actually know that all the experiences of consciousness come from neuron soup? You actually think that there are not enormous gaps and flaws in evolution, not to mention that Richard Dawkins is an arrogant ass amongst arrogant asses, who better to be evolution’s flawed posterboy? You actually dismiss quantum mechanics which has more than proven that atoms, which are the substance of the molecules which make our cells gentlemen have been proven beyond a shadow of a doubt to have the characteristics of both mass and energy? So how does that fit into the Godless spiritless theory of evolution? How is that ONE planet in ONE galaxy amongst billions of stars in billions of galaxies has cafe latte’s, Wall Street, philosophy, art, music and oh geez this list of miracles of awareness of awareness OF our awareness, invention, creativity…oh I’m done, could go forever? The SETI project is a taxpayer’s waste of money and time, they have found NOTHING with the largest freakin’ array of globally connected football sized dish satellites and not even a single unique anything has shown up from “out there”. That makes earth and us a pretty f*&^king special place. Embracing “I don’t know” and admitting we aren’t even close to knowing, mmm that would be much closer to the truth than Dawkin’s et al. evolution. As well, blindly following an institutional religion has plenty of faults…still, not recognizing the mind, body, spirit nature of existence to explain the unexplainable….mmm, sad.

      All of which reminds me, back on topic boys :), that as the author states, crisis is the new profit center and we are in unfortunate, miserable, scary times…an excellent article…

      Cheers, Mario

    • Benjamin November 11, 2010, 1:45 pm

      “Perchance Martin and Benjamin have gotten together to find the singular subject which would send Mario into an intellectual and spiritual tizzy?”

      lol… not at all, good sir, not at all! In fact, I had initially wrote about Dawkins too, comparing him to the same kind of fanatical religious zealotry he claims to be against. But in the end, and in spirit of the article, I decided on WWSS (what would Socrates say). Ignorance is not an offense; just an inevitability as well as naturally occuring, efficient management.
      🙂

      (But I will say this… I’ll believe that understanding and accepting evolution is vital the day we relocate the Sun. It’s too complex and ongoing to yield anything practical, let alone allow us to exercise any control over it. Dawkins himself admitted that it isn’t vital, even to biological research. Kind of makes one wonder what all his fuss is, then!).

    • Martin Snell November 11, 2010, 1:50 pm

      Benjamin the point about evolution is simple. When people can ignore the massive mountain of evidence of evolution and instead believe that the world is only 4800 years old you have a population that can believe anything and can be very easily “tricked”. No wonder most fell for the WMD ruse in Iraq. (I didn’t)

      Mario. Please tell me that you understand that that there is no doubt about evolution (change over time). I understand that there is discussion over the method (through natural selection or …), but that does not refute evolution itself. Man and every species on the plant has evolved from a common ancestor. Period.

      As for quantum mechanics I do not dismiss it. I love it. I was just this week at a talk by a top quantum computing guy, on of all things how plants capture and utilize photons using quantum effects.

      Science is a wondrous thing and has done a fantastic job shining light on what was once the preserve of witch doctors/high priests etc. But yes, humility is still required. Feynman said it best. “I can live with doubt and uncertainty and not knowing. I think it’s much more interesting to live not knowing than to have answers which might be wrong.”

      That of course brings us back to the problems facing the US. The fixation of the “right/conservatives” on black and white distinctions (“there will be no compromise”) is a serious impediment to advancement. Far better to keep an open mind.

    • Benjamin November 11, 2010, 3:13 pm

      “No wonder most fell for the WMD ruse in Iraq. (I didn’t)”

      I see. And what is the secret to a great tasting foot? 🙂

      If most people believed that Iraq had WMD, and only half didn’t accept evolution, it stands to reason that many who supported the war also accepted evolution. But rather than argue all this, I’d rather get back to the article, and my emerging points to some of these comments…

      You can fool some people all the time. You can fool all people some of the time. But you can never fool all the people, all the time. Or maybe not. Some, here and elsewhere, believe all (besides them, of course) are “too dumbed down” for this end.

      Yet, “most” being “too dumbed down” hasn’t even been witnessed, for the biggest (and most dangerous) lies have yet to be told and accepted. I seem to recall, for example, that something like 9 of every 10 letters to Congress were against the bank bailouts. More yet were against cap and trade. I’ve yet to meet an average joe that believes we’re in a recovery.

      It’s not the masses. It’s the liars who are dumbed down. That is so because they have spent more and more time disengaged from reality than most people.

      So how can we be sure that things will just continue as they are? One would think (should, given the evidence in front of them, eh Mr. Snell?) that at some point, deceit, rather than being infinitly viable, is in fact not manageable in the long run.

      But no. Instead, to avoid being a dummy of the masses, I have to give lies and the liars who tell them supernatural powers. And that’s a bummer, ya know? I’m not going to call you a hypocrit, because I’m sure it’s an honest mistake on your part. But still, I have to say, that’s all.

    • mario cavolo November 11, 2010, 5:17 pm

      rest easy Martin….Its hard to understand hardliners who actually genuinely believe that the world began 4800 years ago, that the story of Adam and Eve is factually accurate not a myth, etc…heck, even the Catholic priest at church when I was a kid told us during the homily that plenty of the OT stories were symbolic not factual…humans will grab on to their beliefs won’t they?

    • Carol November 11, 2010, 6:23 pm

      Martin Snell wrote: “Mario. Please tell me that you understand that that there is no doubt about evolution (change over time). I understand that there is discussion over the method (through natural selection or …), but that does not refute evolution itself. Man and every species on the plant has evolved from a common ancestor. Period.”

      You have got to be kidding! You actually believe human beings crawled out of a pool of mud along with the mosquito? Lol!

      You, my dear sir, fall into the same trap that the religious zealots also fall into – Your acceptance of “theories” as fact! Just because I don’t believe (in evolution) that I came from a mud pie DOESN’T mean that I believe that “the earth is 4800 years old” either.

      This argument is JUST LIKE the republicrats vs democrapts debate. Why does there HAVE to be a one OR the other in this debate? Did you ever EVER consider that BOTH “theories” are WRONG?

      Why can’t we all just be intelligent enough to admit we just don’t know how we got here? Humbleness would go along way in this divide and conquer debate.

    • Steve November 11, 2010, 6:30 pm

      There are things one knows. Then there are the things one knows he does not know [like brain doctoring]. And then there are the things that one does not know one does not know. This last realm is where true ignorance lives. To deny change in living creatures is to deny the intelligence of a farmer who lives that fact, and yet said farmer could not fathom what is written on evolution via the bigotry of science, or for that matter the economic theories proffered here. Darwin was argued against by church bigotry that didn’t have the understanding of a cattle breeder in 1 B.C. Yet to say that the Awdawmic People [ruddy faced] have only walked the Earth for 5000 years as the latest creation of the Creator is equally bigotry. When one throws away the stuff on ‘races’ I was taught in college in late 60’s, early 70’s and accepts that there are things one doesn’t know he doesn’t know a new understanding comes forth. I was taught Negroes are black because of living at the Equator under sun exposure. Their noses are flared because of the thin air. Chinese are yellow because they eat rice, and so on, and so on. Old dictionaries have whole sections on racial recognition based upon bone characteristics. That is EVOLUTION from the mass of goo from a big bang caused by something. Failing to understand the possibility that the races are creations occurring at different times over ‘periods of great duration’ is as fatal as saying nothing changes [failed anti-Darwinism]. We are back to the two economic camps. One believes that every act of the individual is acceptable because that individual is a petit-god on Earth. The other camp believes there are Immutable Laws, and a superior Creator who provided a Law that was successful for 5000 years. The failure to follow a Creator always leads to democracy, and Roman theory of ‘civil legislative rights’ created by persons. One system always leads to anarchy, the other to Peace and Dignity. Denial of the things we do not know we do not know has lead us to the point were People don’t care about anything except Self in economic matters, and in society 2010. Very little changes, even though change is ongoing. Selfishness reigns 2010, and therefore nothing is going to change in money, or the markets until the selfishness to wrung from the soul by force. When Gates and Buffet are broke, things will change. From the original article that started all of this it appears that someone created a theory on how to manage a business. People who take on the theory want to change the theory to their will, and thus there is destruction. There are 5 common law torts, and this simplistic model can handle every event encountered without the abuses of 300,000 ordinances of men from a congress that is best defined as bigotry in outlawry. 300,000 ordinances and the players do not care about criminal accounting rules, or the new elite stealing the wealth of a people and taking it to themselves as individuals. If we knew the Law, the congress would be prosecuted for High Treason for taking the people’s money and giving it to the executive branch. If we knew the Law the ones who practice banking, and stock marketing would be prosecuted for their torts. Instead we have 300,000 ordinances all designed to let the corporate self be a petit-god unto self, and only self.

    • Larry D November 11, 2010, 6:48 pm

      @Martin, you should also add:

      … 1/3 of Democrats think GWB was behind 9/11. (Fits nicely with the 1/4 of people who doubt Pres. O was born in Kenya. Just ask his granny.)

      Whatever the connection is between belief in a scientific theory taught in school and the gullibility of people who trusted flawed intelligence that indicated WMD in a nation on the other side of the planet is an incomprehensible philosophical turn. Your disbelief in WMD was founded, I gather, by your perusal of evidence, interviews with highly placed military personnel, and thorough study of CIA and UN documentation. If not, you were just listening to people you agree with.

      As you say, you didn’t fall for the ruse. Yet, President Clinton said Iraq had them…did you believe him then? North Korea has nukes. Did you disbelieve it until they tested them?

      (Speaking of those with brains and without morals, Bill Clinton springs to mind.)

      And for all the shining examples of enlightenment through science, you must also accept pre-frontal lobotomies, ICBMs, nerve gas, thalidomide, thermonuclear warheads and genetically modified organisms as some of the less savory inmates of the holy sepulchre of science.

    • ebear November 12, 2010, 12:09 pm

      “The most prized freedom today seems to be the freedom to be ignorant.”

      Ignorance is popular because it’s easy to learn.

      ebear

  • Harper Roehm November 11, 2010, 2:31 am

    Fundamental Concepts of Quality Improvement edited by Melisa G Hartman and published by the American Society of Quality and for sale on Amazon, provides a terrific foundation for managing a business as a system. It has great practical explanation on how to establish a system oriented culture and includes many system management techniques along with actual examples. The book is a compilation of articles they have published over a ten year period. None of the article authors have been paid or will be paid for inclusion of their article in the book. I urge that if you are either considering using a systems approach or think that you are using a systems approach to at least look at the book.