What’s in a name? How about the three R’s: recognition, reputation, and revenues? What’s the value of a brand? BRANDZ has just published their evaluations and valuations of global brands. It’s a measure of just how valuable the commercial brand is and supporting insight into the whys and wherefores. The shifts and changes in their rankings are a barometer of how our choices of who delivers value are manifested in our buying behavior. It’s not an opinion poll, but rather an evaluation that incorporates business results with analysis inclusive of some subjectivity. It’s free and easily downloaded. The big global headline is that Apple, with an 84% jump in score, has surpassed Google as the most valuable brand in the world. Technology, specifically technology that enables our multi-polarity and interconnectivity to flourish, rules the top of the list … the standard bearers of an increasingly untethered and disintermediated consumer and commercial world. That means that value propositions increasingly incorporate wireless connectivity without a middle man. Googling it, Tweeting, linking up on Facebook or LinkedIn, catching it on YouTube are fully integrated into our lexicon. Recently, repressive government regimes in the Middle East have learned just how powerful these untethered forces are.
There is surrealism to this, particularly for us Baby Boomers. Brands exist in a very Darwinian environment, with success belonging to the fittest. What being fit means has changed lots over the years. The shift years ago from industrial dominance was led by the services economy. In fact, one of the top 5 this year, IBM, now a consulting and technology services giant, was once a hardware maker selling typewriters and lots of computers, behemoths and little ones. The current kings of the hill are all technology firms, with the exception of McDonalds and some might argue that their value proposition and the stuff they sell are untethered, disintermediated, and high tech as well. To nail down the point, Amazon is now a more valuable retail brand than Wal-Mart.
Early losers in this sea change included stock brokers replaced by powerful web engines that enabled more effective, efficient transactional capabilities. Those that transitioned to become trusted advisors are still with us, but very few order takers remain. Be they Borders or Blockbuster, wireless and untethered trumped brick and mortar between customer and supplier.
Delivery of value has increasingly demanded convenience as the driver.
- How often do we measure our performance in delivering convenience?
- Are we ubiquitous in accessibility?
- How many hand-offs exist in between us and the customers’ actual securing the benefits they seek?
- How well are our electrons delivering value? Do we paper or pdf, snail mail or email, travel or teleconference, drive to the mall jungle or click to Amazon, carry cash or card it, keep knowledge in persons or in our systems and processes ……?
- How are our customers deciding where to shop and how will they decide with whom to buy?
- How quickly do we adapt and respond to changing requirements?
- Are our improvement efforts focused on where our customers are going or on getting better at where we are at today?
For many years we’ve been helping our clients sort out how to create and sustain value for their customers. Few would argue that the Voice of the Customer is essential. We all too often find that the Voice of the Customer collected and reported is more about the organization, how well they are liked, or opinions on performance (not real performance), rather than those that focus on the customer’s world. Hearing and understanding the actual Voice of the Customer has too often been interpreted from gathering data that feed survey instruments, reports, dashboards or scorecards. By searching for and producing data that can be rolled up, opportunities for critical insight are lost. Feeding the tool or report can become the goal and by the time the report comes, the customer might be gone. Are we missing something? “Happy families are all alike; every unhappy family is unhappy in its own way.” Leo Tolstoy, Anna Karenina. Count Leo has a point.
Let’s consider firms in the business of making money. The public sector has lots of added complexity in sorting out voices and timeframes. The Voice of the Customer is or should be The Voice of Revenues. Understand why we make money and who has it. What we’ve found often are a great deal of questions that deal with how we make money, and opinions on how well we do the basics, not why. Consequently, we spend lots of money on questions we should be answering with our performance capability data. Customer satisfaction scores are not performance capability data.
Here are some questions to consider:
• How do we know whether we are capturing what we need to know from our customers?
• What do we do with this customer survey data? How and when is it useful?
• We are measuring service and product satisfaction, and yet why are complaints rising and customers leaving?
• There are so many “voices” to deal with, how do I cope?
• How much change are our customers facing?
• How does our service impact their ability to succeed?
•How is time spent in our organization:
1. In a stable repetitive work stream (The process world)?
2. Building and implementing new solutions (The less stable project world)?
3. Responding or reacting to changing requirements (The unstable world)?
• How and when do we find out about customer facing issues?
• Is that good or bad?
• How dependent are we on suppliers?
• How much do our suppliers impact our customers?
• Does our current Voice of the Customer process and information keep up with the “drumbeat” of the marketplace?
Best in Class! How often do we run into the term? I believe it’s a term that has lost much meaning. I suspect that overuse, or selective playing around with what “class” we pick, or the unreliability of rating organizations render it useless too often. In the world or process improvement it is applied to a goal setting step for evaluating how large a gap there is to close and subsequently chartering projects and resources to close that gap. There are some pitfalls to the approach:
• If the “class” we are selecting as a benchmark is a poorly performing one, we may be aiming at becoming the “best of the worst” or “the cream of the crap”.
• If becoming best in class for a unit within an organization does nothing to positively impact the performance of the total organization, we may be investing in meaningless improvement.
• The goal may become obsessive, a powerful distraction, directing attention and resources away from value adding opportunities.
• The customer, shareholder, or taxpayer does not benefit.
The last bullet is very important. Most organizations are not created with a primary purpose to have functions, departments, employees, IT systems, training centers, enterprise applications, procurement groups, or resources of any kind. That’s not why enterprises exist.
• If they are commercial organizations, they exist to deliver goods and services that financially profit so that they can earn the trust of their investors through returns. Yep, they are around to make money. The best ones do it legally, ethically, with respect to all stakeholders, no adverse externalities, and with a vision to create new value. They deliver value to customers and returns to investors.
• If they are a public service organization, they exist to fulfill a mission to deliver beneficial outcomes to their stakeholders (taxpayers and public at large). The best ones are effective, efficient, ethical, agile, focused on delivering benefits and positive societal outcomes, responsive to their public, and transparent. They spend public funds and deliver positive and beneficial outcomes.
• Purpose is fulfilled when value is delivered. There is a value stream that threads what delivers value and it provides the ruler with which to measure what is appropriate or lacking.
So, resources, systems, functions, departments, assets …, within the organization should exist and operate in order for the organization to thrive. That means that goals for units or entities within the organization have real value and legitimacy to the extent that they can verifiably contribute to the organization’s value proposition. Of course, this is unlikely since significant waste abounds and gaps in performance are forever with us.
The issue is not whether to improve or not. The question is how much, by whom, and to what ends. Where should we set the bar? How good is the good we should be? In a relay race, how would we decide where to focus our efforts? How do we create the appropriate focus, discipline and follow-through? Of course, most groups aspire to be the best at what they do, but unfortunately, it is overly focused on only what they do. It would be tragic, if not ridiculous, to claim success within a unit where the organization or enterprise is tanking. Our operation was successful, but the patient died.
It’s hard to miss the changes in the media world, specifically, the demise of the Blockbuster empire. I’m fascinated by Netflix, the Blockbuster busting competitor, implementing the very strategy that made Blockbuster king. Blockbuster was the brainchild of Wayne Huizenga. Huizenga’s strategy took businesses that were fragmented and integrated them, creating customer value. Interestingly, Netflix saw the Blockbuster blindness to its current fragmentation and jumped in.
I recall the early days of video rentals, comprising many small businesses, typically mom and pop entities, often nearby. Customers had memberships in several, or had to wait or hunt about for specific video titles. If the corner store did not have it, you got into their cue or drove to another store. These small stores could not afford levels of inventory for high demand titles, creating unavailability, customer disappointment, and frustration. Summing the collective inventory of 4 or 5 of these small stores, the likelihood of unavailability of a title on any given day would shrink by orders of magnitude. Fragmentation created opportunity for the integrator, Blockbuster. The one stop shop created customer value delivering with more convenience and reduced waste. Netflix took video content another step, they integrated home delivery with web access and eliminated the need to drive to stores. No stops to do all the shopping meant more convenience and less waste. Lower inventories; no brick and mortar, large payrolls and high overhead per rental, made the business more profitable, flexible, and attractive to investors.
Overcoming fragmentation improves capability to meet demand. Fragmentation may be the most ubiquitous problem across enterprises, public or private, local, national, or global. Fragmentation of information between agencies contributed to the horrors of 9-11-2001. Fragmentation impacts supply chains, manufacturing, services, responsiveness, growth, quality, cost, timeliness, decision making, cultures, overhead costs, waste creation, market share loss … countless calamities. Performance improvement programs invariably run into fragmentation issues as big obstacles to implementing improvements or as big root causes of variability and waste (that accounts for Six Sigma and Lean). Fragmentation has always been a tough nut to crack, often because of increasing growth and complexity. There are a multitude of sources for fragmentation; org charts, functions, budgets and accounting processes, legacy and competing systems, data, risk management, fear, control mechanisms, geography, growth … ad infinitum.
I would suggest that fragmentation is a result of being bigger in size within organizations, or more dispersed across organizations. Being both bigger and highly dispersed makes it all the harder. The way variation is quantified and analyzed typically examines variation within an entity and variation between entities.
• The bigger we get, the harder it is to be bigger.
• The more places we’re at, that much harder it is to be at more places.
There is no question that the business and governance marketplace is bigger and more globally distributed, increasing with an astounding velocity. Boeing knows the problems all too well with the perennially delayed Dreamliner. Toyota was challenged last year, their size complexity, diversity, and global presence surfacing a vulnerable underbelly. Military organizations will confess to the same challenges. There are solutions for some of today’s fragmentation problems, as there were in the past. Roads, railways, telegraphs, telephones, networks, systems and models … many of those solutions created the root causes of today’s fragmentation.
The yearly onset of winter has been a critical milestone in our history, life for that matter, on this planet. It triggered severe constraints in access to food, travel, safety and the quality of life overall. Travellers who needed to get across mountain ranges had to make tough choices, and often make winter quarters and postpone travel until the thaws. Even in war, some armies huddled in winter and fought from early spring to late fall. Today, winter continues to constrain and often reminds us that our advancement and technology can be humbled by severe weather. Those in the tropics see a different face of nature, the tropical cyclones and monsoons.
This winter’s snow storms have rolled in with a frightening frequency, size, and impact. For travellers, their effects have been far reaching. Our highly networked transportation systems suffered from and precipitated aftershocks, stranded trains, planes, automobiles, pedestrians, and passengers, … , felt well outside the snowed in airports, streets and terminals. For airlines, this winter has caused the most flight cancellations on record. With steep fines brought on by regulatory “bill of rights” constraints, risking “maybe” flights have far too much downside risk making flight cancellations the less costly alternative. The broad brush of regulation brings on predictable rigidity for the many in order to control the few. Airline losses from storm cancellations exceed $600 million with plenty of winter still left.
The impacts on businesses and enterprises are incalculable, but many economists believe that the adversity this winter has wrought will be felt by many for years to come. The fragility brought on by the forces of nature affects some enterprises more than others. If a business requires travel, face to face transactions, or physical accessibility, the consequences are more severe than those that don’t. Brick, mortar, asphalt and place bring unavoidable rigidity. While technology has increased the effectiveness and efficiency alike, value does not arise until customers derive the benefits they seek. Discussions about lean and waste eventually come to what adds value and what are currently unavoidable costs.
I like to use the story of two business partners, one in New York and the other in London. The year is 1711, and the partners must meet twice a year to review contracts, strategies and business direction. They will alternate venues. The meetings run about six hours. So, one partner travels for eight weeks on a galleon through whatever the seas bring to get to the meeting. Two hundred years later, their descendants repeat the process, but now travel eight days by steamship and 100 years later the subsequent pair makes the trip in eight hours by air. Improvement in travel reduced wasted time, but it was still wasted. One could argue that all of the time in the six hour meetings added value, but that is arguable by anyone who endures six hour meetings. Video conferencing changed the game, no travel with all meeting. The web changed the world and how we look at it.
Blockbuster is in bankruptcy, the iTunes world has replaced music cd media, streaming has replaced the rest, Microsoft has replaced boxed software executives with those who can reach the cloud, AOL has purchased Huffington in order to re-enter the way we access information and content.
Looking back on this winter, what would we have done differently if we knew then that it was coming? Would we have been stranded or connected?
American Airlines war with the web is a fascinating series of events. Nobody can argue that the web is the neural and circulatory network for the preponderance of businesses. Unavailability and inaccessibility are likely to be two deathly symptoms of a commercial entity headed for life challenging times. Now, when I hear about accessibility issues, I tend to associate them with technical or network failures. Something broke, or glitches or evildoers are driving the calamity. Not so in this case. This war has to do with how accessibility is managed. American has made a decision that they will set the rules of how customers can access them.
These days we can book travel through agents or travel departments, call the airlines directly, go online to their websites, or go with a web broker that enables comparisons across multiple providers. The last group, the brokers, enables a platform that increases customer choice by creating a dynamic virtual marketplace where carriers can go head to head for available seats. Here is where technical and commercial complexity is made invisible to the customer, but requires important choices and decisions between the carriers and the brokers. American has their proprietary ticket sales platform, “Direct Connect,” and has decided that brokers must use that engine if they want to sell American seats. It is pretty much a “my way or the highway policy.” Two giants of the online travel world have opted for the highway. Travelocity and Expedia no longer display American flights as an option to their shoppers, they have made the carrier non-existing. American is working with Priceline to team up.
I’m reminded that many years ago Pizza Hut had a “no delivery” policy. If you want our pizza, you come to our restaurant and pick it up. A family owned pizza shop in the Detroit area saw great opportunity in that “my way or the highway” approach to the marketplace and created what became the delivery giant, Dominos. If you call Pizza Hut today, they will gladly deliver.
Convenience is cool to customers. Choice is cool to customers. Time is cool to customers. Many will agree that Pizza Hut had the better pizza …. So what? Airline seats are not pizzas, nor is American alone in accessibility. Southwest ticketing is only available on their website and through agents, but not web brokers. Constraints to accessibility always have effects. Whether Blackberry in Europe or the Middle East, or Apple versus the world …. They have effects, often costly ones.
• How convenient are we to customers?
• Is having the better or only mousetrap enough?
• In a world where choice and options are increasing exponentially, will customers find what they want and need “on the highway”?
“Freedom is not being a slave to any circumstance, to any constraint, to any chance; it means compelling Fortune to enter the lists on equal terms.” Seneca (Roman philosopher, mid-1st century AD)
I received this newsletter today from the most influential mentor in my professional journey. It is a delightful read.
Newsletter: Looking Back on 2010
Impressed and Then Flattened
I got on the train from Taoyuan City in one evening to attend a meeting to be held in Taipei. Although the train was not packed because it was going reverse to the general flow of traffic, there was no vacant seat and I held onto the strap, when a high school girl got up abruptly and offered her seat to me. It was my first experience, and her pure attitude and consideration impressed me. At the same time, feeling that I was not so old as to be offered a seat, my pride was shattered completely and flattened me. Nevertheless, I accepted her warmth and took the seat while lamenting over my age, 70, which is probably an age at which there is a gap between how one thinks of onself and how one is regarded by others.
When I told this experience to some friends in Taiwan, they said offering of seats by the young to the old is nothing unusual in Taiwan. In Japan, I witness sometimes high school or university boys and girls remain seated while a mother holding a baby in one arm is standing and holding onto a strap with another.
Red Shirt Tumult
I was expected to drop by in Taipei on the way back from my business trip to Bangkok in mid-March, in order to join the wedding party of Mingli Shiu, who was once a visiting researcher of my university research group. Having been extremely busy before leaving Tokyo, I had no time to prepare clothes for the wedding, and so I asked a Taiwanese friend over phone after arrival at Bangkok what the differences are between wedding in Japan and there. He taught me two things:
— I should wear a red tie and shirt (white color is for funerals).
— Numbers should be even.
So I inquired at the hotel reception.
Kano: Where can I buy a red shirt?
Answer came back with a very surprised face,
Receptionist: What!? Are you going to join the demonstration?
Kano: No kidding! I need one to attend a wedding party in Taipei.
Receptionist: Then, you can find one in a nearby department store.
When I asked where I could find the counter for red shirts at a department store, the girl at the information desk showed a perplexed face again. I went to where the counter was, only to find that all the red shirts had been deliberately removed. I could not find any crimson shirt, but found and bought a blackish red one finally.
While ‘red shirts’ did not mean anything special a week before, a demonstration had started a few days before my arrival by Thaksin’s supporters wearing the uniform of red shirts, hence called ‘Red Shirt Fraction’.
‘Even numbers’ refer to amounts of money presents. When I asked if even numbers mean 2000, 4000, or 6000 NT, etc. the answer was that, if one wants to present around 3000NT, one can make it 3200NT. I realized, for the first time, that the tacit agreement that money presents should be in the round number without fraction and amount like 3200 NT is not agreeable is applicable only to the Japanese culture.
Note: NT: New Taiwan Dollars, 1 NT=around 3 yen
Temperature at 48 ℃ in Sahara Desert !
I dared to go to Egypt with my wife and our second son for a week in August, being prepared to take the intense heat, at my son’s convenience. We visited several sightseeing spots of the ruins of Ancient Egypt along with the Nile including the Temple Abu Simbel in Aswan which was moved at the lakeside to prevent from being submerged by the creation of Aswan High Dam and the King’s Valley in the suburbs of Luxor, located in the east end of Sahara Desert, but we, during this trip, did not visit Alexandria area where many Greco-Roman ruins still remain, expecting to keep it for the next visit
Purpose of Clothes: Outside temperature was 48℃. We had the first-hand experience that, where outside temperature is higher than the body temperature, the key to overcome the heat is to wear long sleeves to cover skin as much as possible and protect it from the air. For people living in temperate zone like Tokyo, it is believed that clothes are worn to protect from cold, and when it is hot one can wear light clothes. I realized, however, that, the purpose of clothes is heat insulation, and clothes are effective for protecting bodies from both cold and hot. This means that the same principle applies in explaining both caravan crossing desert covering their bodies with thick cloth from head to toe and Eskimo in Alaska wrapping their bodies with fur. It was a big discovery for me, and made me jump with excitement like a primary school pupil.
What Kind of Evolution Took Place during more than Two Thousand Years after the Age of Pyramid? We visited ruins of ancient dynasty on the either side of the Nile as we
cruised in a boat from upstream Aswan to Luxor. The tour guide explained that pyramids appeared suddenly nearly 5,000 years ago. It takes reasonable level of technology and work organization to build such a huge structure making use of floods of the Nile, and should have required very long years to accumulate the know-how. There should have been innovative technological development, including emergence of ironware as well as changes in the organizational culture, during two-thousand several hundred years from the days of pyramids until the country was conquered by the Expedition of Alexander the Great. We could not, however, find clear remnants of the evolution during a week-long travel. My impression was that the evolution during this period was much slower compared to the abrupt emergence of pyramids.
Cleanup Operation of Kotta River
Although I was engaged intently in the operation in the first half of the year as in past years, I stopped completely after the latter half of September because of frequent overseas business trips and preparation for lectures in Japan, only to resume in December. I was prepared to find huge amount of rubbish on the surface of the river, but contrary to my anticipation, only a little rubbish and refuse were found on the river surface and banks. I gathered that the volume of rubbish was worth not nearly 3 months but just about half a month. Somebody might have begun cleaning operation. If so, it makes me feel relieved that I do not have to take up full responsibility any more.
Walking upstream, you find about 20cm deep dead leaves covering the concrete blocks sticking out from the river. Usually plastic bags and other rubbish are mixed in the dead leaves, and yet, I found hardly any rubbish when I removed them. It was the first sight I saw since I started the Cleanup Operation of Kotta River five years ago.
Evaluation of River Cleanliness: Generally, one can guess the cleanliness of a river by looking at how much rubbish is tangled in reed, tall grass like pampas grass, and trees beside the river, besides the transparency of the water. When the water level rises due to heavy rain, rubbish scattered on the banks and in the river is pushed by the roily water, part of which gets caught by the grass and tree branches, and is left behind when the water level goes down. When viewed from this point, Kotta River is a clean one which has no problem in terms of its transparency, thanks to the well-developed sewerage system, and yet, quite a lot of rubbish used to be found on tall pampas on the banks and reed in the river, until half a year or so ago. And now, amount of the rubbish found drastically reduced, if not disappeared totally.
Lack of rubbish found among dead leaves on the blocks or hanging from grass cannot be simply explained by the presence of someone else cleaning the area besides me. It
should be natural to think that some change is occurring in the people living in the area who used to throw rubbish into the river. It is such a pleasant sign. While picking up rubbish in excitement, my heart sank again as I found kitchen garbage in plastic bags and a used bicycle thrown into the river. Human beings are so hard to deal with, and Kotta River is its epitome!
According to the summation of my secretary, the total number of overseas travels I made, including private tours, in 2010 was 14, covering the total of 181 days, i.e. smaller in the number of trips but around 30 days more than the last year. This means that the average number of days involved per trip was larger. It is because, as a result of retiring from the position of auditor of Sekisui Chemical Co., Ltd, the board of directors meeting I attend on the monthly basis is only that of Komatsu, Ltd. and more days are now available for each business trip. The countries I visited this year were eleven over four continents of Asia, Africa, Europe and North America: Taiwan, China, Thailand, Bhutan, India, the United Arab Emirates, Egypt, Denmark, Finland, the UK, and the US. Of these countries, I visited Bhutan, Egypt and the United Arab Emirates for the first time. The cumulative total number of countries and regions I visited so far is 59, the number of travels I made is 285, and the total number of days I spent in travels is 3,358 (9.2 years).
Although most of my time overseas was spent for conferences, lectures, consultancy for companies, etc. I enjoyed visiting, making use of my free time, the Flower Exposition in Taipei; Shanghai Exposition; Stone Forest near Kunming, Yunnan Province of China; Bhutan and Jaipur and Ajanta in India; as well as Manchester in the UK.
Travels I made in Japan was nine times in total, of which there was only one private trip, which I made by driving to Hakone and Mt. Fuji at the beginning of March accompanying my friend from the US, while all the others were business trips to Kyoto and Nagoya. The weather was cloudy when we started driving to Mt. Fuji, but as we came close there, the sky cleared up, probably because all of us had behaved well. We had a wonderful view of the mountain, and that was the most beautiful Mt. Fuji in all the trips I have ever made there.
Manchester—Positive and Negative Aspects of Industrial Revolution: An only object remnant of the days of industrial revolution in its birthplace, Manchester, which I observed within one-day stay, was canals. I learned for the first time, from the exhibition of the Museum of Science and Industry opened using the old railway station building of those days, that, as the revolution progressed, aggravating water and air
pollution, as well as propagation of infectious diseases, troubled the people tremendously, and it took close to 100 years to overcome these problems by implementing various measures including the construction of sewerage system. Although what I learned about the industrial revolution in my high school days was only the bright aspect, this trip taught me that there was also the negative one behind the glorious achievement, which gave me a shock.
When pollution was highlighted as a serious social issue in Japan from the 1960s to 1970s, it was considered to be a unique problem of the country, and yet, the UK was the first to experience it well before! Today, environmental pollution is becoming a serious problem in many newly industrializing countries including China and India in the middle of rapid economic growth. It is an inevitable and universal aspect of industrialization, which is indeed an example of ‘history repeats’ as Arnold J. Toynbee says.
Dubai: It was in the middle of Ramadan when I visited Dubai at the invitation of Hamadan Bin Mohammed e-University. My understanding about Ramadan before my visit was that it is a very strict and painstaking religious practice which involves prohibition of intake of any food or even a drop of water in the heat of the day for nearly a month. My visit there not only confirmed my understanding but also shed light on a different aspect.
Ramadan with Majilis: Each of the two members of the King’s family, who are high officials of the government, invited me to an evening and a night dinners, respectively, called Majilis. This was a kind of open house, where more than 100 guests were invited in each case. The party consisted of Part I and Part II. In Part I, chairs were arranged in a U shape in a large hall, and as guests arrived one after another, they greeted the head of the family, who sat in the middle, before they took seats. Many of the guests, who seemed to be acquainted, had a pleasant talk with each other. Part II started in about an hour, when the guests moved to the dining room where several rows of tables were arranged. On the tables were many types of gorgeous food arranged on large dishes (of course, no alcoholic drinks were served.) Guests, who sat on the either side of the tables, took food on their own plates and ate. The Part II was short, lasting for less than half an hour. I learned that the food left would be served to the poor people in the local community.
They told me that this is entirely an unofficial gathering which any one may join, held every night during Ramadan and which head of the family never skips. I was told that his son would substitute him when the head cannot be present, and it is a very informal and unofficial forum of communication. Both hosts, who receive many guests every
night, and guests have to be quite tough to be fit to this situation.
Comparison to Japanese New Year Culture: I remembered, as I was a child, that my father came home drunk after making the rounds of New Year’s visits to his superiors, and that I heard people say that wives of those high-ranking people who received many guests had a hard time entertaining them. Although this habit has almost disappeared in my generation, there was a Japanese cultural virtue called ‘Giri’ — the sense of obligation — behind this social practice. I wonder if the Bedouin society has a value similar to the Japanese ‘Giri’.
Japanese style communication is often referred to as ‘Nomunication’ (‘nomu’, meaning drinking in Japanese + communication). Could I, then, call communication in the Gulf States, where Dubai belongs, ‘Majilinication’ (Majilis + communication)? When read in Japanese style, this sounds ‘majirinikehshon’ (‘majiri’, sounds the meaning ‘to mix’ in Japanese+ communication), which very well carries the meaning. This has become my favorite play of words. Incidentally, I named communication in Finland ‘Saunucation’ (sauna + communication).
Despite my anticipation that Ramadan, being a very strict religious practice, would help dieting for Moslems, the gorgeous dishes served at Majilis and the way how guests appreciated them made me worry about their weight, as this is repeated every night throughout Ramadan period, although it is nothing for me to worry.
Secrets of Economic Prosperity: I heard news about ranking in terms of international cargo handling volume in a lecture meeting recently. Dubai was reported to have made a rapid progress and become the third in 2009, only after Hong Kong and Inchon. Narita, which maintained the top position until the mid-90s, has fallen behind Dubai to become the 4th. Although Dubai is in the middle of hot desert, there are green forests here and there. I heard that these plants are watered by using desalinated sea water, that while oil is produced in Abu Dhabi, which is adjacent to Dubai, not a single drop of oil is produced in Dubai, and that while population there exceeds one million, 75% of them are migrant workers from abroad. I wonder how such a rapid economic growth was possible: although Dubai is adjacent to oil-producing Abu Dhabi and faces the sea, it may not be favored with good conditions from the traditional viewpoint of trade city locations.
Until around the mid-20th century, rich countries were synonymous with resource-rich ones, which included Argentina, Australia, South Africa, Canada and the US. And so were countries in Europe which had those resource-rich countries as their colonies. Then, the US built a new business model of mass production and succeeded in industrialization and achieved growth surpassing resource-rich countries. Next,
Japan, a resource-poor country, joined rich nations by means of leveraging well-educated, high-standard workforce, which was followed by Taiwan, Korea and other Asian countries. Dubai, on the other hand, has very little resources including water and lack in workforce. What was the key to the success of the economic growth for the country in so harsh conditions? Could one conclude that the growth was enabled by the policy of inviting foreign investment based on the incentive of ‘complete tax exemption’? The same may apply to Shenzhen, China as well. The four-day three-night trip to Dubai was a very interesting one, suggesting me a major clue in considering a key to the economic growth in the globalized environment of the 21st century.
Bhutan, a Country of GNH: Bhutan is a very unique, small country situated in the Himalayas, engaged in the national development with the idea of GNH, or Gross National Happiness, under the leadership of its young King. Not a single beggar or a falling house was found during my stay of three days. Tibetan Buddhism seems to be deep rooted in the people’s life, and temples with a dozen or more of Mani wheels were sporadically found. It left the impression of being a clean, pure and religious country.
Kano Home Party
This year, as in years before, we held four parties at home, inviting close to 100 people in total, of international courses of the Association for Overseas Technical Scholarship and the Union of Japanese Scientists and Engineers. Based on my contention that we should ‘hold party when the house becomes messy,’ parties help us to maintain 5S (‘Seiri,’ ‘Seiton,’ ‘Seiso,’ ‘Seiketsu’ and ‘Shitsuke’, good housekeeping) conditions. Typically in our party, we dance the standard item, Tanko-bushi（Coal Mine Song） together with our guests. I start by showing how to dance by calling out ‘hotte, hotte, mata hotte…’ When I say it in English, i.e. ‘Dig, Dig, again Dig…’ I make mistakes, so I say in Japanese, ‘hotte, hotte…’ Probably because the most of our guests are young, they usually join me in the circle of dancing. Such a body language is very effective in breaking the ice in international groups, making people loosen up after the dance.
A Japanese guest who attended a party recently startled me by asking how come we do not receive complaints from our neighbors for the noise created by many people dancing and singing. This question reminded me that we were complained once before when we were chatting loudly with our guests by a neighbor living in the house on the south side, soon after we had moved into the house 30 years ago. Some twenty years ago, when this neighbor moved and a three-storied construction company building was built on the land, source of our concern was removed, because the building was
uninhabited during the night (although the building shut the sunshine out, and we had to rebuild our house.) I realized that because houses next door other than in the south are all separated from ours by some kind of spatial buffer, such as a six-meter wide road and a canal six meter wide, the sound of which mitigates the noise of our parties, we have been kept from receiving complaints. It is needless to say that we take care not to let noise leak during parties by keeping all the double windows locked.
It is thirty years since we moved into the present place. I realized after retirement that there is only one person I know in the community, i.e. owner of a near-by liquor shop. It cannot be helped because I have been working all my life, leaving all community matters to Akiko. In addition, while there were mainly ordinary houses in the area, there emerged many apartment buildings because of the convenience of proximity to a railway station. Since the turnover of occupants is high in those apartments, I can hardly recognize their faces. So, I volunteered to serve as a group leader of the community residents’ association, which is a role rotated among residents and your turn comes once every ten years or so, and did my best in attending executive meetings held several times a year. Thanks to this, ties of personal relationships are being formed, which I intend to value and nurture.
External Evaluation about Quality Assurance at Toyota
The major focus of mass media in the world almost every day in early 2010 was the quality issue of Toyota cars. When I read a newspaper article in which Akio Toyoda, president of Toyota, was quoted as saying that his company would review its quality assurance system and have the result be assessed by external experts, it did not occur to me that the role would be assigned to me. Four people were involved in the assessment: Prof. Hiroshi Osada, Tokyo Institute of Technology; Mr. Yasuo Kusakabe, who is an expert of automotive technology; Ms. Yoshiko Miura, representing consumers; and I myself. We were devoted to the work by spending substantial amount of time over the two months of April and May. Although I cannot mention the outcome of assessment here because I have obligation to keep confidentiality, our report: “Findings by Independent Experts about Quality Assurance at Toyota”, presented to Toyota Motor Corporation is uploaded to the following URL of the company and accessible. Generosity of the company to make the report public is appreciated. Please refer to
the report in the below if you are interested in.
[Main text in pdf]: http://www2.toyota.co.jp/en/news/10/07/0712b.pdf
External Board Member, Komatsu, Ltd.
Business fared well from June 2008, when I was appointed to be an external board director, until September in all aspects. Economic environment, however, drastically changed after October of that year because of influence by the Lehman Shock. Two years since then have been very difficult ones, and it is only from the latter half of 2010 that I feel the season has changed and spring has returned at last.
Lectures and Presentations
The number of lectures I gave in 2010 is 50 in total, of which 15 were in Japanese, 31 in English and 4 in Chinese, which means, on the average, I gave one lecture around every week.
Commemoration of 60th Anniversary of the Deming Prize: Of all the lectures, the one in which I poured the greatest energy was the one at the conference held in November in commemoration of the 60th anniversary of the establishment of the Deming Prize. The theme of my talk was ‘Management and TQM — Utilization of the Deming Application Prize’. I started talking about ‘Change of Times around ‘Made in Japan’, went on to discuss that the key to the success of TQM is ‘Management and TQM’ instead of ‘TQM and Management’, positioned TQM as a management package for total efforts of the organization, presented the characteristics of the Deming Prize as compared with the Malcolm Baldrige Award and the model of impact the Deming prize gave to the manufacturing industry in Japan, and concluded by recommending to utilize the Deming Prize as a catalyst for management toward business excellence.
The conference was opened with a greeting by Dr. Tetsuichi Asaka, Professor Emeritus of Tokyo University who turned 96 this year, followed by a talk by Dr. Shoichiro Toyoda, Honorary Chairman of Toyota Motor, before my talk.
There were many distinguished guests including Mr. Shoichiro Kobayashi, who was the president of Kansai Electric Power Co., Ltd. when the company was awarded the Deming Prize in 1984, which made me a little nervous. According to a hearing conducted by the secretariat after the conference, my lecture was favorably accepted, which made me feel relieved for having fulfilled an important task.
Incidentally, I retired from the Deming Application Prize Sub-Committee in the end
of December, in accordance with its internal rule which specifies the retirement age of 70. Thirty-three years of my engagement in examination for the Deming Application Prize and diagnosis gave me an immeasurable experience.
Keynote Speech at The 8th ANQ Congress, New Delhi: I made efforts in giving the keynote speech in the 8th Congress of the Asian Network for Quality held in New Delhi in October. The title of my talk was ‘Eight Suggestions for Asian Quality towards 2020’.
The congress, hosted by ISQ (Indian Society for Quality) and QCI (Quality Council of India), and co-sponsored by ANQ members in Bangladesh, Pakistan, and Nepal, was held in the JIIT (Jaypee Institute of Information Technology) in New Delhi. Close to 800 people participated from 19 countries and more than 230 papers were presented. ANQ was started in 2002 with the membership of 10 countries, which has increased now to 17. Operation of the society based on the principle of the ‘ANQ Way — Austerity and Simple Living’ by many volunteers gave very favorable impression. Needless to say, there has been superb leadership and considerate coordinatorship of leaders of quality management circle in India, represented by:
Dr. V. Krishnamurthy, Chairman of Organizing Committee;
Mr. Janak Mehta, Co-chairman of Organizing Committee; and
Mr. N. Ramanathan, Chairman of Conference Committee.
Generally, presentations made at conferences held during the early stage of introduction of quality management tend to be composed mainly of ‘theoretical presentations’, in which sentences are written in the present tense, and as implementation progresses on the shop floor, ‘implementation reports’ written mainly in the past tense increase. Typically, implementation reports at an early stage tend to be enumeration of what has been done, mentioning ‘we did this’ and ‘we did that’, more like diaries of elementary school children. On the other hand, where TQM is implemented in earnest with the leadership of the top management, presentations change to ‘story-type implementation report’ composed of data and logics. While ‘theoretical presentations’ and ‘elementary school children’s diary type presentations’ occupied the majority of presentations when the conference was held for the first time eight years ago, there was increase in ‘story-type implementation reports’ this time, which shows apparent progress in activities quality-wise. It pleases me greatly as a founding member of ANQ.
I concluded my talk with the following words:
‘By around 2020, Asia will take the leadership in the world in quality. I believe that the ANQ Congress will be the most distinguished conference on quality, and
attendance at this conference will be indispensable for professors, professionals, executives, managers, engineers and young researchers who are involved in quality management for obtaining the most up-to-date knowledge and learn from the best practices.’
Establishment of Ishikawa-Kano Award, ANQ, Asia: In the above ANQ Congress, establishment of the Ishikawa-Kano Award was announced and its first awarding ceremony was held.
Dr. Kaoru Ishikawa as the Father of Asian Quality: Dr. Kaoru Ishikawa, my teacher/mentor, guided many people in Asia in many different occasions, starting with the Quality Control Symposium sponsored by the Asian Productivity Organization (APO) and the present Japan Productivity Center (JPC) in 1964, where he gave a special lecture and served as a discussion leader, and then through seminars held by the Overseas Technical Cooperation Agency (OTCA, present JICA: Japan International Cooperation Agency), Japan Standards Association (JSA), the United Nations Industrial Development Organization (UNIDO), and the Association for Overseas Technical Scholarship (AOTS). In addition, he visited many countries to sow the seeds of quality management through seminars and lectures. Starting with his first visit in 1970 to Taiwan, he visited Korea, China, Iran, Thailand, Malaysia and India so far as I know. His contribution was outstanding indeed as the father of quality management in Asia.
Role of Noriaki Kano in Asian Quality Development: The Award named after Dr. Ishikawa’s name as well as mine was established, because I was the one who cultivated buds which sprouted from the seeds Dr. Ishikawa had sewn. True enough, starting his visit to Taiwan in 1970, I accompanied him for trips to Iran, Thailand and Malaysia, and then took over his work while receiving advice from him. I have been taken up with traveling around in Asian countries and engaged in training and education programs in Japan for Asian participants mentioned above for forty years. I feel very much honored for having been recognized for my work as well as for opening of the award with the names of Dr. Ishikawa and me.
Prof. Yoji Akao as the First Recipient of Ishikawa-Kano Award: The first Ishikawa-Kano Award was conferred to Prof. Yoji Akao recognizing his contribution to Asia through his work of establishing and deploying QFD. Prof. Yoji Akao is one of the pioneers of quality management whom I respect most, and I am truly honored by his acceptance of the award.
Distinguished Service Medal, ASQ, U.S.: I was granted the Distinguished Service Medal at the American Society of Quality (ASQ) Congress held in St. Louis in May. The medal is said to be “the highest ASQ medal awarded for service, in recognition of lifetime contributions to ASQ and the quality movement” and I feel greatly honored to receive this medal.
Kano Quality Award, TPA, Thailand: Four companies received the Kano Quality Award established by the TPA (the Technological Promotion Association (Thai-Japan)), which is an organization for promotion of management technologies in Thailand, for recognizing excellent companies promoting TQM. Presentations were made before the awarding ceremony. It is very reassuring to know that their levels are improving year after year.
Honorary Members: The fact that I was given the title of honorary member from both the Japanese Society for Quality Control (JSQC) and the Quality Society of Argentina (FUNDECE) makes me feel honored.
Noriaki Kano, Professor Emeritus of Tokyo University of Science,
Secretary: Yoko Oyama,
Kano Quality Research Office (KQRO), Tel: 090-6043-2299, Fax: 042-371-2800
Many great cities developed for one important reason. They were at crossroads, or at bays, river crossings, or safe harbors. Some were near resources to be harvested or emerging roads, tracks, or caravan routes. They grew because they were or would become markets. Market towns enabled trade, commerce, and exchanges that enabled value creation. Agriculture, mining, cattle, diamonds, forestry … all types of enterprises emerged, so that exchanges could be made, with money or barter as instruments. We could get and sell stuff. For most of human history, markets were visible, tangible, and somewhere we travelled to buy or sell. This tangible requirement and the transportation linkages determined life or death to commerce and the development of cities. Ask the railroad towns that were bypassed by the interstate highway system or mining towns that had no metals or minerals left to harvest. Our conquest of time and space over centuries has shaped this dynamic.
Shopping and commerce “has come a long way, baby!” The yearly post-Thanksgiving shopping frenzy continues to amaze, particularly with how the connected world has changed our business landscape. It’s like watching an unfolding chapter in the Star Wars epic, except that the war is over our spending wallets. In this recent episode of the on-going war, the Cyber Alliance has again bested the Mall Empire for our loyalties. In fact, for some time now, the Mall Empire has painfully learned from these battles, and some have defected to or are replicating many of the Cyber Alliance strategies and tactics. This Cyber Alliance had its beginnings several years ago, deep in Amazon web jungles or perhaps a scenic eBay. If this keeps up, there is a good chance that the Mall Empire may have to close more of their forts or garrisons. If the battlefield is “our wallets”, who gets to it faster?
Business by brick and mortar is diminishing, some to extinction, by economics, wasted resources, overheads, and more often a more ubiquitous predator, the online competitor and operator. In fact, many brick and mortar enterprises today succeed only because they have built an online presence. Many slept in on Black Friday morning while others were out at midnight and stayed out until midday or later. The Friday shopper fought bottlenecks, endured queues, and mass insanity for deals. I logged on, chose, paid, and checked out, all sitting with a great cup of coffee.
From a business perspective, the online world is yet to find boundaries. It, like our universe, continues to grow and we continue to discover more about it. Visionaries are in the wonderful position where new business models are there for the making. The risks and rewards are so different, that in many disciplines agile will trump big and flexible will trump fixed. From the customer’s perspective, it is a whole new journey, walking through boundless virtual shopping malls and the new excitement that more choices and transactional convenience brings.
It has always been about convenience and cost, for buyers and sellers alike. How soon can my customers secure the benefits they seek and at what cost? The virtual world provides dual benefits of customer convenience and a more level playing field for the seller and suppliers. Historically, large brick and mortar meant more items, sizes, and choices for the customer. It defined convenience geographically and in floor space design. Goal one was to get the customer in the door and goal two was to keep them inside shopping, not much different than a casino in Las Vegas. Not so anymore.
The Black Friday and Cyber Monday battles are not just about holiday gifting, are they? How about our own enterprises? Are we there on Friday or Monday, 24-7? Whose convenience does our business model favor?
Yesterday, residents in the San Francisco neighborhood of San Bruno returned to what was left of their homes. Several had burned when a 24 inch transmission gas pipeline failed and a fire ensued. The section that failed was due to fail and, following the rules of physics, it complied. Those who own older homes, older cars, or are getting personally old know that time, elements, and decay will eventually win and create a disruption. The organizations who own and operate the pipeline take their responsibilities to customer, public, and customer safety with lots of gravity. The pipeline was due to be replaced and there was a plan filed with the regulatory agencies to do the repair work. They follow a business process that requires lots of opinions and decisions to weigh in before the line is fixed. It is called regulation and the real problem is compounded, not created by regulation.
In this case, the sometimes dysfunctional relationship between physics and economics has created another calamity. There are powerful forces at work to make it certain that many more calamities will happen. These calamities occur in all types of business systems: personal, private and public sectors, for profit or not. We operate these systems with a very specific fuel and consume that fuel to create value, deliver it, sustain it, and get some more fuel to run the process some more. When we are running out of that fuel in our tanks, we must convert the value we create into more fuel, find ways to consume less, borrow some more fuel, or stop consuming all together. That fuel is money, the lifeblood of economies worldwide. In order to operate our business we are required to compensate our sources of money at a specific rate. It is often the alpha process of all processes. The laws of economics will stipulate that no money means no process.
We have all seen the effects: work stoppages (private and public), staffing impacts, restructuring, budget adjustments, reworked plans, downsizing, ad infinitum. There is one specific behavior that is very dangerous; to systematically postpone, delay, underinvest, or forego maintenance of the physical and human systems that operate the business. It happens. An item scheduled for this year gets pushed into the next year’s budget in order to meet this year’s economic plans and aspirations, and we expect the laws of physics to change for us. Since many of our maintenance plans are statistically derived, the odds that a specific item will fail as a result of a “small” delay seem like a safe bet. It’s a bit like skipping an oil change or maybe taking a medication every other day. Does that become a habit? Do we eventually build a decision system that believes that the odds will always play out in our favor? Do we manage our plans and messaging to reflect an optimistic view? What happens when lots of the stuff is already old? Do we believe in luck?
When we deliver value, it is done so at a certain level of capability, meaning that some are better at converting money into value than others. Left alone, all these systems are subject to decay and disruption. That can be a pipeline or the skills of our people. When we engage in a process that decays faster than the business requirements to create value, a disruption is inevitable, physical or monetary. Yes, a delay in maintenance increases the chances that failure will occur and delays in building knowledge, skill , and tools for our people does the same.
When satisfying an economic goal in the present is competing with a possibility of a negative consequence in the future, who wins? As we face the current economic challenges, how do we decide what not to do? Do we manage the future from the present or the present from the future?
Ever wonder about the question of which came first, the chicken or the egg? It’s hard to escape the current media about eggs, salmonella outbreaks again! I confess that part of me is a chicken, more than a bit concerned about the eggs. Although the broadcasted data says my eggs are likely to be safe, the current outbreak is disturbing. Egg farmers everywhere are sharing the chilling thoughts of what fear can do to our buying behaviors. A bad egg amongst the good can spoil the lot. It’s not just about eggs, is it? So, what would we be willing to pay for the good eggs? I know all about the value of data in decision making, the power of an objective lens, the better understanding of what risk really means, how it improves performance, and that is all good. That is, in fact, good as long as we have evidence that the data is good, timely, and reflective of what we really need to know for good decisions. So, how do I make up my mind about the eggs, particularly when my grandkids want some “cheesy eggs”? Cooking them thoroughly is supposed to kill the microbial varmints, but the old, “just in case” whispers in. I’m making decisions with second hand information with a cost versus perceived risk imbalance. Does that happen with other decisions we make at home, work, or play? (The golf course counts here)
It’s complicated since good eggs look the same to me as bad ones. What I need to know is inside the shell, and I don’t have the tools or knowledge to check. Here’s the challenge. I only know that eggs are bad by the damage they’ve done to someone and if somehow the word gets out and if the media decides to share it and if I happened to catch the news. Those are lots of ifs. Someone has to crack the shell and eat the egg. I don’t have testing data on the carton, and food safety failures are nothing to ignore. The wonders of science and high tech supply chain systems make eggs plentiful and really cheap. I suppose that applies to lots of other stuff that’s really cheap. So if we were in the egg business, we would want our customers to enjoy our eggs safely, always safely, and come back and buy some more. A history of great safe eggs is important and I would want to make sure only good ones hit the skillet.
But, this is not really an egg problem; it’s a quality management problem. The golden rule of “thou shall not use your customer as your inspector,” has been broken. That’s a rule that is foundational to ethical business practices. When we make a sale, accept an order or sign a contract, we are in fact making a promise that our customer will get what they expect, based on either a standard, a contract, or what we advertise or put on our “boxes.” Accepting a specification is the same as making a promise, and those that don’t intend to keep it but still sell the “stuff” are “fibbers” as my grandkids might say, or something much uglier in our adult language. It’s a real problem in industries where all the suppliers make the same promises and claims.
So, how do we make promises to our customers? How do we keep them? Do we rely on customer failure data to know, or do we know that the likelihood of failure is unlikely? How unlikely? Do we need someone with a badge and a club looking over our shoulder or is our respect our customers, employees, and investors a big enough motivator? There is really no difference between eggs, or cars, or cough syrup, or toys, or the innumerable products and services we provide. A promise is a promise and when we break one and harm is done, it’s on our name and reputation.
• Do we know what we’ve promised, or more importantly, what our customers believe we’ve promised?
• Do we lead and manage from the big print or the fine print?
• When was the last time we checked our processes? Are they about always keeping the promises? To whom?
• When did we last evaluate how effective and efficient our controls are? How likely are we to keep the promise?
• How and when do we decide what is “good enough” for our customers?
• What evidence could we produce on demand that would support our promises and earn the trust of our customers?
“Quality is not an act, it is a habit.” Aristotle
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