Six Sigma
The Egg and I
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
Who’s Not on Board?
Not that long ago, a major mobile phone carrier had an effective advertising campaign with a catchy slogan. Yet, I found their slogan troubling. It was troubling in that their banner, “We have fewer lost calls” left with me an impression that “we’re not as bad as the other guys” was written with the intent to establish a positive differentiator of quality and reliability. My reaction then was that the goal was to be the best of the bad, or cream of the crap. Upon reflection, I realized that the problem was with me, and in fact, the carrier’s message was the right one. This carrier was actually speaking the language of quality, not of spin (as I confess was my reaction). Quality is measured by the likelihood of failure against a specification. In their case, our case, it was a message that what mattered to the customer was continuity of service and there is a probability that that service will be interrupted, and the best do it fewer times. The carrier must have studied Dr. Noriaki Kano and realized that in some cases, the best can mean fewer defects, and failures against a basic requirement can only bring dissatisfaction. For the basic requirement of service availability, a service unavailability measure is the right metric and satisfaction is not achievable, that is, zero defects can bring only zero dissatisfaction.
This last week, we witnessed what appeared as truly bizarre behavior from Apple. The new flagship, the iPhone 4, has a troublesome performance problem with the reception. The very beautiful phone integrated the antenna into a smooth metal casing, creating a problem when the phone was held in a particular, albeit very normal, way. Some would argue that the decision process for the product launch suffered from an unhealthy bias wherein form trumped substance and engineering warnings. It’s saddening, coming from an exciting and innovative producer of form and substance. What was befuddling was the chairman’s response to the defects. It began with hubris with what appeared a dismissive tone that trivialized the problem …. Customers don’t know how to hold our phone properly, what’s all the fuss about; it’s the bad media at play. As the evidence mounted of the reception calamity and the web took over, sharing the data, the next stage of responsiveness focused on an attack on the competition, asserting that other smart phones shared the same problem. From here it sounds like it’s about “my” product and brand, not the customer pain. That strategy was a big boo-boo. Motorola, HTC, and RIM did not remain silent, each stating that their designs did obey the laws of physics and sound engineering, after all, customers wanted continuity of service.
Today’s connected world is a dangerous place to forget that respect for the customer and respect for the competition are essential for sustainability of brand value and economic goodwill, just ask Toyota. I’ve always loved Apple’s creativity in form and substance. I also believed that Toyota put the customer first. Funny how often bigger does not beget better. It’s called entropy, another engineering insight often forgotten.
On reflection, I wonder how much of the problem had to do with poor engineering and how much with a culture of “enforced optimism” or some variant of the “emperor’s new clothes?” The evidence to date on the catastrophic BP oil rig explosion and the subsequent environmental opening of Pandora’s Box seem to support the dangers of “enforced optimism” leadership behaviors.
How often does the “enforced optimism” show up in planning (pick any type), budget sessions, objectives, progress reviews and reports, investor sessions, group decision making, scheduling and commitment setting, …., other stuff?
Thoughts?
It’s Your Call
A blown call costs a pitcher a perfect game. This week, it really happened and everybody felt terrible, apologies ensued and the guilty umpire felt genuine remorse and accepted full responsibility for the failed measurement. A poor measurement did not change the perfection of the real performance, a better gage, instant replay validated that, but rather the record of what happened. Those that missed this story and are evaluating the statistics of pitching performance will only have the historic data to evaluate, data that is a false witness of events. Imagine the effects of all the poor measurements in one year of major sports events. Do they change important outcomes? Do they steer rewards or punishments? How about all the stuff that goes on with gamblers in or out of Las Vegas?
Bad measurement in sports evokes big emotions, outrage, indignation and a score of aftereffects that include bragging rights. Does bad measurement in our enterprises conjure similar reactions? What are the chances that we are making decisions as a result of poor measurement, the wrong lens, an obstacle in the way, poor technology, get the picture? If so, the issue is ubiquitous. In over two decades of helping organizations with performance gaps, poor measurements have always been at play, sometimes with disastrous consequences.
The issue is not a simple one. For example:
• Do we use the data that we have and try to conjure meaning from it? Or do we start with what we want to know and then measure accordingly?
• Are we sure that the movement in the data is representative of what is actually happening within the process?
• Do different individuals or functions measure differently? Would they come up with the same value when measuring the same process?
• Does the data just not make any sense?
• How about our “calls” on what we evaluate? Do two managers reach the same conclusion about someone’s performance? If not, who is right? What are the consequences to the individual?
• Do we introduce our own bias into the measurement and evaluation?
• Do we have folks who are easier graders and those that are more demanding? Do they evoke similar or different performance?
• How much of our decision process rely on a subjective call (an opinion) versus an objective measurement (an actual number)? Do we know how often our calls are wrong?
• Do compliance requirements change how we measure performance?
• What happens when lab results are wrong? What if wrong results bring really bad news or they mask the bad news and bring good news?
• Are we ever surprised by events that would have been very visible had we measured differently?
• Does a part of the organization hide or hoard data?
• Do our customers measure our deliverables and call about problems that we should have prevented them from experiencing? What did our data say?
• Do we have our vision checked from time to time? Why is that?
• Do we ever catch how some advertisers deceive with clever use of statistics? How about in our enterprises?
• Is it safer for ourselves to call someone “safe” rather than “out” when we’re not sure, just in case? Consequences are often more severe in one direction versus the other.
• Have we ever spent a lot of money and resources on a decision made with poor data?
So, how’s our data today?
What If?
There may be a really big storm brewing. It may be a signal from a political barometer, or positioning, real outrage… not sure, but the thunder is increasing. The last few months have stoked the fires of outrage, anger, frustration, and deteriorating confidence from a public that may feel that they may have been too trusting. Mine disasters are prompting a more diligent review of whether laws were broken and whether responsible regulators did not regulate, or were distracted when they should have been focused. The oil spill disaster is challenging the process of due diligence and the veracity of permitting submittals, leaving people scrambling to solve the should-have-been foreseen or explicitly considered in operational risk assessments. The financial crisis and the ensuing Goldman Sachs nightmare is ringing lots of alarm bells around the public service halls, prompting the questions of, “Did we do enough? Were we diligent in our responsibility? Where will the light of review shine next?” I suspect that readership will skyrocket for Government Accountability Office (GAO) reports that have been ringing the bells for regulatory reform, transparency, accountability, and better oversight for many years. The scary part of a pendulum swinging is that it often has an axe attached at the end. The court of public opinion is a feeding frenzy for responsible and irresponsible media.
The challenges ahead are not easy, simple, or clear insofar as right or wrong, the role of government, and the balance between protecting the public trust and preserving an environment that is economically fertile for business. The polarity of positions makes the task of finding societal answers that are workable frighteningly complex, requiring agile minds, principled players, and strategic balance. The ravages of unemployment and a riskier economic outlook may stoke the fires for those in search of the guilty. Anger and the search for public justice enjoy a history of harming too many innocent in search of the guilty.
For those enterprises where compliance is a large economic investment or burden, consider getting ahead of this storm. For those who were doing “just enough to get by,” change is likely around the corner.
Compliance brings three categories of costs:
• The Cost of Non-Compliance. That is all the bad stuff that happens when someone is caught and held accountable for breaking the rules.
• The Cost of Compliance. This is a really big number that captures all the activities and costs associated with understanding the rules, complying, or doing whatever is necessary so as to not be found in non-compliance. This usually has many, many more hidden costs that the explicitly budgeted costs.
• The Cost of the Fear of Non-Compliance. This one is very nasty as it captures all the unnecessary, just in case, better look it over, get more reviews, run it by the lawyers, get lots of extra approvals, let’s have a meeting, and endless tons of costs and constraints heaped on because we are afraid of getting in trouble.
Far too many of the assurance and compliance systems rely on “detect and correct.” The unfortunate consequence of control and contain systems that rely on downstream checks and inspections is that they will always fail to some degree. That means that sometimes we learn that we’re dead before we learn that we’re sick. Yep, failure is what tells us that something is wrong. The smarter folks are applying the principle of “predict and prevent.”
Now, what if the yoke of regulation and compliance is about to get heavier, and those who are responsible for guardianship of the public trust are under greater scrutiny, might they also be thinking about their own fear of non-compliance? What’s the cost to everyone else if that is true?
Where are our enterprises? Is this something to think about, or something to think through?
“A man does what he must – in spite of personal consequences, in spite of obstacles and dangers and pressures – and that is the basis of all human morality.” Winston Churchill
Trident in the Storm
“There is opportunity in every storm”, is a phrase I often use. Storms disrupt, are not completely predictable, and affect many of us simultaneously and uniquely, since there is only one of each of us and the effects to us are different than for any other. We experience storms directly and indirectly. In all cases we get outcomes, some that are not evident, need to develop, and then emerge. Some are awful and some are wonderful, for businesses, enterprises, families, people, societies, economies, lots more.
The English benefited greatly when the Spanish Armada was destroyed in a storm, none too soon since attack was imminent. Winds from a storm and great strategy enabled the Athenian fleet to destroy the Persians during the Battle of Salamis in the second Persian Wars (that’s the one that involved the 300 Spartans at Thermopylae …) The outcomes from each have profound effects on what the world is today and even the fact that you’re reading this at all and specifically in English. Storms, opportunities and outcomes and inextricably linked with an every shifting mix of deterministic and random effects. What we do before, during and after these storms will drive outcomes, just like what others do create outcomes that we experience. Inaction and action drive outcomes. Spectators to a storm are impacted, but perhaps with a lesser influence on opportunities.
For many of us the economic storms of the last 18 months have created havoc, redirection, disorientation, and many positive opportunities as well. We’ve learned much about ourselves and even more about others we know and many we’ve trusted. Disappointments may make us wiser and wisdom may make us wealthier in work and life choices. At our shop, we have taken the linkage between storms and opportunities to heart and action. We are delighted to announce that our enterprise, Trident Leverage, is continuing its growth and is now Trident Leverage Group. We are now a full partnership of Kevin Bazinet, Dave Dippre, and me as the Managing Partners. With our growing consulting and business development team, we are excitedly addressing the opportunities that only these storms could have provided.
We believe that our choices matter, particularly during storms. We’re excited at what’s ahead and invite you to join us in making 2010 the year where nightmares become dreams and dreams become reality.
Just Questions …
- How do you know if your Lean and Six Sigma training and development program is succeeding?
- When you set out on your implementation, did you develop metrics to gage progress and success?
- Is success measured in terms of training and certification indicators or on the changes in business performance?
- Have you what appeared to be a successful implementation in a failing business or business unit? Are you counting projects and certifications still?
- Are you still using the guidelines for selecting and chartering projects that were suitable for training candidates?
- Are those guidelines yielding the very best, most important business issues for attention?
- Are you running into “stranded investments” of trained resources in areas with insufficient opportunities for high impact projects while other areas are resource starved?
- Is the value of the program challenged or suffering diminishing results?
- Could it be that what worked to get launched now constrains the needs of your current life cycle phase?
- Is form constraining substance?
- Are the rules and tools setting the agenda for what is an opportunity?
- Are the real problems going elsewhere for solutions?
- Are the best and brightest clamoring for an opportunity to be part of the implementation or running away to protect their careers?
- Have you checked for generational deterioration and decay of approaches and quality of analysis and solutions?
- Are the Lean and Six Sigma physicians trying to cure themselves?
- Has critical thinking improved or has it been replaced by a checklist and lots of forms for approval?
- When was the last time you ran your program through a full physical and checked if your practices and practitioners fit your current and emerging business needs?
- Will you know in time?
Burned by the Budget
This has been a tough season for many. As business belts and budgets tightened, the focus to become leaner has led to some tough choices. Many of the activities we engaged in with customers had to change, even go by the wayside. Maybe it was fewer visits, or less personalized care, as we moved their requests into more “efficient” centers, thereby reducing transactions costs. Some of the requests we did for little or no cost, now are fee based. What about when the economy improves?
I know that irritating feeling when responses to my requests take longer or get mishandled by providers I once bragged about. I will likely change providers, once we emerge from the storm. I will reward those that did not lose sight or memory of who I am as a customer. Possibly you may as well?
Often, when we calculate costs of doing business, we do so with impersonal and questionable benchmarks, leaving the effective in favor of the budget efficient. They are impersonal with respect to our markets and reputation, and improper because of the use of averages. The cost and budget numbers improve and the transactional lens shows progress. Did our arithmetic extend down the value stream to our customers’ experience and costs? The math is different for them than for us.
For us, the very basic view is: Our Price = Our Cost + Margin.
For our customers, the basic view is: Real Price Paid = Our Price + Additional Customer Costs (Inconvenience Costs and Transacting Costs.)
For them, we become more expensive when we make it harder for our customer to buy from us. What may look as wonderfully efficient with our accounting lenses looks harshly more expensive through our customers’ lenses. The opposite is true, when we increase convenience and reduce the cost of doing business with us, their Total Price goes down.
- Do we think they’ll understand and forgive our inconveniences?
- Do we think that in better times, they’ll forget and we can go back to the way it was before?
- Do our decisions enable or disable our customers’ success?
- Are our competitors watching? Are they waiting?
- Will we remain the Provider of Choice?
Mean Times
We like symmetry. Most of us do. There is something in our wiring or programming that finds symmetry attractive, pleasing, and embodying some balance that might actually communicate harmony. We see it in the YinYang and the Taoist philosophy. We often characterize justice as a balanced scale, and countless studies have measured our perceptions of beauty among individuals and found facial symmetry the driving attractiveness variable. When we measure and analyze to find meaning in data, there is also an underlying “hope” that we find symmetry. When we see a “normal” distribution, or bell curve, we enter a comfort zone. In fact, I know countless people who work terribly hard at converting data that is not symmetric or normal into a set that is. Some, actually too many, take out data that does not fit the beauty of symmetry, proceed to insult it with names like outliers and dismiss them from our view.
Loving the comfort of symmetry and filtering out that stuff that isn’t is often dangerous. This need for comfort leads to blinders we create (or are taught to create) when looking at our data. For example, the stuff we often call continuous and plot on a line graph isn’t really continuous, but it feels better look at it as if it was (this is for another day). So let’s get back to our problem with the quest for symmetry. Let’s look at two problems.
The first is with the (insulted) data that we label as outliers. Often the outliers that don’t fit the symmetrical gang are in fact the early messengers that a big change from what we expect has happened and that a whole new family of subsequent consequences may need our attention. There is a phrase that I will paraphrase, “One bad event can erase a whole bunch of good ones.” When the consequences of one bad are really big, seeking symmetry is very dangerous. There are many people today who were devastated in the Midwest from flood damage for which no insurance coverage existed (Katrina victims had their own hell.) There are guilty parties who gave bad advice. While some will argue that “the rules” say to investigate the outliers, it seldom happens, even with those that give that advice. So, with advice, the advice to us is caveat emptor.
The second problem is one that I frequently rant about; while performance or inputs often are symmetrical, consequences are typically not. Consequences are more asymmetrical. It is true in the markets, weather patterns, traffic accidents, air traffic congestion, business deadlines, modern warfare, and many more. An easy one to visualize is the process many use to estimate time and materials for a proposal. Many organizations estimate using what is called a “unit rate” from past performance which is either the mean (average) or another calculation of central tendency (frequency or likelihood). We add a whole bunch of those unit rates up to come up with a total estimate. With all that estimated symmetry, we should expect that half the time we will below that value and half the time above (almost never at that value). These symmetrical probabilities always yield very asymmetrical consequences. We often forget the symmetry and actually expect the estimated value (not a good choice). The benefits that may ensue from coming in below the expected value are typically smaller in impact than the downside effects of being above the value. Being late or falling behind are often really bad news.
- A proposal submitted a day late is rejected without opening.
- Missed delivery dates are subject to penalties or loss of business
- Running behind triggers overtime, expedited shipment, errors and stress
- Keeping an executive waiting for a report can have career altering effects.
- The fear of being late typically results in producing too early, inventory and stale information.
So, on average, we may get more bad news than good.
Does that mean that mean brings meaner?
Dave Dippre joins Trident Leverage, LLC.
We are delighted to announce that Dave Dippre has joined Trident Leverage, LLC as Vice President and Chief Technology Officer.
Dave brings to each engagement an enviable breadth and depth of global experiences across industries and sectors. He has been at the forefront of the development of Six Sigma methodologies and execution. Dave has been a practicing Master Black Belt for almost 20 years and is also a recognized authority in Design for Six Sigma having chaired conferences of practitioners in Chicago, London and Singapore. Dave has an enviable record of success among the hundreds of professionals he has developed and mentored. Many current successful practitioners today still call on Dave as their mentor.
His quality journey began at Motorola in 1985 as a contributor to the original process standardization and optimization effort that became the DMAIC methodology. Subsequently, with his own consulting business, in 1995 he was engaged in the groundbreaking Six Sigma deployments at AlliedSignal and General Electric. He is sought after for his expertise and “original DNA” by a broad range of companies comprising manufacturing, telecommunications, printing, engineering, procurement and construction, financial services, and defense. His insight and bandwidth includes thousands of successful projects across these sectors. Dave holds security clearance.
Dave earned a Bachelor of Science degree in Chemical Engineering and a Master of Science in Industrial Engineering at Arizona State University under Dr Douglas Montgomery, a recognized authority in experimental design.
The Perfect Storm
Our customers make us better! Have you heard that phrase? When I have, the translation that emerges is that our customers sometimes have to drag us into improvement. In fact, it often means that we become aware of the needs to improve from feedback and complaints. Someone might argue that we sometimes innovate from negative feedback.
Those people in business development are always promising products and features that we don’t have, creating chaos for production! Have you heard that one too? Does it mean that we are dragged into innovation because someone promised it to a prospective customer? I’ve heard it often. Funny thing is that a vast amount of the improvements and enhancements to products and services came that way. What does that say about our enterprises?
Let’s then stipulate that imposed requirements get our attention and provoke problem solving and subsequent improvements and innovation for some, or denial and despair for others. If that’s true, there is opportunity in every storm. We are today in a perfect storm. Today we have a storm that affects our markets, resources, financial flexibility and compliance requirements. This storm makes it virtually impossible to carry on with what was business as usual and expect to thrive. This storm may be a signal of climactic change, the kind that has led to extinction of species over millennia.
Let’s consider the part of the storm that scares many, but may energize a few, increased compliance requirements. That heavy yoke has many wondering how we will cope and has provoked a whole series of tests and controls so that we get really good at not doing something. I’ll bet that we have a big increase in our “you can’t do that” professionals around the enterprise. I bet we’ve also brought in hired guns to “advise”. Does it sound like we’re going to spend more so that we can do less? Hmmm … I wonder?
I do believe the adage that “necessity is the mother of invention” and we are ripe today for invention. The innovation engines that the creative side of our enterprises run to conjure new revenue streams are necessary, but not the focus of this discussion. The engine that we should consider is the one that asks the question, “How can we leverage the increasing compliance requirements to differentiate ourselves and gain competitive advantage?” How can we prevent the costs that others will spend in detecting and correcting? How do we build better effectiveness and efficiencies in execution that deliver flawless compliance and create real leverage? Real leverage is where we harvest increasingly greater results and returns from our improved execution. Real leverage shows up in the top line and the bottom line. Real leverage shows up in enterprise valuation and public evaluation. Real leverage shows up in less waste and more goodwill, loyalty and jealousy from the outside.
There is a very different way to achieve compliance, the profitable kind, the competitive kind, the responsible kind. Whether we are public or private, military or civilian, big or small, me or you … we have same questions.
I see more clouds ahead. Shall we stay indoors and close all the windows?
