Posts Tagged ‘management’

We live in a world that is increasingly intolerant of errors – we want everything to be right all the time – and if it is not then someone must have erred with deliberate intent so they need to be named, blamed and shamed! We set safety standards and tough targets; we measure and check; and we expose and correct anyone who is non-conformant. We accept that is the price we must pay for a Perfect World … Yes? Unfortunately the answer is No. We are deluded. We are all habitual criminals. We are all guilty of committing a crime against humanity – the Crime of Metric Abuse. And we are blissfully ignorant of it so it comes as a big shock when we learn the reality of our unconscious complicity.

You might want to sit down for the next bit.

First we need to set the scene:
1. Sustained improvement requires actions that result in irreversible and beneficial changes to the structure and function of the system.
2. These actions require making wise decisions – effective decisions.
3. These actions require using resources well – efficient processes.
4. Making wise decisions requires that we use our system metrics correctly.
5. Understanding what correct use is means recognising incorrect use – abuse awareness.

When we commit the Crime of Metric Abuse, even unconsciously, we make poor decisions. If we act on those decisions we get an outcome that we do not intend and do not want – we make an error.  Unfortunately, more efficiency does not compensate for less effectiveness – if fact it makes it worse. Efficiency amplifies Effectiveness – “Doing the wrong thing right makes it wronger not righter” as Russell Ackoff succinctly puts it.  Paradoxically our inefficient and bureaucratic systems may be our only defence against our ineffective and potentially dangerous decision making – so before we strip out the bureaucracy and strive for efficiency we had better be sure we are making effective decisions and that means exposing and treating our nasty habit for Metric Abuse.

Metric Abuse manifests in many forms – and there are two that when combined create a particularly virulent addiction – Abuse of Ratios and Abuse of Targets. First let us talk about the Abuse of Ratios.

A ratio is one number divided by another – which sounds innocent enough – and ratios are very useful so what is the danger? The danger is that by combining two numbers to create one we throw away some information. This is not a good idea when making the best possible decision means squeezing every last drop of understanding our of our information. To unconsciously throw away useful information amounts to incompetence; to consciously throw away useful information is negligence because we could and should know better.

Here is a time-series chart of a process metric presented as a ratio. This is productivity – the ratio of an output to an input – and it shows that our productivity is stable over time.  We started OK and we finished OK and we congratulate ourselves for our good management – yes? Well, maybe and maybe not.  Suppose we are measuring the Quality of the output and the Cost of the input; then calculating our Value-For-Money productivity from the ratio; and then only share this derived metric. What if quality and cost are changing over time in the same direction and by the same rate? The productivity ratio will not change.

 

Suppose the raw data we used to calculate our ratio was as shown in the two charts of measured Ouput Quality and measured Input Cost  – we can see immediately that, although our ratio is telling us everything is stable, our system is actually changing over time – it is unstable and therefore it is unpredictable. Systems that are unstable have a nasty habit of finding barriers to further change and when they do they have a habit of crashing, suddenly, unpredictably and spectacularly. If you take your eyes of the white line when driving and drift off course you may suddenly discover a barrier – the crash barrier for example, or worse still an on-coming vehicle! The apparent stability indicated by a ratio is an illusion or rather a delusion. We delude ourselves that we are OK – in reality we may be on a collision course with catastrophe. 

But increasing quality is what we want surely? Yes – it is what we want – but at what cost? If we use the strategy of quality-by-inspection and add extra checking to detect errors and extra capacity to fix the errors we find then we will incur higher costs. This is the story that these Quality and Cost charts are showing.  To stay in business the extra cost must be passed on to our customers in the price we charge: and we have all been brainwashed from birth to expect to pay more for better quality. But what happens when the rising price hits our customers finanical constraint?  We are no longer able to afford the better quality so we settle for the lower quality but affordable alternative.  What happens then to the company that has invested in quality by inspection? It loses customers which means it loses revenue which is bad for its financial health – and to survive it starts cutting prices, cutting corners, cutting costs, cutting staff and eventually – cutting its own throat! The delusional productivity ratio has hidden the real problem until a sudden and unpredictable drop in revenue and profit provides a reality check – by which time it is too late. Of course if all our competitors are committing the same crime of metric abuse and suffering from the same delusion we may survive a bit longer in the toxic mediocrity swamp – but if a new competitor who is not deluded by ratios and who learns how to provide consistently higher quality at a consistently lower price – then we are in big trouble: our customers leave and our end is swift and without mercy. Competition cannot bring controlled improvement while the Abuse of Ratios remains rife and unchallenged.

Now let us talk about the second Metric Abuse, the Abuse of Targets.

The blue line on the Productivity chart is the Target Productivity. As leaders and managers we have bee brainwashed with the mantra that “you get what you measure” and with this belief we commit the crime of Target Abuse when we set an arbitrary target and use it to decide when to reward and when to punish. We compound our second crime when we connect our arbitrary target to our accounting clock and post periodic praise when we are above target and periodic pain when we are below. We magnify the crime if we have a quality-by-inspection strategy because we create an internal quality-cost tradeoff that generates conflict between our governance goal and our finance goal: the result is a festering and acrimonious stalemate. Our quality-by-inspection strategy paradoxically prevents improvement in productivity and we learn to accept the inevitable oscillation between good and bad and eventually may even convince ourselves that this is the best and the only way.  With this life-limiting-belief deeply embedded in our collective unconsciousness, the more enthusiastically this quality-by-inspection design is enforced the more fear, frustration and failures it generates – until trust is eroded to the point that when the system hits a problem – morale collapses, errors increase, checks are overwhelmed, rework capacity is swamped, quality slumps and costs escalate. Productivity nose-dives and both customers and staff jump into the lifeboats to avoid going down with the ship!  

The use of delusional ratios and arbitrary targets (DRATs) is a dangerous and addictive behaviour and should be made a criminal offense punishable by Law because it is both destructive and unnecessary.

With painful awareness of the problem a path to a solution starts to form:

1. Share the numerator, the denominator and the ratio data as time series charts.
2. Only put requirement specifications on the numerator and denominator charts.
3. Outlaw quality-by-inspection and replace with quality-by-design-and-improvement.  

Metric Abuse is a Crime. DRATs are a dangerous addiction. DRATs kill Motivation. DRATs Kill Organisations.

Charts created using BaseLine

If you feel miserable at work and do not know what to do then then take heart because you could be suffering from a treatable organisational disease called CRAP (cynically resistant arrogant pessimism).

To achieve a healthier work-life then it is useful to understand the root cause of CRAP and the rationale of how to diagnose and treat it.

Organisations have three interdependent dimensions of performance: value, time and money.  All organisations require both the people and the processes to be working in synergy to reliably deliver value-for-money over time.  To create a productive system it is necessary to understand the relationships between  value, money and time. Money is easier because it is tangible and durable; value is harder because it is intangible and transient. This means that the focus of attention is usually on the money – and it is often assumed that if the money is OK then the value must be OK too.  This assumption is incorrect.

Value and money are interdependent but have different “rates of change”  and can operate in different “directions”.  A common example is when a dip in financial performance triggers an urgent “drive” to improve the “bottom line”.  Reactive revenue generation and cost cutting results in a small, quick, and tangible improvement on the money dimension but at the same time sets off a large, slow, and intangible deterioration on the value dimension.  Money, time and  value are interdependent and the inevitable outcome is a later and larger deterioration in the money – as illustrated in the doodle. If only money is measured the deteriorating value is not detected, and by the time the money starts to falter the momentum of the falling value is so great that even heroic efforts to recover are futile. As the money starts to fall the value falls even further and even faster – the lose-lose-lose spiral of organisational failure is now underway.

People who demonstrate in their attitude and behaviour that they are miserable at work provide the cardinal sign of falling system value. A miserable, sceptical and cynical employee poisons the emotional atmosphere for everyone around them. Misery is both defective and infective.  The primary cause of a miserable job is the behaviour exhibited by people in positions of authority – and the more the focus is only on money the more misery their behaviour generates.

Fortunately there is an antidote; a way to break out of the vicious tail spin – measure both value and money, focus on improving value and observe the positive effect on the money.  The critical behaviour is to actively test the emotional temperature and to take action to keep it moving in a positive direction.  “The Three Signs of a Miserable Job” by Patrick Lencioni tells a story of how an experienced executive learns that the three things a successful managerial leader must do to achieve system health are:
1) ensure employees know their unique place, role and value in the whole system;
2) ensure employees can consciously connect their work with a worthwhile system goal; and
3) ensure employees can objectively measure how they are doing.

Miserable jobs are those where the people feel anonymous, where people feel their work is valueless, and where people feel that they get no feedback from their seniors, peers or juniors. And it does not matter if it is the cleaner or the chief executive – everyone needs a role, a goal and to know all their interdependencies.

We do not have to endure a Miserable Job – we all have the power to transform it into Worthwhile Work.

Some fabulous new SPC software, called BaseLine© is now available – it’s designed for organizations and individuals who see the advantages in having people use a standard performance charting tool that’s statistically robust yet straight forward to use even for the uninitiated. As well as being highly accessible, at under £50 it is easily the most inexpensive option now available.

There is even a time-unlimited FREE version.

BaseLine© is obtainable via http://www.valuesystemdesign.com

How might some people be offended by performance charting?

The idea behind BaseLine© is that most every organisation is these days awash with time-series data, usually held in spreadsheet form, yet very little of it is used to diagnose systemic change. Even people who are held accountable for performance are often unaware of the gold that lies beneath their feet – or if they are aware, are for some reason reluctant to make use of it. Because BaseLine© is so accessible – there really is no longer any reason to avoid using SPC, but wait ..

.. observing those who are taking the plunge it’s becoming clearer to me where this reluctance might be coming from. Whilst some of it is due undoubtedly to low organisational expectation, I’m detecting that some of it is also due to low self-perception of capability, and some might even be because BaseLine© somehow confronts the personal value-set of particular managers. Let me refer to these value sets and capabilities as “memes”(1) and allow myself the luxury of speculatively labelling each one – so that I can treat each as a hypothesis that might later be tested – to see if the accumulating evidence either supports or refutes it. So here goes ..

1. The “Accountability-avoidance” meme – Those comfortable and skilled enough to hold a senior position may still however be inhabited by this meme, which can actually apply at any level in an organisational hierarchy. To most people it is an essential underpinning of their self-esteem to be able to feel that they’ve personally made a contribution whilst at work. It’s safer therefore (at least unconsciously) to be able to avoid roles for which any direct or personal performance measurement is attached – and there are plenty of such roles.
2. The “anti-Management” meme – According to this meme there’s something dehumanising about asking anyone to manage a process that delivers an outcome to someone who might appreciate it. Those who embody this value-set may also think that Management sounds altogether too boring when compared to Leadership since not much good happens unless people can feel good about it, and people have to be led to achieve anything meaningful and lasting. If there’s any management to be done it should be done by the followers.
3. The “anti-Control freak” meme – People holding this meme tend to dislike the whole idea of control, unless it’s the empowering of others to be in control – and even this may be considered too dangerous since the power to control anything can so easily be abused.
4. The “anti-Determinism” meme – Inside this meme Albert Einstein is considered as having completely supplanted the Newtonian “predict and control paradigm” as opposed to having merely built upon it. Life is viewed as inherently uncertain, and there’s a preference for believing that little can be reliably predicted, so it’s best to adopt an “act first/ ask questions later” approach. Deepak Chopra fans for example will know that “the past is history, and the future a mystery” and that therefore almost any form of planning is repellent – instead, emergence is the thing most highly valued.
5. The “Numerophobia” meme – so widespread is the tendency to avoid numbers, it may be easier to think of this as a syndrome rather than a meme – indeed, in the extreme it is a medical condition called “dyscalculia.” Whilst few people readily admit to being illiterate, there are many who are relatively happy to announce that they “don’t do numbers” – and some have even learned that it pays to be proud of it. In one recent UK study 11% were designated illiterate, but 40% innumerate.
6. The “iNtuitives rule” meme – People who are inhabited by this meme are those who may well feel comfortable weaving (even spinning) their story without the benefit of data that’s been fully “sensed”. The Myers Briggs Type Indicator – scores around 25% of people as N (iNtuitive), the remaining 75% being Sensors – who prefer to look for and absorb data via their 5 senses, data that to them feels tangibly “real.” On average around 12% people score as having N/T (intuitive thinking) preferences – yet exec teams & boards often score at more than 50%. Is this because they have had to become comfortable feeling disconnected from the customer interface, or because they were always that way inclined and therefore gravitated towards the apex of the hierarchy?
7. The “anti-Science” meme – According to this meme even the fact that I’m labelling these value-sets/ memes at all, will be seen as being antithetical – regardless of whether it might in some way prove to be a useful scientific device for advancing knowledge. People in organisations may behave in a way that’s anti-science in that tasks and projects are typically carried out in a Plan-Do-Review sequence – unaware that Plan-Do-Study-Act represents the scientific method in action, and is an entirely different paradigm.
8. the “protect my group or profession” meme – According to this meme, people are confident that they know what they know – and have spent several years of their life being trained to acquire that knowledge. They less aware of the extent to which this has formed their mental maps and how these in turn direct their opinions. When in doubt, reference is made to the writings and utterances of their personal or professional gurus – and quoted verbatim, frequently out of context. When a new tool arrives, the default position is: if I don’t recognise it, it should be rejected – until one of the gurus authenticates it.

Wow, when I started the list I didn’t think there would be as many as eight.

Individuals and organizations that are already, or can become, comfortable with applying the scientific method in their organisations – and personally – as a system, will see the profundity in a tool like BaseLine©. Others will miss it altogether, and one or more of the memes listed above could be preventing them seeing it. I’ll continue to collect more data, both sensed and intuited, and report on my findings in a future blog.

One source of test data will of course be the comments I solicit from readers of this blog, so having read these labels and descriptions, do you notice any reactive feelings? If so, can you accurately describe what you feel most confronted by? I’d be delighted to hear from you.

(1) Richard Dawkins coined (or adapted) the word “meme” in The Selfish Gene (1976) as a value set, or a postulated unit of cultural ideas, symbols or practices – which can be transmitted from one mind to another through writing, speech, gestures, rituals or other imitable phenomena. It’s sometimes used synonymously with the phrase “world view.” Clare Graves then made the Value meme (vMeme) a core concept in his Spiral Dynamics model – see Beck D.E & Cowan C.C. : “Spiral Dynamics – Mastering Values, Leadership, and Change” – 1996