The BaldrigePlus Newsletter
Issue 19, Monday May 22nd, 2000
Announcement
NEW LEADERSHIP NEWSLETTER
Our next issue is the 20th! Time for a review and refocus.
From issue 21 we’ll publish this newsletter every two weeks, and alternate with a paid-subscription newsletter dedicated to Leadership.
Why leadership?
- It’s the topic that generates by far the greatest response from our readers
- It’s THE key to success in the new economy
- And there’s a gap in the market. We’re working on a publication packed-full of information you can use every day - not available anywhere else.
We’ll cover the practice and principles of leadership. The key responsibilities – strategy, innovation and ethics. Leadership for everyone (hey, we’re all leaders, right?). Assessment – of leaders and leadership systems – and continues improvement. Case studies. Heroic and charismatic leaders. New-economy leadership. Political leadership. Resources – book and article reviews, links, networks.
Here’s the deal. We'll offer two free issues and a unique Baldrige-derived assessment tool for everyone who expresses an interest. We’ll issue an invoice after two issues – and only email further copies to paying subscribers.
Check it out free, get the assessment tool, and if the first two issues don’t do it for you, just don’t pay. Simple, risk free.
More details next week.
There’s only one economy
And it’s the internet economy. And if it is, where does that leave old-economy standard-setters like quality/excellence awards? Do they risk becoming irrelevant, or at least out of touch? Are they already? If you’ve been paying attention, you’ll know that here at Baldrigeplus we worry a bit about innovation, and its place in the various award schemes. We wonder whether it’s the ‘missing category eight,’ people at innovation champions like 3M like to suggest.
Maybe – think about this – how Baldrige deals with innovation will tell us whether the year 2001 re-write team ‘gets’ the new economy. And whether Baldrige – and by extension the whole world-wide business excellence awards community – misses the new-economy boat and drifts off into irrelevancy. Or not.
While you’re thinking about that, here’s a new-economy guru’s view of the significance of innovation. In the lead article for Business 2.0’s April feature (Boom or Bust?), European Correspondent for the NY Times (and author of “The New New Thing” and “Liar’s Poker”) Michael Lewis, flags his convictions right up front – “The new economy hasn’t just changed business," he says. "It has fundamentally altered our views of wealth, innovation and how far is up."
One of the key concepts of the new-economy, Lewis says, is that innovation is the source of all wealth. Not wildly original, and astonishing that it took so long to catch on. Or perhaps not – as recently as the mid 80s you could get a graduate degree in economics without thinking much at all about innovation. Economic growth was about the proper level of government spending, or personal savings, and innovation, if considered at all, was something like a supply shock.
The ‘New Growth Theorists’ of the late 80s changed all that, arguing that innovation is not just ‘a’ factor, it’s ‘the’ factor in economic growth – a view that was finally becoming conventional wisdom when the internet struck. “Faith in the importance of innovation is at the bottom of the great, inchoate shift in attitudes towards technology,” according to Lewis.
As a group, big-business people have always had a love-hate relationship with innovation, he says. They know they should love it, because it creates new business, but nothing is more threatening to their immediate interests, which are staying right where they are – on top. Fortune 500 executive’s attributes – modesty, discretion, prudence, caution … GOP membership – are antithetical to the new economy.
But there’s a new ideology emerging. The changes that the internet revolution have wrought are all of a piece:
- celebrating innovation challenges the status quo
- glorifying the entrepreneur denigrates Organisation Man
- freely available capital disempowers the capitalist
- valueing change devalues the long term; and
- placing an absurdly high value on the future (by way of staggeringly high dotcom market caps, for example) means placing an absurdly low value on the past.
The key message is embedded in the stock market and in the minds of the people who engineered the internet boom, Lewis says, [and the ‘bubble’ question is irrelevant]. The message? The future will be so different that the past no longer serves as a point of reference.
So which set of values will predominate in year 2001 award narratives? The unsettling new ideology of the internet and the new economy, or the dark-suited long-run verities of the old? Does it matter? It does if you believe that ‘quality’ is what’s desperately missing in the new economy, and if you believe that it's ‘quality,’ however defined, that will eventually separate the winners from the losers. And it sure does if you’d like the ‘Baldrige’ family to survive!
Incidentally, Michael Lewis has some interesting things to say about the ‘bubble’ question (is it, or is it not? Well, no. And even if it is, it doesn’t matter), as well as the transformation of Gen X (from restless alienation to wealth-obsessed boomer clones), the new respect for entrepreneurship (the new economy has taken the risk out of risk), the democratization and commoditisation of capital (huh?) and a new morality for money. Honestly folks, buying Business 2.0 is the best $5 you’ll ever spend.
John Seddon’s visitor from Japan
We’re going to summarise a 2,000 word article from John Seddon’s May 6th Newsletter. Go to www.lean-service.com for the full Monty.
His story begins with a letter from one Takaji Nishizawa, a Japanese industrial consultant, certified lead auditor and author of several books and many articles on ISO 9000, who has spotted, in Japan, the ISO 9000 problems that John sees in the UK. He thought it was a uniquely ‘Japanese’ problem, was intrigued by Seddon's work in the UK, decided to visit to see what he could learn.
John took Takaji to two automotive suppliers (both QS 9000 registered ), a metal box manufacturer, a label maker, a paint maker and a specialist supplier of measurement equipment.
Four themes emerged from these visits:
(1) Bureaucracy versus simplicity
The label maker (a Vanguard client!) had the best quality manual. Manual and management procedures were integrated. Each part began with a high-level overview, procedures followed a ‘purpose, measures and method’ hierarchy, measures were related to purpose, and ‘method’ was a flow diagram of the process.
Similarly, the metal box manufacturer had integrated its quality manual and management procedures, reducing documentation to a minimum.
But the two automotive suppliers had enormous volumes of paperwork and associated bureaucracy. They both, for example, had corrective action procedures. How many non-conformances, Takaji Nishizawa asked one. The answer – five by customers and 2 internally over the last year.
The man from Japan knew immediately this was not a good system – too few problems. “Not unusual,” says Seddon – to declare a non-conformance is often to risk trouble.
The ISO 9001 registered paint maker also had an enormous number of quality manuals, written to satisfy their assessor. Their work flow was very simple, they mixed and canned paints. The bulk of non-conformances reported were for colour matching. The data appeared to be stable over time – in other words there wouldn't be any improvement untill something was changed. Takaji Nishizawa saw a further probable cause of failure. He asked if this organisation specified the method of application – how the paint should be used by the customer. The answer was no.
(2) Use and misuse of quality tools
Some used quality tools without understanding them. Two had tried Kanban. In the first, the line was not a flow; hence Kanban would not improve anything. In the second, the line was making to stock, so the benefits of Kanban would not be realised.
The approach to error-cause-removal in the automotive manufacturers was bureaucratic. Non-conformances were identified by, for example, SPC alert and corrective action reporting, then later analysis. Takaji Nishizawa was concerned that this approach would lead to loss of knowledge because ‘The truth has gone.’ He maintains that the right way to learn is to attend the non-conformance when and where it happens – this is why workers on a Toyota line can and do stop the line.
In another example, one organisation employed ‘good work’ displays at the work-stations. But they were complex, had ‘much small writing’ and were unlikely to be used. Nishizawa observed ‘These managers are confusing two types of information. Information that is common and should be known by all is to be used for training and should not be needed as visual control. Information that is specific (to a customer's job) is needed for visual control and should be available to the operator. When managers fail to make this distinction confusion arises.’
(3) Design control versus process control
Takaji Nishizawa made a profound observation on the implicit theory of the ISO Standard. Design control and process control are treated separately. In fact, it does not raise the subject of process design at all, leaving process management to be thought of in procedural terms. To quote Nishizawa: ‘Quality is made in the process. [ISO 9000] focuses managers on the control of product or service design and, separately, takes a ‘procedures’ approach to processes – there is insufficient attention to process methods – how quality will be made.’
(4) Leadership
Of the six organisations, three showed genuine and sustainable improvements. But this had little to do with ISO 9000. All three leaders had undergone personal learning experiences. One had travelled with a Japanese sensei (expert) around the organisation's sites in America. One had taken a trip to Japan to study with a sensei. The third was applying a systems approach to ISO 9000 registration, avoiding the usual bureaucracy and sub-optimisation.
But their impact went beyond this. Two took a particularly heretical (and skeptical) approach to ISO 9000, arguing with assessors for ‘what was right for my business … I would not be influenced to do things that did not help,’ one said. The other kept the quality manual deliberately vague, saying ‘I don't want it to be precise, that would give the assessor more things to pick on. If the specifics are there the assessors will focus on them. We [ensured] that ISO 9000 would only be looked at from the point of view of how it might add value to the business, nothing else mattered. We integrated our management procedures within the quality manual, which is only ten pages long, and kept them to a minimum.’
Takaji Nishizawa found common problems in Japan and the UK. He was particularly concerned about the poor quality of auditors. The solution? Managers should lead rather than follow their auditors. To do so it will help greatly if they know about the principles and practice of managing flow – the secret behind the Toyota production system. ‘But of course ISO 9000 says nothing about any of that,’ Seddon says, ‘why on earth do we call it a quality standard?’
Note on internet addresses
Rather than live links, we've included the adddresses to off-site resources in full - cut and past to your browser.