iSixSigma

WWDD?

Perhaps you all arrived at this conclusion way ahead of me, but I’m starting to worry more and more about the way we, as continuous improvement professionals, are spending our time.

It’s becoming increasingly clear that the world in general, and the economy in particular, has gone off meds. Yes, I know, this isn’t news at this point. But lest you think I’m the last one to get the message, seek out the open letter that John Stumpf, The CEO of Wells Fargo, recently placed in the New York Times and elsewhere. He was explaining his view on “the value of team member recognition”…which apparently boils down to paid travel to fun places in his mind. Clearly there’s at least one other person slower on the uptake than me.

The press has been all over this letter, including this piece by Maureen Dowd. I don’t have anything to say about it that hasn’t already been said by smarter people. But it does highlight that there is a true shift going on out there. What used to be reasonable, even commendable, has become detestable.

Deming exhorts me to create constancy of purpose, and Wheeler explains to me why reacting to random variation is a bad thing. I feel I have both and intuitive and statistical understanding of “special cause”, and I try to apply that understanding to the work in front of me. Usually that means resisting the tendency to chase special causes in favor of common cause work, and for a long time I have been confident that was the right thing to do.

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But now? A lot of things are changing. Those changes feel drastic. Is it time to react in a special way? Or is this just fluctuation of the larger system? Do we keep running our Six Sigma programs, Lean initiatives, and Quality Management systems and wait it out? Or has the time come to move on to changes and initiatives that are more radical and sweeping? More special? Deming does advocate constancy of purpose, but in the next breath he points out the need to adopt a new philosophy for a new economic age. Which advice applies now? What would Deming do?

Let me offer a few more things to think on to frame this question. Continuous improvement programs usually rely on projects as units of work. Using various toolsets, each project is able to return more value to the organization than they consume in money and resources. Group a bunch of these projects together, add up the saving, and you have a program.

Successful programs might generate 5% productivity each year. In other words, if we do things right, we might produce 105% of what we produced last year for the same amount of money. Or maybe we produce the same amount for 95% of the cost. You get the idea. For the past several years, maintaining that sort of incremental improvement in consecutive years was a great result.

But now? Your sales are down 80%. Your raw material cost are up 150%. You can’t spend $100,000 even for a guaranteed return of $125,000 because credit is frozen. Double digit percentage layoffs abound. In this environment, that ongoing 5% productivity that was great a few years ago is less than a rounding error compared to the huge swings that are happening largely outside our control.

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Take Wiremold as a cautionary example. If you are reading this blog, there’s a good chance you already know something about this company from Womak and Jones’ book “Lean Thinking.”

Great company, hugely strong in Lean, right? Well, read this. Sure, there were clearly other factors involved, and maybe their commitment to Lean isn’t as strong as back in the day. But anyway you slice it, this is a titan in the continuous improvement world staggering from a serious blow. Lean can’t help if there is no demand. You can’t save your way to top line growth. It doesn’t matter how efficient you are if no one has money to buy what you are selling.

I think we at least need to ponder whether anything that we are doing matters at this point. Whether we are maybe even part of the problem. It’s easy to spank Wall Street CEOs as they assume the position in front of Congress, but are we just as guilty of failing to confront a new reality?

Comments 10

  1. Andrew Downard

    Hi James,

    But the question still remains: at a tactical level, what would it mean to seize on this opportunity. What should we actually be doing? Survival is certainly a worthy and constant purpose, but deciding that doesn’t help us plan out our time on Monday.

    (It’s admittedly a bit disingenuous of me to take what Deming wrote 90 years ago and suggest a lack of clarity with respect to conditions today. But it sets up some interesting thoughts.)

    Andrew.

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  2. Mike86

    Andrew,

    The point isn’t so much about dealership inventory (WIP) but about Pull. Once established, the dealer inventory could stay constant and Pull would work even if sales tank. It woudn’t be fun, the factory would still come to a halt, but there wouldn’t be a huge inventory build. However, take a look at the car entry points in CA and the inventory building up as the units come off the boats. Those cars weren’t built to order, they were built to forecast.

    As to Deming, it’s always been first drive out fear. Eliminate variability with inputs. Fix the policies that cause waste and not the people that labor under them. Reduce cost and build quality into the product. When your price and/or quality beat everyone else, and your work force is beind you, you’ll get sales.

    However, I think our current problems are best laid out by a different author, Dr. Peter.

    Mike86

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  3. Andrew Downard

    Hi again Mike86,

    I take your point on Toyota. I wasn’t disagreeing with what you said. I just wonder whether what’s happening (assuming it is actually happening) is the way their system is meant to function in circumstances like this, or whether it is a breakdown. My question is really about intention. I was trying to make the point that Toyota has historically not been afraid to carry inventory where needed to make thier system work. Maybe this is just another example of them doing that. Or maybe it isn’t. I don’t know.

    Senge or Deming – I still feel like we’re defaulting to recommending common cause work. Is that what current circumstances demand? Again, I don’t know.

    Andrew.

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  4. Dragan Bosnjak

    Why don’t you just read the article back at Evolving Excellence regarding Wiremold…
    http://www.evolvingexcellence.com/blog/2009/02/end-game-at-wiremold.html
    It explains the whys of their breakdown…

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  5. Mike86

    While Peter Senge has edited an excellent series of books that I highly recommend, the author I was indicating is Dr Raymond Peter who gave us the "Peter Principle" series. Coupled with Ayn Rand’s "Atlas Shrugged" and you’ve got the current situation pretty well outlined.

    Mike86

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  6. Andrew Downard

    Mike86,

    My bad. I guessed wrong :).

    I’m awarding you 14 points for the Atlas Shrugged reference. Where have you gone, Dagny Taggart?

    I toyed with writing an entry called WWJGD, but eventually decided it was a little bit off topic. And besides, that question was answered in the book.

    Andrew.

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  7. Andrew Downard

    Dragan,

    Thanks very much. I was rather hoping someone might straighten me out on the Wiremold story. The link you provided does just that.

    Even so, I still think there is a point worth pondering here. If we accept that Wiremold did everything right with respect to Lean and enjoyed great success, how could the backslide happen so fast? It says something about Lean if, even when fully and intelligently embraced, it can unravel that quickly.

    Culture change is very hard and typically slow. But it looks from the outside like when a few key folks left, a facile, fast, and wide-ranging change occurred at Wiremold. So I have to ask, was the recent change really a culture change at all? Or was it something else…the dismantling of a program that was only that – a really well-executed program. And if it can happen that easily, should we in the field be concentrating our efforts on more fundamental improvements to the business that can’t be easily undone when the whims of leadership change?

    I have no idea what the truth is. I’m just asking the question.

    Thanks again, Dragan. I appreciate you filling in some of the story on Wiremold.

    Andrew.

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  8. Mike86

    Even the vaunted Toyoda system lost control of inventory and Takt time in the last six months. Obviously, Pull got lost someplace in the production chain and somebody starting building new factories to support forecasts instead of improving efficiency to match demand.

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  9. JConsidine

    As much as I believe the teachings of Deming, I don’t believe that he ever ran an enterprise himself. Your question is a good one – what would he do?

    I could imagine one of his lectures, in which he would variously admonish the missteps of private enterprise and government alike. But what specific prescriptions would he have?

    If the current crises plaguing our economy aren’t enough to create the burning platform and bring about constancy of purpose (i.e. survival) I don’t know what will.

    Meanwhile, targets and quotas abound. Fear is more prevalent than ever. The only purpose that seems to have any constancy is executives securing their bonuses and exit packages. Lowest cost providers, and widely dispersed supplier bases are the norm. Long-term planning consists of looking at the next 3-12 months.

    Doom and gloom aside, I think the firms that get smart and see the crisis as an opportunity to be seized upon, vs. a storm to be weathered will thrive.

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  10. Andrew Downard

    Hi Mike86,

    I’ve seen some what you decribe about Toyota reported in the media as well, though nothing definitive.

    In Toyota’s defence, they have never claimed to have a low inventory at dealerships. I’ve seen the number reported at $3B. Some would say that’s one reason they can be so lean everywhere else, because they do build that buffer at the end. I don’t know enough about the situation to evaluate whether they truly have "lost control of inventory, or whether their buffer is simply doing exactly what a buffer should do – changing size to acount for short term variation. I must admit I’m inclided to give them the benefit of the doubt.

    Andrew.

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