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March 12, 2009

Less selfish capitalism

Fantastic article from today`s FT. The subject itself can interest anyone. But for the discussions we are having specifically on MBE, towards the end of it the author criticises continuously changing. For some that coulr read as a criticism to the whole notion of continuously improving in order to achieve customer requirements and sustainable success in an ever changing reality. I would not agree.
A few days ago I was having that discussion with a friend that works as a business consultant in Brazil. I was defending the concept of constancy of purpose of Deming and he was going against it. He said we always needed to change. I had to explain here that he was mixing different levels of decision. Of course a company has to always change, because the world changes and if the one does not changes it will simply be left behind. As simple as that. But changing is just a way to allow the bigger objective that should not be changed reachable under circumstances that are always new. For example, if taken that concept described on the article bellow that we should create an economy based on values that are more human that should be a constant vision, considered not only on time of crisis like now, but also on the good times. But to do that we will need to constantly improve, learn and improve how to do it. The purpose is always constant (and the deeper it is, the less changed it should go through. For instance you could say that you major life objective -Being happy?- should never change) or should change very seldom, but the strategy the tactics should constantly change, constantly improve.
It took me quite a while to make him understand my point. It is not easy, and I applied the same thinking to the understanding of this article, specially to the bit on the end.

Now is the time for a less selfish capitalism

By Richard Layard

Published: March 11 2009 20:02 | Last updated: March 11 2009 20:02

What is progress? The Organisation for Economic Co-operation and Development has been asking this question for some time and the current crisis makes it imperative to find an answer. According to the Anglo-Saxon Enlightenment, progress means the reduction of misery and the increase of happiness. It does not mean wealth creation or innovation, which are sometimes useful instruments but never the final goal. So we should stop the worship of money and create a more humane society where the quality of human experience is the criterion. Provided we pay ourselves in line with our productivity, we can choose whatever lifestyle is best for our quality of life.

And what would that involve? The starting point is that, despite massive wealth creation, happiness has not risen since the 1950s in the US or Britain or (over a shorter period) in western Germany. No researcher questions these facts. So accelerated economic growth is not a goal for which we should make large sacrifices. In particular, we should not sacrifice the most important source of happiness, which is the quality of human relationships – at home, at work and in the community. We have sacrificed too many of these in the name of efficiency and productivity growth.

Most of all we have sacrificed our values. In the 1960s, 60 per cent of adults said they believed “most people can be trusted”. Today the figure is 30 per cent, in both Britain and the US. The fall in trustworthy behaviour is clear in the banking sector but can also be seen in family life (more break-ups), in the playground (fewer friends you can trust) and in the workplace (growing competition between colleagues).

Increasingly, we treat private interest as the only motivation on which we can rely and competition between individuals as the way to get the most out of them. This is often counterproductive and does not generally produce a happy workplace since competition for status is a zero-sum game. Instead, we need a society based on positive-sum activities. Humans are a mix of selfishness and altruism but generally feel better working to help each other rather than to do each other down.

Our society has become too individualistic, with too much rivalry and not enough common purpose. We idolise success and status and thus undermine our mutual respect. But countries vary in this regard, and the Scandinavians have managed to combine effective economies with much greater equality and mutual respect. They have the greatest levels of trust (and happiness) of any countries in the world.

To build a society based on trust we have to start in school, if not earlier. Children should learn that the noblest life is the one that produces the least misery and the most happiness in the world. This rule should apply also in business and professional life. People should do work that is useful to society and does not just make paper profits. And all professions – including journalism, advertising and business – should have a clear, professional, ethical code that its members are required to observe. It is not for nothing that doctors form the group most respected in our society – they have a code that is enforced and everyone knows it.

So we need a trend away from excessive individualism and towards greater social responsibility. Is it possible to reverse a cultural trend in this way? It has happened before, in the early 19th century. For the next 150 years there was a growth of social responsibility, followed by a decline in the next 50. So a trend can change and it is often in bad times (such as the 1930s in Scandinavia) that people decide to seek a more co-operative lifestyle.

I have written a book about how to do this and there is room here for three points only. First we should use our schools to promote a better value system – the recent Good Childhoodreport sponsored by the UK Children’s Society was full of ideas about how to do this. Second, adults should reappraise their priorities about what is important. Recent events are likely to encourage this and modern happiness research can help find answers. Third, economists should adopt a more realistic model of what makes humans happy and what makes markets function.

Three ideas taught in business schools have much to answer for. One is the theory of “efficient capital markets”, now clearly discredited. The second is “principal agent” theory, which says the agents will perform best under high-powered financial incentives to align their interests with those of the principal. This has led to excessive performance-related pay, which has often undermined the motive to work well for the sake of doing a good job and introduced unnecessary tension among colleagues. Finally, there is the macho philosophy of “continuous change”, promoted by self-interested consulting companies, which disregards the fundamental human need for stability – in the name of efficiency gains that are often not realised.

We do not want communism – as research shows, the communist countries were the least happy in the world and also inefficient. But we do need a more humane brand of capitalism, based not only on better regulation but on better values.

Values matter and they are affected by our theories. We do not need a society based on Darwinian competition between individuals. Beyond subsistence, the best experience any society can provide is the feeling that other people are on your side. That is the kind of capitalism we want.

Lord Layard is at the London School of Economics Centre for Economic Performance. He has written ‘Happiness’ (2005) and co-authored ‘A Good Childhood’ (2009)


Ch ch ch ch changessss!

The most interesting question I took of from the PIUSS PMA (that tks God, I already sent on Monday) was questioning myself if one is really able to build a planned process to change the culture of an organisation. REading books about it I found lot`s of arguments for (and a few against. Smaller quantities because defending that is not possible is obviously less interesting commercially speaking....)


I particularly think that it is possible. But it will take a LONG time. And will need not only a method, a plan, but a lot of skill and occasionally a quite strong fist. I thing it is almost impossible (if not impossible) to change a whole organisation`s culture (unless, perhaps, if it is a small or recently created organisation) smiling, without beeing quite hard and though from time to time.

But I think is possible and Six Sigma can be a good method to do so, if done properly and with care. 


March 08, 2009

Rewards, good or bad?

Every organisation I have always been part of had rewards of some sort. IF you behaved properly, a reward (and sometimes if you didn`t a punishment). Every chance I had to organise something on my professional life took that into consideration. I created prizes related to process improvement, to Knowledge Management, etc. I must say I remember reading some people against this kind of approach, but never paid attention to it. When working on my OPP and CBE PMA`s a found this book (Punished by Rewards - The problem with gold stars, incentive plans, A`s,praise and other bribes) that defended the opposite idea. He said people did not change because of those bribes. They just tried to cheat the system. Once again is something that relates to Deming, that was also not a fan of it. His argument builds on psychology, and is very well defended and rational. I used it as a criticism and reflection in my OPP, CBE, and PIUSS PMA. That came to my mind because in PIUSS several authors defend it a form of making a new culture stick. Create punishments and rewards for those who behave. Today reading something about KBAM I found the same kind of argument. I must say I think the logic behind the book is perfect. I can not argue against it. On the other hand, perhaps out of habit I still can`t think this is wrong. The only defence I can present, however, that if people are not changed by prizes or punishment at least you use those prizes to communicate, to indicate what is desired. This might raise awareness, might make people think about why this reward/punishment is been applied and if you can clearly communicate the reason....another possible advantage is that by giving recognition to someone who behaved in an specific way you could be just saying a "thank you"to someone who did something that the organisation understands is good and desired by it. And that can be used on a Six Sigma program or in a KM initiative. But I agree that people will not change just because of that, they can see that, reflect on it and perhaps change out of their reflection, but not because of the reward itself.


March 02, 2009

Knowing is more them having

About 1,5 years ago I decided to go overseas to study. I had that dream for a while but for one reason or the other I had not done it. However that moment seem very appropriate.

I started looking for it and found all the information's needed. I liked everything but one thing. It was a very expensive thing to do.  I looked for scholarships and they were available however if I wanted them I would have to wait at least one more year and that could have completed cancelled the possibility of coming due to several personal and professional issues.

The thing is, I had money for that. I`ve been working since I was a teenager and I managed to save money for that. I had just enough with a certain margin of safety (and of course if something REALLY out of control, a special Cause happened, I had some emergency alternatives in place). But was it worth? Would not I be better off keeping it, or using it to help me buy a flat or something else?

The first answer to my problem came from my financial background. I calculated what this degree could bring to me in terms of salary increase and compared it to what the overall amount of money would give me interest-wise in a low risk application (if you prefer, made an economical cost calculation using the cost of opportunity concept).  It made sense to spend it that way.

Second I had a very nice conversation with an uncle I have.  And he reminded me of something I always said but had forgotten. What you know is worth much more then what you have. That is specially true when we are young. Knowledge is the best possible asset. No one will never be able to take it away from you. And in this digital workd even more. That was the killing argument, and perhaps the main reason why I am here in the first place.

Therefore it makes all sense the people and organisations should do their best to manage knowledge, to try to make the best out of it. That`s actually what they are paying for when hiring people, specially expensive ones.



March 01, 2009

Six Sigma

Working on PIUSS PMA I read a lot about 6 sigma. Somebody asked what it was and I was trying to explain. SOmething that comes to my mind that I think it is quite interesting is the idea that a method that started basically as statistical control of processes evolved to became a sort of philosofical way of thinking management. It became something bigger, broader. The concept evolved and could be used to all process in te company.

I have only two strong criticisms to it. First the most common way to address it have little concern for human related issues. It needed a bit more of soft skills in my opinion. Second, I think variation works well for the average and mass production. But human beings are individuals, hard to establish limits, averages for several activities that are basically human. For example, assuming everything is a system, every system has processes that are measurable. But and if this system has someone fantastic, a genius? 

Just thinking.

 


February 25, 2009

Six Sigma and the enviroment

Working on PIUSS, 6 Sigma in my mind..

A couple of weeks ago I read an interview with an government officer defending that the amount of kids per couple should be controlled. The idea is that the world was not able to sustain more people. It is an understandable idea but not a simple explanation for 3 reasons:

-In most developed countries the population stable or even decreasing (Italy, France, etc)

-In several other big countries (developing and developed) the growth is rather small and mainly caused by immigration (Brazil, US, China...)

-The biggest growth is in very specific and usually poor countries (most of Africa, India, etc)

The consumption level of resources per capta is VERY small on most of the high growing countries and is massive on the rich developed countries (specially the US). That combination of factor is helping balance the situation.

I was discussing this matter with an expert about 1,5 years ago. And he told his major concern was not population growth or even increase in consumption of resources per capta but the amount of waste. He gave me an example that I found rather shocking. He said that the most efficient explosion engines only used about 14-18% of the energy potential contained on the fuel. All the rest was wasted on noise, smoke, lack of appropriate technologies, etc...Basically only about 200ml of each litre of fuel we use is really used to move the cars, all the rest is WASTED. He gave several other examples related tp water and paper. It was shocking.

I took 2 lessons out of the combination of the information's above. 1st. reducing waste, using everything more efficiently, recycling is an easier, quicker and more efficient way of helping save the planet. Imagine if we could reach a 6 Sigma kind of level to the usage of resources, being wasting anything an defect? Would we be saving the world?  Reducing variation and increasing efficiency on the process would certainly be a more noble (and in the long term better financially speaking) reason to use Six Sigma like techniques to improve production an processes...

Second lesson learned. Try not to waste. Water is scarce, energy too. Everything has an environmental cost and someday, be sure of that, that price is going to reflect on the actual financial cost of things. Water will be expansive, paper too. And depending how we handle it now things can be only reasonably expensive, not unaffordable...


MBE Education and variation…

Follow-up to Education and variation from Francisco's blog

Just came to my mind, after writing my last entry that the same way of thinking also applies to MBE. For example WMG`s process of moderating marks is just a way of trying to reduce variation in a subjective process. As we know taking variation is good, but in the specific process of moderation is it really good? Some prople might have their marks reduced, by that process. The moderator puting his finger is not a bit of tempering? Sometimes can`t this process be unfair if somebodys note is reduced (it seems that the answer would be know, since the module tutor could insist in the mark even if the moderator considered it too high, but is just a thought)

Just thinking....

 


Education and variation

I had tennis lessons when I was a kid (5-6 years old) and them another 2-3 years when I was about 19-20 years old and I having again now. I still prefer football but I rather enjoy tennis. I found tennis lessons here rather diferent from Brazil.

There are some diferences that are related to socio-economical issues and I will not discuss them. But one is the method. Things here are very technical and formal. Limits and standarts are very clearly adressed, processes and strategies clearly defined, method is very, very structured. In Brazil classes where less formal and structured, more improvisation, less theory and explanations.

I was thinking about that and a story came to my mind. Many years ago I read an interview with Alan Prost. He is a French who was one of the most successful formula 1 drivers ever. The interview was conducted by a Brazilian Magazine, therefore he talked a lot about Brazilian pilots. At that point, 2 of the top 4 pilots in the world were Brazilian (Ayrton Senna and Nelson Piquet). The reporter asked how could a poor country, with no special tradition in motor racing or car industry be so good ate producing pilots. Prost answered by giving an example. He said that if there were 2 pilots, being one Brazilian, racing on the desert and there was a traffic light with the red light on,the non-Brazilian would stop and wait  for the green light while the Brazilian would stop, look and if seeing nothing would go on. Taking away the bad example safety-citizen wise what he said is that Brazilians tend no to ne too attached to rules, to value improvisation and creativity. That fits very well in the stereotype the world has of us and the way people see our football, for instance.

Now what has that to do with the first bit I wrote? Well, in Brazil tennis lessons valued the Brazilian way of seeing things, the improvisation while here they are about a disciplined and structured process. In England they care more about variation, their tennis lessons are more 6 sigma, one could say. I think that style is better to produce regular tennis players, it will certainly fit more people and raise more people to a satisfactory level therefore is more appropriate for the objectives of tennis lessons in the level I intend to play. I would recommend the English Style as a better one just as I would recommend it  to an industry producing millions of products or conducting repetitive processes (what 6 Sigma was designed for). 

But there is a catch. If you talking training or producing something special, something that is different and peculiar (a fantastic player or a very specific and peculiar luxury product) perhaps the not-so-technical-and-structured approach could be better. Could make it easier to identify and customise. That`s arguable I recon, but I think that the fact that Brazil goes well in a sport that does not have that much emphasis on repetition but more in improvisation ike football and does not go that well in Tennis could work as a point (but definitely not as an evidence , scientifically speaking).

Yes...crazy and confusing entry really.




February 18, 2009

Common sense strikes back…

Follow-up to Good sense, organizations and people from Francisco's blog

Working on PIUSS PMAI found a phrase rather interesting "Common Sense is the least common of the senses" (better reference it just in case....(Pande, Neuman & Cavanagh ; 2000) ). It relates to my old post saying that most scientific knowledge I saw in my life in economics, finance, engineering, quality, process and so forth are organised and well presented common sense.

6 Sigma is no different. Common sense all the way. Even though I must say that the way it is presented, the toools, the way priorities are defined do stimulate some thinking that we don`t usually do. I realisedsome colleagues are having trouble perceiving the whole logic of thinking on a process and variation related way, and that what 6 Sigma can help with, to show the importance of understanding that logic and presenting a way to relate it to everyday practises and results. So it is a clever way to stimulate and take results out of common sense.

So if I had to say what is the most important aspect of 6S, the one you should really understand it would be: "Pay attention to processes, look at them carefuly and sistematically and take as much variation out of it as possible".

But when the concepts are understoos, it is common sense ain`t it?

 


February 14, 2009

Process thinking is rather addictive. – Argo`s case

As I said before since I began realising the whole process question I created the habit of always think about the processes around me. Again this happened today.

Went to Argos, they actually have a physical store in Coventry. They have a completely different selling process, where you choose on a catalogue in the store, pay on an ATM kind of thing and go and get your stuff on a balcony. Rather interesting for commoditized products. Could help appreciating the process, understanding where they saved money (Aykut was with me and we spent sometime discussing it) and them eventual problems, points of attention, how could I reproduce it somewhere else.

Very interesting process in which a whole business was created. Very good example of a connection between a process and a strategy.


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