All entries for Friday 30 November 2007

November 30, 2007

Competence Centers

This is a story told by eFACS Tutor Tim Perry, they once worked with a multi-national company who centralised everything into competence centres. The company had its accounting & finance department in the States the corporate global headquarter, procurement in Germany the region headquarter, and its operation is in U.K. The result, it was very difficult to tell the procurement and finance that they need better incoming raw materials.

By building up global competence centres in effect to some extend are building up "barriers between staff areas", which encouraged in this case "awarding business on the basis of price tag" and "management by numbers". When was the last time you hear your hardware engineer complaining that the software came from his Indian colleagues did not exactly work as expected and the managers just simply blame the hardware engineer's inability to work across different cultures?

BTW, "Management often complicate the work of the people in design by making last-minute changes in style and engineering, after the plans are submitted production is ready, leaving to the design and production engineers only a few weeks to do a year's work." Any wonders for project managers why projects are so often late by months or even years? When was the last time that the top management wanted a more stylish cabinet or body?

Effective Leadership

Paul told a story about an entrepreneur who came to Thailand with bare hands and created a multi-million business. When he was asked for his secret of success in an interview, he replied I employ people who are better than me.

Try to google this fellow, but was not able to find him. (Paul did not remember his name either) 

However, once upon a time, an emperor in Chinese history said very similar things. It was Emperor Kao Tsu (Gaozu),  his name is Liu Pang (Liu Bang), and he is the founding emperor of Han dynasty. He is one of the few dynasty founders who emerged from the peasant class as well.

After the uprising against Ch'in (Qin) empire, the prominent general Hsiang Yü (Xiang Yu) divided China into 19 principalities where Liu Pang is awarded Han. Before long, Liu Pang launched his war against Hsiang Yü, and eventually defeated him in 5 years.

When he commented why he was successful and Hsiang Yü was not, he said:

The most important reason is that I know how to use people and Hsiang Yü did not. As to be able to set out a strategy in a tent but determine the success or failure of the events a thousand miles away, I am not as good as Chang Liang (Zhang Liang). As to govern the land, conciliate the people, and supply the army so that it lacked neither food nor supplies, I am not as good as Hsiao Ho (Xiao He). As to train large forces and lead them but always being successful whether battle or siege, I am not as good as Han Hsin (Han Xin). These three people are heroes among men, but I know how to use them, so I was able to conquer the lands. Hsiang Yü only had one great adviser, Fan Tseng (Fan Zeng), but was unable to use him properly, and so was he defeated by me.

It is interest to note some people would interpret the art of delegation. Some see it as transfer of authority but not responsibility, others see both. The latter view is perhaps adopted by many managers finding their escape goats, as they are "the supervisor knows nothing about the job".

Some thoughts on Deming's 14 points

In "Adopt the new philosophy", Deming gave 2 examples both in Japan to demonstrate "the economy of a single plan".

Both of these examples are regarding the punctuality of train services in Japan.

Even though I have no doubt that failure raises cost, and as he also pointed out "Excessive medical costs. Excessive costs of liability" are 2 of the deadly diseases. (which are still troubles for the automotive giants in the States)

I just wonder if these 2 examples would be appropriate and easily accepted by his targeted audience, as some considers punctuality as a characteristic of the Japanese people. Interestingly, lots of managers call what they fail to change as culture. Patrick Schmidt used a metaphor, "it's what water is to a fish. The fish takes water for granted. Take it out of its environment, however, and the fish suddenly realises it needs water to survive." I think most of people would be happier to live without delays and mistakes.


In  "Adopt and institute leadership", Deming suggested "Leaders must know the work that they supervise. ...In most organisations, this idea is only an idle dream, as the supervisor knows nothing about the job." What do they know or what should they know? According to many top management, leaders must know how to write sophisticated report, fancy presentations, and plot nice charts. As pointed out by Peter Drucker " turns out that whole layers of management neither make decisions nor lead. Instead, their main, if not their only, function is to serve as 'relays' -- human boosters for the faint, unfocused signals that pass for communication...".

Deming also stated "There was a time, years ago, ...He (the foreman) knew the job. Today, 19 foremen out of 20  were never on the job that they supervise." I wonder if these would be interpreted as promoting the best/oldest in line by some people. I think it is important to note that this must coincide another point "Encourage education and self-improvement for everyone" of his. "Management must go through new learning", as a supervision or managerial role may requires additional or totally different set of skills. It is even more important to note, it is what s/he actually know about the business matters. 40 years of experience might be 40 times of the same experience. 

Sicko & Deming

Watched the documentary Sicko directed by Michael Moore lately. When I finished the film, there is a name that is echoing in my head, W. Edwards Deming.

When I read his books, I always thought that he had some sort of agenda, context or audience. I think perhaps that context is the management adopted by American industries, government and education in particular.

Some interesting scenes in the film:

I think this happened when Bush promoting partially privatised social security system in Omaha, Nebraska. (the clip shown in Sicko is shorter than the excerpt below)

THE PRESIDENT: Good. Okay, Mary, tell us about yourself.
MS. MORNIN: Okay, I'm a divorced, single mother with three grown, adult children. I have one child, Robbie, who is mentally challenged, and I have two daughters.
THE PRESIDENT: You and I are baby boomers.
MS. MORNIN: Yes, and I am concerned about -- that the system stays the same for me.
MS. MORNIN: But I do want to see change and reform for my children because I realize that we will be in trouble down the road.
THE PRESIDENT: Yes, but nevertheless, there's a certain comfort to know that the promises made will be kept by the government.
THE PRESIDENT: And so thank you for asking that. You don't have to worry.
MS. MORNIN: That's good, because I work three jobs and I feel like I contribute.
THE PRESIDENT: You work three jobs?
MS. MORNIN: Three jobs, yes.
THE PRESIDENT: Uniquely American, isn't it? I mean, that is fantastic that you're doing that. (Applause.) Get any sleep? (Laughter.)
MS. MORNIN: Not much. Not much.

When Bush remarked "Uniquely American", it reminded me what Deming said in Principles for Transformation, Out of the Crisis, "They (people in management) shrug off problems of people with crab walk...".  Ms. Mornin is still taking the pride of her workmanship despite by being a single mother and working three jobs, however that she is very concerned that other than her workmanship will be robbed by the end of her work.


There is also a short interview with Tony Benn, the former MP, Secretary of State for Technology, Industry, and Energy, a prominent figure on the left for the labour party.

MR. BENN: Keeping people hopeless and pessimistic - see I think there are two ways in which people are controlled - first of all frighten people and secondly demoralise them.
MR. BENN: An educated, healthy and confident nation is harder to govern.

I always wondered why "Some managers say that a certain amount of fear is necessary to get the work done" as stated by Deming. The logic is perhaps the following, by fearing people, so they can be controlled, capable of controlling means getting work done to many managers. However, I guess when you look back in history, and you can only draw one conclusion, "their accomplishment is negative." (the list would be endless)


Another interview with Dr. Linda Penno, who was a medical reviewer of Humana, a Fortune 500 company, one of the largest Health Maintenance Organisations in the States. 

DR. PEENO: I was told when I started that I had to keep a 10% denial. Then they were giving us reports weekly that would have all the cases we reviewed, the percent approved and the percent denied. And our actual percentage denial rate. Then there would be another report that compared me to all the other reviewers. The doctor with the highest percent of denials was gonna get a bonus.
DR. PEENO: That was how they set it up. Any payment for a claim is referred to as a medical loss. That's the terminology the industry uses. I mean, when you don't spend money on somebody, you deny their care, or you make a decision that brings money in and you don't have to spend it, it's a savings to the company.

That must be an typical example of what Deming called "Management by Numbers" . He also remarked "Internal goals set in the management of a company, without a method, are a burlesque. an attempt to manage without knowledge of what to do..." Isn't that just what happened there?

I also wonder how did Humana made its way to Fortune's Top 5 Most Admired Healthcare Companies in the United States 2007. I could only presume it is the bonus that they handed over to their medical reviewer for the savings they made for the company that eventually elevated their ratings.

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