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April 28, 2011

Variation in Decision–Making

Here is a link to an interesting BBC News Magazine article:

I think, by now, we are all quite familiar with the concept of variation, and how you need to get a system into a control before you start thinking about making changes to it (;-), so the material will not be new, and does not need to be explained. I do, however, want to think about the applications to decision-making. It is essential to be aware of natural variation, even with our intuitive System 1 decisions, or representativeness bias can come into play, and cause havoc. It can cause further problems through anchoring if later decisions are built on this.

The article cites the example of the movie boss who was fired after some poor films, only for the ones that came out soon after (which she had started) to do really well. Had her manager understood variation better, he would not have made the terrible decision to throw away a STAR, for pretty much no reason.

I'm glad we had the benefit of PIUSS (and pretty much all of the other modules) when we took RDM. Doing it this way allowed us to take advantage of what we have learned to date to understand the impact some of the heuristics and associated bias can have, and highlights the importance of knowledge in the decision making process. This links even further with the way we approached the KBAM in-module work. Coming back to RDM, I don't think that understanding of variation was particularly relevant to the decisions we actually had to make, especially since there was so little data, but the principle that you really need to understand something before you can do something about it carries over. Our approach to analysing the situation mainly involved TOWS analysis and the BCG Matrix, which may have had a strong impact on the systemic way we framed the three decisions.

November 16, 2010

Getting to grips with Six Sigma

Prior to last week's work, all I knew of Six Sigma was that if you were a consultant brought in to apply it, you were probably making a LOT of money. I'm glad to say I have a much greater appreciation for it now, as a useful process improvement and problem fixing tool. I like the logical, methodological, DMAIC approach (the PMI material has been great in demonstrating it to me, though I find a lot of the voices very annoying!), and wouldn't hesitate to use it in the future if I felt the situation was right.

The assignment regarding Deming's System of Profound Knowledge was really important in understanding this, and I found it quite interesting. It became clear that while Six Sigma has scope for improving an organisation, it has very little designed to help true, groundbreaking innovation occur, in my opinion. It lacks that in its inherent philosophy, as it is largely meant to make existing processes better, ie. bringing them up to levels of expectation, rather than taking them to the next level (of excitement, if we are to use Kano's model of customer satisfaction). Also, it is a very slow process from what I can see (at least a few months), and knowing when to use it, and when to just simply employ an obvious solution would be a very useful skill to have as a consultant. I take the point that you shouldn't try to mess with a system until you understand it and can account for it, but in business, it's often the quickest response to a problem that is rewarded.

The variation session was great at helping to understand this. I've always hated statistics with a passion, so seeing standard deviations used in a practical and meaningful way helped me to create knowledge out of a lot of information I knew, but never had a use for.

Generally, I really enjoyed the work of the past week. There were some longer hours involved than I would have liked (or even had time for, considering that there is a PMA, project, PMI e-learning, PIUSS pre-module assignments, and FACS pre-work to juggle, and I'm sure we will end up doing more than the 'required' 60 hrs of pre-work and module time), but the extended group discussions were often fantastic - we really got into it and had some great ideas I think. I'm certain that the amount we put in will be rewarded next week when we do the module.

All in all, it is clear that Six Sigma is an important, though not comprehensive tool, and it is highly regarded by many. I see its uses clearly, but feel that I know enough to know that it is not enough in itself to drive excellence into an organisation. As Graeme said, one thing Jack Welch (former GE CEO) said that is often overlooked by advocates, is that you must cultivate an organisational learning environment.

"An organization's ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage."

Otherwise, in my opinion, you run the DMAIC cycle once, forget that it is based on PDSA which is about going round and round the cycle, and end up with some short-term improvements that soon fade away. Which is what a lot of organisations do, and of course, if they use it badly, it's not going to work is it?!

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