July 22, 2013
By sethgodin.typepad.com via Seth’s Blog Article
Measuring without measuring
“Find a goal, make it a number and measure it until it gets better. In most organizations, the thing you measure is the thing that will improve.
Colleges decided that the SAT were a useful shortcut, a way to measure future performance in college. And nervous parents and competitive kids everywhere embraced the metric, and stick with it, even after seeing (again and again) that all the SAT measures is how well you do on the SAT. …
It costs a credit card company (and especially their merchants) a lot of money when fraudulent charges are made, because they often have to eat the cost. So this department of thousands of people works to make the number of fraudulent charges go down at the same time they keep expenses low. Which sounds great until you realize that the easiest way to do this is to flag false positives, annoy honest customers and provide little or no fallback when a mistake is made.
Simple example: I regularly get an automated phone call from the bank with an urgent warning. But even when I answer the phone, the system doesn’t let me ring through to an operator. Instead, I have to write every detail down, then call, wait on hold, prove it’s me, type in all the information, and THEN explain to them that in fact, the charge was mine.
And this department has no incentive to fix this interaction, because ‘annoying’ is not a metric that the bosses have decided to measure. Someone is busy watching one number, but it’s the wrong one. …
Measurement is fabulous. Unless you’re busy measuring what’s easy to measure as opposed to what’s important.”
May 7, 2012
By Joe McKendrick Article
“A new report in The Economist calls the increasing digitization seen in manufacturing with technologies such as 3D printing the dawn of the “Third Industrial Revolution.” One of the most pronounced changes now being seen is a shift away from moving production to regions with low labor costs back to regions where markets reside. “Labor costs are growing less and less important,” The Economist notes: “a $499 first-generation iPad included only about $33 of manufacturing labor, of which the final assembly in China accounted for just $8.”
In fact, the shift to localized production has already been underway — in a new survey of 106 executives at large US-based manufacturing companies, Boston Consulting Group (BCG) finds more than a third, 37 percent, plan to bring back production to the United States from China or are considering it.
… an important factor, is the rise of automation and digitization of production processes within US companies, thanks to information technology and lean methodologies. Emerging technologies, particularly 3D printing, also makes production at the source viable and cost-effective, and it’s likely that many companies and innovators will be embracing “desktop manufacturing” as a way to quickly and smartly assemble and mass produce their goods.
… 3D printing will change “the geography of supply chains,” since 3D printing can take place anytime, anywhere. Spare parts will no longer have to be ordered from some distant locale, they can be made on the spot.”
April 9, 2012
By JP Mangalindan Article
“If such a thing as corporate DNA exists, it has animated the rise of the last decade’s most successful technology companies. Google had a relentless focus on data, Apple a Zen-like obsession with simplicity, and Facebook a world of social connections to mine. Amazon has relied on an altogether more prosaic trait: thriftiness. …
For Amazon, savings are more than a competitive matter. Indeed, the company holds “frugality” up as one of 14 leadership principles. (It “breeds resourcefulness, self-sufficiency and invention,” the company says on its corporate site.) That goes back to 1994, when CEO Jeff Bezos jump-started the e-commerce company and jury-rigged a desk out of a door. “Door desks” became a popular staple within the company years after it went public, and remained “the quintessential example” of Amazon’s frugality, ex-employee Greg Linden explained in 2006. The company still hands out the “Door Desk Award,” a title given internally to select employees who have a “well-built idea” that creates a significant savings for the company and enables lower prices for customers.
That same sense of frugality bleeds into other areas of corporate culture as well. In 2009, Bezos revealed at the company’s annual shareholders meeting that all the light bulbs were taken out of cafeteria vending machines. “Every vending machine has light bulbs in it to make the advertisement more attractive,” Bezos explained. “So they went around at all of our fulfillment centers and took all the light bulbs out.” While Amazon estimated then the measure saved just tens of thousands a year on electricity, it speaks to the way the $48 billion company thinks.”
September 5, 2011
BY Greg Lindsay Article
Only 3% Of What You Buy Is Made In China, But It’s The Most Important 3%
“When we outsourced manufacturing to China and Japan and Taiwan, we may have lost something far more important than low-wage jobs. We may have lost the ability to innovate and grow. …
Just ask Apple’s lagging competitors in the tablet race. Not one designs its own products in-house, having long-ago outsourced even that task to Taiwanese OEMs. The reason Apple has a media, retail, and service industry empire and they don’t is because it could design an MP3 player, smartphone, and tablet when it needed to–and they couldn’t.
But Apple manufactures nothing of its own, of course, having outsourced most of those duties to Foxconn, another Taiwanese company. Given its separation from its production process, Apple may soon–like its table competitors–lose the ability to design innovative products, while Foxconn gains. This is how Foxconn–which recently announced it would add a million robots to its assembly lines to short-circuit further wage increases–was able to release a $100 knock-off of the iPad, the “iWonder,” a month before its release. (And how China’s counterfeit bandits pump out 250 million cell phones each year.)
… we gave our industrial commons to China (and Japan, Taiwan, and South Korea) in the course of outsourcing the dull grind of manufacturing. As a result, American companies had simply lost the ability to innovate in field after field, ranging from glass for LCDs and CFLs to advanced ceramics and composites to lithium-ion batteries (one reason why GM chose LG Chem’s for the Chevy Volt).”
August 22, 2011
By Al Norval Article
“Allan Mulally, Ford CEO, was talking about his experience at one of his first management meetings with the Executive Leadership team at Ford after he joined the company. Allan had enjoyed a successful career at Boeing and had recently joined Ford as CEO. Quoting Allan from the USA Today article,
“In one of the Thursday management meetings, where managers are supposed to show color-coded charts, red for serious problems, yellow for lesser issues, green for all OK, “all the charts were green and I know — we’re going to lose $17 billion. I stopped the meeting and I said, ‘Is there anything that isn’t going well? We’re losing $17 billion.’”
Imagine that, Ford was losing $17 Billion and not one Executive raised a problem – everything was OK in my area – it must be the other guys. The culture at Ford at the time was one where you didn’t surface problems. The underlying Mental Model was problems are to be hidden in closets or swept up under the carpet. Don’t admit you had problems. Mulally realized that it was perfectly natural for organizations to have problems and that the only way to get better was to surface the problems and engage people to work on resolving them.
He went on to say “The next week here comes Mark (Fields, now president of Ford’s North and South America operations) and his charts are all red. Everybody else’s were green. I started to clap, and I said ‘That’s great.’
As a Leader, Mulally was exhibiting the Mental Model of “Problems are Gold”. It’s OK to surface problems – everyone has them. He understood the way to improvement was to surface problems and get to root cause. Only then could countermeasures be put in place which strengthened their systems so the problems didn’t surface again and again.”