Posted on February 2, 2016March 19, 2018 by Mike Clayton

Jack Welch: Supreme Manager

Fortune Magazine named him the greatest manager of the Twentieth Century. He took a well-managed and moderately successful corporation and grew it for 100 successive quarters, transforming it in the process. And now he spends his time teaching younger managers to do the same.

Short Biography

John Francis Welch Jr was born in 1935 and grew up in Massachusetts. He gained a BSC in Chemistry from the University of Massachusetts in 1957 and went on to post-graduate study at the University of Illinois, where he earned an MSc and then a PhD in Chemical Engineering. From there, he joined General Electric, in 1960.

After concerns about the bureaucracy in his first year, a manager persuaded him to stay and from then, his rise through the organisation was steady and fast. He was their youngest General Manager ever, in 1968 and became a divisional vice president in 1972. In 1979, he was a Vice Chairman and Executive Officer, and a year later was named as the next Chairman and CEO of General Electric. He took the post in the autumn of 1981. He set his sights on creating the world’s most valuable company.

He spent the next twenty years growing GE spectacularly, in two phases that we can crudely characterise as ripping down the old (1980s) and building the new (1990s). As soon as he took over, he saw that changes in world business and the then emergent growth of Japanese business would mean that the well-managed but moderate-performing GE would flounder unless he could successfully change it, to compete.

His changes were a great success, growing share price from $4 in 1981 to $133 in 1999, with profits rising from $1.6 billion to $10.7 billion when he left the company in 2001. His retirement has seen the publication of three hugely successful books (co-written with his third wife, journalist Suzy Welch) and the creation of his own business school, the Jack Welch Management Institute, which teaches MBA programmes under the aegis of the private Strayer University.

Welch’s books are:

Jack: Straight from the Gut (2003) – his biography, co-written with John Byrne. Reportedly earned him a $7million advance.
Winning (2007) – his perspective on how he succeeded at GE – along with its companion volume…
Winning: The Answers (2007) – both co-written with Suzy Welch
The Real-Life MBA (2015) – a guide to management and business inspired by his teaching – also co-written with Suzy Welch

Ripping Down the Old – How Welch Disrupted GE in the 1980s

Welch started with a big investment in GE’s corporate management training facility, Crotonville in New York State.
He shifted the focus of GE’s business towards services, creating around 6,000 new businesses during his tenure
He determined to deal with unprofitable businesses, famously saying that if a business was not rated at number 1 or 2 globally, it would be fixed, closed, or sold. This is a pretty rigorous application of the strategy implied by the BCG Matrix.
He flattened the management structures and devolved power down to business units, creating far more decision-making autonomy for general managers.
His closures and simplifying activities resulted in a massive ‘downsizing’ of the business by nearly 200,000 staff, saving the business $6 billion and earning him the epithet of ‘Neutron Jack’ (after the Neutron Bomb that kills people while leaving infrastructure standing).

Building the New – How Welch Re-built GE in the 1990s

Having torn down what Welch perceived as not working, in the 1990s, he turned to creating a set of sustainable practices.

Managers were evaluated against the ‘Welch Matrix’ of values and new managerial appointments and deployments took up a full month of his time every year. He articulated his 4 Es of ‘energy, energisers, edge, and execution’, and placed adherence to values above achievement of figures.
He asked experts at Crotonville to develop a mechanism to hold middle managers at all levels accountable and in 1988 launched the ‘Work Out’ process of town hall meetings where managers had to give answers and make decisions, and created opportunities for large group brainstorming. This process was widely emulated by other businesses.
He learned how Walmart – then as now, hugely successful – stayed at the top of its game by gathering information constantly about what promotional activities are working and failing (for their competitors as well as for themselves) and then rapidly making changes. He adapted what he learned into GE’s QMI process of ‘Quick Market Intelligence’. This opened up huge commercial opportunities.
To encourage innovation, he recognised the need for excellent communication up and down the organisation, and across its businesses and divisions. His ‘Boundaryless Organisation’ was, perhaps, one of the biggest drivers of GE’s success.
In 1997, Welch initiated rigorous quality management, mandating Toyota’s ‘Six Sigma’ process throughout the business, expecting huge numbers of managers to be trained and gain their ‘belts’.
Finally (for this quick summary), Welch spotted the coming of the web as a primary means of doing business. Throughout the mid to late 90s, GE businesses were adjusting and developing their practices in a piecemeal fashion. In 1999 Welch launched his ‘destroyyourbusiness.com’ initiative to compel every part of GE to reinvent itself.

The upshot of all of this was not just spectacular growth, which other great CEOs have achieved. Welch was able to create a lasting change that persisted under the next CEO.

Pithy Soundbites

Welch is well known for coining pithy soundbites. Here are a few favourites.

‘Change before you have to’
‘Lead rather than manage’
‘Control your destiny or someone else will’ (also the title of a 1995 book about how Welch was making his changes).
GE is ‘the largest petri dish of business innovation in the world’
‘For a large organisation to be effective, it must be simple’

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Posted on November 25, 2014March 19, 2018 by Mike Clayton

Joseph Juran: Quality Management

Joseph Juran is one of the leading thinkers on the route establishing a culture of quality throughout much of Japanese and then western business. He asserted that quality was nothing new or clever. Rather, it is elemental and elementary. That said, he watched as, for 25 years, his adopted homeland of the United States ignored the quality imperative. Then, in his late seventies, he lived to see American businesses wake up to quality. In his eighties and nineties, he was active and, indeed, energetic in consulting and advocating for quality.

Brief Biography

Joseph Juran began his long life in 1904, in Romania. His family emigrated to the United States, and from 1912, he grew up in Minnesota. He gained his first degree in Electrical Engineering at the University of Minnesota (he later gained a Doctorate in Law at Loyola University) and went straight to working for Western Electric at its Chicago Hawthorn Plant (where Elton Mayo later conducted his famous studies).

In 1928, he wrote his first pamphlet on statistical approaches to manufacturing quality and rose up through the business. Along the way, he ‘invented’ the Pareto Principle (of which more later), but by 1945, he was ready for something else.

In 1945, he joined the faculty of New York University, to allow him time for lecturing, consulting and writing. In 1951, he published his first substantial book, the Quality Control Handbook. This is still in print, much updated, enlarged and revised, in its sixth edition, under the title Juran’s Quality Handbook: The Complete Guide to Performance Excellence. He was becoming well known, although initially, not so much in the US as in Japan. In 1954, he was invited to Japan for a series of lectures, and Japanese companies eagerly took up his ideas on how to increase their manufacturing quality.

In the US, the concept of quality was largely ignored. But in 1979, he founded the Juran Institute in the hope of increasing awareness of and engagement with his ideas. It was in the 1980s that quality started to rise up the agenda of US companies, and he became, in his 80s, a much in demand speaker and consultant. In 1988, he wrote the book that most marks his contribution, Planning for Quality – now out of print. The ideas, however, are all incorporated into later editions of other books.

Juran remained active, undertaking consultancy until the final years of his life. He died in 2008, survived, until the end of the year, by his wife of 81 years, Sadie, who was also born in 1904.

Juran and the Pareto Principle

Juran noticed early on that not all defects were equal. He found that some causes resulted in many defects and others in a few. A small number of causes accounted for a vast number of the defects. This, he recognised, was the same pattern as that which Italian economist Vilfredo Pareto found when looking at the distribution of wealth among Italian citizens. Juran recognised this as a general principle in the way some effects were distributed, and named it the Pareto Principle. It also became known as the 80/20 rule, because Juran found that around 80 per cent of defects were cause by 20 per cent of the underlying problems.

Juran and Deming

The other huge name in quality management was a contemporary of Juran’s, W Edwards Deming. However, where Deming put huge faith in the value of statistics, Juran saw another equally important effect, which his writings are at pains to stress. Possibly influenced by the work of Elton May at the Hawthorn plant, Juran placed huge emphasis on the human aspects of quality management. In so doing, he was an early exponent of employee empowerment.

Juran identified what has become known as his Quality Trilogy:

Quality Planning
Quality Management (or Control)
Quality Implementation (or Improvement)

From these, he identified a nine-step roadmap to achieve the ideal of quality.

Quality Planning

1 Identify your customers
2 Determine their needs
3 Translate their needs into your own language

Quality Management

4 Develop a product that meets their needs
5 Optimise the product to your own needs too
6 Develop a process that can create the product

Quality Implementation

7 Optimise the process
8 Prove the process works under operational conditions
9 Operationalise the process

Company-Wide Quality Management

Perhaps Juran’s biggest contribution was to see quality as a cultural, rather than operational imperative. He argued that senior managers must not just be involved in, but must actively lead the quality processes. They must not delegate them: the impetus must come from the top and accountability and responsibility must remain there. However, he also saw empowerment of workers at all levels as a key to making quality work successfully.

You Might Also Like…

our articles on the leading modern quality methodology, Six Sigma:

and also The Efficiency of Order: The 5S Methodology.

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Posted on May 22, 2012March 19, 2018 by Mike Clayton

The Efficiency of Order: The 5S Methodology

I think anyone who knows me will tell you I am a pretty orderly person. My wife may even go further. The first thing I did when I moved into my first house was make a shadow board for frequently used household tools, and then mounted it on the under-stair cupboard door. It’s now on a cupboard door in the utility room of our home.

Some time ago, I wrote, in another place, about the Japanese methodology of 5S. I then pretty much forgot about it until, last week, it returned to my consciousness. I was working with a team of people in a big high tech manufacturing business, and someone in the room used the term. I realised it was time to refresh my memory… and yours too, while I am at it.

Another Improvement Technique

Just like Six Sigma (which we covered extensively in March), 5S is an improvement methodology but this one really is Japanese and it trades obscuring jargon and complexity for gratifying simplicity.

Three Six Sigma Articles

Belt up and Reduce Errors

The DMAIC Solution Process

Six Tools from Six Sigma

It gets its name from the English transliterations of the Japanese names for the five stages: seiri, seiton, seiso, seiketsu, and shitsuke.

Through the marvels of the breadth of the English language, however, it is possible to translate all five (near enough) into English words that still begin with S. I wonder how many languages are rich enough to allow that…

1: Seiri – or Sorting
My shadow board would be no good in optimising a manufacturing process. It contains everything I might need for a wide range of scenarios. Step 1 involves reducing that to only things I will need for the scenarios that my workspace is designed for.

2: Seiton – or Set in order
A place for everything and everything in its place. My shadow board does at least allow easy access so I know exactly where to find any tool I need – and where to replace it when I am done.

3: Seiso – or Shine-up
Keep your work space tidy, neat, clean. An old habit of the Royal Navy, I believe from reading the Patrick O’Brian novels, is a fastidious (nay obsessive) concern to scrub and polish.

4: Seiketsu – or Standardise
Same task: same tool set: same layout. Everything uniform and repeated to create total inter-operability.

5: Shitsuke – or Sustain
Get it good then keep it good. Don’t back slide but embed good practices into daily routine

Wikipedia has more

The great organ of knowledge even suggests (without giving us their Japanese language equivalents) that we add:

Safety
Security
Satisfaction

And why not? I bet Pocketblog readers can even think of more options.

So, here’s the deal

It really doesn’t get any simpler than this. And simplicity is good, so I commend the principles to you.

Hey, there you go… I just did it: Number 9: Simplicity.

Oh how I love the English language. More please…

I’d welcome ideas in the comments space below.

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Posted on March 20, 2012March 19, 2018 by Mike Clayton

Six Tools from Six Sigma

Last week, we looked at the over-arching process used for correcting and improving within Six Sigma, DMAIC (Define, Measure, Analyse, Improve, Control). DMAIC and Six Sigma are supported by a huge toolkit of quantitative and qualitative tools to support measurement and analysis. Not all of them need advanced statistics or sophisticated training to use with some benefit.

Any competent manager should be building your own personal toolbox and here are six that can be readily and widely applied.

Five Whys

A simple means to get to the root cause of a problem is to start with a statement of the problem and to ask ‘why?’ Then, starting with your answer, ask ‘why?’ again, and repeat until you can go no further. Now you have a root cause.

Why five? There is no magic to five, but it does seem that you rarely need many more stages and too few steps will usually only take you to an intermediate cause. Five seems to be at the sweet spot for many problems.

Fishbone Analysis

Also known as the Ishikawa (after Kaoru Ishikawa) Method, this is another way to help find causes. But its emphasis is on breaking down the multitude of causes to an effect. You represent the outcome (often unwanted) as the head of a fish, and then show/facilitate identification of as many causes as possible, representing each as a fishbone.

Some causes are sub-categories or root causes of another cause, creating ever finer fishbones.

SIPOC Analysis

SIPOC analysis looks for the source of a problem or poor performance in one of five places, with the:

Supplier
Inputs
Process
Outputs
Customer

The Five Cs or 5C Process

It does not get simpler, conceptually, than this. This will help you stabilise, maintain and improve a process or work environment.

Clear Out
Get rid of clutter and non-essential assets, materials, processes.
Configure
Create a tidy and effective working space:
’a place for everything, and everything in its place’.
Clean and Check
Keep everything clean and use the cleaning process to spot damage, faults and abnormal conditions.
Conformity
Ensures that everything conforms to the standards that have been set.
Custom and Practice
Ensure that everyone knows and follows the rules, and understands what purpose they serve.

Box Plots

Box Plots are a good way to plot data to see the effects of variation. Rather than plot single data points, representing an average, such as the average height data for boys, below…

We can plot the ranges of heights for most boys (70%) with a box and nearly all boys (94%) with the bars. This allows us to see two ranges on one chart. Use the box for the commonly occurring range and the bars for either the whole range or, as here, for all but the extreme outliers, as in the chart below…

Failure Modes and Effects Analysis (FMEA)

Perhaps the most complex and sophisticated tool here, so, in a nutshell, we examine every possible failure mode and assign it a score. Scores over a certain threshold lead the failure to be considered ‘critical’.

The score, or ‘Risk Priority Number’ is given by:

RPN = Severity x Occurrence x Detection

The individual scores for severity (how bad the fault is), Occurrence (how frequently it is likely to occur) and Detection (how hard it is to spot prior to release to customer) are calculated separately according to standard tables. Examples of these tables are on the DMAIC Tools website, here.

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Posted on March 13, 2012March 19, 2018 by Mike Clayton

The DMAIC Solution Process

In last week’s Pocketblog, we took an overview of the Six Sigma approach to process improvement, and left readers with the statement: ‘it is time for the most interesting bit: the practical tools that non-experts can apply to making simple improvements from day to day.’

For all of the levels of certification that practitioners can acquire, most of us can simply understand and apply six sigma’s tools to day-to-day projects, problem-solving and improvements without training, just by understanding the basis and applying our own good sense and intuition. I am not arguing against the value of full training and certification, but it is a huge investment if all you want to do is fix a small issue.

Indeed, many of Six Sigma’s tools have a life of their own outside the methodology and have simply been co-opted in to provide strength in depth for practitioners’ toolkits. Next week, we’ll do a round-up of some of these. This week, we’ll focus on the beating heart of the Six Sigma methodology, the DMAIC Process.

The Beating Heart: DMAIC

DMAIC can be viewed as a problem solving process, but I prefer to think of it as a ‘solution process’ because it starts with defining the solution you need to find.

Let’s break it down:

Define

Define the solution you need, in terms of: who it affects (customers, clients, colleagues, stakeholders), the process involved, and the extent of the process (whether it is the full process or a part of the process). Choosing the right problem to solve is an important part of the Six Sigma process. It means making best use of necessarily limited resources. The Define stage ends with a team charter that sets out the scope and status of the project.

Measure

Six Sigma is nothing if not couched in mathematics and quantitative methods. This gives it its robustness. The second step in the DMAIC process is to measure the current performance level, to give a good baseline against which to evaluate improvement measures. This is a good opportunity to talk about Six Sigma’s Xs and Ys.

A Y is a measure of output performance. It is an effect of the process. Motorola talked of Big Ys as the things that matter most to the business’s most critical customers. The Measure stage of DMAIC concerns itself with Ys.

An X is is a cause – a factor, variable or process element which can affect the outcome. The Big Xs are the factor that have the greatest impact on Big Ys.

Analyse

Now it is time to find the cause of any failing in performance. At the Measure stage, we understood the performance (or Ys) – now we find what factors affect that performance (the Xs). Six Sigma has collated a host of quantitative and qualitative tools to gather data for the Measure stage and to interrogate it for the Analyse stage.

Improve

An effect Y is some function of one or more Xs so, in mathematical speak:

Y = f(X₁, X₂, X₃, …)

If you can understand what Xs are important and how to change them to improve Y, then you can implement valuable changes. Having a strong philosophy of quantitative, evidence-based interventions, Six Sigma practitioners will always look for opportunities to conduct limited (low risk) trials to test the validity of their evaluation before a full implementation.

Control

The final step is about evaluating and sustaining the improvements. Practitioners will set up a regime to monitor and control the relevant X factors and monitor the resultant Ys.

… and one more step?

In the UK, the Six Sigma Group (training and consultancy) advocates an extended DMAICT process that I would wholly endorse. Other organisations may, too. The final step is…

Transfer

DMAICT

Transfer what you have learned and the principles you have used to the operational staff who can then use this knowledge to maintain and further improve the processes. This is very much a step that is essential for external consultants to offer, if they want to avoid client-dependency. Of course, some consultants relish such a dependency, but transferring learning is more respectful, more sustainable and, ultimately I believe, more reputation-enhancing.

Learn More: References on the Web

The best website I have found, by far, is iSixSigma. It is a commercial site offering many related services, with free membership if you want additional information like newsletters. It has a lot of valuable articles and a Six Sigma dictionary.

MoreSteam.com is an online Six Sigma training business that also has a lot of freely accessible resources on its website. The link will take you to the Knowledge Center (US Site).

My third recommendation is DMAIC Tools – another site with a wide range of free resources to help you learn about aspects of Six Sigma. As its name suggests, this has a big focus on the tools and especially has a good coverage of the statistical side of the methodology.

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Posted on March 6, 2012March 19, 2018 by Mike Clayton

Six Sigma: Belt up and Reduce Errors

There is nothing that is more likely to evoke an aura of ‘science’ than a Greek letter, judiciously applied. Couple it with a number and our science antennae are twitching excitedly: Six Sigma.

Even I find myself seduced – and I grew up with Greek letters, numerals, and strange sub- and superscripts. My PhD was liberally sprinkled with α’s, γ’s, Δ’s, θ’s, λ’s, ξ’s, τ’s, φ’s, χ’s, & ω’s.*

So it is little wonder that Motorola’s 1986 innovation in quality management has become a massive success and an industry in itself. I am talking, of course, about Six Sigma or, to dress it in its seductively scientific clothes, 6σ.

So, what is Six Sigma?

Six Sigma has variously been described as:

- a management philosophy
- an improvement process
- a business strategy
- a statistical measurement
- a culture transformation methodology
- a development toolkit

And it is all of these things. But, in particular, Six Sigma is a structured methodology to drive process improvement.

You get what you pay for…

The easy belief is that quality costs money – ‘you get what you pay for’. The philosophy of Six Sigma – like other quality methodologies, like TQM (Total Quality Management) – is that the opposite is true; errors cost money: quality saves money. If you can drive down the error rate, you also drive down costs.

Add to the mystique

To add to the mystique of the scientific-sounding statistical term ‘six sigma’, the developers have introduced a flavour of the orient, by labelling the levels of training Yellow Belt, Green Belt, Black Belt and, wait for it… Master Black Belt. These echo the westernised grades in martial arts like judo, karate and aikido.

Yellow Belt
Typically one to two weeks’ training to learn to use the basic tools of Six Sigma.

Green Belt
Typically two to three week’s additional training, to handle problem solving tasks, leading small teams.

Black Belt
Typically an additional two to four weeks’ training, experience of two or more Six Sigma projects and passing a test, will bring you to black belt status, where you can lead your own project.

Master Black Belt
With lots of experience and lots of training, you can train, mentor and advise black belts. Eventually, Master black belts progress to a higher state of being where they can reconfigure whole production lines through thought alone.**

What does 6σ actually mean?

The lower case Greek letter s, or sigma is the standard symbol, used by statisticians for the ‘standard deviation’. In a distribution, the standard deviation is a measure of the variation from the mean. If there is a lot of variability, then the standard deviation will be high. If most instances are close to the mean, the standard deviation will be small. In a common distribution of values – called the ‘normal distribution’ – these two examples look like this, with the small standard deviation belonging to the narrower graph.

You can see the 1 and 4 standard deviations distances. You can also see that there will be almost no instances at 6 standard deviations’ distance from the mean. In fact, six sigma posits 3.4 defects per million instances. This is pretty close to the ideal of ‘Zero Defects’.

(For technical reasons, this error rate is actually calculated from a 4.5σ deviation from a mean shifted 1.5σ from the desired mean.)

On to the interesting bit

Now you have had a whistle-stop tour of some aspects of Six Sigma, it is time for the most interesting bit: the practical tools that non-experts can apply to making simple improvements from day to day. Except…

You will have to wait until next week for that, because we’re out of space for this week!

The next articles in the series are:

* No, those aren’t grocers’ apostrophes.
They are there to ease readability.

** This sentence is pure hyperbole.
Only Jedi Master Black Belts can do that!

A Management Pocketbook you might like

The Improving Efficiency Pocketbook, by Philip Holman & Derek Snee

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Posted on August 30, 2011March 19, 2018 by Mike Clayton

Deming's System of Profound Knowledge

I recently did three blogs about towering management thinker, Peter Drucker:

Another hugely influential management thinker and a direct contemporary of Drucker’s was W Edwards Deming.

W. Edwards Deming

Deming was a mathematician and Physicist, who turned to statistics and management. In so doing, he became the most influential non-Japanese thinker in within Japanese industry, and a leader in the subject of quality – arguably the founder of TQM, Total Quality Management.

On the subject of quality, he asserted that:

When people and organizations focus primarily on quality, quality tends to increase and costs fall over time.

However, when people and organizations focus primarily on costs, costs tend to rise and quality declines over time.

Profound Knowledge

Deming and Drucker were at one on the matter of knowledge. Both believed deeply that managers need a wide knowledge over a broad spectrum of topics. Deming went further than Drucker, in articulating this as a fundamental principle of management.

Deming said that managers need to have a ‘system of profound knowledge’. The layout of profound knowledge has four parts, all related to one another:

Appreciation for the system that they are a part of
(What, today, we would call ‘systems thinking’)
Knowledge about variation
What drives quality and how to measure cause and effect statistically (as we do today, with processes such as Six Sigma)
Theory of knowledge
Understanding critical thinking processes and what we can and cannot know about a system. His most famous single contribution is popularising the ‘Deming Cycle’ (which was actually invented by Walter Shewhart).
Plan – Do – Check – Act
Psychology
How human beings respond in different situations

Challenge

This seems to me to be an excellent syllabus for a management programme, but I wonder how many managers are really learning about all four of these elements. This system creates a synthesis of the management thesis and antithesis of the 20th Century:

Scientific Management versus People Management

14 Points for Management

In so doing, Deming articulated his 14 Points for Management. These, whilst many have become commonplace today, still resonate well.

Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs.
Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.
Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place.
End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust.
Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.
Institute training on the job.
Institute leadership (see Point 12 and Ch. 8). The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers.
Drive out fear, so that everyone may work effectively for the company (see Ch. 3).
Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service.
Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.
a. Eliminate work standards (quotas) on the factory floor. Substitute leadership.
b. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.
a. Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.
b. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, inter alia, abolishment of the annual or merit rating and of management by objective (see Ch. 3).
Institute a vigorous program of education and self-improvement.
Put everybody in the company to work to accomplish the transformation. The transformation is everybody’s job.

Management Pocketbooks you might Enjoy

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