I didn't see Deming's 14 points until 1979, yet they were familiar to me, reflecting what I'd grown up with, consistently embracing a philosophy of improvement, leadership, training, education, teamwork, eliminating fear, removing barriers, avoiding showiness, teaching correct principles to encourage more self-management.
Practical principles captured in simple comments like "Be wise" and "Be nice" and "Do good" and "Do better" and "Don't quit" make points without being complex, but watch out for window dressing.
Be wise - really think, observe, clarify, evaluate, act, learn, repeat, don't quit.
Be wise - it works better to be nice. Not being nice adds negative emotions with attendant complexity and vagueness. Negative emotions are an underground drag on progress. Positive emotions are powerful for good.
Act - be wise, think, be nice, do good, do better, plan, prototype, test, implement, assess, keep learning, keep improving, don't quit.
Patient persistence in pursuit of perfection will lead to better practices and more profits, allowing greater rewards for all concerned.
Sunday, January 4, 2009
Saturday, January 3, 2009
Who helps your company?
Every company has one or more owners, stockholders, public or private, many or few. Every company is comprised of all who work within the company as management and/or employees. Owners may or may not work within the company, and management and employees may or may not be owners.
The greatest, most improve-able help available to a company are the relatively permanent people who "work for the company" as employees and management. They become immensely valuable especially when cross trained in their various areas of responsibility. Their value and ability to contribute to improvement increases as they "understand the company" and "compete for the company" and "think for the company" and "collaborate within the company" and "act for the company." When their hearts and minds, as well as their bodies, are working for the company, the rewards will be greater for all. No other asset of the company has as great a potential for return on investment than the people inside the company.
Externally, companies get their most vital help from their customers and potential customers, the source of all demand for the products and services of company and therefore the source of all operating cash needed to acquire all assets and pay all expenses and costs associated with survival and growth of the company.
Companies are customers themselves as they in turn depend on their suppliers (1st source, 2nd source, etc.) to provide whatever the company adds value to and sells to customers. Suppliers can provide all kinds of help to companies beyond the obvious. And the company can benefit from cross training insights from being both a supplier and a customer.
Companies also make use of other professional service providers, sometimes including a corporate attorney, an accounting firm, an auditor, insurance, public relations and advertising, recruiting and HR services, equipment maintenance, facility maintenance and custodial service, etc.
Most of these service providers are engaged to either help keep the company out of trouble or help attract more customers. As part of the working network familiar with the company, they can often provide helpful insights for improvement.
Another type of service provider that can help improve the value of the company includes management consultants, coaches, and advisers, including members of boards of directors and boards of advisers.
Companies are wise to recognize that all their networked helpers can be of value in improving the company and not neglect potentially valuable insights.
The greatest, most improve-able help available to a company are the relatively permanent people who "work for the company" as employees and management. They become immensely valuable especially when cross trained in their various areas of responsibility. Their value and ability to contribute to improvement increases as they "understand the company" and "compete for the company" and "think for the company" and "collaborate within the company" and "act for the company." When their hearts and minds, as well as their bodies, are working for the company, the rewards will be greater for all. No other asset of the company has as great a potential for return on investment than the people inside the company.
Externally, companies get their most vital help from their customers and potential customers, the source of all demand for the products and services of company and therefore the source of all operating cash needed to acquire all assets and pay all expenses and costs associated with survival and growth of the company.
Companies are customers themselves as they in turn depend on their suppliers (1st source, 2nd source, etc.) to provide whatever the company adds value to and sells to customers. Suppliers can provide all kinds of help to companies beyond the obvious. And the company can benefit from cross training insights from being both a supplier and a customer.
Companies also make use of other professional service providers, sometimes including a corporate attorney, an accounting firm, an auditor, insurance, public relations and advertising, recruiting and HR services, equipment maintenance, facility maintenance and custodial service, etc.
Most of these service providers are engaged to either help keep the company out of trouble or help attract more customers. As part of the working network familiar with the company, they can often provide helpful insights for improvement.
Another type of service provider that can help improve the value of the company includes management consultants, coaches, and advisers, including members of boards of directors and boards of advisers.
Companies are wise to recognize that all their networked helpers can be of value in improving the company and not neglect potentially valuable insights.
Thursday, January 1, 2009
The Clearer, The Better
We all want improvement, greater cash flow, more value, better quality. We all have problems to solve. Vagueness, while a subtle enemy, is a greater enemy than complexity. Simple is good. Clarity is better. As helpful as simplifying complexity seems to be, clarity that a child can understand is better. It might just be a subtle aspect of complexity that is the root cause opportunity for improvement. While simplifying might overlook something subtle, clarity spells it out. Important difference.
When things aren't going well, life gets more complicated, especially whenever and wherever we are not clear about why, what, and how things aren't going well. When things are going well and things are all clear we can sleep well at night even during storms, and life is better.
The "simpler" that is desirable has the uncommon clarity of common sense without missing anything meaningful. Getting things clearer might take more thought initially but more complete and accurate clarity is apt to yield better, faster, lower cost results overall.
Many forms of obfuscation (concealment of meaning) foster vagueness and can happen for sometimes subtle, but almost always knowable reasons. Root cause clarification for obfuscation will reveal meaningful improvement opportunities.
Statistical process control, key performance measurement, monitoring, and management systems, personality and behavioral profiling, practices of modern science and improvement programs applied to business are potential power tools in the hands of those who are suitably enlightened in the vital basics of business and appreciate the perpetual advantage of clarity.
When things aren't going well, life gets more complicated, especially whenever and wherever we are not clear about why, what, and how things aren't going well. When things are going well and things are all clear we can sleep well at night even during storms, and life is better.
The "simpler" that is desirable has the uncommon clarity of common sense without missing anything meaningful. Getting things clearer might take more thought initially but more complete and accurate clarity is apt to yield better, faster, lower cost results overall.
Many forms of obfuscation (concealment of meaning) foster vagueness and can happen for sometimes subtle, but almost always knowable reasons. Root cause clarification for obfuscation will reveal meaningful improvement opportunities.
Statistical process control, key performance measurement, monitoring, and management systems, personality and behavioral profiling, practices of modern science and improvement programs applied to business are potential power tools in the hands of those who are suitably enlightened in the vital basics of business and appreciate the perpetual advantage of clarity.
Ideas Come to Life with Action
One of my heroes, Spencer W. Kimball, was fond of saying "Do it."
I liked framing those words within "Don't Quit."
Improvement ideas create value only when action bears some fruit of value. To ever get anywhere on anything, one must act. That's the simple cycle of the improvement process: think--act->result--think--act->result--think--act->result. My father's version was "plan your work and work your plan." Just keep it up with an eye for overall improvement.
Action makes something of ideas. Results may be desirable or undesirable, sufficient or insufficient. Keep up the "think, then act" cycle to continue learning and improving. You will get one item polished well enough, but what more in the bigger picture can be improved? Move on to more.
Look for situations where "obviously" needed action has not been taken to produce improvement, think it through, especially why action has not been taken, then determine what action can and should be taken, and do it, and don't quit until its done. Learn fast, fail fast, change course in your direction as needed for overall betterment.
Most of the time, only real action has any possibility of producing positive results. But there are certainly times when "no action" is either called for or is at least the best choice for now. Making that wise discernment carefully, but also plain old luck, can often make all the difference. Since you most often never know unless you try, there is a reasonable bias for action, all things considered.
Where many ways can be tried (many ways to skin a cat), but none are assured of success, get on with it. You may have to try all the ways to get something to work anyway. It may be you just plain have wear out (overcome) the resistance with pleasant persistence.
One chronically unprofitable manufacturer supplied 60% of its product to one large OEM through a multi-year contract for pricing that was simply not profitable. It took the action of 11 different, separate, creatively unique, and pleasantly orchestrated tries over several months asking for a higher price in spite of a supposedly fixed contract before the OEM finally agreed to a 20% price increase which immediately made the manufacturer acceptably profitable. Simple minded determined, but pleasant persistence made all the difference.
Another severely unprofitable manufacturer had spread its existing resources over 14 product lines as a result of prior mergers in an attempt to provide a complete family of products and diversify risk. Acting upon the idea to focus on 3 of those products produced a 20% pre-tax profit.
We all know stories like these. It takes courage to act. Risk of loss assessments are not to be overlooked, but fear of failure is a familiar beast to be beaten.
I liked framing those words within "Don't Quit."
Improvement ideas create value only when action bears some fruit of value. To ever get anywhere on anything, one must act. That's the simple cycle of the improvement process: think--act->result--think--act->result--think--act->result. My father's version was "plan your work and work your plan." Just keep it up with an eye for overall improvement.
Action makes something of ideas. Results may be desirable or undesirable, sufficient or insufficient. Keep up the "think, then act" cycle to continue learning and improving. You will get one item polished well enough, but what more in the bigger picture can be improved? Move on to more.
Look for situations where "obviously" needed action has not been taken to produce improvement, think it through, especially why action has not been taken, then determine what action can and should be taken, and do it, and don't quit until its done. Learn fast, fail fast, change course in your direction as needed for overall betterment.
Most of the time, only real action has any possibility of producing positive results. But there are certainly times when "no action" is either called for or is at least the best choice for now. Making that wise discernment carefully, but also plain old luck, can often make all the difference. Since you most often never know unless you try, there is a reasonable bias for action, all things considered.
Where many ways can be tried (many ways to skin a cat), but none are assured of success, get on with it. You may have to try all the ways to get something to work anyway. It may be you just plain have wear out (overcome) the resistance with pleasant persistence.
One chronically unprofitable manufacturer supplied 60% of its product to one large OEM through a multi-year contract for pricing that was simply not profitable. It took the action of 11 different, separate, creatively unique, and pleasantly orchestrated tries over several months asking for a higher price in spite of a supposedly fixed contract before the OEM finally agreed to a 20% price increase which immediately made the manufacturer acceptably profitable. Simple minded determined, but pleasant persistence made all the difference.
Another severely unprofitable manufacturer had spread its existing resources over 14 product lines as a result of prior mergers in an attempt to provide a complete family of products and diversify risk. Acting upon the idea to focus on 3 of those products produced a 20% pre-tax profit.
We all know stories like these. It takes courage to act. Risk of loss assessments are not to be overlooked, but fear of failure is a familiar beast to be beaten.
Wednesday, December 31, 2008
Business Model Innovation
Even things as important as cash flow, profit, growth, continuous improvement, and innovation can become tiresome if harped on to excess. So we seek a certain balance, then find even the concept of maintaining balance can become monotonous.
Whether or not we have a psychological need for cycles, they are everywhere. Fashions come and go because sameness is stifling, variety being the spice of life. Vicissitudes keep us on our toes. Nature, replete with cycles, always exhibits natural tensions, pros and cons, ever present opposition in all things, ebbs and flows in various forms, all giving rise to opportunities. So it is with markets.
Maintaining, if not improving, market and business health and well being is a practical necessity of business life, to survive, much less grow through the many life cycles of business. Choices to follow a product or business life cycle without innovation lead to business failure, death or recycling. Innovation is creation of a new cycle, a new wave, new growth potential. Many innovations fail, but no innovation, like no seeds and no cultivation, yields no harvest.
Product life cycles are well known, well studied, and even service life cycles are familiar in the world of marketing. The cycles of the other elements of a company's business model may be less familiar, but are no less real. Contracts make an attempt to counter cycles, but ultimately cyclic pressures, like all market forces, will be manifest in some way, like all laws of nature.
Business survival, much less thriving in hard times, requires business model innovations that produce more cash flow and profit improvement, the life force, life blood, of business. Pricing is often paramount, but any of the factors in the equation, any of the ingredients in the recipe, any of the elements of the business model can be problematic, and therefore opportunity-laden.
And business model innovation doesn't have to be as radical as Google, WalMart, wireless communications or online stores. Sometimes seemingly minor tweaks can open doors to exciting new horizons. The key is to open minds to see a bigger picture of possibilities and fail fast in figuring out what's going to fly.
Whether or not we have a psychological need for cycles, they are everywhere. Fashions come and go because sameness is stifling, variety being the spice of life. Vicissitudes keep us on our toes. Nature, replete with cycles, always exhibits natural tensions, pros and cons, ever present opposition in all things, ebbs and flows in various forms, all giving rise to opportunities. So it is with markets.
Maintaining, if not improving, market and business health and well being is a practical necessity of business life, to survive, much less grow through the many life cycles of business. Choices to follow a product or business life cycle without innovation lead to business failure, death or recycling. Innovation is creation of a new cycle, a new wave, new growth potential. Many innovations fail, but no innovation, like no seeds and no cultivation, yields no harvest.
Product life cycles are well known, well studied, and even service life cycles are familiar in the world of marketing. The cycles of the other elements of a company's business model may be less familiar, but are no less real. Contracts make an attempt to counter cycles, but ultimately cyclic pressures, like all market forces, will be manifest in some way, like all laws of nature.
Business survival, much less thriving in hard times, requires business model innovations that produce more cash flow and profit improvement, the life force, life blood, of business. Pricing is often paramount, but any of the factors in the equation, any of the ingredients in the recipe, any of the elements of the business model can be problematic, and therefore opportunity-laden.
And business model innovation doesn't have to be as radical as Google, WalMart, wireless communications or online stores. Sometimes seemingly minor tweaks can open doors to exciting new horizons. The key is to open minds to see a bigger picture of possibilities and fail fast in figuring out what's going to fly.
Tuesday, December 30, 2008
The All Important Business Model
An old friend who has banked tens of millions of dollars over the years from a pretty simple business likes to say he's never had a so-called business model, adding that all he did was take care of customers. While talk about business model can be misguided, all businesses have a model, elements of which make them by definition a specific business. My friend studiously served his customers, but always profitably for consistent and very meaningful cash flow. His industry is very depressed right now, but he still produces positive cash flow. He has a good business model which he understands very well and executes wisely.
Business model elements usually start with potential customer need which helps define product or service, then goes to demand which helps define volume and price, which multiple into sales or revenue. But the business model importantly includes cost which yields gross margin, then all other expenses required to incur the costs and produce the sales, which combine to produce the income or profit and that all important cash flow. I'll never forget hearing Al Shugart talk about cash being more important than your mother.
Add capital requirements and necessary measures of ROI and you have the essential elements of the business model or business formula or recipe for success. Any one element or factor can make all the difference for good or ill, but it is ultimately the combination that counts most. The cost factor includes the pivot point of supply. Volatility of supply volume or cost, like volatility of demand volume or price, can create major challenges to overcome. Quality of product and service relates to both cost efficiencies and price/demand effectiveness.
The ultimate expression of the elements of the business model is the vision of the company strategically instilled into the minds and hearts of an enlightened leader-inspired self-directed organization.
Business model elements usually start with potential customer need which helps define product or service, then goes to demand which helps define volume and price, which multiple into sales or revenue. But the business model importantly includes cost which yields gross margin, then all other expenses required to incur the costs and produce the sales, which combine to produce the income or profit and that all important cash flow. I'll never forget hearing Al Shugart talk about cash being more important than your mother.
Add capital requirements and necessary measures of ROI and you have the essential elements of the business model or business formula or recipe for success. Any one element or factor can make all the difference for good or ill, but it is ultimately the combination that counts most. The cost factor includes the pivot point of supply. Volatility of supply volume or cost, like volatility of demand volume or price, can create major challenges to overcome. Quality of product and service relates to both cost efficiencies and price/demand effectiveness.
The ultimate expression of the elements of the business model is the vision of the company strategically instilled into the minds and hearts of an enlightened leader-inspired self-directed organization.
Empowering Vision
Knowing clearly what you want to say greatly affects your utterance. Knowing clearly where you want to go and what you want to be drives your strategy - how you plan to get there.
Clearer vision not only helps produce clearer strategy, but unifies and intensifies confidence in both strategy and execution. Clear and vivid vision leads to more internalized imagery which taps inner emotional motivation. When you can really taste what you're after, you're even more likely to work to keep all systems aligned, to make progress more efficient and success more likely. The more everyone is on the same page, seeing and tasting the same vision, and tuned in for more effective teamwork, the more likely the success, by some combination of better execution and crucial changes in strategy.
Vision development, clarification and internalization take time, but that time is well spent when it improves buy-in, motivation, productive creativity, and overall enthusiasm and resourcefulness for vision accomplishment. The more vividly the vision is instilled into every member of the organization, the more vibrant and productive the performance.
Many common, but unnecessary, time wasting, resource-consuming problems never appear as greater overall alignment is achieved to take the shortest distance between two points to hit bulls eyes step by step until the vision instilled within is brought to reality.
Clearer vision not only helps produce clearer strategy, but unifies and intensifies confidence in both strategy and execution. Clear and vivid vision leads to more internalized imagery which taps inner emotional motivation. When you can really taste what you're after, you're even more likely to work to keep all systems aligned, to make progress more efficient and success more likely. The more everyone is on the same page, seeing and tasting the same vision, and tuned in for more effective teamwork, the more likely the success, by some combination of better execution and crucial changes in strategy.
Vision development, clarification and internalization take time, but that time is well spent when it improves buy-in, motivation, productive creativity, and overall enthusiasm and resourcefulness for vision accomplishment. The more vividly the vision is instilled into every member of the organization, the more vibrant and productive the performance.
Many common, but unnecessary, time wasting, resource-consuming problems never appear as greater overall alignment is achieved to take the shortest distance between two points to hit bulls eyes step by step until the vision instilled within is brought to reality.
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