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Archive for May, 2009
From 2004 through 2007, we worked to apply Deming’s principles at Force Protection, a business faced with enormous opportunity and challenges. I attribute our transformation from start-up to established billion dollar company largely to the System of Profound Knowledge, which we worked to implement, not perfectly, but as best as we could.
By no means is it easy, or was the job complete, and transformation in the midst of growth is difficult, but without the System I do not believe we would have overcome these challenges. I attribute our success to the methods and theories developed by Deming.
Deming’s insight on complex social systems taught our management team to look at the company as a whole with a life of its own rather than as a loose collection of departments or individuals.
Deming’s theory is profound in its impact and amazing in its simplicity. As an American who taught these critical management theories to Japanese businesspeople after World War II, Deming quietly changed the world.
With these same theories and no natural resources except a motivated workforce along with committed leaders and managers, Japan developed the second largest economy in the world and a commitment to excellence and collective prosperity. Deming’s Theory of Profound Knowledge, his 14 Points for Management, and the practice of continual improvement are essential for any organization looking to compete successfully over the long-term.
In many ways, I believe that the current global economic crisis, especially as it is manifested in the United States, is the direct result of a departure from proven principles. What we are witnessing is the massive fallout that results from a systemic failure. Rather than functioning according to Deming’s principles and in accordance with the System of Profound Knowledge, individuals are striking out on their own and pursuing their own self-interests, in business and government, to the detriment of everyone.
Only by returning to the basics and the principles that have led to greatness can we ever hope to find a way out of the current crisis. The opportunities are tremendous. At Fort Ashford Funds, we are committed to helping our insurance and risk-related portfolio companies and the companies we invest in effectively pursue these opportunities through positive systemic transformation.
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In 2001, days after the 9/11 attack, I began a new chapter in my life as I returned to school to seek an MBA at Pepperdine University with the aim of developing a deeper understanding of management systems and theories taught in business school. During this period, I studied the theories and history of scientific management, reviewed and discussed various approaches, studied and dissected companies, experts, outcomes and theories.
I looked at newer, “better” thinkers who led the successful companies like Coca-Cola, Dell, Toyota, General Electric, Microsoft, Wells Fargo, Berkshire Hathaway, and McDonalds to name a few. I looked at companies and approaches that were failing including Enron, Lotus, the Big Three Automakers, Apple (ok, Steve Jobs fixed that), and numerous Internet companies.
Through this review I became more impressed with the System of Profound Knowledge. What struck me most was the simplicity of the Deming approach and how it addressed all aspects of a business (and how the world worked).
The challenge was and continues to be the amount of work that is necessary to implement a ‘systems’ approach – it requires management to work hard and maintain a commitment to building long-term value instead of focusing on short-term incentives and rewards. It is humanistic and relies on cooperation. It also requires self-reflection, a commitment to ethical practices, and on-going learning instead of “instant pudding” solutions.
Up next: Putting principles into practice (next week’s first post). In the meantime, here’s wishing everyone a safe and happy Memorial Day weekend!
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My introduction to Deming’s System of Profound Knowledge came through a friend and co-worker as we attempted to transform a foundering Internet company into a “real business” with profits and growth. This was toward the end of the initial Internet revolution when business measures such as profit and revenue had been replaced with bizarre measures like “hits,” “clicks,” and “eyeballs.”
The first step involved hiring two “experts” from Apt Leadership to train our senior management to allow us to better compete in the marketplace. The initial 4-day class introduction consisted of viewing endless hours of videos done in the 80s and early 90s by a slow talking, ancient guru by the name of W. Edwards Deming.
As I said last week, up until this point in time:
“I adopted management theories focused on individual recognition/punishment and altered my views based on the latest management book lauded through the business press. I believed working hard, relying on experts, tracking and monitoring tasks, managing personalities, upbeat slogans, and keeping positive would lead to success.` ~ from 5/15/09 blog entry, “My Initial Forays Into Management“
What started as a slow and painful snooze-fest quickly evolved into a radical reflection on my personal belief systems and management/life theories. During the 4-day process (some of which I missed), I began a personal transformation process as I gained insights into the ideas of Deming’s System of Profound Knowledge. It became apparent to me that Deming’s approach made more sense than the management theories I had developed on my own. In particular, the Red Bead Experiment led me to question many of my strongest beliefs in how to manage individuals and lead a company.
The change did not happen overnight. With these new insights, I began to reflect actively on my understanding of how to manage a business and recognized the shortcomings of my historical approaches to managing people. My basic assumption was if Deming’s System of Profound Knowledge is so good, how come nobody uses it? My interest in management theory grew intensely, the more I read, listened, pondered, and reviewed.
Next up: Back to school (later this week).
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My early views on management evolved from experiences at Hewlett-Packard, Microsoft, and a series of start-ups/turnarounds; advisors who worked with me through the 5+ companies I have managed; and books and articles from business luminaries including Drucker, Blanchard, Porter, Peters, Robbins, and Hammer.
I adopted management theories focused on individual recognition/punishment and altered my views based on the latest management book lauded through the business press. I believed working hard, relying on experts, tracking and monitoring tasks, managing personalities, upbeat slogans, and keeping positive would lead to success.
In simple terms, I attributed my achievements to personal efforts instead of timing and depended upon others while attributing failures to the individuals involved even if they did not have a clear understanding of what was expected. I viewed my expertise as recruiting and building a team of top performers and setting them loose to do great things using management theories like MBOs, MBWA, Best Practices, and Benchmarking.
Then, as you’ll read next week, I began a transformation process that ultimately impacted everything I thought I knew about business management and more!
Next up: My journey of discovery begins (next week’s first post).
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Businesspeople are good at doing. As a result, they are often guilty of shooting first and aiming second. At Fort Ashford Funds we seek to aim first. We believe every organization must have a belief system in place and a set of principles that drives its decisions and practices. Out of good principles, effective practices are born and improved.
 W. Edwards Deming (photo used with permission from W. Edwards Deming Institute) Each individual’s belief system is unique — influenced by his or her education and experience. My belief system is strongly influenced by my understanding of W. Edwards Deming ideas and teachings, particularly his System of Profound Knowledge.
I believe leaders must learn that to compete effectively, they must cooperate. Incentive compensation, management by objectives, annual evaluations, and individual goals create a culture of competition and fear instead of cooperation and harmony.
Deming’s System of Profound Knowledge is designed to transform an organization into an organic whole, where departments and individuals function effectively and efficiently as a single entity. I encourage everyone in business management to study Deming’s theories as explained in his book, The New Economics.
Next up: My initial forays into management (later this week).
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From 2004 through 2007, we worked to apply Deming’s principles...
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In 2001, days after the 9/11 attack, I began a...
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