I cannot
overemphasize the importance of learning how to understand variation and how to
manage in its presence. Brian Joiner said it best in his training course
(Copyright Oriel Incorporated, formerly Joiner Associates, 2009). “When people
don’t understand variation:
•
They see trends where there are no trends and miss
trends where there are trends
•
They blame, or credit, others for things over which the
others have no control
•
They can’t understand the past or plan for the future
properly
•
Their ability to manage or lead is impaired”
Managers can
learn to manage in the presence of variation if they do three things:
•
Learn appropriate statistical methods; as described in
the Memory Jogger or similar book
•
Ensure workers are trained in & use appropriate
problem solving and statistical methods
•
Learn to think statistically
This lecture addresses learning statistical
methods, learning to think statistically and discusses three experiments that
are valuable to learning about managing in the presence of variation
Learning Statistical Methods
To achieve the increased
organizational effectiveness promised by this course it is necessary to train
everyone in the organization in the basic problem solving tools and statistical
methods covered in the Memory Jogger. Workers and managers must become familiar
with and use flow charts of their processes, check sheets to gather data on
their processes, Pareto charts, cause and effect diagrams (fishbone diagrams),
run charts, histograms, scatter diagrams and control charts.
Self-study of the Memory Jogger
book or a similar book that is written for self-study is one way of learning
appropriate statistical methods. In my experience the best way to learn these
techniques is to train teams that have common ownership of processes. The team
picks a problem in one of the team member’s processes that they think needs
improving. A trainer, well versed in these methods then teaches several teams
at a time by teaching a technique and then letting the teams put the technique
into practice for the problem they have selected. It takes about 50 hours
spread over about three months for a team to work through learning the
techniques, gathering data, analyzing the data and evaluating the success of
its process improvement efforts.
It typically costs several
thousand dollars per team, in addition to the cost of the team’s time, for such
training. However, the cost savings resulting from the process improvements
conducted as part of the training typically saves five to ten times the cost of
the training within about a year. This claim is based on documented savings of
over $20 million by about 300 such team training efforts over several years in
the late 1980s. These teams were from several types of organizations including
manufacturing, health care, and civil government services.
Using Statistical Methods
After teams are trained they
are ready to be empowered to have control over their process within some
boundaries that must be determined for each organization. Typically trained and
empowered teams do not have to be encouraged to take control of their
processes. Most are eager to fix problems that bother them by making their work
more difficult or increasing their work load. These are also the problems that
reduce the effectiveness of the team’s processes. As mentioned earlier, it is
important to monitor empowered process improvement teams so that workers are
not too heavily involved in process improvement at the expense of getting
normal work done. In organizations of more than about 40 people it is prudent
to designate a person skilled in statistical process control techniques to
monitor all process improvement work. This person should ensure that workers
are collecting data on the workers’ processes, preparing control charts and
solving special cause variation to bring their processes into stable control.
Only then should improvement activities be initiated to reduce variation and/or
change the mean of a controlled parameter.
It’s good practice, where it makes sense, to
have workers post their control charts where they are visible to the workers
and to managers. Remember, managers are workers and are also responsible for
processes. Sometimes managers should have control charts for their processes
and these should be visible to others except where the charts involve private
data relating to people. Having control charts visible to all reinforces the
intent to manage on the basis of data rather than someone’s guesses or
intuition.
Financial and productivity
related data should be available to all as is necessary for evaluating process
improvements. Providing such data also helps build and maintain trust in
management. Workers are trusted with trade secrets that are far more valuable
than typical financial data. Denying them access to financial information
prevents them from accurately calculating the cost savings from their process
improvement actions and tends to build distrust of management.
A quick search of the web shows
that there are numerous vendors offering software packages to assist with
generating the subject charts and diagrams. I think it’s a better learning
experience to have workers learn how to generate the products by hand before
having access to software. The software isn’t really necessary and not having
used the commercial products I can’t attest to their utility or cost
effectiveness. Therefore I recommend students learn without the help of
commercial software and then try a commercial product and determine for
themselves if it is a good investment. It may be that such products save time
and result in fewer errors so that they pay for themselves over time. I would
caution the student that if the software automates most of the data collection
and processing to observe carefully to learn whether using such automated tools
reduces the ownership workers have in the control of their processes. If they
feel the software is being imposed on them and their processes by management it
may demotivate them. Of course a wise approach is to let the workers decide if
such tools are helpful and cost effective.
After workers are trained,
empowered and monitored properly they should take responsibility for fixing
special cause variation without involving managers. Knowledge workers can also
take responsibility for improving their processes, i.e. reducing common cause
variation, without having to get permission from or involving managers. This
frees managers from many of the daily crises that take time away from
maintaining and improving their own processes. Workers controlling their
processes effectively are the basis for the claim in the introduction to this
course that if a manager practices the methods taught here there are fewer
crises requiring management attention and therefore more time to work on
important long term problems.
Learning to Think Statistically
Many books on leadership advise
their readers to trust their intuition in making decisions. I wholeheartedly
agree with this advice. Being effective often requires making decisions with
limited data. In my experience decisions based on available data plus intuition
are correct most of the time and the benefits gained from timely decisions
outweigh the costs of the few times mistakes are made. I believe that the
quality of decisions based on intuition can be improved by learning to think
statistically. Thinking statistically means using available data, your
experience and your intuition to make judgments based on probability and
statistics in situations where statistics apply.
One objective of learning to
think statistically is to no longer spend any time explaining obvious common
cause variation or asking others to explain common cause variation. Such
mistakes are common in analyzing and discussing financial data and productivity
data. I have had to sit through or read through countless examples of someone
explaining why this months’ expenses for something are up by x% or this months’
sales missed the forecast by y% when the common cause variation in the
parameters under discussion was greater than x or y%. It should be obvious to
the student at this point that such discussions are a complete waste of time
and frustrating to those who have learned to think statistically. Explanations
are only called for if a parameter exceeds an agreed upon control limit. Feeing
one from such time wasters makes time available for process improvement,
growing the organization, working with customers and other effective work.
Weekly or monthly reports are a
typical place where seemingly learned discussions of common cause variation are
popular. That is another reason why I never liked weekly reports. If you are
required to write such reports make sure you are not wasting both your time and
your supervisors’ time by discussing common cause variation unless it is in the
context of a process improvement action.
Learning to think statistically
takes practice. Try to recognize common and special cause variation even when
you don’t have a control chart available. Often your experience and intuition
are sufficient. This is a useful skill in daily life but should never be a
substitute for managing work processes on the basis of data. A good way to
practice is by reading or listening to news reports. Think about reported
incidents and assess whether you think they are due to special or common cause.
An example is a report that some people are concerned because they believe
there is a high incidence of “x” in their community. The “x” might be cancer,
crime or some similar undesirable event. The fact that the community is
concerned is newsworthy, whether or not the concern is justified depends on
whether the high incidence of “x” is special or common cause variation.
Typically insufficient data is reported to enable an accurate decision. In such
cases make an educated guess for the practice.
Try assigning probabilities to
events and assigning relative importance to reported events based on your
knowledge of the statistics related to the event. An understanding of the
statistics of normal distributions applied to limited data given in news reports
is often sufficient to make a determination of common or special cause
variation with good probability of being correct. You soon find that the
newsworthiness of an event often is not proportional to the relative importance
of the event compared to other similar events. That is ok for the news media;
their first priority is to interest their audience. It’s usually up to the
audience to put events into proper context and statistical thinking is
essential to achieving a good understanding of news events.
As you learn to think
statistically you begin to look at work data more carefully. You do not jump to
conclusions without collecting and examining data to determine whether
something is common or special cause. You stop wasting time looking for
explanations of common cause variation and hopefully go to work improving the
processes under your control. You take appropriate actions and stop taking
inappropriate actions in the presence of variation.
Appropriate actions to take for
processes (the system) that exhibit variation are summarized in the chart shown
in figure 19.
Figure 19 Appropriate actions
in response to variation.
Brian Joiner,
cited above, also has a great summary of “Consequences of Inappropriate
Management Actions (i.e. violations of the rules summarized in figure 19):
•
Wasted time and energy
•
More variation in the system
•
Loss of productivity
•
Loss of confidence in the manager
•
Problems continue”
As shown in
figure 19 the system should not be adjusted in the presence of common cause
variation. This is called tampering by W. Edwards Deming and just makes the
variation worse. If special cause variation is present then you must “Look for
the Difference”, i.e. look for the reason that the variation in question is not
within the control limits. There is usually some anomaly that accounts for the
special cause variation and this anomaly must be corrected so that out of
control limits variation doesn’t continue. It is possible that the system has
changed and therefore needs adjustment as indicated in column two. However, do
not adjust the system if it has not changed as that would be an inappropriate
action. The best training example of the results of inappropriate actions is W.
Edwards Deming’s famous funnel experiment. If the student has access to the
Deming video tapes I strongly recommend watching the tape on the funnel
experiment. If that tape isn’t available an excellent alternative is available
thanks to Dr. Yonatan Reshef, of the School of Business at University of
Alberta. It’s discussed in the first exercise for this lecture.
After you have learned
statistical methods, learned to think statistically, trained your workers and
empowered them your organization will take fewer inappropriate actions and more
appropriate actions and the organization’s effectiveness will increase.
Exercise 1
The Funnel Experiment
Go to the web site
http://www.business.ualberta.ca/yreshef/orga432/funnel.html and
study the funnel experiment. Dr. Reshef provides the rules and has a
demonstration that you can download and work through yourself. Please take the
time to work through the exercise. It is important to engrain in your mind the
principles associated with inappropriate actions. If you have difficulties
getting clear results from Dr Reshef’s demonstration you can see the results of
a computer simulation of the funnel experiment at
http://www.spcforexcel.com/ezine/july2006/july_2006.htm#article4 Click on
funnel experiment in the contents list on this web page.
The objective of the exercise
is to learn the difference between tampering (some call it tinkering) and true
process improvement. All workers that you plan to empower to control their own
processes should work through the funnel experiment as part of their training.
After studying the funnel
experiment listen carefully to politicians in the news. As they recommend
actions consider whether the recommended actions are tampering or sound process
improvements. As you become more expert at statistical thinking you will notice
that many politicians recommend actions that sound good to their constituents;
often independent of whether the recommended actions are appropriate for the
variation that precipitated their recommendation. Also, listen to other
managers and your superiors as they suggest responses to problems. Try to assess
if their suggested responses are sound process improvements or a form of
tampering. These exercises help engrain the teachings of the funnel experiment
in your mind.
Exercise 2
The Red Bead Experiment
Another of Deming’s famous
experiments is the red bead experiment. You can learn about the red bead
experiment at http://www.redbead.com/docs/expressindia19111998.html by reading
the article by Manjari Raman. This article provides a clear definition of the
experiment and a concise summary of the teachings of the red bead experiment.
There is additional useful information at www.redbead.com but I strongly
recommend that you buy Dr. Deming’s video for your organization. It is
available at http://www.trainingabc.com/xcart/product.php?productid=16249&cat=254&page=1.
Observing the red bead
experiment carefully or participating in the experiment is a powerful learning
experience. Watching the behavior of participants is an amazing demonstration
of the human nature that we encounter every day in our work. Workers try to do
the impossible when bosses demand it even though the workers know that they
cannot succeed. And we have all seen bosses who demand the impossible from
workers in a system that is incapable of enabling the workers to achieve what
they have been asked to do. Some trainers recommend that managers and their
workers jointly do the red bead experiment and discuss it together as a step on
the way to changing the behavior in their organization. I think that it is
sufficient to watch the experiment but I think it is very important for the
student to watch it, not just read about it. After viewing and perhaps
discussing the red bead experiment with others, the student is likely to be
less enthusiastic about arbitrary goals and management exhortations or slogans.
Also it’s likely that the student will develop a more favorable assessment of
the willingness of most workers to attempt to do whatever management requests.
These likely changes help make the student a more effective manager.
If you find that the pace of blog posts
isn’t compatible with the pace you would
like to maintain in studying this material you can buy the book “The Manager’s Guide for Effective
Leadership” in hard copy or for
Kindle at:
or hard copy or for nook at:
or hard copy or E-book at:
