Serving the People to Lead the Organization

May 26, 2013

Live and work to serve the people. This is the vital but rarely mentioned part of any effective management system. Servant leaders live and work this way. They foster a community that shares commitment to the needs of others. Indeed, servant leaders are selfless. They put themselves last. They put first the interests of the community, so their organization can make a positive difference. Next, they put the well-being and interests of the people who rely on them. Last, and last all the time, they consider their own interests.

What are the other attributes of the leaders who serve to lead?

Servant leaders understand the power of their organization as a system. They take responsibility for their system. They ensure their organizational management system is responsive to the needs of stakeholders. They consider the needs of employees, customers, suppliers, owners and others affected by the organization. A servant leader does not blame others for the poor performance of their system. They make followers less fearful of speaking up; however unpopular the truth may be.

Servant leaders ensure departments collaborate effectively. Their management system is cross-functional or process-based. Such systems enable organizational learning of future opportunities. Such systems also reduce the associated adverse risks. Servant leaders persuade, monitor and coach users to show respect for the requirements. They also show their respect for the organizational management system. They ensure it is improved and changed as necessary to enable the organization to improve its performance for stakeholders.

Servant leaders know their strengths and weaknesses. They understand that their team members have innate strengths and weaknesses too. They ensure process teams blend the different strengths of individuals for shared success. They nurture the personal, professional and spiritual growth of individual team members so individuals can make the best use of their talents.

Servant leaders are able communicators. Their systems gather data. After data analysis, information helps with effective decisions. Servant leaders actively listen and encourage active listening by decision-makers. Servant leaders also observe and seek to understand the needs of any silent stakeholders.

Servant leaders see beyond the limits of their organization with respect for customer needs and the needs of other stakeholders. Servant leaders focus on long-term organizational change. They develop future leaders so their organization continues to enable success for the stakeholders.

Servant leaders exemplify, align and share the behaviors, ethics and values of their organization. Their inspirational organizational culture creates and sustains a healthy work environment. It is integral to the holistic management system that is conducive to quality in everything the organization does.

Why no social responsibility certification?

April 25, 2013

Many organizations now are developing their management systems to deliver social responsibility for sustainable stakeholders. They realize that, as with ISO 14001, they must go way beyond compliance with the law to be ethical and socially responsible.

Indeed, our supplier networks must be helped over many years to fulfill requirements while preventing loss and improving lives of their stakeholders.

As organizations create sustainable stakeholders we can learn enough to specify viable requirements (perhaps in ISO 26001) from years of adopting the recommendations of ISO 26000. This may be helped by the mother of all international management system standards, ISO 9001, turning ISO 9004’s sustainability recommendations into requirements (audit criteria).

We need to learn from the effective socially responsible organizations creating sustainable stakeholders all over the world before we develop the definitive audit criteria necessary for any credible certification scheme.

Meanwhile, we among the world’s citizens should not rely on ISO (or auditors!) to protect our rights. We must continue to fight for our rights so we value them and protect them.

Is defect the same as nonconformity?

March 9, 2013

Defects adversely affect the functionality of the product; indeed the defective product may be dangerous. A product’s nonconformity is a failure of a characteristic to meet a requirement. Defective products are therefore more serious than other types of product nonconformity. The gap between the two (defect and nonconformity) is wasteful but a margin of safety is necessary because designers and customers seek assurance of safety, reliability and durability but both have limited information about the actual performance of materials, structures and subsystems in a wide variety of operating conditions.

Surely, because of these unknowns, we have to treat product nonconformity as if it were a defect? Therefore, defect and nonconformity may differ but we treat them the same way in that they must be corrected and that we should learn from them to improve our management systems.

In the continuum from an outcome being defective to perfect, we could usefully think along the following lines:

1. Defective – outcomes may injure or kill someone
2. Nonconforming – outcomes fail to meet a requirement
3. Quality – outcomes fulfill customer requirements
4. Excellent – outcomes exceed the needs of customers
5. Perfect – an ideal many choose to pursue

Meanwhile it is reasonable to expect designers to continue to improve their processes and product specifications based on their understanding of the actual performance of materials, structures and subsystems. This knowledge can be used to close the gap between defect and nonconformity.

Yes, designers must also address service quality or the customer’s feelings. Customer feelings are among the needs translated by designers into product requirements. Consequently, they appear in the product specification not as customer feelings but as product characteristics. We may prefer our tea served with love. The designer knows this but the service specification remains silent on this point so as not to sully the love characteristic of the service by specifying “serve with love”. This is why training is the key to excellent customer service. Designing the service part of the product remains an intriguing area of research. Of course, we continually learn more about product design and delivery by listening to the customer’s perceptions about how well their needs were fulfilled.

Differentiating clearly between an acceptance criterion (a requirement) and a blemish or deviation from perfection remains a difficult quest but we are on the other side of that continuum when we are talking about the difference between a defect and a nonconformity. From an engineering or design point of view, specifying the requirements that enable everyone to uniformly differentiate between 1, 2 and 3 are seen as the most important. Between 3 and 4 we have a point where customer needs become their new requirements. Some companies, such as Apple, anticipate or stimulate this transition point from hidden needs to requirements that drive customers to buy their products better than most. This may be due to the designers being very close to, if not the same as, the more futuristic customers.

How do I measure the effectiveness of training?

February 19, 2013

Why do we feel a need to measure the benefits of doing the right thing? We find this in quality costing too. Most quality costing is about the cost benefits of keeping promises instead of the cost benefits of making the promises valued by customers. Likewise, we need to do enough of the right thing the right way with our organization as a system to fulfill our collective objectives of creating (and keeping) more successful customers.

People, of diverse innate abilities, benefit in different ways from education and training. Some employees benefit immediately from the formal education and training. Others benefit more from workplace experiences following the education or training. Moreover, we all benefit from a process-based management system that helps us to determine requirements and coordinate our work to fulfill requirements.

Taking the individual out of the system, one could measure the abilities, skills and knowledge of each individual before and after the training session. However, we cannot change the innate abilities of anyone and the slower learners from workplace experiences may be marked down. This is not to mention the contributions or impediments of the leaders and the rest of the system.

Diverse process and project teams comprising individuals of different strengths and weaknesses help each other to fulfill objectives. Managers wisely play to the strengths of their people and avoid exposing their weaknesses. We cannot make everyone the same like robots.

What counts is competence of the individual, the process, leadership and the system of which all three are part. Therefore, we have to optimize the system (parts that work together) so it adds value faster and prevents loss sooner. $ per millisecond may be the ultimate metric appearing on the dashboard for all to see as a smoothed moving average.

What is the value of quality?

January 4, 2013

Some organizations survive by reducing their price of nonconformity from 40% to 20% of revenue. These organizations inspect and audit to stop bad quality from reaching the customer. Reducing the price of nonconformity (PONC) is their laudable quest. If the organization served no customers or delivered no product, PONC would be zero! Quality management therefore requires another metric.

The term “value of quality” makes us think about this. Customers pay for whatever they value. They buy when they are confident that what they buy will fulfill their needs. These needs include affordability. Therefore, we manage quality to deliver value. This includes preventing loss.

Organizations prosper by ensuring they add value faster than their competitors do. They ensure their organizational management systems enable employees to add value quickly. Organizations apply this thinking (summarized as $ per millisecond) when developing, using and optimizing their management systems to deliver more value even faster. Consequently, they can earn a lot more with services and products that are highly valued by more customers.

Leading organizations design, make and deliver services and products that exactly fulfill the needs of their intended customers. They avoid waste in hitting this target. They learn of new needs and new ways to add value – faster and perpetually. They know that sorting good product from bad (aka inspection) slows the velocity of adding value. They know that falling short of customer needs wastes valuable resources. They know that exceeding customer needs, in terms of what they value, increases costs without reward. They may reach a design dilemma: features that do not fulfill customer needs are a waste but delivering more features than customers initially say they require may expose needs not fulfilled by competitors.

The product and its outcomes may include the customers’ wider perceptions of value. Customers used not to care how well their favorite company treated its suppliers or paid its taxes. Increasingly even the most loyal customers care enough about any suffering in how the product is made. Imagine destroying a valuable brand by misusing it as a tax dodge. Customers and employees care about global organizations paying taxes where they work and live. They value social responsibility enough to influence their buying decisions and their career choices.

Hence, quality includes value as perceived by our customers as well as services and products free of nonconformity. Organizations develop, use and improve their management systems to enable employees to add value faster while preventing loss sooner.

2012 in review

January 1, 2013

The WordPress.com stats helper monkeys prepared a 2012 annual report for this blog.

Here’s an excerpt:

600 people reached the top of Mt. Everest in 2012. This blog got about 3,400 views in 2012. If every person who reached the top of Mt. Everest viewed this blog, it would have taken 6 years to get that many views.

Click here to see the complete report.

Playing our part in value networks

December 22, 2012

Stakeholders may dream of having their requirements satisfied by the organizations that affect them. Some politicians and NGOs say the stakeholders have the right to have their requirements fulfilled. Others say that stakeholders, who can, should earn that right. It is intensely political as the forces for “equal opportunities” fight the forces for “equal outcomes”.

Organizations can understand themselves as systems and then develop their process-based organizational management systems to enable workers to add value faster and prevent loss sooner to benefit all stakeholders. They reward employees for working to benefit customers so employees can look after their families, their communities and themselves.

Businesses network and these networks comprise many different organizations so they are complex. Members may organize themselves to become a value network. Organizations are the nodes in the value network. Each node interfaces with other nodes that use contracts to govern their relationships as customers and as suppliers. Building, supporting and running a value network requires transparent, voluntary, consensus standards. Some of these standards specify more reliable management systems. Organizations develop and use their management systems to govern their work. They may even show they are ethical and competent enough to join and remain members of the value network. Once a supplier promises a standard, customers may use contracts to enforce even the voluntary standards. Organizations can and do impose strict selection and re-selection criteria on the members of their value networks.

Of course, the leaders and managers of the value networks and the organizations that comprise these networks should personally be transparent and accountable. However, to encourage risk taking to generate wealth, the individual decision makers are largely protected by their organization becoming the person accountable in the eyes of the law.

This separation of the organization from the people that run it creates mistrust. How then are customers confident enough to do business? Personal relationships count for a lot in making and accepting promises. The organizational management system helps salespeople and sales processes to make and keep competitive promises for their customers.

Customers and other stakeholders rely more and more on the law to protect them from poor decisions and broken promises. Organizations can see the rules are changing and want to stay ahead by broadening their duty of care to include customers, employees and communities. Indeed, the 2006 Companies Act in the UK reminds company directors of these wider duties.

Now we see companies climbing on the long bandwagon named “Sustainability for ALL Through Being Socially Responsible in Everything We Do”. Even if it were available, ISO 26000 certification would not “prove” social responsibility or sustainability credentials.

Instead, organizations have to perform to prove their heads, hearts, decisions and actions are socially responsible to their stakeholders. Stakeholder trust may then grow from websites that truth-check the social responsibility and sustainability claims of any organization. Indeed, stakeholders may fund these websites directly or indirectly.

Instead of publishing socially irresponsible versions of “greenwash”, may we see more leadership by global companies benefiting their stakeholders wherever they operate?

The primacy of process

November 3, 2012

Many people confuse processes with procedures. Processes are the work of cross-functional teams. Procedures are the specified way of doing the work. Procedures can be mind-numbing for competent workers especially when they specify unnecessary detail or are used instead of training.

A process may or may not add value. A procedure may or may not be effective and may or may not be documented.

Processes are the counterculture where the culture is for functions to congregate in departments to politick for promotion. Such departmental thinking has to change for the functions to coordinate their work to form a joined-up process to create more successful customers.

Indeed, processes refocus workers from keeping old-style departmental bosses happy to collaborate in satisfying customers. Processes that add value to inputs are the lifeblood of organizations that want to create more successful customers. This makes the new-style process bosses very happy.

Processes usually bring resources and controls so the work of humans can add value to a wide variety of inputs. Resources include skills, knowledge, facilities and equipment. Controls include care, coordination, methods and decisions. Get the inputs, resources and controls right and the output will be free from defects and other failures to fulfill requirements

Middle managers add value by coordinating, monitoring and improving the performance of cross-functional process teams to make sure everyone has what they need to keep their work in balance with customer demand. When customer demand reduces, middle managers or coaches help process teams improve their skills, facilities, equipment, methods or remove kinks from their processes. Or, as a last resort, they may be redeployed to under-resourced processes.

Leaders add value by establishing and living the values that impart care for customers and the requirements of other stakeholders. They ensure their organizations work effectively as systems to direct, nurture, support, redesign and remove processes as necessary to fulfill the organization’s mission. Small companies grow and become successful by providing value and continually improving their management systems, processes and products.

Process Management within well-designed systems are necessary for our work to pay our way in this world as we create more successful customers.

Are management system standards really standards?

October 13, 2012

We expect a standard to be definitive. Products that conform to standards for electrical safety, for example, are safe. But management system standards specify general requirements for parts of the system without guaranteeing the performance of all management systems that conform to the standard. Some say this is because standards for management systems generate widely differing interpretations according to the circumstances of use.

So, is a management system standard like ISO 9001 really a standard?

To answer this we first need to examine the relationship between products, processes and systems. Products depend on their processes. Processes depend on their system. The organization is the system that nurtures or disrupts its processes.

By focusing on product standards, we can verify products for conformity and reject those products that do not conform. But an inspection-led approach to quality increases costs for customers. Some processes result in products that would be too expensive to verify fully. Consequently, for processes that could result in products with hidden defects, we had to have process standards too. These special processes include sampling, testing, brazing, auditing and anodizing.

Then we realized that if standards work for special processes, why not capture a model of how the best organizations actually deliver quality assurance?

This led to the first quality system standards that customers could specify in their contracts. Adherence to these early system standards enabled their contractors to focus their time and effort on prevention to reduce the cost of poor quality. Contractors now paid costs of poor quality so they invested more in the prevention of nonconformity. Customers (and contractors) saw quality improve and their costs reduce. A win for all parties involved.

Customers pre-qualified new contractors by auditing their quality systems. Contractors, having to entertain a customer audit every month or so, found this very expensive. Customers had to reduce the number of second party audits. In 1979, the UK issued BS 5750 as a civilian model for quality systems. In 1987, this standard became ISO 9001. LRQA (Lloyd Register Quality Assurance) was the first registrar accredited in 1985 to certify quality systems resulting in one certificate that was recognized everywhere.

Guidelines like ISO 9004 are not standards because they recommend rather than specify acceptance criteria. Documents that specify requirements for management systems are standards but they need a real customer’s requirements and a real system to be fully useful as standards. When combined with the contractor’s management system the standard’s requirements are usually sufficient to determine conformity or cite evidence of nonconformity for corrective action.

Using ISO 9001 with real external requirements driving use and improvement of the management system we see that it becomes an effective standard. It is possible for a well-trained thinking auditor to gather and evaluate evidence to verify conformity of that system to the standard.

Productive work creating prosperity for all

September 11, 2012

Can we live within our means without robbing future generations of their livelihoods? Yes, by productive work within process-based organizational management systems that eliminate causes of waste, assure quality and assure social responsibility for sustainability.

Process-based organizational management systems, driven by lean sensibilities, enable the people who work within them to add value faster and prevent loss sooner. Productive work adds value to metals, plastics, soils, food, people, data, information etc… That is to say confident customers will happily pay a lot more for the output than the cost of all the inputs. Supported by a management system, work may increase the value of inputs tenfold or more. Some of the increase in value pays for sustainable design, production and delivery. The increase in value also pays for the facilities, investors, money lenders (or partners) and taxes. That leaves the employees who use their share to look after their families, their communities and themselves.

However, countries and their citizens cannot prosper by enabling their people to polish each other’s shoes. Nor can they rely on their citizens continuously shopping for stuff. Nor should they print money willy-nilly. Countries must compete or cooperate on opportunity and quality to export more and earn new money to invest so their citizens can feel secure and confident enough to invest, work, study, play and enjoy family life. Therefore some nations’ taxpayers invest in healthcare, infrastructure and education (especially in the sciences and engineering) to enable thriving enterprises to protect the environment while adding a lot more value for global markets. This way inventors and entrepreneurs are encouraged to solve problems that create wealth and well-being through more value adding work.

Trade imbalances vary according to the relative productivity of each trading nation and that influences the value of each country’s currency. Sharing low value adding work with other countries may result in less inequality globally between countries. Enabling customer countries to make what they would otherwise import could more responsibly improve sales (such as making Range Rovers in Saudi Arabia). Devaluing currency is widely seen as a sign of economic failure but may be temporary to boost exports.

In the eurozone we see the results of nation states affected by these economic facts of life while, unfortunately, sharing the same currency. Germany invested long term and sold its products all over the world. People living in the ‘club-med’ region bought these imported products with cheap borrowed money, instead of earned money, or in place of privatizing and paying taxes to invest in creating more value themselves. Consequently, regions that largely comprise government workers, food growers and hosts of tourists are not adding enough value to compete with “Vorsprung Durch Technik”. Years of nonproductive work, easy money and underemployment are now having their tragic consequences on the lives and fortunes of ordinary people.

Process-based organizational management systems are used to make work more productive in farming, education, training, purchasing, design, production, delivery, operations, maintenance, government, and recycling. Just about every enterprise can benefit or suffer consequences of not providing the means for teams to determine and fulfill requirements. Without process-based management systems we see silos of like-minded individuals trying to keep their bosses happy instead of earning the confidence of customers and other stakeholders. Occupying jobs instead of working productively for customers is a road to ruin. The future may see food producing countries, coupled with government reforms and the removal of subsidies, earning enough for a positive balance of payments with their trading partners. Apart from the adverse and beneficial effects of global warming it all depends on the quality delivered and value added by work of farmers aided by animals and then machines. More productive farmers tend to result in farmhands becoming factory workers adding value to other materials thereby earning more dependable incomes.

And today marks another painful anniversary of four evil acts never to be forgotten. Nations enjoying a temporarily bonanza in non-renewable resources may invest in healthcare, infrastructure and education but some do not oblige their young men and women to work for a living. Wherever the idle live, if they don’t feel loved or are taught they are superior, they may harbor hate for strangers or colleagues. They may even choose work that adds no value and destroys life and lives. Hopefully the reawakening of the people will restore wise leadership, respect for others, productive work and leading-edge science and other important human endeavors.

Sustainability, from being socially responsible in all that we do, can prevail if all nations prepare. Visionary leaders prepare people for the era beyond the loss of abundant natural resources. They enable work to increase value while conserving resources. They cooperate internationally for justice so more people have a chance to work for a secure living. They encourage cooperation and responsible competition. Their example makes us want to volunteer, to contribute to the arts, and to invest so we prosper more equally and sustainably with time for play and well-being from our productive work.

Accordingly, all organizations in government, not for profit and commercial sectors are well advised to develop and optimize their process-based management systems so workers help each other to fulfill stakeholder requirements while removing all work and waste that does not add value for all.