Time to Move Into Other Spots (Again) – Go Add Value Someplace Else

I’m doing it again.  Moving into other spots.

I’m joining some colleagues at the Institute For Enterprise Excellence to understand and pursue “purpose-driven lives” and to try to help others do the same.

A friend gave me a great book by Scott Adams (part of the Dilbert collection) as a going-away present.  This gesture had great meaning for me, and gives me some hope that I’m on the right track for where I can continue to try to add value.

go add value someplace else

I’m still part of the “gang tackle” to transform healthcare and will continue to be connected to the great work at the ThedaCare Center For Healthcare Value.  The work is not yet done, just moving into another spot.


Why Do I Keep Coming Back? Deming Institute Conference

I had the good fortune to attend the Fall Conference sponsored by the Deming Institute this past weekend. This visit was extra special as I was able to attend with my son, Dan.

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The conference was great (as always) and several times Dan asked me how many companies understood and applied what was being talked about and discussed.  It’s pretty clear that the percentage is low.  It would be much easier to say “I don’t see any reason to work uphill since these principles are not being followed by most people.”

Yes, it’s easy to give up.  But I keep coming back.  Why?  Since I first met Dr. Deming in 1985 I knew what he was talking about was important, but was understood by few.  I think it’s important to keep trying and keep up the hope.  As I talk with people, I come to realize that there ARE some people who are “getting it” and the number is growing, but perhaps not at a steep pace.

So, there’s hope that that there’s hope.

I simply don’t see an alternative but to try, and to continue to learn.  I can’t go back to managing by results just because others are doing it.  I can’t start a performance evaluation system just because it’s the prevailing style.  I can’t chop the organization into parts and manage the parts just because others do it.  I simply can’t do it.  And I won’t.

I take solace from the advice from Dr. Deming in is 1993 book The New Economics:

“The first step is transformation of the individual.  This transformation is discontinuous.  It comes from understanding of the system of profound knowledge.  The individual, transformed, will perceive new meaning to his life, to events, to numbers, to interactions between people.  Once the individual understands the system of profound knowledge, he will apply its principles in every kind of relationship with other people.  He will have a basis for judgment of his own decisions and for transformation of the organizations that he belongs to.  The individual, once transformed, will:

  • Set an example,
  • Be a good listener, but will not compromise,
  • Continually teach other people,
  • Help people to pull away from their current practice and beliefs and move into the new philosophy without a feeling of guilt about the past.”

W. Edwards Deming. The New Economics for Industry, Government, Education (p. 93).

Truth And Consequences

There once was a television show called “Truth Or Consequences.”  I can remember watching the version that Bob Barker hosted.

I offered some thoughts on Truth in this blog post for the ThedaCare Center For Healthcare Value.

Here are some thoughts on consequences.

I had the good fortune to participate in a coaching education and training session at one of our Healthcare Value Network member organizations last week.  They have been learning about guiding principles for enterprise excellence.  One of the important points about these principles is that they govern consequences.  While values govern behavior, principles govern consequences.  I often see these two blended together, but there really is an important distinction.

The executive management at this organization has been doing a lot of great work focused on learning about these guiding principles.  They have taken their organizational values and anchored them to the guiding principles.  The result was an articulation of “ideal behavior.”

This coaching course was one of the initial introduction of these ideal behaviors to the next level of management.  The word “consequences” came up.

The traditional view of “consequences” conjures up images of punishment.  That’s not the kind of consequences we were talking about last week.  We are not talking about the CEO or anyone in top management checking to see if people are following the ideal behaviors.  The focus here is “compliance.”

The kind of consequences were were talking about are the consequences of not understanding the guiding principles.  For instance, if I don’t fully understand the principle of “think systemically” I might unintentionally make matters worse for someone else in my system through my actions or best efforts.  The focus here is “understanding and commitment.”

Nothing Lasts Forever

A friend of mine once told me this “nothing lasts forever”.  All things have a beginning, middle and end.  I wrote about this recently in a blog for the Deming Institute.  I wrote about “S-Curves” and how this pattern (that is used in physics, philosophy, marketing, economics and other areas) can be found everywhere.

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We rediscovered the truth of this statement – nothing lasts forever – when our family visited the Boy Scout camp that we (and other families) grew to love and cherish.  The camp is closing.  Nothing lasts forever.

lyle closed

Like any institution, the Boy Scouts of America has problems.  While some people focus on these shortcomings, we always focused on the good things.  Trustworthy, loyal, helpful, friendly, courteous, kind, obedient, cheerful, thirty, brave, clean and reverent.  Few people can argue with those guiding principles.  They will serve you well in life.

My sons (both Eagle scouts as am I) both worked at Robert S. Lyle Scout Camp.  They were a part of the weekend and shared their thoughts (click on the image):

jerry dan

My daughter worked at the camp as well.  She was the health officer when she was on staff.  She made that sign.

annie lyle

Our son and his wife got married at this camp.  Yesterday was their anniversary.  It’s a special place.  It WAS a special place.  Nothing lasts forever.

family at lyle

I heard some advice from the Troop Scoutmaster during his last “Scoutmaster Minute” at R.S. Lyle.  “Don’t mourn because it’s over, smile because it happened.”

with mr f

Maybe some things DO last forever – true friendships, and maybe guiding principles as well:

Trustworthy, loyal, helpful, friendly, courteous, kind, obedient, cheerful, thrifty, brave, clean and reverent.

Performance Evaluations – How Is This Still A Thing?

In 2014 I presented a paper at the Deming Research Summit on the topic of “Understanding and Application of Deming’s System of Profound Knowledge in Healthcare.”

In 2015 I presented a paper on the topic of “Understanding and Misunderstanding Variation in Healthcare.”

This year I’d like to write and present on this topic: “Performance Evaluations – How Is This Still a Thing?”

I’ve outlined my proposal below.  I would be interested to know if anyone would be interested to participate in this effort.  You can respond by commenting on this blog, or sending me an e-mail at steck001@gmail.com.


Performance Evaluations: How Is This Still A Thing?

Proposed research paper for 2016 Deming Research Summit

Dr. Deming saw the annual performance evaluation as one of the systems that would need to be addressed by Western management if they wanted to survive and thrive.

Here are some quotes from his 1986 book Out Of The Crisis:
Chapter 2, Principles For Transformation of Western Management
“12a. 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.”

Chapter 3, Diseases and Obstacles

“Many companies in America have systems by which everyone in management or in research receives from his superiors a rating every year. Some government agencies have a similar system. Management by objective leads to the same evil. Management by the numbers likewise. Management by fear would be a better name, someone in Germany suggested. The effect is devastating:

“It nourishes short-term performance, annihilates long-term planning, builds fear, demolishes teamwork, nourishes rivalry and politics.   It leaves people bitter, crushed, bruised, battered, desolate, despondent, dejected, feeling inferior, some even depressed, unfit for work for weeks after receipt of rating, unable to comprehend why they are inferior. It is unfair, as it ascribes to the people in a group differences that may be caused totally by the system that they work in. Basically, what is wrong is that the performance appraisal or merit rating focuses on the end product, at the end of the stream, not on leadership to help people. This is a way to avoid the problems of people. A manager becomes, in effect, manager of defects. The idea of a merit rating is alluring. The sound of the words captivates the imagination: pay for what you get; get what you pay for; motivate people to do their best, for their own good. The effect is exactly the opposite of what the words promise. Everyone propels himself forward, or tries to, for his own good, on his own life preserver. The organization is the loser. Merit rating rewards people that do well in the system. It does not reward attempts to improve the system. Don’t rock the boat. If anyone in top management asks a plant manager what he hopes to accomplish next year, the answer will be an echo of the policy (numerical goal) of the company. (James K. Bakken, Ford Motor Company.) Moreover, a merit rating is meaningless as a predictor of performance, except for someone that falls outside the limits of differences attributable to the system that the people work in. Traditional appraisal systems increase the variability of performance of people. The trouble lies in the implied preciseness of rating schemes. What happens is this. Somebody is rated below average, takes a look at people that are rated above average; naturally wonders why the difference exists. He tries to emulate people above average. The result is impairment of performance.”


Here are some quotes from his 1993 book The New Economics:
Chapter 2, The Heavy Losses
“Differences there will always be between any two people, any two salesmen, etc. The question is, what do the differences mean? Maybe nothing. Some knowledge edge about variation (statistical theory) is required to answer these questions. Ranking is a farce. Apparent performance is actually attributable mostly to the system that the individual works in, not to the individual himself. A simple equation will help to understand the futility of attempts to rank people. Let x be the contribution of some individual, (yx) the effect of the system on his performance. Then suppose that we have some number for his apparent performance, such as eight mistakes during the year, or sales of $8,0(x),000.

Then x+(yx)=8

“We need x. Unfortunately, there are two unknowns and only one equation. Johnny in the sixth grade knows that no one can solve this equation for x. Yet people that use the merit system think that they are solving it for x. They ignore the other term (yx), which is predominant. There is another factor to take into account, the Pygmalion effect. Rated high at the start, anyone stays high. Rated low at the start, he stays low. Ranking creates competition between people, salesmen, men, teams, divisions. It demoralizes employees. Ranking comes from failure to understand variation from common causes. (See Out of the Crisis, p. 310.) The Red Beads (Ch. 7) will teach us some of the difficulties and errors in ranking people. The so-called merit system introduces conflict between tween people. Emphasis goes to achievement of rank, merit, not on the work. The merit system destroys cooperation. We continue this theme in Chapter 6.”


Purpose of the 2016 paper:

1) To review the arguments that Deming (and others such as Kohn, Scholtes, etc.) have made against the use of the annual evaluation system.
2) To understand the current state of this type of system in today’s organizations by interviewing people in a variety of roles in an organization.
3) Some key questions to explore:
– Are there organizations that do not have a performance evaluation system?
– What has been the experience in organizations that have attempted to dismantle performance evaluation systems?
– For organizations that have performance evaluation systems, what is the purpose? What do they expect the system to do? What actual systems do these systems drive?
– Some specific questions (same questions asked of top management, middle management, front line):
* What do people think the process is getting them?
* Is it pushing strategy?
* Is it promoting cooperation?
* is it pushing performance improvement?
– If you discontinued your current performance evaluation system, what do you think would happen?
– Why do you think your current performance evaluation system persists?
– If you have been the recipient of or the provider of performance reviews, how did you feel or act afterwards both in the short term and long term?
– Other questions?

Ground rules for conducting the research and writing the paper:
1) The authors acknowledge individuals who contributed their time and provided input, but will not attribute quotes to individuals or to organizations.
2) Research will be conducted through phone and in-person interviews with people in various roles in the organization: top management, middle management, front line, human resources, organizational development, clinical, non-clinical, improvement (lean) team support areas.
3) Research will be conducted in organizations that provide healthcare as well as other industries.

Best Conference Ever! – Till Next Year (2015 Edition)

We just wrapped up the 6th Annual Lean Healthcare Transformation Summit in Dallas.  Based on my conversations with many who attended, it was one of the best conferences ever.  Of course I said that back in 2011, and then 2012 and 2013, and then 2014.

There were lots of great things about the Summit.  Most of the key take-aways were hit by Jim Womack in his closing keynote presentation which he titled “Moving On With Mended Management.”  I’ll try to summarize with a “top 10” list:

10.  The title is based on John Toussaint’s latest book Management On The Mend, which was given to summit attendees.  Jim advised everyone to take Friday off, read the book on the flight home (it works below 10,000 feet), and form a plan on Monday.  This book contains ammunition for deniers, resisters and anchor draggers.

9. Jim described his efforts to find a doctor for his own healthcare needs (RFP for Jim’s eye).  One physician wanted to schedule the appointment and procedure at his (physician’s) convenience.  When Jim asked the 2nd physician about his outcome data, the physician said that he didn’t need it (or have it?)  He boasted that he was a “Harvard-trained” doctor.  “So am I!” claimed Jim (where he got his Ph.D.)  Dr. #3 was apparently the one who invented the procedure that Jim needed, but he did that 40 years ago and is now over 80 years old.  Jim pointed out that it was easier to get data to help his daughter buy a used car than it was for him to get data to choose a physician.

8. “You can treat a patient with drugs”, Jim said, “but drugs don’t get at the root cause.”  Jim admitted that he has been a “drug-pusher” in the lean world.  He told people they needed to do kaizens, then more kaizens, then more.  All these tools (add in A3, 5S and others) won’t do it.  What IS needed is a behavior change in management.  (But prescribing drugs is easier, so we tend to do that.)

7. Jim shared a useful resource to deal with the “anchor draggers” who say that lean thinking won’t work in healthcare.  Planet-Lean.com has some useful information for everyone, whether the application is healthcare or any other application.

6, As far as what is yet to be done in healthcare, Jim reminded us that the “authority of lean is your experimental findings.”  So, we need to keep experimenting.  There needs to be more experiments with the payers of healthcare.

5. We need more yokoten, which is more than “spread.”  You can spread anything, like fertilizer or bad ideas.  The people trying to spread need to understand what they are doing.  You can’t spread something you don’t understand.  Jim also advised against “industrial tourism.”  A visit for an hour or a day won’t do it and actually produces more harm.  Yokoten requires adaptation (one-size-fits-all only works with socks).

4. Modern management (Jim called it Sloan management) will continue to produce more MBAs who will produce more KPIs and this will only produce the “triple M” (more meaningless measures).  This will only delay progress and actually works against our efforts.  When bonuses are tied to results, people will find a way to get the numbers.

3. Jim talked about addressing a group of graduating physicians at Harvard Medical School.  He asked them, “what have you learned?”  One graduate said, “I learned how to become a workaround genius.”  That’s the current state.  Our system of education produces skills for workarounds.

2. Regarding a question about what to do with senior managers who don’t understand or are resistant, Jim pointed out that their behavior may be due to not understanding or due to fear.  People in management (nobody really) wants to look foolish.

1. Jim’s final thought for the 600+ who were convened for the Summit was this – “You don’t need luck.  But you do need perseverance.”

Thanks Jim!  We’ll persevere and tell everyone about our progress at the 7th Annual Healthcare Transformation Summit in Miami, FL, June 15-16, 2016;

T-Minus 3 Days Till the Annual Lean Healthcare Transformation Summit – Top Management Has a New Job: Side Management

Last year we created a video explaining the benefits of coming to the Annual Lean Healthcare Transformation Summit.  The experiment went pretty well, so we are doing it again.  Click on this image to watch the video.

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If you are not registered for the Summit, it’s too late now.  We have reached capacity.  That’s a new thing for us this year.  It’s a big deal.

I’ve been doing lots of reading (and re-reading) about the science behind “S-Curves”.  I recently blogged about paradigm shifts and S-Curves here, here and here.

One of the authors, Adrian Bejan, discovered a law of physics that explains the phenomenon of S-Curves.  It is call the Constructal Law.  In his book Design In Nature he defines this new law:

“For a finite-size flow system to persist in time (to live), its configuration must evolve in such a way that provides easier access to the currents that flow through it.”

In this book, Bejan writes:

“One of the most powerful insights born from the constructal law is that social systems are natural designs that emerge and evolve to facilitate the flow of the currents they represent on the landscape.  This evolution has a direction in time toward greater and greater access to move more mass (for example, people, goods, information) per unit of useful energy.

“To show that human organizations are governed by this principle of physics, we should find two features.  The patterns of their channels should have a vascular shape and structure as we observe in other point-to-area flow systems, and this patterns should evolve in time to provide greater flow access.

“This is what we find.  To see how, we have to introduce a cornerstone characteristic of natural design-hierarchy.  Although it has received a bad rap as a symbol of inequality, hierarchy is essential to good design.  Instead of providing advantages to one entity to the detriment of another, it arises naturally because it benefits the entire flow system.”


The prevailing view of an organization is the hierarchy as shown below.  Peter Scholtes provided one explanation about the history of this structure in his book The Leaders Handbook.


Here’s the story as he tells it:

“On October 5, 1841, two Western  Railroad passenger trains collied head-on somewhere between Worcester, Massachusetts and Albany, New York, killing a conductor and a passenger and injuring seventeen passengers.  That disaster marked the beginning of a new management era.

“Prior to the early 1800s in the United States (and the early 1700s in Europe), business was much the same as it had been since the Middle Ages: operating as cottage industries, tradespeople made their wares one item at a time and sold them to their neighbors.  There was no “manager.”  The owners of the enterprises did the work themselves or coached apprentices and assistants who did the work alongside them.  In Europe, quality was assured by guilds and their marks of approval.

“Then came the development of coke as a fuel in England and the discovery of anthracite coal in Western Pennsylvania, both leading to the possibility of mass production and mass distribution.  The owner of a cottage shop could choose to hire engineers to build machines of mass production and by 1830 begin to use the burgeoning rail systems for mass production.  Or the shop owner could stay in the “cottage,” continuously worrying about competition from those on the rail system who had entered the new industrial age.

“It was the time of a great paradigm shift in managerial thinking, the equivalent of letting go of a managerial flat-earth perspective.  For the owners of businesses, these were truly traumatic times, requiring them to rethink the premises and practices of their work: How, they asked, will we run a large geographically dispersed organization?

“Other than the army and the church, there were few models for such a management practice in the 1800s.  The railroads were the first industry to come to grips with how to manage in the new era.  In the United States the Western Railroad was the first to extend itself beyond ordinary regional boundaries, the first with complex schedules and multiple trains on the same track.  it was also the first with a disastrous train wreck, a harbinger of tragedies to come.

“The Massachusetts legislature launched an investigation into the causes of the train wreck and the directors of the Western Railroad appointed a committee headed by Major George W. Whistler to find a remedy.  Their recommendations had major immediate impact on the railroads, over the next decades, helped all of U.S. managerial practice.

“Part of the recommendations for the railroads was an organizational structure that looked like the “train wreck” chart (same as the organization al chart image above).  While the standard organizational chart may seem ageless, it was, in fact, adapted from the Prussian Army and introduced to American business practice as a way to prevent train wrecks!  In its time , it was revolutionary.  Its unique features:
* Central offices run by people called “managers” (a new term)
* Distinct functional divisions
* A “chain of command,” clear line of authority
* Clear lines of communication and reporting
* Clear descriptions of responsibility for each individual from top to bottom.

“Daniel McCallum, President of the Erie Railroad, later elaborated on the Western Railroad’s chart with his Six Principles of Administration:
1. A proper division of responsibilities.
2. Sufficient power conferred to enable the same to be fully carried out, that such responsibilities may be real in their character (that is, authority to be commensurate with responsibility).
3. The means of knowing whether such responsibilities are faithfully executed.
4. Great promptness in the report of all derelictions of duty, that evils may be at once corrected.
5. Such information, to be obtained through a system of daily reports and checks, that will not embarrass principal officers nor lessen their influence with their subordinates.
6. The adoption of a system, as a whole, which will not only enable the General Superintendent to detect errors immediately, but will also point out the delinquent.

Scholtes goes on to say:
“A fundamental premise of the “train-wreck” approach to management is that the primary cause of problems is “dereliction of duty.”  The purpose of the organizational chart is to sufficiently specify those duties so that management can quickly assign blame, should another accident occur.”


So where does the idea of paradigm shifts, S-Curves and the constructal law physics help us to understand what the new role of hierarchy will be (if not “command and control” and “blame”)?

I think the new job of top management (and the hierarchy) is “side management” as illustrated in the diagram below.

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Management should not be in the role of “customer.”  That black line represents the work systems that the front line employees are involved in every day to provide value to the customer.  Management should exist to support this effort, to align the work of everyone to provide value to the customer.

Top managements new role is “side management”, and they are not the customer.