Death to the Performance Review!

I came across a blog post on the Lean Blog about “Professor Channels W. Edwards Deming and Writes "Get Rid of the Annual Review” that comments an article in the Wall Street Journal by Dr. Samual Culbert, a Professor at UCLA Anderson School of Management. The premise of the article is that 

“It [Performance Reviews] destroys morale, kills teamwork and hurts the bottom line. And that's just for starters.”

Amazing, finally somebody has successful articulated exactly how I feel and what I want to say after every performance review that I have ever experienced. I am sure many of us have experienced this inexplicable sense of anguish, desperation and “I am not good enough” that follow the days after a performance review. It doesn’t matter how many positive and how many “great”, “excels in”, and “could not do without you” comments you get. We always focus on that one “needs improvement” or “could do better” comment that is probably in there, as Prof. Culbert points out, to justify the pay increase (or not) that has nothing to do with your performance.

“It isn't, "How are we going to work together as a team?" It's, "How are you performing for me?" It's not our joint performance that's at issue. It's the employee's performance that's a problem.”

I believe that the practice of performance reviews is in fact a symptom of lacking leadership skills. In this modern age we love the new shiny tools, and the diet pill. There is no substitute to the social interaction and personal sacrifice that a leader needs to exert in order to create a winning team. Dr. Culbert points out, which is so much in line with my experiences - it brings a chill to my spine:

“Instead of energizing individuals, they are dispiriting and create cynicism. Instead of stimulating corporate effectiveness, they lead to just-in-case and cover-your-behind activities that reduce the amount of time that could be put to productive use. Instead of promoting directness, honesty and candor, they stimulate inauthentic conversations in which people cast self-interested pursuits as essential company activities.”

When lacking skill we naturally look for tools as a substitute. If you don’t know how to fix a car, then it certainly will not help to use the expensive wrench. The scary part here is that there are even software tools for this! You need to acquire these skills and expertise, which in the case of leadership requires both years of experience and some fundamental personal traits that not everybody has. 

As Dr. Culbert also points out we love to measure, yet measuring requires some kind of baseline.

 

“In almost every instance what's being "measured" has less to do with what an individual was focusing on in attempting to perform competently and more to do with a checklist expert's assumptions about what competent people do. This is why pleasing the boss so often becomes more important than doing a good job.”

We love quantifying for many reasons, but it does not work for everything, especially when it comes to leadership and team work. It is another example of “Quantifying the Unquantifiable”.The end results are much more destructive than they are helpful or performance enhancing. Mark Graban points out in his blog post that this is very much in line with the teachings of Dr. Demmings. Demming in fact pointed out: 

"Running a company on visible figures alone is one of the seven deadly diseases of management. "

I have had this blog post bottled up so long that just finally writing it feels good. Thank you for the inspiration Dr. Culbert, I am now officially a fan!

What makes a good leader?

I have observed that discussions about what makes a good leader focus on personal traits, achievements and personal experience. It is always about the individual. We have the notion of leadership and heroism, which in fact have nothing to do with each other. Actually heroes are not necessarily good leaders because they tend to do things by themselves - alone.

I find it interesting that most of what has been written about the making of a good leader or leadership development is by persons who have achieved a position of power and influence and use retrospect. My view is from a position in “the weeds”. Although it is very important learn from history and experience, we also have to understand the “Now” and that “Now” is already history. We live in a dynamic environment that is every changing. What makes a good leader is specifically the ability to deal with this dynamic environment from all the different aspects, most importantly social, organizational, and business. It is as if we always hear about the successes and not the failures. E.g. you always hear about seamless child births that take an hour or two in labor, not the ones that take 22 hours in labor and end with an emergency C-section.

I believe that just as important to leadership development is environmental influence. The environments in which we are able to operate, interact and transform also say a lot about leadership capability. We are all products of our environments and I would venture to say that being in the right environment has a lot to do with leadership development. Someone may have all the right things to be a good leader but if he is in an environment that never lets him emerge as the leader he is, it is not going to happen. Some of the things that foster these are social interaction, experiences (both success and also importantly failure) in the context of a group, not personal failure. Great leaders emerge when they rise to the occasion typically by mobilizing a group of people to perform and achieve success by empowerment, motivation, and inspiration. If the environment is inhibitive, such as micro management, short term performance goals, positions that are not a good fit it may never happen – they will never realize their true potential. The people that I look up to as great leaders do not necessarily have prominent personality, but rather the ones that are highly regarded by their peers for guiding shared successes and achievements.

Product Management & Leadership

Over the last period I have been pondering about the Product Management and Leadership. The obvious connection has to do with the fact that setting strategic direction in both cases is a main component. However how can one even talk about these in the same breath? Product Management is function or role in a company while leadership – well so much has been written and discussed about it that it is hard to even find a starting point. For example about Technology Leadership.

That being said I have some ideas about where there are things that are may be important to understand between the two. Why you may ask is this even important to write about? Well not for any specific reason other than interest and current observations in my professional life that have been lacking, misused and/or I feel not being done properly. So this blog posting maybe nothing more than venting, letting some hot air out – if you know what I mean? Yet there may be some lessons to learn, for me at least by merely trying to articulate some of this.

Since good leadership involves the ability to develop a strategy, or strategic direction, it is natural to think that a Product Management role needs to have somebody with good leadership skills. However in many cases the Product Manager is used to nothing more than gather and define market requirements, while assisting in market positioning. Doing these tasks in the absence of the ability to affect the strategic direction relegates the Product Manager’s job to a secretarial nature. I call such Product Manager – Product Secretaries. Their contributions are more administrative in that they are conveying other people’s needs, in this case the Market or customers to the product development organization. 

Leadership is about empowering, motivating and inspiring people to do more than what is expected of them. Empower, motivate and inspire – that cannot be said enough times. It is the ability to guide a group of people to perform better than the sum of their parts – or individual contributions. Empower, motivate and inspire – did I mention that? Not enough… In the context of the Product Management role collaboration is also very important. Another of those forgotten aspects since most cases Product Managers are focused on one or many products. Think if we can foster collaboration (yes empower, motivate, and inspire them to collaborate) the group will work together, learn from each other and find many aspects of the market needs that may be complimentary as well as new ones. We as humans are inherently social beings. It is actually quite easy for us to collaborate. However when management is applied instead of leadership, personal goals and adherence to process wins, quenching the elemental fundament for collaboration. A posting in the "Agile Management Blog" gives an example.

Another interesting observation about leadership in product management roles is the fact that personal opinions become factual. Since we are trying to set a strategic direction with the lack of market evidence or data we shape opinions into facts. We need something to base decision on right? It has not been said enough times “Your opinion although interesting is irrelevant” (from Pragmatic Marketing, a version of an Albert Einstein qoute). We may take a word of warning from the current financial crisis, some say caused by the thinking that we are invincible in our actions and opinions. As long as we achieve our short term goals – let’s just ride it. Well at a certain point we will hit the wall, which apparently they just did, and we get smacked in the face with reality.

Organizational Performance

I recently answered a question on LinkedIn that I tought would complement some of the earlier discussion in the post about Agile Manufacturing Systems.

Dumitrescu Bogdan asked: When and why do network organisations(companies) perform poorer than hierarchical ones? The structure of organizations certainly has great impact on their performances, network forms of organizations have emerged under cultural impact (see Guanxi business) or under the pressure of poor performance of hierarchies/bureaucracies; networks forms of organisation have proven their potential (see the Asian Tigers) but sometimes networks fail, when and why?

In order to answer this question you need to take a look at the pros and cons of each type of organization. A hierarchical organization is well suited in sustaining its current business model. Think of it as highly tuned and very god in dealing with its known business environment. Everybody knows their role including the politics and therefore as long as the environment is stable – not a lot of changes both internally and externally such as new products, emerging markets, etc – then it is pretty well functioning. Such an organization is less suited for example in turbulent markets, where there may be a need for a dynamic and risk prone business strategy. Flat organizational structures, i.e. networked or sometimes also referred to as Heterarchical, are better suited to this situations since they can change easily and tend to leverage people’s inherent adaptability. This type of organization, when it is well run, adheres to “Holonic” principles – a term used to describe the mechanics of a social system. The weakness of a flat structure is that it is typically not very efficient. When the business environment is relatively stable a hierarchical structure will in probably perform better. Also flat structures are typically much better in fostering innovation and creativity. People tend to feel more engaged since they share responsibility, as compared to a hierarchical organization where they are told what to do. This is an important point – the ability to motivate and inspire people (aka leadership) can make any organization excel. One of the methods to do this is to make people feel that they have an effect on the outcome, shared responsibility etc. This is probably why Toyota is so successful.

Research about Agile Manufacturing Systems

I recently read a post in a Yahoo group that I am a member of thought was interesting in

holonics · Holonic Manufacturing Systems

.

Anthony Reardon posted:

"The first thing that came to mind when I read the goal of HMS at the entrance to this site was something I saw on National Geographic I believe. They were doing some deep water exploration and encountered a previously undiscovered form of life. Simply put it was a collective of single cell organisms that had adapted to work together- thereby creating an organization yet not classifiable as a self contained organism in the usual sense. Some had adapted a focus on bringing in materials, others to process, and others to move through. The benefits of the work were distributed throughout the organization. Could represent some of the earliest activities of holonic organization and I think a great starting point for discussion."

My response:

You bring up a very important point with the analogy ot biological systems. I would like to share some classification of the different approaches that have been present specifically relating to manufacturing systems. Most of this research was initiated in the 1990’s and has unfortunately have not evolved much since then as the original researches went in different direction including myself. All these approaches share a common goal - to achieve agility by imitating systems that exhibit chaotic dynamics and emergent behavior, which are the key to agility and of course adaptability. Emergent behavior is how these systems are able to deal with unanticipated situations; in fact this behavior is how they survive, competing with other organism/systems. This may be obvious when you consider the characteristics of agility or, better yet, observe agility in nature. The organisms that you describe have a goal: To sustain themselves and grow. These “unintelligent” living cells achieved symbiosis to create a new life form – that is emergent behavior. Interestingly some of the research in this field focused on “cellular automata” also related to research in the field of Artificial Life.

In general there have been 3 threads of research specific in the manufacturing system domain. They are:

Biologic Manufacturing System: This research was spearheaded by Kanji Ueada in the 90’s. The idea is quite far reaching and tries to imitate the behavior and mechanism of biological systems in a manufacturing systems. The main concepts are “Genetic Coding”, and “self Organization”. In a BMS the cell “attracts” the sub-components it needs, and “repels” the sub-components it produces. Ueda points out that the main problems that present manufacturing system have are caused by the separation of artifacts and information. Thus products and corresponding information are separately processed. He therefore he suggests that like in the realm of life, artifacts and information should be inseparable. This makes the coexistence of such contradictions as flexibility and autonomy possible. Read more here (http://www.cam-i.org/displaycommon.cfm?an=1&subarticlenbr=70)

Holonic Manufacturing Systems: The main notion of this concept is to imitate human social behavior in manufacturing system, as I posted in a post in this blog and in the Yahoo Group of course.

Fractal Factory: The theory regarding the Fractal Factory has its roots in Germany and was initiated by H.J. Warnecke – as introduced in his book “The Fractal Company (see it on Amazon). Warnecke suggests that the manufacturing systems of the future have to be seen by embracing the whole of reality by using a holistic approach. The Fractal Company attempts to reduce the consideration and phenomena in industry to a common denominator by applying this holistic approach. The term fractal is used because of the nature of fractals, which according to Warnecke should be imitated in the manufacturing systems. It is an independent entity within a corporate structure whose goals and performance can be precisely described. Warnecke lists the following characteristics for fractals: Self-similarity, Self-organization, Self-optimization, Goal-orientation, and Dynamics.

There is also an excellent paper written by some folk at the CSIRO Manufacturing Science & Technology, Preston, Victoria, Australia that compares these difference concepts.

Much of the research at the time was focused on realizing some of the mechanics and behavior of these system using Multi-Agent systems – since the structure and behavior of these systems resembled the same attributes that made Bbiological, Holonic, and Fractal so agile.

My personal area of research during these times was Holonic Manufacturing System as I pointed out in earlier post in the Yahoo group. Take a look at my Blog for some more on HMS as well. If you are interested in more information let me know I can share some publications that I have on these topics.

Discussion about metrics and KPIs

The following are snippets of a discussion that I have had with Scott Stephens (read his blog ) that started as an answer to a LinkedIn question. I think that it has some important and interesting points about metrics and KPIs.

Question from Scott:

What is your source for KPIs or business metrics? There is a challenge identifying which business measurements are important, how to measure, and how often to measure.

Me
Metrics are used to gauge and measure how a business is performing. Performance is how effectively a business is achieving its defined goals. Hence metrics only make sense in the context of business goals. In order to find the important metrics for your business you should ask yourself what are my business goals and how do I know that I am achieving or performing to the defined goals. Dr. Deming once said that: “Running a company on visible figures alone is one of the seven deadly diseases of management. Manage what you can't measure“. If you are looking for financial metrics the Balanced Scorecard methodology should be a starting place. My suggestion would be to make sure you well defined goals and then figure out how you would measure you are performing against these goals. Those will be the metrics that matter to you.
Scott: If I was specifying an SOA approach to systems, I would want to know what is the required operating spec and how would I state it. So if I know that to achieve a production schedule I need raw material availability, what is the metric to measure raw material availability? What is the definition? Is there a resource that I can share with my supplier? Would they agree that it is a “standard?” Does CAMSTAR software recognize those standard metrics? If so, where do they come from?
Me: Manufacturing KPIs are not practical to standardize. I have done some research into the matter and what I have found is that although there are some definitions of general (or meta) standard calculation their implementation differ. This phenomenon is not only related to KPIs in manufacturing but also to Manufacturing System that are notoriously heavily customized. It is my contention that a standard Manufacturing System, as well as manufacturing KPIs that can be applied broadly is an illusion. The main reasons are a direct result of the dynamic nature of the manufacturing shop floor. Even in companies that try to standardize you will find difference between production lines that manufacture the same product or product family. This is because manufacturing systems evolve; driven by the need to optimize and reduce waste. That is of course is also part of the continuous improvement philosophy. Hence KPIs that are defined today to measure performance toward a goal may not be valid tomorrow since the goal and/or environment have changed.
Scott: I agree that based on my research there is little standardization in the world of business measurements but I am not sure that this is a function of the uniqueness of the users or simply not much work in defining and developing metrics resources. I also agree with the continuous evolution of measurement and process but (and maybe this is my background in systems engineering) I believe that a top-down approach organized by high level measurements will support a results driven business and accommodate the change that you high light. Schedule performance, for example, is a metric that I think crosses multiple industries and organizations. The broad definition and method for calculation will not change although the mechanics for driving change in the measured result will.

Mission and Vision

This topic has always been close to heart since I have experienced both the good and bad side of it. Recently I answered a question on LinkedIn on this topic and thought it would be a good idea to share it.

Here is what I replied:
"I believe that it has to do with leadership. Vision and Mission statement like many other things are part of a company’s culture and organizational development, and have everything to do with motivation and leadership. In order for Mission and Vision to have an effect in an organization, the people have to
1) Know them
2) Understand them
3) Believe in them

In most cases Mission and Vision are known at best, rarely are they understood by anybody else other than the team that came up with them, and even more rarely to people truly believed in them. Intriguingly, when people believe in these statements they are not really necessary, since at that point they are simply part of the companies’ culture. In such cases you will also observe a correlation between strong leadership and organizational focus.

So it really doesn’t help to keep pushing these to people to remember or memorize the statement, you have to motivate them to know, understand, and believe in it."

You can view the whole thread here.

But really what prompted me to write this posting is a proverb I came across:

"Tell me, I forget. Show me, I remember. Involve me, I understand."
-- Chinese Proverb

The Quality Monster

When I was fresh out of college and got involved in my first consulting gig I was somewhat confused to learn about the prevalence and power of the “quality department” in most of the companies that I was working for. Through my studies I learned that quality was a controlling concept that manufacturers used to make sure that everything was – if you will - ok with the product. It took my quite a while to understand and grasp the extent of this monster of an organization, which seemed to have a deliberate separate existence within each company.

Where did this quality organization come from? It seemed unnatural to have quality managed by a separate entity. My understanding at the time was that quality was inherently part of the process. It came from good engineering and good craftsmanship – with a sprinkle of discipline. If you separate the quality management from the process, you create a conflict of interests. The people involved in each department strive towards different goals.

Why then do we have huge quality organizations in regulated industries? Ah-ha “regulated” that may be the clue. It seems to stem from the push for compliance. Regulated bodies like to have confidence that there is compliance. How better to show this other than be dedicating a separate organization to secure compliance? So it seems that in fact its politics and not anything to do with good engineering or manufacturing practices.

In my mind quality and product are tightly connected. Quality products is what we want, there is no sense in product with no quality. Therefore it makes no sense to separate these to organizationally either. Like a good German engineered car (or Japanese nowadays) it is a result of an effective production system. In fact in quality is something you get free if you simply Lean-out your process. Quality is inherent to the process. However you can’t just tell your quality department to go home one day? Is it me that fails to see the benefits in what we consider best practices?

Re-inventing the CIM Wheel?

Lately I have been involved in launching a new product portfolio that consolidates two major manufacturing system’s software domains – manufacturing execution and manufacturing quality. All the discussion around the positioning and value proposition of this new “Integrated” product brought up and discussed ideas that were not in fact new. Although for years, there has been consensus that manufacturing is best operated in an integrated manner the common business practice around adoption and implementation of such systems is still very much departmentalized. In the 80’s the concept of Computer Integrated Manufacturing or CIM as well as other initiatives brought strong focus on the integrated nature of manufacturing and more importantly putting the customer in the center, in other words customer focus. It seems that the originator’s of these concepts where already seeing what is obvious in today’s business environment.

It does not cease to amaze me to what level we keep “reinventing the wheel. In fact in this case we were re-inventing the “CIM Wheel”. Yes remember that concept? Anybody with a degree in industrial or manufacturing engineering has hopefully had some exposure to this concept – right?

There was talk about “breaking down the walls”. Design for Manufacture, Design for X, Concurrent Engineering, etc – remember these hot topics from the 80’s and 90’s? However looking at the picture in today’s manufacturing businesses it is surprising to see that the walls are still there and sometimes they have been re-arranged and reinforced. It seems that the proliferation of information technology with all its rewards and benefits is also used as a tool for reinforcing these walls. How many times has somebody used the “it’s their system…” as an excuse. Another aspect of all of this in comparison to 30 year ago is the emergence of new IT department with CIO leadership that sometimes turns out to be keeper of all the gates between the walls!

So what is it that makes it so hard for us to re-use these old concepts? I am not sure. One notion is that the people that are currently moving into executive or positions of increasing influence where in fact educated during the 80’s and 90’s where these concepts where most prevalent. But is that the only reason? I suspect not. I believe that they are in fact valid today as much as they where 20 or 30 years ago. In fact one of the main barriers at that time was technology, which has advanced explosively and today provides us a rich and usable platform to achieve truly “integrated” manufacturing systems. I believe that today we prefer to use the term interoperability but in essence the goal is the same.

What are Holonic Manufacturing Systems?

I thought that I would start some posts in this blog about some previous research that I have been involved in- Holonic Manufacturing Systems. I feel that the theory and the fundamental problem that it addresses are still very relevant in todays world - and maybe even more so?

The Holonic Manufacturing System (HMS) is a new paradigm for next-generation manufacturing systems, which presents a concept that can be used to achieve agile manufacturing systems. It suggests a new paradigm in manufacturing, which changes our old outlook, yet brings many challenging technical problems to solve. The HMS theory focuses specifically on the field of manufacturing control and information technology in manufacturing. HMS is aimed at meeting the challenges of manufacturing environment for mass customization or low-volume and high-variety products. The idea behind HMS is to provide a dynamic and decentralized manufacturing process, in which humans are effectively integrated, so that changes can be made dynamically and continuously.

The central concept of HMS is the term “Holon”, which originates from the work of A. Koestler. A Holon is defined as simultaneously a whole and a part of the whole, thus it can be made up of other holons. This property ensures that holons are stable forms, which can survive disturbances. Furthermore, a Holon is autonomous and co-operative and sometimes intelligent. This property ensures that they are intermediate forms, which provide the proper functionality for the form they are part of. Alternatively, holons have a self-assertive tendency, which is a manifestation of their autonomous nature, and have an integrative tendency, which expresses dependence on the larger whole or their co-operative nature. The Holon's hybrid characteristics allows for entities that co-operate with other entities by offering services to them (servers) and at the same time can act autonomously as free a entity (free agent).

Finally the notion of a “holarchy” is introduced as a dynamic hierarchy of self-regulating holons. The strength of a holonic organization, or holarchy, is that it enables the construction of very complex systems that are nonetheless efficient in the use of resources, highly resilient to disturbances (both internal and external), and adaptable to changes in the environment in which they exist. The HMS paradigm seeks to translate this con­cept, that Koestler developed for social organizations and living organisms, into a set of appro­priate concepts for manufacturing industries. The concept combines the best features of hierarchical and heterarchical (the opposite of a hierarchical) organization, since it pre­serves the stability of a hierarchy while provid­ing the dynamic flexibility of heter­archy.

I know that this is very academic - I will follow up with some posts that exemplify this theory in the future. What do you think?

Welcome everybody!

I am new to this, but I thought that I would give it a try.

In a world where marketers and almost everybody is spreading hype about nearly everything it is getting harder and harder to understand what is the true essence of things that matter to us. Therefore I decided to I can maybe contribute in an area that is of interest to me - namely manufacturing systems. I have been working with and researching in this domain for quite some years now and I am baffled everyday by how people and organizations attempt to solve problems with the latest acronyms. We are always looking for the quick-fix, yet I have noticed that in most cases we are re-inventing the wheel. The Problems and challenges that manufacturing organization face have been the same for quite some years - it is the solutions that change.

So hopefully this blog can start some healthy discussion and exchange of information about this topic. My intent is to voice some opinions in order to start this discussion - hopefully this will work?