In Search of Excellence: Awaken Your Inner Deming (Part 11)

What's the difference between Compliance Excellence and Contextual Excellence? Is one better than the other? Which one does a Deming organization pursue? In this episode, Bill Bellows and host Andrew Stotz talk about the variety of types of excellence, and why they matter.

TRANSCRIPT

0:00:02.7 Andrew Stotz: My name is Andrew Stotz and I'll be your host as we continue our journey into the teachings of Dr. W. Edwards Deming. Today, I'm continuing my discussion with Bill Bellows, who has spent 30 years helping people apply Dr. Deming's ideas to become aware of how their thinking is holding them back from their biggest opportunities. The topic for today is episode 11: In Search of Excellence. Bill, go ahead, take it away.

0:00:28.9 Bill Bellows: All right. So, as I've been doing for the last few episodes, I like to go back to the prior episode. Because I listen to these again and again and again. Oh, there's other things I wanna say. [laughter] Remember the title of the last session, Andrew?

0:00:46.1 AS: Well, that depends. [laughter] The title was, It Depends.

0:00:50.7 BB: Alright. Alright. So you know I'm fond of that phrase. So I wanna... I thought of after, you know, in the last couple weeks is, I took a class in program management at a big university in Greater Los Angeles. I mean, it could have been anywhere, but it was in Los Angeles, and there were 25, 30 people in the room, maybe more, from around the world coming into this university. It was a three day program, you know, like, $1,800. $1800. I had just joined a department called The Program Management Office, and I thought, I should go find out what program management is it all about? I had some ideas, but I thought, "I want to go take a real class on this." The class was presented by an aerospace veteran in project management. He had been involved in major programs with Hughes, installing, you know, working on airports around the world and other DOD stuff.

0:01:48.6 BB: And I mean, he was, he was a very interesting guy. I got there early every day looking, I was hoping there'd be an opportunity I could start a conversation with him, have lunch with him, that never happened. But three days long. And so, on the second day, he threw out a question to the audience, and people are sitting in a... It's kind of an amphitheater, with the rows were kind of curved. So he throws out a question to the audience and the guy in the front row answers, "it depends." [laughter] And the instructor very deliberately walked from the front of the room, a good 15 feet without saying anything, just walked right at that person in the front row, you know, all at the same level, gets right in his face and says the following, Andrew, are you ready?

0:02:47.6 AS: I'm ready.

0:02:48.6 BB: He says, "Are you an attorney?" [laughter] And I thought to myself, "All of that for the answer, "it depends," really?" And so, [laughter] later that afternoon, somebody asked the instructor a question, "Hey, what if you're in a situation where you gotta deal with blah, blah, blah, blah, blah, this, this, this, this, this, how would you handle that?"

0:03:17.3 AS: And for the listeners out there, you know the punchline here, come on, give it to me. What did he say?

0:03:23.5 BB: No, here's what he said. He said, "Well, if it involves this, I would do this. If it involves that, I would do that." And so, what did I say, Andrew?

0:03:42.6 AS: What did you say? What do you mean?

0:03:44.7 BB: I bit my tongue.

0:03:45.9 AS: Oh, you didn't say anything when he said that?

0:03:48.6 BB: Because what he just said was, "it depends."

0:03:50.4 AS: "It depends" in another way.

0:03:52.8 BB: Yeah. He found another way to say "it depends." So it was also...

0:03:56.0 AS: He sounded kind of smart, you know, well, let's just narrow it down to two potential options.

0:04:00.8 BB: "Are you an attorney?" Yeah. But he still... What he was still saying was, it depends on the situation.

0:04:09.3 AS: Yep.

0:04:09.8 BB: And I just thought... I mean... And not that I didn't mind that answer, but I was just dumbstruck as to why he was so emphatic in challenging this answer, "it depends"? And I just thought, again, I never went up and asked, but I just thought, I wasn't sure it was gonna go anywhere. So anyway, so I wanted to throw that out. Going back a couple episodes, I wanna talk about metrics and KPIs and point out that there's nothing wrong, I mean, we're not saying KPIs are bad. What we're talking about is, when KPIs are used as goals and in a way that unnecessarily drives the organization in different directions, but if a KPI is just a metric of how we're doing in sales, that's one thing.

0:05:03.7 BB: But if the metric is, I want sales to be this number, and I go to people in procurement and say, "I want you to cut back on procurement," you know, we can end up with a conflict. You know, I had a woman in class once who worked for a gym, health club. And her job was to sell memberships and get on the phone every day, sell memberships, sell memberships, sell memberships. And she told her boss, she says, "Now, if I do a really good job, lines will form if we don't get more equipment. So, while I'm doing this, shouldn't we be working on that?" And her boss' attitude was, "You keep working on that and don't worry about that." So what she realized, it was just a revolving door of replacing old people with new people. They were just managing the parts in isolation. But another thing I think we had agreement on, you know, also had agreement on KPIs is it's... We're not saying there's anything wrong with metrics, but in organizations where we've worked, we've seen people drive change with, "give everybody a KPI."

0:06:17.5 BB: We could have great ignorance of variation. We have... Leading to dissolution of, just increased separation of organization. What I'm also reminded of is a quote that Dr. Deming used to use of his statistician colleague, Lloyd Nelson, who said, "the most important numbers used to manage an organization are unknown and unknowable." And one example from when I worked for Boeing is a good friend of mine was at the Boeing Leadership Center and there was a big emphasis at that time on what's called the Economic Profit Calculator. Making sure that business decisions close. They were not gonna build the next generation airplane unless they've got all the sales lined up and you have to have closure and closure within some timeframe, and that person came out.

0:07:12.4 BB: That was the big driving change in that era. Well, right after that presentation by somebody senior, the Chief Operating Officer, Harry Stonecipher presented. And what was near and dear to Harry at that point was something he started when McDonald Douglas was separate from Boeing, then Boeing bought McDonald Douglas, and he was really big on an education program that allowed anyone to pursue any degree, all reimbursed. So if he wanted an AS degree, a Master's degree, a law degree, not only were they paying for the degrees, but there were people getting a Bachelor's and then getting a Master's in Science and a MBA, so he just go at it, go at it. And he's very proud of that.

0:08:00.5 BB: So, my friend Tim is listening to all this and he says, "This afternoon, we heard from so and so in finance about Boeing business decisions needing to fit into this Economic Profit Calculator, how does your education reimbursement program fit into that model?" And his answer was, I thought really profound, he said, "there are some things you just do." And to me that fits in with Deming saying, you can't measure the price of education. We brought an instructor in, we had you away for so many hours...

0:08:34.6 AS: You can measure the cost.

0:08:36.1 BB: And so, we can put some numbers on it. But what are the benefits? The benefits show up in the future. So I really admire that Stonecipher's answer was, I think very much in keeping with Deming is, we're gonna spend money on education. So, I just wanna throw that out for in terms of metrics and what not.

0:08:52.9 AS: And I would just throw in my thoughts on KPIs, which has gotten stronger and stronger over the years, and that is that, I really think people should stop KPIs. And the reason why is, because I think they've gotten to the point where it's just so misused and so, people are so reliant on it. Now, I know that that's an extreme view and so... But I say it to also challenge people to think about it, but if you can't stop the KPIs, then I would say the most important thing from my perspective, is make sure that compensation is not linked to the KPIs. Which of course, people will come back and say, that's the whole point of KPIs.

[laughter]

0:09:44.4 BB: Exactly.

0:09:44.5 AS: And if you remove compensation connection to KPI, and instead of that, you use coaching and working with your team, and you have metrics of what you want to achieve as a company, as an organization, as a department, and you look at those metrics... Nothing wrong with that, but it's when you bring in the personal, particularly the personal incentive or the division incentive that can then sub-optimize... Can optimize a part of the organization, either an individual or a department, and therefore, sub-optimize the total.

0:10:22.0 BB: Oh, yeah. If you tie those metrics... Yeah and that becomes the... What makes them sinister, when you provide that incentive that... And I'm sure we've both seen people given incentives and they're not gonna leave, what I tell people is, they're not gonna leave a penny on the table, whether it's get rid of that division, lay off so many people, they are going to achieve that metric, because there's money on the table and in the way of that problem.

0:10:55.2 AS: And for those people who are listening or vie