Quality and Innovation

We covered Kaplan and Norton’s (1996) Balanced Scorecard in my ISAT 654 (Advanced Technology Management) class at JMU a couple weeks ago. Appropriately, the students recognized that the research into balanced metrics and the strategy maps underlying the method is nearly 20 years old. Hasn’t the Balanced Scorecard been modernized since then, they asked, to reflect changing concerns in a changing world – especially social, political and environmental concerns? After all, sustainability and social responsibility are major concerns these days, and any scorecard that’s worth its salt should incorporate these considerations, they argued.

Here are a few “modernizations” I found that might be of interest:

• Moeller and Schaltegger (2005): They propose a mechanism to integrate the environmental and economic indicators for sustainability into a balanced scorecard.
• Sidiropolous et al. (2004): They propose a concept to adapt the BSC to include measures that can be captured from typical Environmental Management Systems, e.g. ISO 14001 and EMAS.
• Social Responsibility Key Performance Indicators (KPIs) and potential use in a BSC
• The Balanced Scorecard and Corporate Social Responsibility: Aligning Values for Profit

 

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References:

Möller, A. & Schaltegger, S., (2005). The Sustainability Balanced Scorecard as a Framework for Eco-Efficiency Analysis, Journal of Industrial Ecology, 9(4), 73-83.

Sidiropolous, M., Mouzakitis, Y., Adamides, E., & Goutsos, S. (2004). Applying Sustainable Indicators to Corporate Strategy: The Eco-Balanced Scorecard. Environmental Research, Engineering & Management, 1(27), 28-33.

On April 9, 2009, Computerworld published a highly “Digg-ed” post entitled “Why Goofing Off Boosts Productivity”. This article highlighted some recent research results from the University of Melbourne that demonstrated the utility of occasional Twittering and Facebook-ing from work, and suggested some additional anecdotal reasons why “Internet slacking” might be productive.

Productivity has been described in many ways, for example as the ratio of output to input , task completion through David Allen’s Getting Things Done, or focus on business results using the concept of the Results-Only Work Environment.

But it is easy to forget that quality and sustainability also play a role in productivity as well. Jorgenson & Griliches (1967), for example, explicitly define productivity as the ratio of total input quality and quantity to total output quality and quantity. Hawken, Lovins & Lovins (1999) consider total-resource productivity in Natural Capitalism, a measure that emphasizes the efficiency with which a production process uses its energy, natural resources and other inputs. That is, you can’t be productive if you are creating a lot of waste – and you are optimally productive if the outputs of your process are useful inputs to someone else’s process!

Problem-solving capacity, in my opinion, represents one of the key elements in total resource productivity – and one that we routinely overlook. As a result of the process of working, can you simultaneously accomplish results and emerge feeling refreshed and renewed? The human psyche and capability to achieve is the ultimate renewable resource, and “burnout” is the indicator that you may be sacrificing total-resource productivity for higher levels of “more traditional” productivity.

The same theme was touched on in an April 8, 2009 post by Dan Markovitz called Why Isn’t Thinking Time Part of Your Standard Work? Although it is acknowledged that thought without action may not be productive, he notes that action without thought can be wasteful as well:

Action without thought leads inevitably to one of the seven forms of muda. It’s very hard to actually stop doing and start thinking, but that’s the real way to eliminate waste and create value. There’s a recent story about a computer room at Toyota’s Torrance headquarters that was getting too warm. Most people would get that email and immediately turn up the air conditioner. You know, respond immediately to the email. But these guys did a root cause analysis and found that the real problem was a blocked air duct. The symptoms didn’t go away immediately, but the real problem was actually solved. It just required some time to think.

The lessons here are interconnected: a) quality and “people-sustainability” are factors in total resource productivity, and b) time to think and reflect contributes to quality in the problem-solving process. Not building “reflective time” into a project schedule or a GTD/ROWE process can negatively impact results when the whole system is considered.

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Hawken, P., Lovins, A. & Lovins, L. H. (1999). Natural Capitalism. Little, Brown, & Co.: New York.
Jorgenson, D.W. & Griliches, Z. (1967). “The Explanation of Productivity Change”. Review of Economic Studies 34(99): 249–283.

I am pleased once again to host John Hunter’s Management Improvement Carnival, featuring some interesting or noteworthy articles that have been posted over the past couple weeks. Be sure to check out previous installations of the Carnival to get a broad sample of the most recent blog posts that are relevant to managers who are interested in quality, innovation and process improvement.

• Small is the new big. Sustainable is the new growth. Trust is the new competitive advantage. All of the rules of business have changed, and the seismic shift is both electrifying and frightening. But there are opportunities to be embraced, and many of them are summed up in this HBS blog article entitled Why Small Companies Will Win in This Economy
• There is a great post from March 8 by June Holley, talking about self-organizing to achieve systems-level innovation. She notes that because theory is lacking, this process might be protracted, but to get to the point of understanding theory we need some more “real life” examples and case studies of how we self-organize in our organizations well – and not so well.
• Is environmentally friendly insulation higher or lower quality? Reflections on the Building Material Emissions Study discuss its outcomes. How we deal with the interplay of quality and social responsibility will become an even greater issue over the next several years as our ability to grow unbounded is checked against the availability of resources – check out this study to see what related studies might be on the horizon.
• Sustainability 2.0 Doesn’t Add Up by Samuel Mann is an interesting read, reflecting on the notions of sustainability, social responsibility, psychology, and organizations. I’ve included it here for its broad coverage of some interesting topics and vignettes.
• And did you know that neuroscience may provide some insights into how to stage your process improvement efforts and your initiatives that focus on innovation?
• And don’t forget to try out Gmail Autopilot, the newly released utility that will help you autorespond in very meaningful ways to your mundane emails and even your money laundering spam from foreign countries. It’s a technology advancement so advanced it’s unbelievable!

AIG is falling. Bailouts are flying. All of the rules of business have changed, and the seismic shift is both electrifying and frightening. But there are opportunities to be embraced, and many of them are summed up in this article entitled “Why Small Companies Will Win in This Economy“. Here is my favorite part, a veritable mantra for the 2010′s:

Small is the new big. Sustainable is the new growth. Trust is the new competitive advantage.

Thanks to Betsey Merkel (Twitter: @betseymerkel) who initially Tweeted this. And thanks to Valdis Krebs (Twitter: @valdiskrebs) without whom I wouldn’t have seen Betsey’s insightful retweets and started following her too.

According to some researchers, it’s the end of the world as we know it – sometime this century, in fact. Economists and policy researchers have actually envisioned it coming for about three centuries, though.

The most recent tap on this subject came on March 7, 2009, when journalist and Hot, Flat, and Crowded author Thomas L. Friedman published an Op-Ed in the Washington Post, entitled “Is the Inflection Near?” He describes how the economic, financial and political systems that we have established in the world – particularly in the west – are inherently unsustainable, and that in order to achieve a truly green world, our fundamental systems for living life must shift:

Let’s today step out of the normal boundaries of analysis of our economic crisis and ask a radical question: What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall — when Mother Nature and the market both said: “No more.”

We have created a system for growth that depended on our building more and more stores to sell more and more stuff made in more and more factories in China, powered by more and more coal that would cause more and more climate change but earn China more and more dollars to buy more and more U.S. T-bills so America would have more and more money to build more and more stores and sell more and more stuff that would employ more and more Chinese …

We can’t do this anymore.

What would you think if I told you that this was actually not a new idea, and that the notions Friedman presents were determined by a simulation done over thirty-five years ago? Furthermore, what if I let you in on the fact that people have been thinking about this conundrum since the late 1700′s? It may sound outlandish, but in this case, truth is stranger than fiction.

The simulation that I refer to was done in 1972, with a model called World3 which was coded in the object-oriented Modelica environment. It’s the subject of the Club of Rome commissioned study called “The Limits to Growth” (full text is here). Although the model has received criticism for some of its assumptions, a redaction in 2002 upheld many of the outcomes of the model. In 2009, Dr. Dennis L. Meadows (who directed this research) was awarded the 25th Japan Prize from The Science and Technology Foundation of Japan. Recall that the Japanese were the ones who initially recognized Dr. W. Edwards Deming for his contributions to revitalizing the economy – decades before the Americans embraced Deming’s teachings – and spawned the quality revolution in U.S. business in the late 1970′s and 1980′s that has embossed the landscape of how we do business today. From the Japan Prize announcement:

Dr. Dennis L. Meadows served as Research Director for the project on “The Limits to Growth,” for the Club of Rome in 1972. Employing a system simulation model called “World3,” his report demonstrated that if certain limiting factors of the earth’s physical capacity – such as resources, the environment, and land – are not recognized, mankind will soon find itself in a dangerous situation. The conflict between the limited capacity of the earth and the expansion of the population accompanied by economic growth could lead to general societal collapse. The report said that to avert this outcome, it is necessary that the goals of zero population growth and zero expansion in use of materials be attained as soon as possible. The report had an enormous impact on a world that had continued to grow both economically and in population since World War II.

We also have a rich literature dating back centuries that has studied the relationships between population, environment and technology. In the 1700′s, English economist Thomas Robert Malthus studied these relationships in terms of the projected effects of uncontrolled population growth. “Before Malthus, populations were considered to be an asset. After Malthus, the concept of land acquisition to support “future large populations” became a motivating factor for war.” (citation) The 20th century Boserupian Theory of Ester Boserup, in contrast, suggests that advances in technology will drive the capacity of the world to support population. Researchers like Steinmann & Komlos (1988) have simulated the interplay between both paradigms over time and suggest that there is a cyclical dominance. (I note that references to Malthus and Boserup, let alone Meadows’ World3 model, are rarely on the lips of policymakers.)

In my opinion, it is not climate change we should be worried about per se, but the social, economic and global political system that drives human interactions with each other and with the environment. Climate change may be a symptom, but it is just a tracer for the attitudes of unbounded material growth that are contributing to the effects (if you want to learn about climate change and policy, Prometheus is a good place to start – my point is not to argue the merits of “is it” or “isn’t it” happening because others including Pielke, Jr. do that very well). Regarding climate change, we need to decode what the data is trying to tell us about how we’ve structured our large-scale systems of interaction with one another – rather than merely trying to control our personal “carbon footprints” or recycle more (though these may be important ingredients in the solution).

There is nothing new under the sun. Only today, the forces of production, consumption and population have metamorphosed into a crisis of sustainability – a “perfect storm” to test our ability to live and work in the limit case.

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Steinmann, Gunter & Komlos, John (1988). Population growth and economic development in the very long run: a simulation model of three revolutions. Mathematical Social Sciences, Vol. 16, No. 1, Aug 1988. 49-63 pp. Amsterdam, Netherlands.

(I originally wrote this article for the ASQ Software Division Newsletter compiled in the first quarter of 2009. I’m reproducing it here because I’ve found the ITEA criteria to be remarkably useful for all kinds of planning since I was introduced to it last year.)

For software professionals, particularly those of us who manage product development or development teams, it is important to track progress towards our goals and to justify the results of our efforts. We have to write effective project charters for software development just to get things moving, evaluate improvement alternatives before making an investment of time and effort in a process change, and ultimately validate the effectiveness of what we have implemented.

This past fall, I had the opportunity to serve as a preliminary round judge for the ASQ International Team Excellence Award (ITEA). My subgroup of judges met at the Bank of America training facility in Charlotte, North Carolina, where we split up into teams to evaluate almost 20 project portfolios. A handful of other events just like ours were held at the same time across the country, giving many people the opportunity to train and serve as judges. Before we evaluated the portfolios, we were all trained on how to use and understand the ITEA criteria, a 37-point system for assessing how well a project had established and managed to its own internal quality system. The ITEA criteria can be applied to any development project or process improvement initiative in the same way that the Baldrige criteria might be applied to an organization‘s strategic efforts. For software, this might include improving the internal processes of a software development team, using software improvements and automation to streamline a production or service process, and improving the performance or quality of a software product. (For example, I can envision the ITEA criteria being used to evaluate the benefits of parallelizing all or part of a software system to achieve a tenfold or hundredfold performance improvement.)

You can review these criteria on the web at http://wcqi.asq.org/2008/pdf/criteria-detail.pdf yourself. There are five main categories in the ITEA criteria: project selection and purpose, the current situation (prior to improvement), solution development (and evaluation of alternatives), project implementation and results, and team management and project presentation. An important distinction is in the use of the words Identify/Indicate, Describe and Explain within the criteria. To identify or indicate means that you have enumerated the results of brainstorming or analysis, which can often be achieved using a simple list of bullet points. To describe means that you have explained what you mean by each of these points. To explain means that you have fully discussed not only the subject addressed by one of the 37 points, but also your rationale for whatever decisions were made. Sustainability of the improvements that a project makes is also a major component of the ITEA criteria. Once your project is complete, how will you ensure that the benefits you provided are continued? How can you make sure that a new process you developed will actually be followed? Do you have the resources and capabilities to maintain the new state of the system and/or process?

The ITEA criteria can serve as a useful checklist to make sure you‘ve covered all of the bases for your software development or process improvement project. I encourage you to review the criteria and see how they can be useful to your work.

Why measure? Because measurement compels behavior. I’ve written about this previously in my article on the Trash Guy, but now Google is taking note:

”Studies show that being able to see your energy usage makes it easier to reduce it.”

This is the driver for their new Google PowerMeter project, which envisions a future where access to energy informatics is through your desktop. The project, an initiative of Google.org (the philanthropic research arm of Google), provides this as their pitch:

“How much does it cost to leave your TV on all day? What about turning your air conditioning 1 degree cooler? Which uses more power every month — your fridge or your dishwasher? Is your household more or less energy efficient than similar homes in your neighborhood? … At Google we’re committed to helping enable a future where access to personal energy information helps everyone make smarter energy choices. To get started, we’re working on a tool called Google PowerMeter which will show consumers their electricity consumption in near real-time in a secure iGoogle Gadget. We think PowerMeter will offer more useful and actionable feedback than complicated monthly paper bills that provide little detail on consumption or how to save energy.”

I like it. I’ve always wanted to have a simple way to monitor my home energy usage that doesn’t require me to buy an expensive device like the Black & Decker EM100B Energy Saver Series Power Monitor- that probably doesn’t give me the granularity of information I’m looking for anyway.