From the Perspective of Quality Management: Is Socialism So Bad?

I saw an article today entitled “Barack Obama’s Stealth Socialism”, syndicated by many blogs including this one. It seems that many are concerned that our nation’s foundations of capitalism might crumble and be replaced by socialism, including John McCain, who called his opponent a socialist at a Saturday, October 18 rally.

Proponents of socialism say that disparity in incomes leads to the exploitation of workers, oppression of minorities, and imperialism. Instead of maximizing profit for a minority, there is a blueprint for the economy so that profits are routed to meet the needs of the people – health care, childcare, housing subsidies, transportation, and so on. There are many socialist elements in place in the U.S. right now, including welfare and public schools.

This led me to ask: why is socialism bad? The campaign promises that resemble socialist aims – and they exist on both sides of the ticket – might seem pretty good to some people. So what’s the catch? Before you read any further, note that I’m not attempting to advocate one position over another – just to ask a difficult question that others might be asking, and see if concepts from technology management and quality management can provide some insight. With this in mind, we consider that “government”, from the perspective of technology management, is all about two things:

  • setting and enforcing standards (which includes laws, regulations and policies), and
  • providing a structure for decision making.

Both of these aspects play a fundamental role in setting up and operating quality systems, which are a form of government (on a smaller scale)! Government is different than a production system like capitalism, socialism or communism though. There are, however, often links between the two: for example, government can set the standards that influence both the means of production and how a country interacts with other countries through its economy. The difference between government and the production system is, loosely, analogous to the difference between strategy and tactics.

  • Government: Democracy is government by the people where decision-making occurs on the basis of a vote. The voting majority wins. A republic is a government in which the people delegate representatives to represent them – and make the decisions for them. The U.S. is a republic, not a democracy (ie. your vote doesn’t really count if the electoral votes that come from your state ultimately go to “the other guy”.) Democracies and republics are both systems for decision making. Fascism is also a system for decision making – but all of the decisions are unilateral, and made by a dictator (or under some sort of dictatorial control). The process of reaching a decision depends in a large part on the standards you are using to judge the context of a problem – and the opportunities available for a solution!
  • Production: Capitalism is characterized by an economy where investment and ownership in the production and distribution of goods is primarily private – through individuals and corporations. In a capitalist economy, you can start your own business and have the potential to grow without bounds. In a socialist economy, you can’t grow too much, or your excess profit is siphoned off to support social causes. Some feel this isn’t fair, and that it hinders achievement, leads to low quality products and services, and higher levels of unemployment. (The socialist agenda could be considered a reaction to inequalities in income distribution, such as those observed by Pareto’s study of the wealth distribution in Italy, from which the famous 80/20 principle was first observed – for a summary, see Levy 2001.

So why are people scared of socialism? In addition to taking the “powerball” potential out of capitalism, it also seems to be perceived as a “gateway drug” to communism (and then on to dictatorial decision-making) for the ruling parties. Previous nations that have attempted to blend socialism with dictatorships (e.g. Cuba, Russia) are held up as examples of certain doom. Other examples, such as the European socialism that’s in place today, are criticized because tax rates are oppressive at 50-60%, even though those countries blend socialism with democratic decision making. No one has “gotten socialism right,” balancing public services with reasonable costs, and doing so without eventually losing sight of fundamental human rights.

Does this mean that socialism can’t be an effective production system? No; it just means that there are no historical examples of resounding success to draw from, and the risks are palpable – which can be frightening to people. (Maybe the design of socialism in our country is just suboptimal.)

Levy, M. (2001). Market efficiency, the Pareto wealth distribution, and the Levy distribution of stock returns. Unpublished manuscript, Jerusalem School of Business Administration, Hebrew University of Jerusalem. Available here.

What is Green Six Sigma?

Green Six Sigma, also called “Green Sigma” by IBM, refers to a Six Sigma or Lean Six Sigma (LSS) project in which the tangible benefits are also environmentally conscious – such as reducing landfill waste, reducing energy requirements, reducing variation in energy usage, and systematically conserving energy or other natural resources (e.g. water). In addition to the environmental benefits, there are also often cost reductions – trash service can be expensive, especially if the refuse needs to be hauled or special pick-ups must be arranged.

Although the term may be new, the practice is not! One of the pillars of the Toyota Production System, which developed in the early days after World War II, was its aggressive attitude towards waste – Toyota was the first company to achieve zero landfill waste in all of its operations. The tools and techniques of Green Six Sigma are identical to those used in any other LSS project.

In its 18 August 2008 press release “A Measured Approach to Going Green“, IBM describes the “Green Sigma” consulting offering. It’s nice that the company is calling attention to the fact that established methodologies can be used to promote sustainability, but don’t be confused – it’s not a novel approach.

What are Standards?

Standards represent “accepted ways of doing things” and can be defined as sets or features of characteristics that describe products, processes, services or concepts. (National Research Council, 2005) Alternatively, standards can be described as “rules, regulations, and frameworks intended to enable individuals, groups, organizations, countries and nations to achieve goals.” (Spivak & Brenner, 2001) According to these authors, there are five types of standards: 1) physical or measurement standards; 2) standards for symbols, meanings and language; 3) standards for products and processes, including test validation, quality assurance, and operating procedures; 4) standards for systems (including management systems and regulatory systems); and 5) standards for health, safety, the environment and for ensuring other consumer interests. Standards may be compulsory (as in the case of legal and regulatory standards, such as the Sarbanes-Oxley requirements for financial reporting) or voluntarily adopted (as in the case of product interface standards such as USB for computer peripherals).

Because standards are a mechanism used by social groups to promote norms, and to facilitate the creation of artifacts that advance human capabilities, standards are technologies. (Recall that Random House defines technology as “The sum of the ways in which social groups provide themselves with the material objects of their civilizations.”)

What can standards do for you and your projects? The importance of standards can be explained in terms of the eight goals that standards can be used to achieve (Blind, 2004):

  • Compatibility – facilitating cooperation between people, processes, systems, or technologies
  • Communication – facilitates information flow between people, processes, systems or technologies
  • Conformance – provides a common basis to establish competency or define excellence
  • Continuous Improvement – helps organizations leverage the “lessons learned” that are imbued within the standards
  • Establish Order – promotes consistency, reliability and effective communications
  • Prescribe Behavior – enables organizations to reduce variability between people and systems
  • Promote Social Order – establishes a basis for legal and ethical behavior
  • Establish Shared Meaning – provides a context for communication, compatibility and conformance

A standard is “working” if it accomplishes one or more of these goals (depending, of course, on how relevant and pertinent the goals are to the project that is being pursued). For example, it’s probably not very important for two computer devices to “promote social order” if they need to communicate. But it’s definitely important for people.

Blind, K. (2003). The economics of standards. Kluwer Academic Press.
National Research Council. (1995). Standards, conformity assessment and trade. National Academy Press.
Spivak, L. & Brenner, F.C. (2001). Standardization essentials: principles and practice. Marcel Dekker.

What is Lean Six Sigma?

Lean Six Sigma (LSS) is a structured problem-solving approach for improving quality and productivity. Lean approaches focus on improving speed and flow in business processes, which leads to the outcome of reducing waste. Tools such as value stream mapping (VSM), flow diagrams, 8D, FMEA, and OPCP are typically used. Six Sigma methods seek to reduce variation and/or defects in either processes or products. In these cases, methods such as statistical process control, design of experiments, and “Design for X” are often employed. The target metric is typically “Six Sigma”, which represents no more than 3.4 defects for every million opportunities you have to generate a defect. This means that how you define a defect is pretty important!

But what about if you want to take an integrated approach to problem solving, where you think about how reducing waste, reducing variation, and reducing defects are all inter-related? It is in precisely these cases that Lean Six Sigma is so valuable. Pundits advocating Lean will rightly note that Six Sigma methods don’t reduce waste; Six Sigma enthusiasts will point out that Lean can’t help you remove defects or manage variation. But what if the special cause that’s confounding your process is also generating tons of waste? Makes sense to look at the problem holistically, which is what LSS helps you do.

Both Lean and Six Sigma help us identify forces that make our processes unnecessarily complex. It is by rooting out these causes that we achieve the primary goals of LSS: reducing waste, reducing variation, and reducing defects. Using a framework like DMAIC helps us pose the following questions:

  • What’s your quality goal? (Hint: choose the most important from the three above)
  • How do you define a defect? (Note: this often changes for each new LSS project)
  • What tools can you use to achieve that quality goal, given a broad selection of Lean and Six Sigma methods to choose from?

(Specific examples illustrating how to ask and interpret these questions using DMAIC will be presented in future articles, along with a description of how to use the Lean Six Sigma Quality Transformation Toolkit – LSSQTT – to execute your project.)

A successfully completed Lean Six Sigma project will generate a clear tangible value. This could include financial savings, savings in time and effort, reduced costs of materials, improved cash flow, cycle time reduction, or improved (measurable) customer satisfaction. Typically, a single Lean Six Sigma project will improve only one or two of these variables. Don’t try to improve all at once, which could get you bogged down in details. Iteration is the key!

What is Innovation?

invention -> Innovation -> Technology Transfer -> Diffusion of Innovations

Innovation is the practice of making new concepts and ideas relevant and useful to individuals and communities of people.

This contrasts with the process of invention, through which new ideas are generated while the linkages between these new ideas and existing ideas are simultaneously uncovered. Innovation defines the context of use, while invention does not. The products of innovation are fundamentally ideas, characterized by novelty, utility and relevance. However, the distinctive feature of innovation is that these ideas, once connected with a particular context of use, at once capture the potential to add value to systems, people, processes and even other ideas.

Although new mechanisms for value creation can be unlocked through the innovation process, value is created when new products, services and processes are designed, through the integration of knowledge and the understanding of the capabilities of the organization that is poised to deliver that value.

As a result, innovation is critically dependent not only on the people doing the innovating, but also on the social networks of people connected to those innovators, whose influences inform and impact the process of discovery. (Radziwill & DuPlain, 2008)

What’s the bottom line? Innovation does not exist without people who have needs, and who are somehow connected to one another!

Radziwill, N. M., and R.F. DuPlain, 2008: A Model for Business Innovation in the Web 2.0 World. Chapter in Web 2.0 Business Models, IGI Global Publishing. Available from Amazon.

What is a Quality System?

According to the ASQ glossary online, a quality management system (QMS, alternatively referred to as simply a “quality system”) can be considered a mechanism for managing and continuously improving core processes to “achieve maximum customer satisfaction at the lowest overall cost to the organization”. A quality system applies and synthesizes philosophies, standards, methodologies and tools to achieve quality-related goals.

A quality system thus represents a specific implementation of quality philosophies/concepts, standards, methodologies and tools, for the purpose of achieving quality-related goals. Upon implementation, a quality system will be unique to an organization.

The International Organization for Standardization (ISO) prescribes a minimum standard for the elements of a QMS through the ISO 9001:2000 standard. The major components of an ISO-compliant QMS using these guidelines are: [1]

  • Identification and mapping of processes (administrative, organizational, operational)
  • Specific determination of the interrelatedness of processes (including identification and mapping of cross-cutting processes that span organizational boundaries)
  • Plan for operations and control of these processes, recognizing that the conditions and specifications for control of each of the processes may be different from one another,
  • Plan for dynamically allocating resources to accommodate the demands of the operations and control of these processes,
  • Application of systems thinking by identifying the system of systems that comprise the interdependent processes,
  • Identification of mechanisms to measure, monitor, analyze and continuously improve the processes in the context of the organization and its environment, and an
  • Action Plan for proactively deploying the QMS through the organization, which must include the development of
  • Records that track compliance to the QMS and changes that are made to the QMS itself.

The July 2003 issue of Quality Progress [2] discussed all of the following as “quality systems” – ISO 9000, Ford Motor Co.’s quality operating system, lean, Six Sigma, lean and Six Sigma combined, systems thinking, complexity theory, the Malcolm Baldrige National Quality Award criteria, combinations of methods and unique approaches. But the full article didn’t answer the question of “Where do I start?”

In response, Radziwill et al. [3] proposed a general approach to determine what quality systems should be used, if any, what methods to apply to which processes, and how to select appropriate quality tools (for example, advanced product quality planning, failure mode effects analysis or quality function deployment) for the questions that need to be answered as part of a quality system.

[1] Cianfrani, Tsiakals, & West (2001). ISO 9001: 2000 Implementation Guide. Milwaukee, WI: Quality Press. AUTHOR’S NOTE: This is an AWESOME BOOK!!! Totally explains all the aspects of ISO 9001:2000 that a manager might need to know to understand how it all fits together, and it’s much lighter than my laptop.
[2] “Multiple Choice: What’s the Best Quality System?” Quality Progress, July 2003, pp. 25-45.
[3] Radziwill, N. M., Olson, D., Vollmar, A., Lippert, T., Mattis, T., Van Dewark, K. and J.W. Sinn. (2008). Starting from Scratch. Quality Progress, September, p. 40-47.

What Obama and McCain can learn from Michael Porter

On September 26, in the first Presidential debate between Barack Obama and John McCain, the candidates discussed the perceived success or failure of the war in Iraq. McCain vigorously promoted his feeling that the troop surge was a success, while Obama focused on the rationale behind invading in the first place – claiming that the tactics may be working, but the bigger picture, the strategy – was misplaced. McCain launched back with a criticism: “I’m afraid Senator Obama doesn’t understand the difference between a tactic and a strategy.”

“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” — Sun Tzu, Chinese General, 500 B.C.

Pundits have questioned whether either of the candidates really knows the difference between strategy and tactics, despite some evidence to the contrary. In politics, the distinction between strategy and tactics is compounded by the fact that the military defines strategy in a very specific context where the concepts of policy and strategy can easily be entangled.

But politics aside… do you know the difference? And do you know why you should care?

The answer lies in a 1996 article in Harvard Business Review by Michael Porter entitled “What is Strategy?” – one of the classic articles in management. He argues that there is a fundamental difference between strategy, which involves striking a contrast between yourself and your competitors, and operational effectiveness, which means “performing similar activities better than rivals perform them.” All of the pillars of managing quality and productivity fall into this latter category, which explains why executives have, according to Porter, struggled to translate those operational improvements into sustainable profitability.

“Improving operational effectiveness is a necessary part of management, but it is not strategy… The operational agenda is the proper place for constant change, flexibility, and relentless efforts to achieve best practice. In contrast, the strategic agenda is the right place for defining a unique position, making clear trade-offs, and tightening fit… strategic continuity, in fact, should make an organization’s continual improvement more effective.”

Using this frame of reference, a country’s foreign policy is more akin to its strategy than war plans or their means of execution.

Why should you care? Because fighting the good fight of operational effectiveness will not necessarily win you the strategic war. Figuring out what you do uniquely, how and why you do it uncommonly well, and understanding how to align your capabilities with your mission is the secret to success. Are either of the candidates meeting these criteria? It’s your call.

Porter, M. (1996). What is strategy? Harvard Business Review, November-December 1996, 61-78.

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