In Clayton Christensen’s new book, Competing Against Luck, the authors delve into the importance of gaining a deep understanding of what your customers desire. The book lays out a Theory of Jobs to be Done in a very compelling way. To me this is a great example of extending Deming’s ideas with a great deal of useful content on how to effectively become more customer focused.
We all have many jobs to be done in our lives. Some are little (pass the time while waiting in line); some are big (find a more fulfilling career). Some surface unpredictably (dress for an out-of-town business meeting after the airline lost my suitcase); some regularly (pack a healthful lunch for my daughter to take to school). When we buy a product, we essentially “hire” it to help us do a job. If it does the job well, the next time we’re confronted with the same job, we tend to hire that product again. And if it does a crummy job, we “fire” it and look for an alternative.
The article and the book discuss the insight gained by understanding what your potential customers desire (what job the customers are trying to accomplish) and what prevents them from becoming customers.
That realization helped Moesta and his team begin to grasp the struggle potential home buyers faced. “I went in thinking we were in the business of new-home construction,” he recalls. “But I realized we were in the business of moving lives.”
This is reminiscent of W. Edwards Deming’s discussion on truly understanding the needs of customers and also Russell Ackoff’s ideas on seeking solutions by looking at the larger containing system. Often innovative solutions can be found if you expand the scope of what you see as the system. By expanding the scope of your vision from the product you provide (a house) to the larger system you can learn that the objections to moving you hear are not the primary objections. Often it isn’t concern about the house, or competitor’s offerings, that is stopping them from becoming customers but worries about all the hassles involved with moving.
If you see your job from the customers perspective you may change the scope of your offerings. You can add services that help the potential customer chose you. In the book, they explore the example mentioned in the article in more detail. They also discuss how an online university changed their processes to address the issues their potential customers faced in the “hiring” process. They changed, not the “product” (education), but the processes supporting potential students making the decision to hire Southern New Hampshire University.
Competing Against Luck is packed with valuable ideas:
Throughout this book we will refer to jobs in shorthand simplistic terms for ease of reference – but it’s important to emphasize that a well-defined job is multilayered and complex. And that is actually a good thing. Why? Because it means that perfectly satisfying someone’s job likely requires not just creating a product, but engineering and delivering a whole set of experiences that address the many dimensions of the job and integrating those experiences into the company’s processes. When you’ve done that well, it’s almost impossible for competitors to copy.
A very simple view of the concept is that customers want ability to create a 1/4″ hole in wood, they don’t want a drill. A drill is a means of getting a 1/4″ hole but if you focus on making a better drill you may miss possibilities for other solutions.
Dr. Deming would talk about the importance of knowing what business you were in. If you are in the business of making carburetors you are at risk of technological innovation putting you out of business. If you are in the business of injecting fuel within internal combustion engines you can then produce fuel injectors that eliminate the need for catalytic converters.
As I wrote about in my first post, my first job out of college was at the GM Livonia Engine Plant, outside of Detroit. General Motors wasn’t my ideal workplace after having read Deming’s Out of the Crisis and learning a bit about Lean manufacturing in college. If possible, I wanted to work in something closer to the Deming environment. But, I needed a job, so I cast a wide net.
To my surprise, during the interviewing process, GM promised me a different type of workplace (one that existed, at least, at this plant), one based on the Deming philosophy. I was probably the only kid coming out of college who recognized or cared about that. But, it really mattered to me.
Sadly, it didn’t take very long to realize that the plant had a very traditional management style, very traditionally combative labor/management relations, and a typical blame-and-shame, command-and-control environment that made people miserable and didn’t deliver quality to the customer or any of the right business results.
What had happened? I was told that Dr. Deming had taught some workshops within GM, particularly the Powertrain division in the 1980s. A forward-thinking plant manager modified the Deming Philosophy to create something called “The Livonia Philosophy.”
But, after a period of success, that plant manager was promoted and the new plant manager, essentially hit the “undo” button on all of the Deming stuff. There were still posters in the hallway glass cases celebrating the new approach. But, it was no longer the daily reality in the plant. I’ve blogged about some of the problems and chaos on my blog before.
One of my colleagues gave me a copy of a “Livonia Philosophy” handbook that was gathering dust, and I’ve kept it to this day.
The first page says “The Livonia Operating Philosophy” is born from “a changing business environment requires that together through trust, communication, and respect for the individual, we will build an organization supportive of all employees in the development and utilization of their knowledge, ability, and skill towards the achievement of personal as well as organizational goals.”
Wow. That sounds very much like the Toyota Production System and Lean management. Toyota talks about “respect for people” or “respect for humanity” as an “equally important pillar” of their Toyota Way management philosophy (the other being “continuous improvement”). The Livonia plant didn’t have a lot of trust and mutual respect. Without that, the communication mainly came in the form of yelling and screaming when results were poor.
The W. Edwards Deming Institute You Tube channel provides a large number of great videos. And the great content is not limited to the most popular videos, there are many wonderful videos that receive fewer views.
Emphasis on short-term profits: short-term thinking
It is easy to focus on short term goals and use a somewhat simple short term figure to measure success. But just because it is easier to look at the quarterly profit figure than determine progress without such a clear measure doesn’t mean it is wise. And in fact it is not wise.
Also, the idea of quarterly profit being a simple measure of success is flawed in more basic ways than just short term versus long term thinking (the idea that boiling things down to 1 short term measure is an acceptable measure of future success). The games played to manipulate earnings are enormous (and no surprise to those who understand likely outcome of pressure to meet short term goals is a desire to manipulate the figure rather than improve underlying results). In Profit Beyond Measure by H. Thomas Johnson and Anders Broms, the authors provide many good thoughts on the problems of accounting measures and management.
At GEICO, for example, we enthusiastically spent $900 million last year on advertising to obtain policyholders who deliver us no immediate profits. If we could spend twice that amount productively, we would happily do so though short-term results would be further penalized. Many large investments at our railroad and utility operations are also made with an eye to payoffs well down the road.
At Berkshire, managers can focus on running their businesses: They are not subjected to meetings at headquarters nor financing worries nor Wall Street harassment. They simply get a letter from me every two years and call me when they wish.
I wrote on my Curious Cat Management Improvement blog in 2007, Eliminating Quarterly Earnings Guidance: “It is good to see more people understand the bad practice of excessive short term focus on quarterly profits. It is also a bit amusing to see the Chamber of Commerce pushing an idea Deming was called unrealistic for proposing.”
While my work is usually associated with the term “Lean” and the lessons from the Toyota Production System, some of my earliest learning and inspiration for improvement came from the work of W. Edwards Deming. I don’t think I learned anything about Deming or his work as an undergraduate Industrial Engineering student from 1991 to 1995. I do remember my statistics professor saying something in class, in early 1994, right after Dr. Deming passed away. I think I was the only one to raise my hand after he asked who had heard of him.
Why had I heard of Dr. Deming? I was fortunate that my father had an opportunity to be a student in the famed four-day seminar, while working as an engineer at the Cadillac division of General Motors, in the late 1980s. I don’t remember getting too many details from my dad about the class, other than Dr. Deming chastising some executives who showed up during the last hour of the last day. But, I was curious enough to check out the copy of Out of the Crisis that was on my dad’s bookshelf. I first read the book during a break between quarters during my junior year in college.
Out of the Crisis resonated with me – not because of statistics, but because of the human factors, the psychology, and the workplace dynamics that I already recognized from the workplace, having worked a few part time retail jobs at that point. For example, I had experience with one bullying boss who didn’t listen to his employees.
Thankfully, I also had some very good managers who still fell victim to conventional wisdom management ideas, such as a store manager creating special sales incentives and contests that seemed silly and unnecessary. My co-workers and I didn’t understand why we had to be motivated to sell video game systems during the holiday shopping season, since that’s what we already enjoyed doing (read more about it in this post from my blog). It was one of my first experiences with teamwork and intrinsic motivation being squashed by extrinsic incentives and competition.
Tim Higgins provided the Deming 101 presentation at our 2016 annual conference – Curiosity, Learning, Knowledge, and Improvement:
Tim starts off by saying that some people think Deming’s life was about variation but Deming’s purpose for understanding variation was to learn. This insight is wise. Quotes are useful to provide focus but that can also serve to over-simplify. To understand Deming’s ideas you need to understand the context within which each quote resides. Understanding variation is important but within the entire context of his management system not as an isolated concept.
Throughout the presentation Tim does a good job of exploring the importance of our natural curiosity and the importance of a system view (understanding the connections between components not just understanding components individually).
He also discusses a point that might seem obvious but often seems to be overlooked
If you are going to collect data you need to get back to the fundamental question: why are we collecting this? What are we trying to learn? What are we going to do with that?
You need to understand what it [the data] is going to tell you about your system that might be useful?
Tim mentions Edward de Bono’s ideas at several points during the presentation. I also find de Bono’s ideas worth exploring and that his ideas and tools offer insight to aid those applying Deming’s ideas.
Skip Steward, Chief Improvement Office (CIO) for Baptist Memorial Health Care Corporation in Memphis, Tennessee is the latest guest on the Deming Podcast (download the podcast).
Dr. Deming’s thinking continues to influence me, not only in things like PDSA thinking, but also in some of those other fundamental principles around constancy of purpose, around how we think about systems, how we think about the worker and the work that they are doing.
A friend of mine the other day told me that “improving the work is the work.” I reflect on Dr. Deming quite often.
Skip discusses that it unfortunate that at Baptist Memorial Health Care the knowledge of Deming is largely limited to the folks working in quality specific positions. He says this is something he has seen throughout his career – with Deming’s ideas not being appreciated as widely as they should be.
He also discusses the success they have achieved in involving senior executives in the organizational hierarchy (CEO of the individual hospitals etc.) as active participants in practicing the principles of Baptist Management System in their daily work. One thing that has worked very well is using Toyota Kata principles. The executives have taken to that practice quite well (more effectively than other attempts to engage senior executives in changing their behaviors).
Skip talks about building relationships to earn the right to work together with staff to improve the organization. He did not just rely on the authority of his position, he understood the importance of earning respect and trust in order to help facilitate the adoption of new management system practices.
He also talks about the de-emphasis on tools several times in the podcast. At the same time if you listen to what he says they have done, and are doing, he lists a great deal of tool and concept use.
As I have said before I understand the criticism of using tools without understanding how they fit into a management system. That use of tools without the vision of how those tools play a role in a view of the organization as a system greatly limits the possible benefits.
At the same time those tools and concepts are very powerful and ignoring them also creates a system that is much less effective than it could be. It seems to me he really is using tools and concept a great deal but in a way that is integrated with the management system. The emphasis is on thinking systemically and understanding the role those tools are meant to fulfill. The tools serve a purpose they are a means to an end, not an end themselves. This is exactly the right way to do things, in my opinion.
One way to improve the system (based on the knowledge that confirmation bias is ingrained into how we think) is to encourage dissenting opinions in your organization. Often our organizations put great pressure on people to go along with the accepted opinion. This certainly makes things easier and it reduces interpersonal conflict (making things easier for managers). And in most cases going along is sensible.
The organization has survived and grown based on those accepted beliefs and practices. And the people in the organization will be reluctant to challenge what has worked. It is understandable that organizations have evolved in this way.
Confirmation bias will increase this reluctance. As confirmation bias tells us that people will accept “evidence” that supports their beliefs and reject evidence that undermines their beliefs. And institutionalizing this practice by disparaging those that question the accepted beliefs we magnify the negative impact of confirmation bias.
Most of those accepted beliefs are working fine within the organization or changes would have been made previously. It can be that the current practices are wise, or it can just be that they can be accommodated. One big problem for the organization is the impact of many different weaknesses, in isolation, may be minor but when you add up (or thinking systemically, when you appreciate the interactions created within the system by them) the impact of all the bad practices together might be very large.
In most organization we need to introduce changes to the management system that reverse the current pressure to go along and to not question or ask for evidence of current practices. Most management systems would benefit from encouraging the challenging the accepted beliefs. They would benefit from encouraging the testing of beliefs and the examining of the results of those experiments.
With an understanding of psychology we can accept that confirmation bias is a weakness in how we think. And we can see in our organizations all the ways we encourage compliance and going along. Such practices further reinforce confirmation bias. Even if someone could force themselves to question and push back against confirmation bias personally, when they see the challenges of moving forward with those thoughts within the organization they are dissuaded from doing so.
A lot of people ask about my grandfather’s quotes. If you go to quotes.deming.org we put together a very cool site where you can actually see specific quotes my grandfather has made and then it will tie it back to where that quote came from (page 22 of the New Economics, Out of the Crisis, to a particular article). So it’s a fun way to see what those quotes are and we are continually adding quotes to it.
He also discussed the initiatives that the Institute is focusing our resources on: the Deming Education Initiative and the Deming Non-profit Initiative.
Kevin also announced The W. Edwards Deming Institute will be providing a new online learning program soon and that offering will be expanded greatly over the next few years.