Leadership While Viewing the Organization as a System

Interview of John Hunter by Bill Fox part 3 of 3. Read parts 1 and 2 Predicting Results in the Planning Stage and How Does the Deming Management System Fit With Other Management Strategies

Bill: My next question, John, was about self-leadership. This is another surprise to me. I have been involved in transformation improvement projects from almost 30 years, and it seems like leadership has always been the issue or problem or Achilles heel. Either we weren't getting enough support, or there was a change in leadership that would change the whole direction. And that is sort of the back story on why I created these interview series. I was involved in an improvement project about five years ago, and we had a great team, we were doing a great job, and we were really doing it right, and a new CIO showed up on the scene. This wasn't what she wanted to do, so she canned everything and essentially got rid of the whole team. And I had seen this over and over again, and I was so frustrated I wanted to do something about it.

That's what caused this idea to create this interview series. The first year I was doing it, I was still working in a large corporation, and what started to happen was fascinating. People were seeing that I was leading this conversation and, all of a sudden, that started to change things around me. People started talking about improvement more, people started talking to me about it when something came up, the senior manager would come and talk to me. I always found that fascinating, and as time has gone on, I guess I've plugged into that idea more, especially after David Marquet and Leadership at Every Level, and I've been talking more and more about that everybody can be a leader, and maybe that's what we need to do because it seems that the top leaders aren't getting it done, so to speak, in my opinion. We don't seem to have enough enlightened leaders leading change enough to get to where we need to go. And I'd be curious on any of your thoughts on self-leadership or if you have any observations on that.

John: Over time, I have become more and more focused on the overall system and figuring out how to look at whatever problem we're having within a larger context. And I find that usually leads me to a better solution. There are a couple of ways to see this in respect to leadership.

The first one is when you have one of Deming's deadly diseases (or his 14 points), like the mobility of top management. One problem with very mobile leadership is you constantly have to change. That then undermines continuity of purpose, so it undermines long-term thinking and undermines long-term programs and those (which are also in Deming's two lists). So, they intertwine with each other.

There are several problems associated with mobility of management. If those problems were addressed, then maybe mobility of management would not matter so much. But when these problems exist, then the problem of mobility of management exacerbates them.

I see a management system as weak when it allows some new leader to come in and flip over the management system. If some new CIO came into Toyota and tried to throw out principles, they would not be able to do so. When you have a strong management system in place that has been committed, that just wouldn't be allowed. And so I think a weak management system is the real problem (when there is frequent changing of principles and direction).

The problem is not so much the new CIO or CFO that comes in and decides: "I'm a new person, I can't do whatever the last person did. I have to do my own things. I have to get a huge bonus based upon my ideas, not just continuing with what was working really well..." Usually the problem is that the management system is so weak that there isn't consistency of purpose, that individual managers don't understand the whole system, that the organization has bonuses based on silos, and people come in and try to tweak their silo to their bonus. All sorts of different problems make it worse.

So if I see the weak management system as the problem, the solution is not nearly as easy as coming up with a new CIO. I don't really think the problem is so much the CIO not being a good manager - because the system shouldn't allow a new manager to come in and ruin a good management system. The management system is the problem. So we need to fix that and that's a very long, hard thing to do well, but it's the kind of thing that a company like Toyota does.

The subtitle of my book is Building Enterprise Capability, and the reason for that is I saw that everything kept coming back to that, and part of capability to me is resiliency. So if you have a management system that's working really well today because we have Steve Jobs, and as soon as Steve Jobs leaves, everything will fall apart, that's not a really good management system.

It might be a really profitable one for a limited period of time, but it's not a very good one. That is one of the questions with Apple: "Do they have that kind of management system or do they have another?" And I think they had enough good processes, they had a very strong and capable executive leadership team, and Steve Jobs was a special, unique person that had tremendous value, but it wasn't that he was carrying a bunch of losers to success.

So, you have to try to build that strong organizational structure; one that isn't so fragile that when one or two senior leaders change, things fall apart. But it's very difficult and many organizations have weak management systems. It's a lot easier to accomplish in smaller organizations, because individuals can have a bigger say. If you're in an organization of a hundred people, and there's been some real success with lean or Deming's ideas, and some new person comes in and tries to get rid of it, people stand up and say "No".

In big, huge organizations, it often can be very difficult because there's all sorts of big internal politics and issues that get involved. It's very difficult to find where where the political power is being wielded, things happen and no one can really say "no" and make it happen. So sometimes a bunch of people would quit and go to other organizations, but the damage has already been done. The organization loses the good management practices and those people may flee to better organization (which helps them) but it doesn't help the organization that loses them.

So I think that yes, there's tremendous power in individual leaders, individual people making a difference, but what I believe is what those people have to focus on is building the capacity of the organization so it's resilient. As part of building the success in the organization, it's not just having a project that is successful for this month; we need, for example, to build up this new sales pipeline.

With each project I'm trying to also build an understanding of variation, I'm trying to build an appreciation for system's thinking in the organization, I'm trying to build the respect for people. And as each of projects succeed I'm trying to get those messages across. So when we're having success on troubleshooting some problem and coming up with success, and understanding variation helped us get this result, I try to make that visible.

The aim is that two or three years down the road, when I'm not there and when there's a meeting and people are making a decision off the seat of their pants without understanding variation and without understanding respect for people, that other people in the room are saying: "Wait a second. We have seen over and over this same kind of thing. We make a judgment in this meeting without going to the gemba, without understanding really what's going on, when we don't understand variation, we are focused on a short term quarterly goal the results are bad. We need to focus on how are we going to improve the system. We need to have the people who are act the gemba, take this problem, we need to do PDSA, have them experiment and learn and try a few different things, and that is what we need to do."

I don't measure success in the success of short term projects. We need that. But that is just the minimum. Real success, significant success, comes from building a stronger management system. That will result in not one success but tens and then hundreds of successes. As this progresses people become more and more committed to the improvement management system. After a number of years of this more important success (that of building an appreciation for the organization as a system, understanding of variation, respect for people and an understanding of what is evidence and what is not) it's very difficult no matter how senior a person is for them to come in and totally throw things out.

When Deming was very popular in the 1980s, there were all sorts of things going on. But the changes were often not deep enough. New MBAs came in and sort of said: "Well, we can't do Deming anymore. That's not something new in the last two years. We have to have some new idea. So we're going to do something else." While a bunch of what Deming said ended up staying in that organization; it was diluted and changed.

So, for example, there was a lot more attention paid to the voice of the customer than there had been before they paid attention to Deming. But, unfortunately, when the new person came in and they often threw out the rigor, they often lost an appreciation for variation. They often lost respect for people. But some of the tools that were used stayed in the organization and they made the organization much better than they were without the tools.

It is a fragile management system that allows the change of one or two leaders, whether they are leaders as in a CFO sense or whether they are this great software developer that had the whole team doing lean software and as soon as they leave, it just falls apart because they were the personality that made the whole thing work. When the changes relied on that person, there wasn't really a system improvement: as soon as they left, the apparent system improvements collapse.

Bill: You're making me realize how fragile so many organizations are in terms of management systems. The last question I had here was about the Deming system learning and modifying, and I was wondering how that was evolving since he had passed.

John: Yes. It's a very challenging thing to build upon the Deming management system in a unified way without Deming. What I think does happen today is lots of good stuff, but it doesn't often get reunited back into the Deming Management System.

So you'll have lots of good things. Like, for me, minimum viable product is a good example of an enhancement to Deming's thinking. It's new terminology and words around stuff that Deming basically said, but it adds some new examples and a new way of thinking about how to do it that is useful and helpful. And in my belief, that extends to Deming.

One of the problems is there’s no Deming sitting there being able to act. No one to say "Oh, yes! Minimum viable product!" should move into this core knowledge. When Deming was around he could incorporate it in his seminar. But that option doesn't exist now.

You do have the Deming Institute's Annual Conference, and you do have a Deming's Research Seminar at Fordham University every year. So those things help.

But not having someone (or some organization) to refine and update the core system is one of the problems. When you have new things come along, or like I was saying before, Clayton Christensen's disruptive innovation idea is really great stuff. I can take it and tie it to Deming's thinking. But it's not really put into the corpus of Deming Management System now because there's no one who can make that decision.

Of course, the methods I can think of to address that problem are far from perfect. Which is likely why we are in this situation, which has issues, but may be better than alternatives.

I did something that illustrates this idea actually. Dr. Deming started with five deadly diseases, he added two more to that list to reach the famous seven deadly diseases. I think if Deming were alive today he would add two more deadly diseases, so I've talked about that: overpaid executives and the broken patent and copyright system. I think it could easily be the 9 deadly diseases now, but without Deming to make that call it isn't the same.

Regarding the overpaid executives, I think that's a no brainer. It is obvious how most of these overpaid executives act. You cannot have that and respect for people in the same organization. They obviously don't respect people, there's no question. Just by, as they are, taking from the system the profits created by tens of thousands of people and saying they are deserve it just for themselves. Especially when they then go and fire a whole bunch of those that created the success, or cut their health benefits while taking tens of millions for themselves. They cannot have that and respect for people. They have chosen selfishness instead of respect.

They also will gamble with the future of the organization. A very simple way to make yourself big huge bonus is to leverage the organization. You take big risks; if you win because the economy is strong, something good happens, boom, profits are huge and you make a bunch of money; if you lose, the company goes bankrupt, big deal. That's not Deming Management System. So, I have no question Deming would have added the overpaid executives to the deadly disease list ten, fifteen or twenty years ago.

The broken patent and copyright system, especially when I was talking about it first, seven or eight years ago, I questioned whether Deming would have included it. It's becoming more and more obviously a broken system that prevents innovation that allows big, huge organizations to manipulate the system to prevent innovation. It seems to me to fit fairly well.

Deming took it from five to seven, that's a perfectly wonderful thing for him to do. But how can you decide whether the deadly diseases should now be nine? I don't really think there is a good way to do it, so you'll have me say that I see two new deadly diseases, and pretty much no one else will care.

So I think the hard part is that you don't have this unified body of knowledge that keeps growing, but you have a very good bunch of work that is extending Deming's ideas and looking at the application of the ideas and extending it to things like the Internet. The web didn't exist when he was doing stuff. There's lots of new opportunities that the web allows, especially new tools or new ways of thinking. To me, almost all of them are just tweaks on: "Ok, we can do cool stuff with voice of the customer," or companies like Amazon and Google especially can do some really cool PDSA-type experiments on "Does this new idea work in the marketplace? Or Does that thing work?" because they can do experiments for very little money on millions of people at the same time, where in a non-web world it was really hard to do the same experiments. Back then you had to do experiments on this small little segment that was often very costly.

So, I do think the ideas are being extended; the problem is they don't get collected back together into an accepted Deming knowledge base.

Bill: This has been fascinating for me, to learn more about the Deming management system itself. I first got involved a little bit back in the 80s when I read one of his books, and I was managing a training in technical support department. And I started collecting the data on the customer satisfaction, because it was poor, and we used that data to vastly improve it. It was fascinating what you could do by collecting that data and looking at it, analyzing it and understanding it. That was a great experience.

Updated listing of interviews with John Hunter