Learning from what has not worked in the Past

The Past

In developing a strategy to enhance the learning capability of organisations and society in the future, it is surely prudent to be aware of what has not worked in the past. It is a long depressing story.

Subsumed by the Status Quo

What will become apparent from the following is that there has been a whole range of excellent initiatives all nibbling away at the edges of “The Status Quo.” These initiatives have failed to make any real inroads. Innovative projects within organisations provide stark examples. They secure significant progress but as soon as the champion of new concepts moves on, the thinking and the practice within the organisation reverts to the status quo and the gains are lost.

The Status Quo is a big big beast. It is the outcome of very complex interconnected systems that includes how we are educated, the stock exchange, the media, the need for public accountability, the evolving dominance of the accounting profession and what can be measured, our culture of action, our short term thinking, etc. etc. etc.

The fundamental recognition is that despite the excellence of the following initiatives they have failed to significantly improve the thinking and learning ability of the whole – The Status Quo.

The author ask that you simply scan the following list of initiatives to gain an impression of our past attempts to develop our society. The aim of this chapter is to set the scene to the fact that we will have to think deeper, or very differently, from the past 25 years if we are going to make a difference.

The Stock Exchange

The stock exchange is now dominated by institutional investors who have no connection with those working within companies – see Hopper and Klein – it is run by short term gamblers

It is noteworthy that progressive companies such as W L Gore and John Lewis Partnership are not owned by the stock market.

We have not Learned from Literature

In reviewing management literature we observe the very extensive list of scholars who have been challenging the simplistic Command and Control principals of our present style of management.  Fredrick Taylor (1910+) The Gilbreths (1920+) Mary Parker Follett (1925+) Walter Shewhart (1930+) Elton Mayo (1930+) Douglas McGregor (1950+) Fredrick Hertzberg (1960+) David McClelland (1960+) Joseph Juran (1950+) W Edwards Deming (1950+) Alfie Kohn (1980+) Peter Senge (1990+) Margaret Wheatley (1990+) Tom Johnson (2000+) to name but a few.

These scholars have written profound books that have been read by many many people. They have also provided exceptional presentations attended by a large number of individuals. The validity of their research and the knowledge conveyed has never been questioned. Yet they have not been able to influence the management practice in the vast majority of our organisations.

The notable exception would be the work of Homer Sarasohn, W Edwards Deming and J M Juran in Japan in the 1950s. Because of their circumstances after the war, plus the high regard they had for American Scientific Management of that time, the JUSE of Japan were able to ensure that at least 80% of the leaders of Japan’s manufacturing base attended and listened to the presentations by these innovative thinkers. As they say, the rest is history, within four to five years from this time Japan was able to transform itself from a poor quality producer to one that has dominated the quality market ever since. Unfortunately “The West” has not been able to emulate this learning ability.

We have not learned from Examples of Application

There are also prominent examples of innovative thinkers who have been able to influence their own company - John Spedan Lewis (John Lewis Partnership) Bill Gore (W L Gore and Associates), Ricardo Semler (Semco) Mondragon (The Basque Cooperative venture) and Taiicho Ohno (Toyota)

The first thing that stands out from these excellent companies is that by implementing modern concepts of management they have achieved significant improvement. All the organisations mentioned above have acquired a leadership role within their own market.

The second aspect that is apparent is that the innovative thinkers have been able to influence their own organisation, but not the rest of society.

In a similar vein is the work of the Baxi Foundation and David Erdal. David himself was chairman of the paper manufacturers Tullis Russell when he designed and led the employee led buy out of the company. He was subsequently CEO of the Baxi Foundation which played a leading role in securing all employee ownership of Loch Fyne Oysters. The Story of Loch Fyne Oysters is recounted in David Erdal’s book “Local Heroes.”  Alex Salmond, Scotland’s first minister is quoted as saying – “The story of Loch Fyne Oysters is inspirational...The model of employee ownership at Loch Fyne Oysters shows what can be achieved when people are empowered and trusted.”

Yet as a society we continue to fail to learn from these examples. Though the examples are highly visible, they do not seem to challenge the fundamantal perceptions behind our existing Status Quo mode of management.

Failure to Learn from Projects

A dramatic example of an improvement project within an organisation comes from The Grampian Justice System (Summary cases) case study supplied to the writer by individuals within Grampian Police. The consultants on the project were Vanguard. The diagram below depicts the time taken from when an individual is charged to the conclusion of the court case. By enabling communication across hierarchical communication structures and involving all parties involved in the justice system a particular section was able to improve the average time taken from 247 days to 35 days.

 The above improvements were maintained for a period of time within the section studied, but the lessons learnt were not transferred to other components of the Justice System. Worse still was that one part of the above system -the Procurator Fiscals office – declined to dismantle its hierarchical communication structure – so the overriding system is now steadily moving back to the poor performance of the status quo.

Another case study involved W Edwards Deming when he was advising Don Petersen CEO of The Ford Motor Company over a period of approximately 8 years in the 1980s. Together they achieved a very significant transformation as to how the company was managed. Don Petersen expressed the view that had it not been for Deming’s advice the Ford Motor company would have gone into liquidation at that time.

When Don Petersen retired, the new CEO wanted to do things his way, ceased using Deming, and reverted back to the standard American management philosophy. Ford’s present day profitability requires support by the American Government while their principal competitor Toyota continues to dominate the market.

There is also the story of Yorkshire Brick. Alan Winlow became CEO with the company losing money, producing poor quality and was deemed to be an environmental pariah by its local community. Within 10 years the company was providing the highest quality bricks in the region, it was highly profitable, had involved the community and the local council in all manner of environmental issues. In fact Alan was awarded a CBE for his efforts. The company’s excellence attracted outside buyers and it was taken over by The Marshalls Group. The group appointed Alan Winlow as Group Quality Manager but they failed to learn from him and what he had achieved at Yorkshire Brick. Within three years Alan resigned and the latest news is that Yorkshire Brick is now in the process of being closed down.

As previously mentioned the recurring theme is that once the champion of new concepts moves on, the thinking is invariably subsumed back into the status quo and the lessons learnt are lost.

Visits to Japan

In the 1980s there was a spate of study tours to Japan. But few knew what they were meant to observe and they failed to learn of the underpinning thinking behind the success of their manufacturing element of their economy. A famous booklet at that time that was titled – “You won’t do it” came from a question asked of a Japanese economist when he was asked why the Japanese were willing to opening their doors to European visitors. His reply was “Because it would take you 10 years to get to where we are now – and by that time we shall be even further ahead. And besides we know you will not do it”

There is also the famous quote from Konosuke Matsushita – chairman of Panasonic - in 1982

“We are going to win and the industrial west is going to lose out: there is not much you can do about it because the reasons for your failure are within yourselves. Your firms are built on the X theory model. Even worse, so are your heads. With the bosses doing the thinking while the workers wield the screwdrivers, you are convinced deep down that this is the right way to do business. For you the essence of management is getting the ideas out of the heads of bosses and into the hands of labour. We are beyond your mindset. Business, we know, is so complex and difficult, survival of firms so hazardous in an environment increasingly unpredictable and competitive and fraught with danger that their continued existence depends on the day to day mobilization of every ounce of intelligence”

There was also the numerous visits to The Nissan factory in the North East of England where it is being proved that Japanese management thinking can be transferred all over the world.

Matsushita’s words still ring true today. We still think that management is about getting the ideas out of the heads of bosses and into the hands of labour. McGregor in the 1960s called this culture X Theory or “Direct and Control” today we refer to it as “Command and Control.” A culture that is very prevalent in this country, especially the Public Sector.

Copying Toyota

While we are talking about Japan, may we identify another major failure over the past 30 years, which has been the West’s attempts to learn from the extraordinary success of Japanese manufacturing, especially Toyota. In response we have developed a whole range of initiatives starting in the 1980s with Quality Circles, then TQM, Process Re-Engineering, The Business Excellence Model (EFQM) and now Six Sigma and Lean.

 What we have been doing is copying the methods used at Toyota but applying them onto our existing perceptions of management. In the main they have been copied without taking on board the different theoretical assumptions of the Japanese culture. As Deming says we “have copied without the aid of theory.” These initiatives have, despite significant investment, made little difference to our dominate perception of management.

Quality Managers

A further outcome of Japan’s “quality” revolution was the “Quality” movement of the 1980s and organisations beginning to employ “Quality Managers.” They are still in place today though they have now acquired responsibility for Heath and Safety plus the Environment. They have been a breed of highly dedicated and knowledgeable people, and have led many projects that have secured significant progress, but they still have not been able to influence the underlying culture of their organisations.

The writer visited an excellent group working in NHS Tayside led by Jim Duffy. Jim expressed the view that his group would go into a section and achieve significant improvement in both performance and morale. However within approximately two years all progress would have been lost because the section was still required to work within the dominant “command and control” culture of the NHS.

Management Consultants

There are some excellent Management Consultants in the market. They have done brilliant work. But these management consultants tend to provide what companies want rather than what they need. Another breed of consultant has evolved that satisfy the demands of the leaders of organisations – quick fix solutions that do not challenge the underlying culture of the organisation - Balanced Score Card or Six Sigma being examples. A dramatic example being The Royal Bank of Scotland employing Harvard University consultants to implement a “Performance Management” system; a system that reflects unadulterated command and control concepts. We would contend that a University of Harvard’s standing knows that “Performance Management” techniques reflect out of date management concepts; they have simply been chasing the money. Edwards Deming referred to this type of consultant, and those whose advice is not based on sound theory as “Quacks”

Quality Forums

From the early 1990s “Quality Forums” sprung up all over the country. Derek Marnock, CEO of Aberdeen Chamber of Commerce, following a study tour to Japan, established the very successful Grampian Quality Forum. They met monthly for presentations by eminent thinkers often securing an monthly audience of 100+. They even secured 1000+ to hear a presentation by Tom Peters.

These forums sprang up all over Scotland. The other highly successful forum was the Lothian Quality Forum. In the later years it was under the chairmanship of Andy Lippok and was still meeting regularly up to 2005.

In Edinburgh the Quality Scotland Foundation was formed; again doing excellent work, especially in promoting the Business Excellence Model (also known as EFQM). It is still in existence, however the writer in a meeting with the new CEO a few years ago pointed out that the organisation had moved away from its roots of opening out new thinking and was now providing what their members wanted – his point was dismissed with the hard fact that if they the Foundation were to survive then they had to produce what was being requested rather than working to lead organisations into new fields of thought.

There are also many smaller forums many of which survive to this day – our own Deming Learning Network, AMED, The Society for Organisational Learning in Scotland (SOL), the excellent Internationals Futures Forum, The Charted Quality Institute, etc etc.

None of these forums have made a significant dent into how our organisations and society thinks.

DTI

In 1998 the DTI in conjunction with CBI and the Design Council broadcast a series of presentations that were received all over the UK, from Aberdeen in the North to Brighton in the South. One such presentation was from Richard Branson. The quote from the copy of the presentation reads:

All a company is, is its people, and if you think of every single way to get out there to motivate the people than as a group of companies you can achieve pretty well anything.

 It was an excellent presentation

Seminars

There is also every year excellent thought provoking seminars. For example The Deming Forum, (was the British Deming Association) have provided transformational high quality seminars every year since 1988.

Training and Videos

There are also many high quality training courses plus a comprehensive range of training videos. The big disadvantage of external training is that it informs and energises individuals outside the system in which they are working. When they return to their desk they rarely have the opportunity to change the overall system or culture of the organisation and find that they have to slip back into the original practices of the enterprise.

The same argument applies to the many excellent videos. They inform the individual not the organisation – and it is the organisation that has to change. It is the organisation that owns and sets the methods and practices that individuals use.

With his background it is hardly surprising that the majority of training courses are aimed at middle to lower management and is dominated by such course as conflict resolution, presentation skills, etc

International Web Sites

There is a vast bank of knowledge now available on the World Wide Web plus those sites that encourage group discussions. These sites do call for us to think about our society and how we might reorganise our structures. The disadvantage is that there are so many that it is difficult to steer our way through to sound thinking. They are also talking to the individual. Individuals feel dis-empowered until they are able to connect to a critical mass or a national movement.

Our Universities – Schools of Management

Our Universities should be the fountain of future management knowledge; we should be looking to them to push the boundaries of the management knowledge and practice in our society. But they are not. Their teaching is said to be out of date. They are not even able to influence how their own institutions are managed. In fact the Universities are subject to as strong a “command and control” culture as any in the public sector.

The question as to why they do not provide a lead in how our society is managed is a “systems” issue. There is an opportunity to research why our University system fails to provide this lead.

Obvious Waste

In Context of waste might we consider the above diagram? It is a portrayal of a Local Authority system to change a 3 pin electrical socket in a house belonging to the local authority (A council house).

We contend that no individual designed the above system. It has evolved from the ethos of not only the organisation but also its environment or society as a whole. That whole involves out of the new Scottish Building Regulation, the developing litigation culture, insurance, the sensational seeking media, the requirement of government to manage the public purse, etc. etc.

None the less there is inordinate waste in this system; not only the waste in excessive processes and checks but also the waste of the spirit of the skilled electrician.  A relevant quotation is from John Seddon in his book “Systems Thinking in the Public Sector”

“Demoralisation may be the most pernicious cost. If goodness or badness is judged according to compliance with specification, people are bound to become demoralised, especially when instincts tell them the specifications and associated inspections are taking them in the wrong direction”

This diagram was supplied by a person working in this system. He saw the waste and, we would contend, so does everybody else working in this system. The waste is obvious. Yet the organisation, because of its structures, is not able to eliminate this waste.

Our Management practice is declining

W Edwards Deming in 1993 considered that our management practice was in fact getting worse. In his preface to his book “The New Economics” he wrote:

“The huge long range losses caused by the present style of management has led us into decline. Most people imagine that the present style of management has always existed, and is a fixture. Actually it is modern invention – a prison created by the way in which people interact. This interaction afflicts all aspects of our lives – government, industry, education, healthcare.”

Those who have studied the causes of the credit crunch and the disastrous years of Gorge W Bush’s tenure as President of the USA might well conclude that in fact the decline has accelerated over the past 10 years.

Conclusion

The stark message from this long and depressing list is that if we are to make progress we have to learn from these failures, think deeply and design a different strategy fir the future.