The Great Quality Guru, W. Edwards Deming had a lot to say about how managers use data incorrectly and waste the resources of an organization.
It was part of his philosophy of quality which he called “profound knowledge.” He stressed a number of mistakes typically made by managers when handling data. Here are some of the problems along with the antidote for each misuse.
Mistake 1 – Assuming variation is a result of special cause variation when it is really due to common cause variation.
Common cause variation is when a system is in statistical control with small random type variation occurring.
The only way to tell if a system is in control is to consider all the data, usually by plotting it, and finding out if the data variation is within certain defined bounds, called “control limits.”.
If it is in control, then for managers to ask people to explain the variation is simply a waste of their time. People will dutifully go off and try to find out what caused the variation, but the answer will be only a guess and not valid information.
When one or more data points go outside the control limits of normal variability, then there is a special cause. In these cases, it is not only possible but vital to determine what caused the variation so it can be controlled and eliminated in the future.
Most managers fail to determine if a signal is due to special cause variation when they ask underlings to explain what happened. This causes a large waste of effort and time and it lowers trust.
Mistake 2 – Assessing the capability of a process based on the most recent data point.
It is tempting to react to the most recent data and ask people to take corrective action based on that. At home, we might say, it’s cold in here, why not turn up the heat?
But just because it is cold at the moment does not mean the system needs to be adjusted. It may be the low point of the cycle that is in common cause variation. In which case, if we turn up the thermostat, we are doing what Deming called “tampering.”
Tampering is defined as moving the set point of a system experiencing common cause variation in an attempt to reduce the variation. In fact, it can be demonstrated that “chasing” the perfect setting will result in a large increase in the variation of the process. It is better to leave things alone.
Many of us have experienced this when sitting in a meeting. All of a sudden someone will say, “Whew, it is very warm in here” and turn down the thermostat. Ten minutes later people in the room are reaching for their sweaters because they are chilled, so up goes the thermostat.
All day long people fiddle with the darned thermostat and swear at the heating system. The problem resides in the fingers of the people playing with the setting, not the furnace control. They are tampering, which results in roughly double the temperature variation than if they just left things alone.
Mistake 3 – Interpreting two points as a trend
This flaw is ingrained so deeply into the fabric of our thinking that we rarely even realize how stupid most statements of movement really are. Every day we read in the paper or hear on the news something like the earnings for Company X are up by 20%. We think that is a good thing. Rubbish!
All it means is that in comparison to four quarters ago the earnings are 20% higher. It says nothing about the actual trend of the data. For knowledge of how the company is doing, we need to plot the data and consider the quarterly earnings over something like 8 consecutive quarters. Only then we can know what is really going on.
Many advertisements for products are based on the faulty logic that two points make a trend. When we hear that interest rates on mortgages is down by ½ point, that is a symptom of two points equaling a trend. We really cannot use that data to imply what has been happening to interest rates in the past or is likely to happen in the future.
Mistake 4 – Looking for blame rather than root cause
When something goes wrong, managers often focus on who messed up and why rather than what aspect of the system was the root cause so it can be fixed. They think if they can pinpoint the culprit and punish him or her that will eliminate problems in the future.
Actually, the reverse is true. By trying to find a scapegoat, people tend to hide the truth and work to pin blame on other people to protect their own interests. That leads to infighting, conflict, and other disruptive behavior.
Mistake 5 – Too much automation of process data.
This issue is counter intuitive. One would think that data plotted and interpreted by computers would be superior to that plotted by hand.
In fact, data where people have been involved in the process is more useful, because people have the ability to spot peripheral issues and correct them where a computer will just keep logging rubbish.
When people rely on the machine always being right, there can be disastrous results because, at the root of it, the machines are controlled by people, but once programmed, people tend to rely too much on the machine and forget to check for sanity.
That situation is how pilots occasionally fly into the side of a mountain, because they rely too much on the dumb auto pilot and forget to watch where they are going.
When we take the time to use data correctly, we normally build higher trust within an organization, because people are not being asked to resolve a figment or ghost of a real issue.
These 5 mistakes are the most common ones. There are other symptoms of how managers use data incorrectly to the detriment of their organization and the people. The antidote for each of these problems is to make sure managers are educated on these flaws and modify their behaviors to avoid the pitfalls.
The preceding information was adapted from the book Leading with Trust is like Sailing Downwind, by Robert Whipple. It is available on http://www.leadergrow.com.
Robert Whipple is also the author of The TRUST Factor: Advanced Leadership for Professionals and, Understanding E-Body Language: Building Trust Online. Bob consults and speaks on these and other leadership topics. He is CEO of Leadergrow Inc. a company dedicated to growing leaders.
OD is short for Organization Development. This is not a new term. Behavioral scientists have been writing about Organization Development for over 40 years. The science has evolved into many different approaches all aimed at the same objective: to enable massive improvements in organizational performance through specific and planned interventions.
I have been involved with hundreds of OD efforts over the past decades. Some of these have resulted in the desired improvement. Some have not. In this article I will reveal some green lights, some caution (yellow lights), and some things to stop doing, or red lights.
Let’s review four major types of OD interventions (there are others, but they are usually variations or combinations of these four):
Although the objective of each of these techniques is the same, the viewpoint and methodology for each is different. I will give my personal views of the strengths and problems with each method from my experience. All of these methods can work. The trick is to match the leadership style and organization culture so that the one selected has the best chance of success in a particular case.
Most OD work is performed with the assistance of trained facilitators. They have the professional training to lead groups through the chaos of change to arrive at the objective. Managers who attempt a “do it yourself” approach to OD work often create more turmoil and make things worse. This is especially true if the leadership dynamic is part of the problem (which is usually the case).
OD work is tricky. It requires the skill of someone trained in this field. Headstrong managers who decide to undertake massive organization change without help are like critically ill patients trying to remove their own appendix. It is not a smart strategy. The flip side is that the effort needs to be owned by the manager rather than the consultant. Leaders who abdicate their responsibility to be the spiritual leader of the organization pay for it with lower trust.
Most organizations contemplating an OD initiative, do so because they are not satisfied with how things are going. If the current trajectory of business is meeting or exceeding goals, there is little impetus for change. The Action Search approach takes on a somewhat negative spin from the outset. The idea is to determine what is wrong and fix it quickly.
The first stage is to gather data. What areas of the business are falling short? How can these be changed to perform better? Unfortunately, many efforts using this technique become “witch hunts” where management looks for scapegoats. The process becomes one of uncovering ugly issues, followed by defensive tactics by those in charge.
Most of us have participated in this type of intervention. It takes place on a regular basis in some companies. Ask yourself how successful these programs have been in your experience. Do they produce positive change, or simply mask more underlying issues while creating interpersonal chaos? My experience indicates this technique should be used only under very tight constraints with ground rules supporting solid values. That does not happen very often. Hence, using Action Research has a real potential to backfire if not managed extremely well.
This approach is the mirror image of the “action research” technique. The process starts by asking what is working well. Groups focus on what is going right rather than what is going wrong. The idea is to find ways of doing more of the right stuff, thus providing less reinforcement for doing the wrong stuff.
This is a much more pleasant process. It feels good to focus on strengths. It also provides a benchmark for improvement. The danger is that groups who are failing miserably can deceive themselves into thinking all they need do is clone the few bright spots to succeed.
I witnessed an example of this, years ago, and it was ugly. One business unit was on the verge of extinction, so they did a three-day exercise in appreciative inquiry. By the end of the exercise, they were celebrating, dancing, and singing about their wonderful opportunities while they were actually going out of business. Six months after the crepe paper, helium balloons, high fives, and “jive dancing,” they were all looking for new jobs.
I believe appreciative inquiry can be much more powerful than action research, but it needs to be tempered by reality. A combination of both methods can avoid a kind of “Pollyanna” view of reality.
In this process, the focus is on the vision rather than the current state. The idea is to get groups engaged in defining a compelling view of the future. When compared to the present, this allows clarification of the gaps between current practices and organizational goals. Outstanding vision is the most powerful force for all individuals and organizations. Here are some comments on vision from my book (Whipple, 2003, p27).
Without a well-defined vision, the organization has no true direction. It is like a ship without a rudder, sailing around at the mercy of the wind, hoping to find a safe port with little chance of reaching one. Creating vision is absolutely essential for any group because it gives a common direction and provides a focus for energy.
Not all vision statements are helpful. Some are relegated to plaques on the wall and ignored. This is a tragedy because an uninspiring vision breeds apathy and is worse than no vision at all. If people point to the vision statement on the wall and say, “that is where we are supposed to be going but they don’t act that way,” you are in trouble.
Getting a great vision is not a 15-minute exercise. Some groups spend months working on developing a good vision statement. The process can get convoluted and burdensome if not handled correctly. If you are adept at facilitating group discussions, you may conduct this yourself.
If not, a professional facilitator would be worth the investment. As the leader, even if you feel qualified to lead the discussion, you still may want to hire an outside person so you can become one of the people developing this material. The danger if you lead the discussion is that you could influence it too heavily.
In general, if a leader brings in a consultant to facilitate a discussion or to assist with a particular instrument or skill set, there is usually a high value.
If the consultant is brought in to get into the trenches and do the dirty work of leadership, it is often a disaster because the consultant can undermine the leader. The leader calls in a consultant and says, “Things are a mess around here and I’m under a lot of pressure. Performance is horrible recently and morale is way down. I haven’t time to fix the problem because I am overloaded just trying to run the business and I have to attend all these management meetings. I need you to assess what is wrong and recommend a program to get back on track. If my team buys into your recommendations, we will let you handle the program.”
This leader probably has lost the ability to lead the organization effectively. As the consultant mucks around trying to understand problems, significant negative energy is unearthed but the consultant doesn’t have the authority to fix these issues. Meanwhile, the leader is “busy running the business,” and being micro-managed by superiors. Morale and performance go down even further until, finally, the leader is simply forced out.
This is why it is important for the leader to be the driving force in creating a vision for the organization. It cannot be delegated to a consultant or even a high-ranking lieutenant. The leader is responsible for making sure the vision statement is clear, compelling, memorable, actionable, and real.
Key ideas for developing a good vision statement:
• Most importantly, make sure your vision tells everyone where the organization is going. A nice sounding phrase that doesn’t have pull makes a poor vision. For a football team “We will be number one in the league within 3 years” is a better vision than “We will improve our position in the rankings every year until we become the top team in the league.”
• Avoid grandiose sweeping statements that are too broad. “We will become the best in the world at computer technology” would be too general and vast for a good vision statement. A better example might be “Our superior microchips will gain 90% market share with computer manufacturers in 5 years.”
• Make sure people can connect their everyday activities to the vision. “Every interface is a chance to bestow great customer service” would allow everyone to view daily activities with customer service getting top billing.
• Keep it short and powerful. Avoid long lists of items that sound good but don’t create a picture. For example, being “trustworthy, loyal, helpful, friendly, courteous, kind, obedient, cheerful, thrifty, brave, clean, and reverent” may be a good motto for the Boy Scouts, but it would make a terrible vision statement.
• Select colorful words that inspire rather than describe. “Our greeting cards melt the heart and transform the soul” would be superior to “Our greeting cards are better because they make people feel great.”
• Keep it short. The fewer words the better. “Absolutely, positively overnight” is better than “Our packages are guaranteed to arrive by the next day or your money back.”
• Use special words to emphasize your most significant point. “We will never, ever, run out of stock” is better than “We promise to keep our customers needs met by always having stock on hand.”
• Don’t try to be abstract or cute in order to grab attention. “We have the softest software in the nation” might be a slogan helpful on Madison Avenue, but it makes a lousy vision. Instead try “Software delivered on time, every time!”
The initial thoughts often contain the seeds of the eventual finished product. Craft these thoughts into words and images. Sometimes a picture or logo can be enough to communicate a vision, like the Rock of Gibraltar for Prudential Insurance. Other times, it can be a slogan, such as Wegmans Market’s “Every day you get our best” or General Electric’s “We bring good things to life.” The expression needs to have “pull”; it must provide forward momentum.
Communicate the organization’s values and vision to everyone in it. Do this well and often, as it forms the basis of everything to come. Frequently demonstrate your alignment with the vision by naturally working it into conversations. You might say, “Well, let’s call the customer and tell them about this situation. After all, our vision is to put the customer first.”
Whole System Intervention
This is a kind of zero-based approach to OD. In this case, the activities of the organization are viewed through a “systems” approach. The emphasis is on getting a critical mass within the organization to redefine the business. Processes become the focal point for redesign efforts. This is less threatening than the action research technique because of focuses on the “what” and “how” rather than the “who.”
The challenge with a systems approach is that can get pretty complicated. In systems thinking, we try to understand the interrelations between things. This is opposed to the usual linear way of thinking – If we do one thing it results in an effect. In systems thinking we need to understand not only the direct effect of actions but also the side effects. If leaders are unhappy with performance, they need to look at their system because it is perfectly designed to give exactly the result they are getting. Trying to untangle what is hurting the system and streamline the process for a better result can get convoluted.
The four OD interventions described in this article are the cornerstones for organizational improvement. They need to be applied with care and judgment to be effective. When OD activities go awry, the “cure” is often worse than the “disease.” With the health, or even survival, of the organization at stake, it is important to do this work carefully with the assistance of an expert.
The preceding information was adapted from the book The TRUST Factor: Advanced Leadership for Professionals, by Robert Whipple. It is available on http://www.leadergrow.com.
Robert Whipple is also the author of Leading with Trust is like Sailing Downwind and, Understanding E-Body Language: Building Trust Online. Bob consults and speaks on these and other leadership topics. He is CEO of Leadergrow Inc. a company dedicated to growing leaders.