Rear View Mirror Management - MBO and MBR (Management by Results)

[Don Winton]

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Subject: Re: Rear View Mirror Management

Date: Tue, 16 Feb 1999 21:54:11 -0600
From: Jim McKinley

M.B.O. is a "focus on the results" method of management. Focus on watching process outputs and reacting to them when the results are not satisfactory (results do not fall within "M.B.O. specifications"). How can we improve a process by focus on results (too late when results have been produced)? Answer: we can't.

I'm not completely sure this is an accurate characterization, but it may well be...I'd have to look at the MBO material closely.

I integrated M.B.O. and M.B.R. (Management by Results) under M.B.O. in my description above, both are practiced together as a single method from my observations.

In the approach I describe (which is really a variation of MBO (that's not a fair characterization), the majority of time spent in the management process is spent, NOT looking in rear view mirror, but looking forward, identifying barriers, particularly process ones, (eg. variation) and addressing them.

If the "but looking forward,.... particularly process ones (eg. variation)" is focused on process outputs, this is what Dr. Tribus is describing (as I understand his meaning) as "looking in the rear view mirror." There is nothing wrong with studying process outputs, but studying outputs is not sufficient. Making decisions based on studying process outputs alone can lead rapidly to serious trouble. There is better management theory available.

If you look at the MBO position (I think) where it starts is with a "strategic planning" process that is FORWARD looking. However, you are correct that the flaw is an over-emphasis on the results, and too little on process.

I agree this can be what leaders are attempting to do (make predictions) using M.B.O., but the methods (M.B.O./M.B.R./variations on M.B.O.) are ill suited for making prediction. These is a nasty "surprise" leaders encounter in the processes they are attempting to make predictions about, Dr. Tribus has described this "surprise" well in his paper titled "The Germ Theory of Management."

upstream in the process(es), change our focus from the results to the causes of the results, "look out the front windshield". Confusing special causes of variation with common cause variation, taking action by making changes to the design of the process based on special causes (tampering) makes our results worse (increases the dispersion in the process and may shift the mean away from the desired target). Rule 2 and 4 of the funnel dominate the decision making processes of boardroom discussions I have witnessed.

I forgot a key word in a statement above, the statement should have read: "taking action on perceived special causes (tampering)"..... I was attempting to describe Shewhart's mistake 1 and missed the mark.

If you focus on the communication process between management and employees, you can use that process to "form the bedrock" to look at both special and common causes, I think. The system I describe is meant to do that.

Improving communication in organizations is very important, but I don't understand how this as a basis to "look at both special and common causes." Could you tell us what you mean when you use the terms "special cause" and "common cause?" I suspect there may be a different meaning for the terms used by different people in the thread this topic came from.

I relate this to attempting adjustments (steering wheel) in the course of our car while looking behind us, taking action on the process without knowledge of the variation (causal system) in the process.

This is deceptively limiting. Is it possible to steer based on our aim, taking into account where we have been in error in past situations?

These are very useful theories which can be integrated as a system "to steer toward the aim."

Of course. Data analysis, and charting data is based on what has happened, yes? We correct our system based, on both aim and our knowledge of the data.

TNE 2nd Ed., page 100:

"Use of data requires knowledge about the different sources of uncertainty. Measurement is a process. Is the system of measurement stable or unstable? Use of data requires also the understanding of the distinction between enumerative studies and analytical problems. An enumerative study produces information about a frame. The theory of sampling and design of experiments are enumerative studies. Our Census is an enumerative study. Another example is a shipload of iron ore. Buyer and seller need to know how much iron is on board.

The interpretation of the results of a test or an experiment is something else. It is predication that a specific change in a process or procedure will be a wise choice, or that no change would be better. Either way the choice is a prediction. This is known as an analytical problem, or a problem of inference, prediction."

Jim McKinley

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The DEN has been quiet on this one, therefore your folks input would be appreciated.

Regards,
Don

[Kevin Mader]

Don,

This topic looks like one we touched on a few weeks ago on your post about Japan...Was Deming right? MBO or MBR (or by any other name) in my experience sells folks short and leads to undue animosity.

I remember presenting to the management group of an organization that they should pick a continuous improvement project in their area and determine a measurement system to track progress. I was lambasted (mostly by senior management) because I mentioned that it wasn't important to set a numerical goal, more important to put measurement and reporting systems in place and learn about the process and optimize it. Comments such as "How can you accomplish anything without a goal?" or "What are you shooting for if you don't have a target?". I shut my mouth. People in the meeting began to select arbitrary figures, target goals, without understanding the "inputs" to the process (one associate decided to reduce an issue to less than 10% of all orders only to find out that the problem was less than .3% to start with). Many created targets that they could never hit, not in the proposed timeframe anyway and with more consequence than gain. What did we achieve? People busted their butts to try and hit the target, got frustrated, and gave up. Sets a bad taste in everyones mouths.

Many MBOs are set much in the same fashion. Where were your efforts to fall, above or below the target? Hopefully the target was within the confines of the process, or you may as well be shoveling sand into the ocean! Maybe you would get lucky and fall on the right side of the centerline and you would receive your bonus. Funny thing, you are rewarded arbitrarily. Let's face it, statistically you have a chance to win or lose without doing anything. Does that look like a good way of doing business? Reward when you don't do anything out of the norm and penalize when someone either "tampers" for improvement or actually does make good moves only to be offset by natural variation in a process? What a goof!

Anyway, some fuel for the fire. Do I think numerical goals or quotas work? No, not unless you are stuck in the Taylor era. Good post by the way Don. Now back to the group...

[Kevin Mader]

Don,

Tree? What tree? I enjoy reading your posts filled with the many references of past reading. I can hear Dr. Deming's voice in my head each time.

Good points reiterated in your post. I agree, I would sure like to have Marc's missing magic wand to cast a few spells.

The "New Philosophy" is "the path less traveled". You need to know this when you adopt it. After two years, the hill here is flattening out some. This is attributable to patience, plenty of hard work, and with the help of some polished outside resources who moved up the pace of the march. People need to be shown 'why' the new paradigm should be adopted. Once they understand its simplicity, I feel they will.

How does the "multitude of management (_o_)'s out there" learn this philosophy? Probably the hardway. I think your personal management style is very effective. Leading them a bit, letting them take the line, let them taste a bit, and..... BOOM! Set the hook! Hard to get off the hook once you have established a pattern of successful rebutts to an easy, but direct, line of questions (ie. your "Now what?" question). People of integrity will appreciate what you did to them, open their eyes. Others will think other things. So what (perhaps they're part of the 6%).

"How could they know". Exactly right. In a world of MBA run organizations and filled with Financiers after visual numbers only (throw in those MBOs), the paradigm stands strong. I keep this in mind when working with my fellow associates. I can't hold them accountable for the years of brainwashing they endured (although you could argue that perhaps I am) to use the paradigm. That doesn't mean that I give up hope, drop my mission? No. It's just more of the hill to challenge me. Back to the group...

[Marc]

I love these little business philosophy threads. You guys really bring some interesting thought and info here.

My only real contribution here is to say I am not a 'business' person. A look at my resume and you can see I'm definitely not a career business person. As I have been immersed in the business world it never leaves me since I first understood about 10 years ago --> The tenor and involvement of upper management sets the course. An example is Coors. Very conservative but not exactly MBA freaks. They understand diversity and a broad view.

I was recently at a plant right that, well, if I was plant manager - well, I'd raise the roof on housekeeping. I won't go into detail, but it's a disgrace. And it goes on up. Scrap is unbelieveable. I mean, we're talking old automotive - and a UAW plant to boot.

Well, top down, I say. I really liked working with Motorola in Mexico. The plant manager was the first I have ever met whom I really admire. It was a most pleasant experience. We talked about his experiences. An American, he started in Texas. Said he didn't fit in the business mold. Went to Malaysia if I remember correctly, and loved it. He said it's a lot like Mexico in that you do rule the plant and make decisions. And that plant is family. He really took care of folks down in Guadalajara. I liked his style. I felt I could trust his word. Anyway, he's back over in the far east - he said he likes it most there. He has no interest in returning to the US. He treated me fairly. Gave me the authority I needed to get the job done and heeded my advice. We did the job and did it on time. I enjoyed my time in Guadalajara so very much. The folks at the plant were really nice folks. I wish I spoke Spanish (yeah - I know - I can learn if I really want to so I must not really want to or I'm just plain lazy which is probably the case, actually) as I would have loved to have stayed down there!

And they did something no other company had done, or has done since: They took me out for dinner my last night there, got me good and drunk on really goodtequila, and then presented me with an engraved trophy. Their thanks to me was overwhelming! Now, those people were great people. The neat thing was it was one of those few experiences where I felt the strength of a real team effort. Everyone did their part and did it well without walls and pointing to others and stupid stuff. Interested. Tell me what to do and I'll do it.

Anyway - it's different there. But - even in the US - the top brass set the tenor and the course. A good company has good leadership. All the theories. All the 'programs'. Succesds (progress or whatever you want to call it) requires a long term roadmap. Plan your course and your tools and your measurables.

When you talk about goals - well, that goes back to my comments in the *other* philosophical thread about Zero Defects. Umm, well, that is one possible goal. There are multiple goals. Sales evolution. Product evolution. Employee evolution. Manufacturing process evolution. Design process evolution. So - where are you and where do you have to go? Which specialist are you in the food chain?

The key word here is evolution wherein lies some of the problem. The environment - animals, plants, etc. - is relatively steady. But the mechanical and business world we live in is evolving at an increasingly exponential rate (just as is population growth) based upon data and technology evolution.

Our paths are in part dependent upon our individual ability (not to mention the drive) to re-adjust to the evolution function periodically (Do you use Windows 98 and the latest 'Office' suite?) AND with increasing frequency. Note how it was in the 1940's and 1950's - I mean compared with today - well, heck. Washing machines, refrigerators and everything considered (yes - cars) things weren't moving like the increasing speed of processors every year.

This said, it can become difficult to keep to a road map. But - I'd like to try. Now - All I need is a company to let me! I'll set the tenor of the company!

The only goal is to identify, consider and integrate into your current road map the next challange.

Me thinks there's too much bull in many established 'management' theories. As with ISO 9000, TQM, re-engineering, etc., etc., the road map should have elements of many resources and so it is with 'good' management.

But who am I to know??? I have no formal business education.

Kevin - it sounds like you're getting what you want and need.

By the way, you said:
--> I can't hold them accountable for the years of brainwashing they endured <--

Personally, I hold EVERYONE who doesn't think like me accountable for something! (Heh heh heh!)

[Don Winton]

I enjoy reading your posts filled with the many references of past reading. I can hear Dr. Deming's voice in my head each time.

Thanks, Kevin. It is nice to know that someone enjoys my ramblings. As far as WED goes, I hear him all the time (damn annoying sometimes). But, remember what I have stated in the past, do not read only what people have said he said, read what HE said (and that goes for my stuff as well).

The "New Philosophy" is "the path less traveled".

Agreed. But, is that not our (quality professionals) function? Glad to hear it is working well for you.

I think your personal management style is very effective. Leading them a bit, letting them take the line, let them taste a bit, and..... BOOM! Set the hook! Hard to get off the hook once you have established a pattern of successful rebuts to an easy, but direct, line of questions.

I have learned that a person’s thinking process is just another one of WED’s systems. It also can be broken down into inputs and outputs. Provide the correct input and the output is predictable. No offense to ANYONE out there, but training most people is just like raising kids, but you have much less time. Giving them the information they need is not enough, you must teach them how to apply it. Therefore, I try to break down my systems and hands on stuff to this philosophy of inputs and outputs. Hence my message behind the ‘tree’ lesson. It is not enough to teach them not to steal, but to demonstrate what will happen if they do. Know your path, or your destination is uncertain.

"How could they know". Exactly right.

Not my words. Deming’s.

I love these little business philosophy threads. You guys really bring some interesting thought and info here.

Marc, I have always believed that discussion, positive or negative, is beneficial. Glad you like mine and ours. I do try.

Well, top down, I say.

Agreed. I can usually tell when I meet the plant managers what conditions on the floor will be without having even seen it. This is an especially nice talent when interviewing potential employers. I thank my Lead Assessor training, but mostly the instructor who taught me.

Anyway - it's different there. But - even in the US - the top brass set the tenor and the course. A good company has good leadership.

Leadership is the key word. Anyone can manage, but very few can lead. There is not a problem with having goals, but only goals set with proper input and thought can succeed. Believe this or not, a previous employer of mine prepared a five-year strategic plan EVERY YEAR.

Do you use Windows 98 and the latest 'Office' suite?)

Do not even get me started on that. Those who believe the latest ‘thing’ is a must have are living in a fantasy world. I believe you said it best; appropriate and applicable. But, those who do believe in the latest bells and whistles are the ones who made Gates rich.

Me thinks there's too much bull in many established 'management' theories. As with ISO9000, TQM, re-engineering, etc., etc., the road map should have elements of many resources and so it is with 'good' management.

Reiterate the term ‘bull.’ I have said it before and I will repeat until the lesson is learned or I am worm food. Not one single model is applicable to any one operation. Apply the tools that are appropriate to your methods. Trying to use Deming (alone), ISO 9000 (alone), TQM (alone), TSM (alone), IPM (alone) or whatever is doomed to failure.

But who am I to know???

I will be the first to admit, I am no expert. I rely one others to supply the foundation of what I expound. After all, this stuff is years old. If I HAVE seen further (?), it is because I have stood on the shoulders of giants.

All others shall be PUNISHED!

One way or another, one way or another, Marc.

A boy was walking along the beach and saw that millions of starfish had washed on the shore. He began throwing them back, one at a time. A man walking along the beach noticed him and said, "Why are you doing that? You can't possibly make a difference." The boy picked one up and tossed it into the water and said to the man, "It made all the difference to that one."

Regards,
Don

[This message has been edited by Don Winton (edited 02-24-99).]

[Don Winton]

Kevin,

Yea, I believe this thread splintered off another one, but I do not remember which. You are probably correct, though.

Anyway, on with the show.

How can you accomplish anything without a goal?

Yea, I find comments like that one typical with most (not all) management types. I try to explain it to them like this (real example that happened to me):

"OK, what happens when you reach your goal?" Typical response, "Mission accomplished."

"Now what?" Typical response, "Uhhhhhhhhhhh." Then it is my turn to 'lambaste.'

Sometimes the point gets across. Most times, NOT.

This example illustrates your point. They will set some arbitrary goal (achievable or not, how can they know without defining inputs, as you pointed out) and CANNOT think beyond that. What a waste.

statistically you have a chance to win or lose without doing anything

Yea, succeed or fail. Unless inputs are determined and analyzed (windshield), how can you determine outputs (rear view mirror). It does no good to see the tree AFTER you have ran into it!!!!

"How could they know. Who taught them."

Use of data requires knowledge about the different sources of uncertainty. Measurement is a process.

If there is any single one rule to chart a course, this is the one. Making measurements and collecting data is subject to the same rules as manufacturing a product. The data is the product. If anyone has any ideas to try to get this through to the multitude of management (_o_)'s out there, please let me know.

Regards,
Don

[Kevin Mader]

Guys,

Very refreshing. I agree that when we find a good topic, tons of good reading occurs. Guadalajara sounds like a soul saver. I am fortunate to have had a couple in my short life, one coming fairly recently which keeps my personal vision unobscured and undamaged. A nice reality check, places things into perspective and reaffirms personal beliefs. Marc, imagine that, an organization interested in what you have to say because they believe (even understand) that you are there to help! Anyone would feel tickled under those conditions. If not, check them for a pulse.

Funny thing, I have often wondered how other folks in different countries would receive...well direction. More or less receptive? I have been in two positions in the past 10 years, both having large, diverse ethnic work forces. In my experience, they have less trouble adopting ideas than do folks who were born and raised here (exceptions of course, both ways). Curious. Could it be the brainwashing? I tend to think so. Well, my long range goal will eventually test that theory. Time will tell. Back to the group...

[Marc]

Maybe it's my pessism, but I see most 'Mericans as John Wayne wannabes. There is a big load of me in US folks and very little we. I liked Guadalajara as it was a big we thing. And in speaking with some folks who managed foreign companies, I always hear good things.

As I said, I don't know much. I just watch it all go by. Maybe - since I'm closing fast on 50 - it's just what I think and maybe it's not appropriate. I learned about data in college through science courses and my anthropology experiences. I should point out I didn't start college until I was 24 (back in 1974). But - college was an eye opener. As I drifted into the business world from the medical world (I was an EEG Technologist in a former life) in the early 1980's I started watching. I had seen business take root in hospitals but that didn't bloom until after I was gone.

So - I read this stuff and recognize many things and it keeps coming back that I feel (not from you folks, but from 'business' folks) too many people believe there is a 'magic bullet'. I go a lot of businesses which do a lot of different things and I see that each is its own microcosm where you have to take a little of this from here and a little of that from there and use it. I go in one plant and the employees are eating at work stations, spitting on the floor and in general are friggin' pigs. This tells me upper management are pigs. I don't expect much. On the other hand it never ceases to surprise me how many people e-mail me and ask me to "Send me everything you have on ISO9000". Idiot. Like heck. The site has more than enough to get you started and you don't even want to read.

So - I take all this and end up with my "How Marc would run a business". I take pride in taking a BA instead of a BS as I find so many ignorant frigging engineers. I come back to what my appy said when I was in my teens. I can't remember my complaint at the time, but it boils down to 30% of any population are fools, 60% is capable and will do what is necessary. And 10% are leaders. While I don't have data, my experience points to a grain of truth. Call a plumber. 3 of 10 are incompetent, 6 of 10 can do the job, but only 1 of 10 comes up with a unique, advantageous solution which in the long run saves you money.

Enter CEOs. (I'll stay out of the laps of engineers here) You have 1 out of 10 who is the benevolent dictator who can bring everything together. The rest are - well, they exist. That 1 of 10 (maybe the ratio is too high - maybe 1 out of 100) is a leader and will help a team prosper.

A boy was walking along the beach and saw that millions of starfish had washed on the shore. He began throwing them back, one at a time. A man walking along the beach noticed him and said, "Why are you doing that? You can't possibly make a difference." The boy picked one up and tossed it into the water and said to the man, "It made all the difference to that one."

Yes - a part of it is how one looks at life and, in turn, business. The facility I am at I am having fun at. They're problem children as a group, but there are a few exceptional individuals. I can stay above the fray as I'm only there for a short while, but it's great to watch. I really think my not knowing a **** thing about business until I was in my early thirtys (no - my parents didn't even teach me the value of a dollar, so to speak, and it shows) has made me look at business differently.

I like science. I like numbers. I like graphs. I like pictures. My life has not had so much of that 'bottom line' to it. So - when we start talking about things like EVOP - I see the value there (assuming your company is at a point where you can really use it - not continuous fire fighting). My mind hasn't set to the total cost. And don't get me wrong. I do not profess to have all the answers. Early in my 'consulting career' I met with a plant manager and told him the folks had to concentrate on the program - which he was slowly shutting down. He told me the plant was bleeding badly and that if he didn't stop the bleeding there would be no business to worry about getting ISO for. A couple of years later the plant was ISO. He stopped the bleeding first. Had I been at the helm - well, who knows. I saw the logic at the time, and even today I somewhat believe the two could have 'walked hand-in-hand' (ISO drive and 'saving the plant'). But - he brought things around. And did ISO. And I know the limited value of judging by 20-20 hindsight. So I give him credit. I probably would have bankrupted the company.

As we go thru these 'philosophical' threads, I see a lot of good things. And we discuss holes we know about and recount them to warn others how deep some of those holes are. The threads give me ideas. And the threads provide a place to ramble and bitch about things like: Those who do not Believe! (Heh heh heh!) Much of this is attitude. And what you will work under. And what you dream.

I like it when you guys (umm, well, folks in case any gals are here) post this stuff as it helps me understand some of the stuff I *might* have gotten in business school.

So - how did you folks 'get where you are'? R U happy?