Taking Lean to a whole new level.
Note: The Illusion of Management is not a political blog; however, those struggling to create change within their organizations and build a culture of responsible data analysis can learn a tremendous amount from Scott’s new book. Thus, I explore the concepts of Adams’ book and how they pertain to the Illusion of Management.
Win Bigly is Dilbert cartoonist (and trained hypnotist), Scott Adams, newest book where he reviews his prediction that Donald Trump would win the 2016 election from the viewpoint of Trump using the techniques of what Adam’s describes as a Master Persuader. Other examples of Master Persuaders are Steve Jobs and Tony Robbins. Adams walks readers through his explanation of why facts don’t matter, tactics of Master Persuader’s, and explores the psychological concepts of confirmation bias and cognitive dissonance through the lens of the 2016 election. Adams explains a Master Persuader is an individual who recognizes people are irrational 90% of the time (recall behavioral finance advocates from the last post argued innate irrationality invalidated the efficient market hypothesis) and uses this observation, along with confirmation bias to “pace and lead” the
victims subjects. Adams draws upon examples such as Trumps extreme immigration stance early during the Republican primaries as a way to match his supporters on an emotional level and then lead them later in the race as he transitions to a less extreme position. Adams also notes Trumps ridiculous behavior and visualizations such as the infamous “Wall” are a tool to prompt discussion which elevates the issue in importance as a result of the “energy” consumed from the ensuing discussions and ridicule. Enlightened individuals such as Illusion of Management readers have likely seen this tactic deployed in the office as a skilled individual can successfully “spin up” a seemingly benign issue and suck the life out of an organization.
Persuasion Tip #4: The things that you think about the most will irrationally rise in importance in your mind.
Another popular tactic outlined by Adams is the High Ground Maneuver where a persuader elevates the discussion to a level where everyone agrees. Adams example is Steve Jobs’ handling of “Antennae gate” where Jobs famously stated all smart phones have problems in response to issues with the iPhone 4. In the corporate world you’ve likely heard ambiguous statements such as “We need to focus on quality” or “create a quality mindset”(Note: Strategic Ambiguity is also a tool of the Master Persuader). Inevitably if the High Ground Maneuver goes unchecked the organization will likely kick of projects such as standard work deployment projects where the resulting work instructions are pulled out for external audits and collect dust for the other 360 days a year.
Persuasion Tip #13: Use the High Ground Maneuver to frame yourself as the wise adult in the room. It forces others to join you or be framed as the small thinkers.
Though Win Bigly aids readers in identifying tactics of the Master Persuader, the continued discussion of confirmation bias is vital for ensuring meaningful performance improvement. From the perspective of the Illusion of Management, confirmation bias is crucial in perpetuating an environment where “noise” in performance data can be translated into “evidence” of progress or poor performance based on the bias of the observer. Adams uses evolution to explain this as understanding reality isn’t essential for people to live long enough to procreate. Evolution & confirmation bias also explains why people are skilled at pattern recognition enabling humans to circumnavigate the globe with the stars; however, prompts us to see patters where information is purely random (Source). The most fundamental tool in the war against confirmation bias & motivated persuaders is the control chart. Control charts can be used with upper and lower control limits which bound individual results within a range which is considered “noise” or common cause variation. Other rules such as those developed by Western Electric (link) can be used further enable filtering of signal from noise. Armed with tools such as control charts and the lessons of Master Persuaders outlined by Adams’ provide enlightened and motivated individuals with a fighting chance against the Illusion of Management.
Persuasion Tip #7: Its easy to fit completely different explanations to the observed facts. Don’t trust any interpretation of reality that isn’t able to predict.
W. Edward Deming was an American statistician, management consultant, and professor credited with influencing the Toyota Production System (TPS) and lean manufacturing (subjects which will be explored on this blog at some point). Along with the Plan-Do-Check-Act cycle and advocacy for statistical quality control (e.g. control charts), Deming developed his 14 key management principles. In this post we will explore #8, “Drive out Fear”.
“Drive out fear, so that everyone may work effectively for the company”
– W.Edward Deming
I found myself pondering this concept most recently while reading “A Random Walk Down Wall Street” by B.G. Malkiel. A book first published ~40 years ago which explores the efficient market hypothesis, wisdom or lack thereof of investment gurus, and the madness of crowds in great detail. In his book, Malkiel discussed the work of Kahnemann & Tversky (critics of the efficient market hypothesis) whose behavioral experiments discovered that people are extremely loss averse and in situations where loss was assured, individuals exhibit risk-seeking behavior. One such example is provided below:
Consider the below options for yourself:
Option 1: Guaranteed loss of $750
Option 2: 75% chance of a $1000 loss & 25% change of no loss
When faced with the two options provided above, Kahnemann & Tversky found that 90% of subjects selected option #2, despite the fact that the expected value of both decisions is the same. How could this concept apply to organizations?
In organizations where individuals are held “accountable”, often a euphemism for a perform or “you’re fired” management philosophy, individuals are put in situations where loss may be assured. Based on the work of Kahnemann & Tversky it is the tendency of the vast majority of people to exhibit risk seeking behavior. In the world of business this may result in shipment of nonconforming product, hiding injuries, violation of environmental laws & policies, etc.
In my own experience I’ve witnessed individuals “manipulating” on-time delivery numbers, supervisors aborting lengthy processes early to meet delivery commitments, and overriding safety features to reduce cycle times. One organization had a philosophy uttered jokingly by employees on the production floor, “Ship it! We’ll worry about it when it comes back”. As a young engineer I found myself chastising the individuals while seemingly oblivious to the fact that the behavior was human nature and a response to the management system.
For years, quality professionals have been focused on developing detailed “processes” to the point of annoying everyone within the organization. The switch of ISO 9001(Quality Management System used across many countries & industries as the minimum requirements of a
quality management system) from process thinking to risk based thinking has quality professionals around the world preparing SIPOC’s (Supplier-Input-Process-Output-Customer) diagrams and performing FMEA (failure modes and effects analysis) activities throughout their organizations in an attempt to map out organizational risk. I find myself wondering how we eliminate the greatest risk, FEAR in our organizations?
“Well, 99% of things done in the world good or bad is to pay a mortgage”
-Nick Naylor, Thank You for Smoking
W. Edward Deming: https://asq.org/about-asq/honorary-members/deming
14 Points for Total Quality Management: http://asq.org/learn-about-quality/total-quality-management/overview/deming-points.html
“A Random Walk Down Wall Street”: https://www.amazon.com/Random-Walk-Down-Wall-Street/dp/0393330338
ISO 9000: https://en.wikipedia.org/wiki/ISO_9000
One of the pivotal experiences which provided the catalyst for starting this blog occurred in Fall of 2012 when I was living with my soon to be first wife and helping to raise her son. He was in his 1st grade and was struggling with a behavior to a degree where the school put him on a daily behavior report card system.
The report card consisted of him receiving a score card every day with each school subject and recess. Under each subject he would receive either a smiley face or frown face for behavior and work and a single face for recess. The report card allowed for a maximum of 13 Smiley faces though he typically received around 3-4.
After begging, bribing, scolding, pleading, and any other “Hail Mary” attempt to try to get him to behave I had a Eureka moment. After each day we attempted a different reward (bribe) or punishment in desperation to try and correct the behavior. Being an experienced process engineer I figured there would be no way to determine which input variable would lead to the desired output if we were consistently turning the proverbial knobs on a daily basis. I recognized the school had gifted us with a measurement system allowing us to trial a single incentive system and evaluate its effectiveness over a period of time and use statistics to measure the difference. This would prevent us from chasing “noise” and ensuring we would be able to identify real progress. Thus, we set a goal of 10 Smiley Faces per day and worked out an incentive program with his after school day care teacher.
Lo and behold the number of smiley faces increased (see the example graph below) and he drastically reached a point where he was averaging nearly 10 smile faces per day. Being the
obnoxious data savvy engineer, I performed a t-test and the resulting p-value was significantly below 0.05 indicating the change in performance was statistically significant. For the next several days I practiced my interview with Oprah and Dr. Oz while brushing my teeth as I had successfully deployed process engineering and management fundamentals to solve the fundamental challenge in parenting.
A few days (or maybe a couple weeks), I ended up picking up the boy from school and ran into his teacher. Proud of my accomplishments I had to ask, “How has his behavior been?”. Waiting in anticipation for an “Atta Boy” moment his teacher paused and said, “he is receiving a lot more smiley faces; however, by the end of the day he is a real terror”. Note: She likely put it more politically correct, but you get the gist.
Defeated, I had my first real world lesson in Goodhart’s law: “When a measure becomes a target, it ceases to be a good measure”. Children 1, Engineer 0.
Goodhart’s Law: https://en.wikipedia.org/wiki/Goodhart%27s_law
The Illusion of Management is a term I initially coined to describe regression towards the mean and the subsequent political grandstanding by “savvy” managers. As a data enthusiast I found myself constantly amazed observing managers taking credit for regression towards the mean with no fundamental change to the process generating the results.
I illustrate this point below with an actual quote:
“Scrap improved because I have been emphasizing quality in the weekly safety meetings”- Anonymous Plant Manager
Best case I find these scenarios annoying and an impediment to real continuous improvement efforts, while worst case ensuring over confident managers with little to no knowledge of causal relationships are rising to the top of American institutions.
In this blog we will explore this and other concepts to help the fellow “Enlightened” enjoy some laughs and blow off steam!