I recall a simple story from Deming. Thomas Nolan teaches his son, Patrick Nolan, to create a control chart. The child plots the arrival time of his school bus. The points have some variation but there are two point outside of control limits. He shows it to Deming with an explanation for those points – “new driver” and “door closer”. Deming is really happy. Real education. The child has learnt to distinguish special cause variation from common cause variation. A breakthrough.
I remember another experiment that Deming described running. The setup is a funnel that is kept in a fixed location. There is a piece of paper with a target drawn on it. The goal is to drop a marble through the funnel and hit the target. Every time the marble is dropped there is some natural variation in the system – and the marble falls in the neighborhood of the target. There are multiple modes of the experiment, two of them are:
- He would drop the marble through the funnel and observe its deviation from the target. He would record the results in a control chart. No adjustments were made
- He would drop the marble through the funnel and observe its deviation from the target, say z. Before the next try the funnel would be adjusted by aiming it at a new target with deviation -z from the original target
Guess what happened in the two cases? In the second experiment the accuracy of the funnel system got worse and worse as the adjustments being made took the system out of control. Not a very effective way of hitting the target. In the first experiment the system remained in control with a spread around the target.
I am fascinated by this experiment. It carries some very profound insights into management. Managing a goal directed system means getting it closer to the goal. In order to get it closer to the goal the manager has to take actions – make adjustments. If the manager cannot distinguish natural variability or noise from a real signal – the result is chaos. The actions of the manager amplify the variability to make the system (including the manager now) extremely sensitive to small variations. A system out of control.
What are the lessons of this experiment? Managers occupy a very sensitive spot in an organization. Reacting to noise can have very destabilizing effects. At the same time their job is to provide the feedback loop. Making the adjustments so the system gets closer to its goal. How can they embrace this agency and be effective?
Then there is the opposite problem. Organizations experience uncertainty and systematically ignore it. A simple example is asking someone to make a commitment. And asking them to be efficient. Unless the work is extremely standard this is a no win situation. In most cases there is considerable uncertainty associated with completing even everyday tasks. While making the commitment the person is conflicted on what estimate to provide. A few naïve souls will over commit and occasionally under deliver. Most will under commit and over deliver. From an organizations point of view the ones who over commit may be more useful. They are more focused, challenging themselves and the organization and behaving in ways that allows work to be completed swiftly. But they will miss their commitments quite often. The ones who under commit are being reliable and meeting a different organizational value, of keeping their word. On a personal level reputation is all about the strength of one’s word. Extremely valuable currency in most social settings. But at an organizational level they are potentially wasting organizational capacity and time.
Most organizations that face uncertainty have extensive coping mechanisms in place to deal with this dilemma. When people are forced to make firm commitments in the midst of uncertainty and the unreliable commitments of others, they create a narrative of victimhood. They have a ready list of problems that are outside of their control – customer demand is unstable, the engineers are not reliable, the testing team is not working fast enough, the sales team does not know how to sell. Most of these complaints are not meant to be solved – they are coping mechanisms to let the organization know that our performance is not entirely in our control.
Culture is our collective narrative – the different stories that we tell about ourselves in different contexts. These narratives once established become filters – every piece of confirming evidence reinforces their validity, every contradictory piece of evidence is filtered out. Once these silo narratives are established, these are the coping mechanism, mermaids and moh, that hold the organization apart. Ultimately this culture becomes the constraint of the organization. It holds the organization back from achieving its goal.
The prickliness of people keeps increasing, every problem is someone else’s fault, any suggestion to improve is seen as an accusation of incompetence. Why? Because accepting any such suggestion could invalidate the narrative. The result is an organization locked in place. With the silos and stories that create victims, with loss of agency at all levels. A high price to pay – but a necessary consequence of not making the distinction between signal and noise, between uncertainty and performance.
A key part of reversing this culture is creating the ability to make the distinction between noise and signal, between uncertainty and performance. A starting point is to bring the focus to flow – to create full kit and reduce the work-in-process. This creates a different way of managing uncertainty. Instead of focusing on making and meeting commitments the focus is on following the rules of flow. The results are a consequence of following the rules. The second step is to make buffers explicit and monitor their usage. This allows managers to observe in real time the impact on buffers and take corrective actions. This is a critical step in changing the culture. Buffers protect the organizational commitments but they also provide a mechanism to distinguish “uncertainty” from “performance”. Finally the third factor is to set ambitious targets that create the need for improvement. From a cultural change standpoint this is the critical injection. An organization that is trying to separate itself from the competition will be forced to create a new narrative of excellence, of forgiving mistakes in the pursuit of improvement. Once this new narrative starts to be established it will create a virtuous cycle. Positive news will reinforce the narrative. Setbacks will be filtered out. Confidence in reaching a higher level of performance will create agency at all levels. This is then a last key element – articulating a narrative of success.
Leadership is a precious resource. Not always is it scarcity of talent. It is often a scarcity of belief. A leader is someone who can see through the fog of confusion and provide direction and purpose. Once organization leaders start to see the future, belief grows. Significant improvements are always possible, all conflicts can be removed with win-win solutions, people are good and never say I know. “Insha-allah” the promised land can be reached 😊.
Read “In too deep … of mermaids and moh” – Article on one way to handle the distrust across organizational boundaries
Read “90% right and 90% wrong at the same time” – How a bad filter generates dis-trust
See Jaideep’s post on what we remember from old projects.
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