Vol. 8, No. 8

August 2006

PQ Systems

Learn to add charts to PowerPoint

Quality Quiz: With a video!

Six Sigma

Data in everyday life

Bytes and pieces

FYI: Current releases


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Six Sigma and more:
Silos, suboptimization, competition, and cooperation

"Go on home for the rest of the day." That was a phrase that the hourly workers at the Frigidaire appliance assembly plant heard fairly often when I worked there. The plant was then a part of the Frigidaire Division of General Motors Corporation. It was not unusual for assembly line workers to be sent home at noon and paid for a full day's work. I came to really understand those short days only as I began to understand silo mentality and suboptimization from the teachings of Dr. W. Edwards Deming. You see, the managers of the plant unknowingly had different and inconsistent goals, including:

1. The purchasing manager's goal was to minimize purchase price.
2. The material manager's goal was to minimize inventory.
3. The quality manager's goal was to assure adequate quality.
4. The production manager's goal was to maximize the efficiency of his workers.
5. The labor relations manager's goal was to avoid a strike without giving away the company.
6. The union's goal was to negotiate a contract that would maximize the security, wages, and benefits of their members.

Each manager had his or her own silo, important but not necessarily consistent with the company's overall needs. They all seemed to be admirable goals except that together they resulted in sending workers home at noon for a full day's pay. You see, the inexpensive parts the purchasing manager bought sometimes didn't work. The low inventory levels ensured that no replacement parts were available. The quality manager could not accept shipment of defective products. Having workers do something that was not part of the production schedule would drop efficiency. The union, fearing that their members might be laid off, even temporarily, negotiated a contract that required a full day's pay even when there was an unplanned work assembly line shutdown. So there you have it; silos and suboptimization.

This month's topic was also the topic of the class I taught last week. The textbook for that class mentioned "conflict of resources" as well as "conflict of goals" as a source for intergroup conflict. The example of that phenomenon that came to mind was, in fact, not an intergroup conflict. It was an interorganizational conflict. In our work in Jackson, Michigan in the 1990s, we came to understand that many of the nonprofit organizations in the community believed that there was a fixed pot of gold out there somewhere for which they were all competing. As you can imagine, many of the services they were providing to the community were designed to meet similar or identical needs. Because of this culture of competition for scarce resources, the various nonprofits regularly sent similar requests to the same funding sources. This competitive attitude bred a culture of secrecy among the various nonprofits. Frequently, funding to help the community got spread around the agencies so that none had enough resources to really get the job done and coordination was practically nonexistent.

That culture has improved somewhat for two reasons. First, we began to talk about how the community might be better served if the nonprofits began to work more closely together. Second, the funders, recognizing the competitive phenomenon, began requiring that requests for funding start coming from partnerships of community organizations. Let's look at these ideas from another perspective.

Related phenomena are the concepts of competition and cooperation as articulated by Dr. Deming and Alfie Kohn. Alfie Kohn's research that argues persuasively against internal, artificially created win-lose competition such as awarding an employee of the month, grading on the curve, and competing for the next promotion, raise, or bonus where it seems impossible for everyone to achieve the prize. I believe his theory is another way to look at silos and suboptimization, but it is a little more controversial. The controversy comes, I believe, from the extremely high value we place on individual freedom in the United States and the "lone ranger" mindset, that individuals in a competitive environment are the ones that get the job done in this country.

In a win-lose environment, people seem to strive for excellence, but they may also focus on defeating the competitor by lying, cheating, or misrepresenting. They may also just give up if they feel that the playing field is unfair. I think we can all agree that our elected representatives spend all too much time trying to make others in the opposing political party look bad rather than serving their constituents. The domestic auto industry focused its attention on each other rather than on the customer in the 1970s and look what has been happening to them. We did some work in the 1990s with various Pennsylvania school districts, trying to help them improve retention rates only to find that they all used different metrics because they each wanted to get a competitive edge on the other. They felt the competitive edge was necessary to get their share of the state money pot. Let's look at cooperation as an alternative strategy.

My favorite story about cooperation comes from Dr. Michael Cleary himself. Here's my version. In the early 1980s, Mike had set up a typical individual incentive system for his sales employees at PQ Systems. After a few years of listening to Dr. Deming decry the problems with internal competition, Mike decided to try a different way. After much complexity and hard work, the system was revised to be much more connected to PQ performance than to individual performance. The benefits of the change were both quantitative and emotional. The resulting cooperative culture led to higher sales and a more open environment among the employees.

Looking at external competition and cooperation, there's the classic marketing advice never to go head to head with a competitor; always find a niche. We are also seeing examples of partnering as an alternative to external competition. Reminder: the winners always write the history books, so maybe the stories are a little tilted toward the advantages of competition. On the other hand, the Olympics are the ultimate in win-lose competition and the results seem to be remarkably good.

So here's what I believe to be true for Six Sigma. Competition that artificially creates winners and losers is a little suspect. Internal win-lose competition is probably not a good idea. The transformation of external win-lose competition to cooperation may yield pleasant surprises. Don't forget you are probably a winner in your organization, so take a little time to talk to some folks in your organization who are not as "winnerful" as you, and reflect on what you learn. Then start on an internal transformation from competition toward cooperation. And don't forget to look for those external cooperative opportunities, too.

I'd love to hear your stories. I'm at support@pqsystems.com

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