Quality

Lessons from Facebook: It's All in the Measures

Today is the day that the first group of Facebook "lock-up" shares, post-IPO, go on the market. The analysts (in all their always fascinating wisdom - and, yes, I'm being sarcastic) told us it would be a bloodbath from the moment the markets opened. Then they told us that we wouldn't know for a day and a half. Then they said it was already accounted for because everyone knew it was going to happen. Then they said it's really November - when the next, much larger, tranche of shares are unlocked - that anything is really going to happen.

What all of this tells you is that - pretty much always - you shouldn't listen to the people who are measuring your organization as outsiders. They don't know your business. You do.

The question is: what do you know...and how do you make the best use of it and other measures you need?  Here's the answer.
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The expression "You manage what you measure" is not only true, it directly impacts the way you run your business in the short and long term.

Let's use Facebook as an example. At the time of this writing, the company has over 955 million users worldwide - nearly half of whom use the service each day. And in the company's early days, big user numbers was exactly what they needed - so that's what they measured.

But now, it's not about the number of users. It's about how the users use the site. Because to succeed in the long-term the company needs to convert those users - on their and their advertisers' behalf - into sales.

What does this have to do with you? Everything. Because just as Facebook is actively redefining what's important in their measurement systems - based on data they have and data they need - you need to do the same.

Now you may be saying, "Oh, that's Facebook. They're big and they're a technology company. We're different."

Sorry, but no, you're not. In fact, every company in every industry that has succeeded or successfully pulled itself up - whether out of bad economic cycles or complete changes in the competitive landscape - always does so through their measures.

Because you manage what you measure.

The way you want to think about this is as a form of executive and management creativity. That you and your team are going to move away from the measurement equivalent of "[we/our industry] have always done it that way" and recognize that there's rich information that you're collecting - and that you're not.

Start by asking:
  • What measures and opportunities are we looking at - because we're used to them - and, as a result, missing others?
  • Do our current measures give us the information we need to understand both existing and emerging markets - local, domestic and global...in and out of our expected sector?
  • Do we have measures that combine real-time (i.e., process), predictive (i.e., strategic) and alternative (i.e., soft) as well as results (i.e., backward looking)?
As you expand your measures, so, too, will you expand your success.


LEAN: Jim Blasingame on Quality and Profitability

For over ten years, Jim Blasingame and I have been having conversations on his radio program, The Small Business Advocate about how to make small businesses succeed. Most of them have been about how to implement quality for the quickest and highest levels of profitability.

He very generously wrote the Foreword to the 20th Anniversary Edition of my book, Managing for Quality and, now, has created a video that gets to the heart of the matter.

Take the three minutes.  He's definitely worth watching.

LEAN: Lessons Learned from Banking Regulation

There's a fascinating piece in Joe Nocera's New York Times column today about bank regulation and complexity.  In it, he raises the question of whether the over-complexity of new banking regulations worldwide are going to cause greater difficulties and possible failures than a more sensible, streamlined approach.

This is an easy one. The answer is: Yes - because complexity causes failure.

Big failures or little.  Lost time or opportunity. Lost money, customers, employees, profits, revenues, parts...you name it, if there's complexity built into your system, there are losses and failures going on.

The problem is, in most cases, it's hard to see them.  That's because, in most cases (and unlike what's going on now around the world with banking regulations) the complexities are so deeply built into the way you do business that you don't even see them anymore.

That's actually why Quality, Lean and all the rest exist: to hunt out the variation (for which read 'complexity') in your systems.  Once you can see them, then you can decide whether or not they serve your purposes.

Just so you know - in most cases, they don't.  They're there because someone at some point came up with a solution that made sense at that moment that was reactive to a situation that no longer exists.  Or wasn't as well thought out as it should be.

What we know is that the banks need to be better regulated - simply because the world can't afford another meltdown like we saw in 2008.

What we also know is that, not only because of Dodd-Frank in the United States, but in looking at banking regulation being imposed around the world (and, yes, that includes China, too) there is no coordination or consistency.

The threat - at least by the banks - is that the regulations are so overly complex and onerous that they won't be able to operate or keep their best talent.  That may or may not be correct, but, let's face it, they've got skin in the game and a real reason for not wanting to be held accountable.

Putting their arguments aside, we come back to the same issues you need to be addressing in your own enterprise:

  • Where does complexity exist?
  • Why? What was the purpose of those policies or procedures?
  • Do they still apply?
  • If no, how do we get rid of them without causing replacement complexity?
  • If yes, how do we redesign what we've got to reduce the complexity?
  • And, finally, do we have the right measures to ensure that this - as well as other - complexities in our system are findable and addressable?
Go through that mini-assessment and you'll suddenly find that there are LOTS more profits available in your existing organization than you currently gain.  Fast and easy, too.

Then you can start taking on the hard stuff.

For more information on successfully implementing Quality and Lean, take a look at:

Quality and Finance

I had a great time today talking with Jim Blasingame about quality and finance on his "Small Business Advocate" radio program.  Here, in three parts, is my interview. Happy listening!

On Quality and Strategizing Your Financial Plans




On Quality and the Rule of 97% Predictability




On Using Quality as a Competitive Discriminator


The Success of Failure - Jim Blasingame's "Small Business Advocate"

I'm very happy to report that Jim Blasingame, the host of the Small Business Advocate Radio Program and creator of one of the most valuable resources for small and medium sized businesses out there, has chosen to feature my article "The Success of Failure" on his website.

As many of you will know, the article first appeared in my most recent Thinking Executive Newsletter.

Do go check it out on Jim's site.  And listen in on Wednesday as I'll be live on his program continuing our discussions on quality, profits and being best of breed.

To hear previous interviews I've done with Jim, visit my archive page on his site.