“No ONE approach to management can be a panacea…”
In the last few years, during countless sites visits, conferences, webinars etc, I'd noticed a lot of discussions between people about the superiority of the one management method above different ones (Lean vs Six Sigma, SCRUM vs Prince2 etc). Such polarisation is naive and wise business leaders will see this as such (seems like it is always attractive to polarise a debate by the orthodox followers of each philosophy).
The truth is, it is highly unlikely that a single method will fit for all situations. In fact, all management/project methodologies have more in common than we think, and they are following the same core concept – a common sense.
But let us start from the beginning…
WHAT WAS BEFORE
Before the industrial revolutions, most of the trades have had a similar structure, where the full product was produced, controlled, and taken care of by 1 highly skilled person – a master craftsman. The only way to learn the trade was to get an apprenticeship with one of the masters, where all the skills have been passed from him to apprentice during many years of work.
…AND THEN – INDUSTRY REVOLUTION
In the 1800s, people learned how to use water and steam to power machines. As production capabilities increased, the businesses also grew from individual cottages of trade masters to production halls. We started developing hierarchy within organisations with owners, managers, and employees.
In the 1860s and ’70s, the Gasoline engine has been developed which gave birth to the automotive industry – the industry, which will impact the entire manufacturing world later.
Most early automobile companies were small workshops which produced a few handmade cars. Soon after a few cars were produced, almost all of them abandoned the business. The handful of companies that survived, faced many technical and financial challenges.
As demand for cars increased year on year, producers were forced to find a cheaper and quicker way to produce their cars (at this time, the chassis of the car stood still while individual parts were brought to it).
HENRY FORD (INDUSTRY 2.0)
“If you always do what you’ve always done, you’ll always get what you’ve always got.”
“Whether you think you can, or you think you can’t–you’re right.”
The person who took this challenge was Henry Ford by the beginning of the 20th century.
The key to his success was a development of:
- the mass production (with Ford Model T)
- division of work tasks (standardisation)
- assembly line
Henry Ford pioneered the famous manufacturing strategy, in which all the resources used at the manufacturing site - people, machines, equipment, tools and products were arranged in such a manner that a continuous flow of production is facilitated. To understand his remarkable thinking, let us look at the few numbers.
Since 1908, model T was built manually, and it took about 400 man-hours to make 1 car.
During improvements between 1908-1912, Ford Motor Company reduced man-hours/car to 150.
Introducing assembly line reduced this time to 75 in 1913, to finally go down to 50 man-hours in 1927. Ford has sold 15mln of model T in the world.
The beginning of mass production and automation put efficiency and effectiveness to a completely different level. This approach introduced a ‘Waterfall Model’ of thinking, where each task occurs after another in linear sequential phases. At the same time, it displaced the primal connection between master and apprentice (worker). Control of the work quality and production by the master craftsman has been lost. Quality started to be check at the final stage of the process.
FATHERS OF MANAGEMENT & MASS PRODUCTION
FREDERICK WINSLOW TAYLOR
The ‘modern era’ of management started with Frederick Taylor and his work around scientific management (Taylorism). He is a father of the time study which he introduced in 1881 (around the same time, Frank and Lillian Gilbreth, began their work around time & motion study by using a different method than Taylor, called motion pictures – studies of Taylors and Gilbreths provided a cornerstone for the design of contemporary manufacturing systems).
Taylor claimed that production efficiency can be greatly improved by close observation of each operative and eliminate of time waste in their operations. His book from 1911, “Principles of Scientific Management”, contained all his life’s work ideas around management, like for example: Quality standards, suggestion schemes, standardise, rewards for operatives.
HENRI FAYOL
In 1916, Fayol started to publish his ideas about supervision and management, based on his experience in running a coal mining company. He introduced ideas of unity of command (one employee received orders from one supervisor only), 5 basic principles of planning & control of production (planning, organising, commanding, coordinating, and controlling), and 14 principles of management which clarified and organised structure of manufacturing operations.
MAX WEBER
German sociologist. His main input into management development was his ideas on bureaucracy (rational-legal model). He tried to create a general model which emphasizes qualification, specialisation of job, a hierarchy of power, rules, and discipline. He formalised universal attributes of organisational efficiency and effectiveness.
WALTER SHEWHART (1924) – SPC
"Postulate 3. Assignable causes of variation may be found and eliminated.”
At the beginning of the XX century, process quality control did not exist. The inspection was limited to standard checks of the finished product at the end of the assembly line where any defective product was removed.
The first person who tried to challenge quality issues was Walter A. Shewhart. He worked for Bell Labs, where one of his tasks was to reduce the frequency of failures and repairs of telephony transmissions systems. In 1924, he created and introduced the Control Chart – a process behaviour chart (later, one of the Ishikawas 7 basic tools of quality) which today is a base of Statistical Process Control (SPC). His work around statistics helped to create Six Sigma philosophy in 80s’ as well.
W. EDWARDS DEMING & JOSEPH. M JURAN
“If you can't describe what you are doing as a process, you don't know what you're doing.”
“Without a standard, there is no logical basis for making a decision or taking action.”
The quality in today's shape would not exist without the work of Edward Deming and Joseph Juran.
In 1927, Deming joined Bell labs where he met Shewhart and studied his work. By many people, he is regarded as the father of the PDCA cycle (not to mention his workaround sampling techniques and management theories).
Joseph Juran had the chance to work in Bell labs as well. His work around the Pareto principle within quality and his Quality Management (Quality Control Handbook, 1951) brought the Japanese Union of Scientists and Engineers (JUSE) attention, which invited him to Japan in 1952.
Funnily enough, the US manufactures have turned a deaf ear to all Deming and Juran work. They strongly believed in their waterfall model initiated by Ford, which was the basis of every single US manufacturing company at that time.
After the Second World War, Japan, banned by the US government to develop an army, changed course to expand its economy. Japanese products had very poor quality at this time. They invited American quality experts where, working independently, Deming and Juran, influenced and inspired the leaders of the Japanese industry (including Toyota) to strive towards revolutionary quality-control techniques: Statistical Control, PDCA Cycle and Quality Management, which will be one of the foundations of TPS and Lean. Within the next 30 years, Japan products will become a synonym of the highest quality.
TOYOTA & TPS - SAKICHI TOYODA
“There is nothing that can’t be done. If you can’t make something, it’s because you haven’t tried hard enough.”
To understand Toyota and TPS (Toyota Production System), you need to get to know the history of Toyota founder - Sakichi Toyoda.
He was a Japanese carpenter and inventor. His first successful invention was accomplished by the age of 24 – it was Toyoda's wooden hand loom (1891). His new textile weaving device has been faster, cheaper, and produced better quality than other machines available at this time.
Within the next few years Sakichi, on his own, using trial and error methods (which later will be one of the pillars of TPS - Genchi Genbutsu - “Go & See yourself”), experimented with looms and permanent energy sources (steam engine) – this is how the first Japanese power loom has been invented. Again, new development greatly increased productivity and quality. The new power loom was also equipped with the weft auto-stop mechanism (Jidoka – another future principle of TPS) - this is how Toyoda Automatic Loom Works Ltd raised.
TOYOTA - KIICHIRO TOYODA
“Before you say you can’t do something, try it.”
After many years of successes and inventions within the textile weaving industry, Sakichi’s son, Kiichiro Toyoda, decided to try his hands in the automobile industry. He established an auto division within Toyoda Loom Works In 1933. In 1937, Toyota Motor Corporation was formed. During his very productive and successful work within the company, nurturing his father’s principles, Kiichiro Toyoda expanded his father’s concept of Jidoka and build foundations of another one – Just in Time (after his visit in Ford Michigan to understand the flow of assembly line).
TOYOTA – EIJI TOYODA
“…employees are offering a very important part of their life to us. If we don’t use their time effectively, we are wasting their lives.”
Eiji Toyoda, Kiichiro’s cousin, took the charge over Toyota after Kiichiro and his executive staff resigned (as a result of a fifteen-month employee strike due to the shattered economy of Japan after WW2) in 1950. In the same year, he went to the USA to study the automotive industry and manufacturing methods. After touring Ford Motor’s US facilities, Toyoda set a new main objective for the company – improve Toyota’s manufacturing system to be equal or better than Ford. He appointed this job to a veteran loom machinist - TAIICHI OHNO.
TOYOTA & TPS – TAIICHI OHNO
“let the flow manage the process, not the managers administer the flow”.
Ohno knew he cannot compete with Ford’s mass production, market share, supply chain and finances (productivity of the Ford was 10 times bigger than Toyota’s at this time). Toyota did not have large sites or warehouses where they could keep all raw materials or built cars. Ohno did what he knew best – he went back to the shop floor with his engineers and started to develop “new rules of the game”.
Thanks to the contributions of his predecessors, American teachers (Deming & Juran) and Henry Ford, between 1950 – 1975, Ohno collected, streamlined previous concepts, and added his solutions (including Kanban) under “one roof” – this is how Toyota Production System (TPS) has been created – an integrated system of production and management.
To understand the innovative character of TPS philosophy imagine the first 50 years of automotive – mass production with huge volumes, queues of the same car model, and assembly lines, where people are split over simplest, mindless tasks. No quality control or problem-solving during process…
And then, TPS arises – a philosophy which strives on continuous improvement of processes… and the People!
Where big batches and inventory have been swopped with One-Piece Flow, Kanban and JIT (Just In Time).
Where all production stream relies on a pull system and elimination of waste. Where, what is the most important, the people are in the centre of the organisation – where every worker could stop production line anytime (!), has been involved in problem-solving, company improvements and has been encouraged to learn, raise qualifications, and strive to be better every day (Kaizen).
Toyota has broken (like Ford 50 years back) all manufacturing paradigms of that time. They have changed the way that people think.
Eventually, thanks to TPS, Toyota reached unprecedented levels of success and grew to one of the biggest automotive company in history.
Toyota never tried to hide its breakthrough results (unnoticed abroad for a long time by the way). In the ‘60s and ‘70s, other Japanese companies (Mazda, Nissan) started to copy their solutions. The first English article about TPS has been published in 1977 (comparison of manufacturing sites in Sweden, USA, Germany with Japanese Toyota).
“IF JAPAN CAN … WHY CAN’T WE?” - TOTAL QAULITY MANAGEMENT
In the late 70s and early 80s, Western countries faced stiff competition from Japan’s ability to produce better, high-quality products at competitive cost. Businesses began to re-examine quality control techniques invented by Shewhart, Deming and Juran (even NBC News tried to find the answer of the quality issues during television show “in 1980).
Quality control have been addressed by the work of Armand V. Feigenbaum and
Kaoru Ishikawa, which have been the lifeblood of Total Quality Management (TQM).
TQM brought repeatable, predictable control to manufacturing (through traceability) and solutions of achieving higher profits through high quality.
In later years, TQM will give raise to ISO-9000, Tick-IT, and other quality-related initiatives.
THEORY OF CONSTRAINTS (TOC) - DR ELIYAHU M. GOLDRATT
“I say an hour lost at a bottleneck is an hour out of the entire system. I say an hour saved at a non-bottleneck is worthless. Bottlenecks govern both throughput and inventory.”
“Tell me how you measure me, and I will tell you how I will behave.”
Let’s jump to 80s’ now, where a few seemingly unrelated but significant events occurred.
1st one - 1984 year and introduction of Theory Of Constraints (TOC) by dr Eliyahu Goldratt in his bestselling business novel "The Goal".
TOC was heavily influenced by Goldratt’s grounding in physics and philosophy.
In essence, TOC relates to bottleneck management, Throughput accounting, Thinking Processes and Critical Chain Project Management (developed over time). In relation to bottlenecks (where TOC is most famous for), TOC assumes that a value chain is only as strong as the weakest link in the chain, therefore TOC seeks to identify this constrain and manage/improve it.
SIX SIGMA - BILL SMITH
“The smart guy will outsmart himself. The lucky guy will run out of luck. The money guy will never have the desire. But hard work will take you anywhere you want to go.”
2nd one - Bill Smith (American, Motorola’s engineer) and year 1986, when Six Sigma process improvement concept has been introduced.
In a nutshell, Six Sigma strategy seek to focus on two areas: quality assurance of the process output and reduction of variance.
Smith utilised work of Carl Friedrich Gauss (normal curve concept) and Walter Shewhart workaround statistics.
He decided that the traditional quality levels (defects in thousands of opportunities) did not provide robust data, so he decided to measure all defects in Defects Per Million Opportunities (which should strive to 3.4 DPMO).
Motorola’s Six Sigma provided a full methodology to attain the 3.4 DPMO goal and it was made up of four steps: Measure, Analyse, Improve and Control. In 1995, Six Sigma landed in General Electrics, led by Jack Welch, where further development of this philosophy has been made (e.g., include the Define Phase) and began the most widespread of Six Sigma even attempted.
HIROTAKA TAKEUCHI & IKUJIRO NONAKA – THE GODFATHERS OF SCRUM
3rd significant event and the same year 1986 - the ‘Harvard Business Review’ published an article of 2 Japanese professors, H. Takeuchi and I. Nonaka - “The New New Product Development Game”.
In their article, Japanese professors exposing weaknesses of ‘Waterfall Model’ of thinking within product development (they are using a comparison between NASA and i.e., Fuji-Xerox, Canon, 3M, Honda, Epson and Hewlett-Packard as an example). Instead of the old-fashioned way, they are proposing different, modern viewpoint - tasks overlapping approach, which is much faster and much more flexible than normal, linear (waterfall) way. The most effective groups, according to professors, are self-organizing project teams with the authority from management to make autonomous decisions. Top management role is restricted to remove obstacles. Takeuchi and Nonaka compared these teams to rugby ‘scrum’.
This article will fall into Jeff Sutherland hands 7 years later, which will create a SCRUM framework.
LEAN MANAGEMENT (1990)
“The Machine That Changed the World” by James P. Womack, Daniel T. Jones, and Daniel Roos was the cornerstone for popularisation of Lean Management (and where the term “Lean” was first coined).
The book itself is a detailed study summary of the automotive market within fourteen-countries (International Motor Vehicle Program) and comparison of two fundamentally different business systems - Lean (TPS) and Mass Production (Toyota vs General Motors). Womack and colleagues documented the superior ability of the Japanese automotive manufacturing processes over western mass production pioneered by Henry Ford.
SCRUM – JEFF SUTHERLAND & KEN SCHWABER (1995)
As we mentioned before, 7 years after publicity of the “The New New Product Development Game”, the article got to Jeff Sutherland. At this time, Jeff worked in Easel Corporation as VP of Object Technology where, annoyed of wasting time and money by ‘Waterfall’ method with endless Gantt Charts (still most popular in the USA at this time), he developed a new way of product delivery - the SCRUM Framework.
In 1995, at an Association for Computing Machinery research conference, together with Ken Schwaber, presented the article, where they introduced their new, formal way of software development.
In 2001, SCRUM will become a part of Agile methods. In the same year as well, the first book about SCRUM has been published () by Ken Schwaber and Mike Beedle.
AGILE (2001)
SCRUM was not the only method of software development created in the ’90s. Other software engineers, frustrated by the ‘Waterfall’ weaknesses, like:
difficulty to follow the sequential, linear flow,
difficulty to identify all requirements at the beginning of the project,
working version of the product can be obtained late/on the end of the project,
have created their own approach to planning and delivering new products.
In 2001, at a ski resort in Snowbird, Utah, a group of 17 software developers produced the “Manifesto for Agile Software Development” (known more commonly as the Agile Manifesto) with 4 key values:
Individuals and interactions over processes and tools
Working software over comprehensive documentation
Customer collaboration over contract negotiation
Responding to change over following a plan
Agile methodology does not refer to one specific approach. Under agile ‘umbrella’ we can find a group of individual methodologies which share the same values and implement agile principles. Methods which have been developed are:
Crystal Methods (Alistair Cockburn, 1991)
Rapid Application Development (James Martin, 1991)
Dynamic Systems Development Method – DSDM (Butler Group London, 1994)
Adaptive Software Development – ASD (Jim Highsmith & Sam Bayer)
SCRUM (Jeff Sutherland & Ken Schwaber, 1995)
Feature Driven Development – FDD (Jeff De Luca, 1997)
Extreme Programming – EP (Kent Beck, 1999)
Adaptive Software Development – ASD (Jim Highsmith & Sam Bayer)
Lean Software Development (Mary & Tom Poppendieck, 2003)
While these methods vary, the common thread among all of them is a similar model that allows for more flexibility and less overhead planning.
CUSTOMER DEVELOPMENT – STEVE BLANK (2003)
Throughout his long professional career, other than working in 8 high technology organisations, Steve Blank built 9 companies from scratch. During this time, he noticed that a lot of early-stage companies, blinded by the idea of their product, focusing all their energy and efforts on product development ignoring their potential customer needs at the same time. This was the core problem which he addressed in his Customer Development methodology.
His concept, in a nutshell, is a scientific approach to balance product and customer development during an early stage of building a new company, where customer needs and issues are in the centre (does my product solving customer’s problem?).
Blank’s Customer Development is a cornerstone of the Lean Start-Up movement developed by one of his students – Eric Ries.
AGILE MEETS KANBAN – DAVID J. ANDERSON (2010)
Can anyone imagine today’s SCRUM without the Kanban board?
Kanban has been developed by Taiihi Ohno in 1950s’, based on USA supermarkets, which Ohno has seen during his US visit (empty shelf indicated replenishment). For a long time, Kanban was associated inseparably with Lean and TPS only. In 2010, David J. Anderson published a book "Kanban: Successful Evolutionary Change for Your Technology Business” where he describes evolution and application of the Kanban concept within Agile software development methods. He pioneered Kanban practices as a superior method to visualize work, improve the flow and limit work in progress (WIP) during software development.
LEAN STARTUP – ERIC RIES (2011)
“The best student I ever had” – said Steve Blank about Eric Ries.
Ries introduced Lean Start-Up methodology in 2011 in his book "The Lean Startup”, where he combined Steve Blank’s Customer Development with Toyota’s Lean. The concept itself grew from 2004 when Blank was an investor and advisor to Eric’s company (IMVU).
Lean Start-Up aims to shorten product development cycles by delivering MVP (Minimum Viable Product) only, and rapidly discover if a proposed business model is viable by validated learning (Build–Measure–Learn loop, correct KPI’s), iterative product releases (continuous deployment) and hypothesis-driven experimentation (Pivot, Split testing).
The methodology has been adopted by entrepreneurs worldwide as a constructive way to build a successful business.
No ONE approach to management can be a panacea…
Agile and Lean, considered as revolutionary today, have their roots in concepts introduced by Toyota many years ago. The pillars of Toyota concept came out from Henry Ford’s work, Deming and quality control which have been developed even further back. Like TOC and Six Sigma – all these theories represent the best practices for running a process, system, projects, or value chain.
Toyota strived to the continuous improvement of quality – the same as Six Sigma, TQM, TOC, or the SCRUM Team.
“Individuals and interactions over processes and tools” from Agile Manifesto – the same as respect people principle from TPS or TOC pillar – “People are good – avoid blaming”.
“You need to seek simplicity” – one of the Extreme Programming ‘Dimensions’ – the same as TOC - Every situation is simple.
Deming PDCA cycle is the basis of SCRUM’s Sprint, Six Sigma DMAIC and Toyota’s A3.
The list of similarities is endless…
However, in my opinion, the biggest connection between all these theories is an attempt of answering issues and misconceptions brought up by the industrial revolution in the 20th century.
During the implementation of mass production and formal processes, we have lost a human approach to managing projects, processes, and manufacturing. Philosophies above trying to fix this problem.
Of course, all methodologies above have differences as well, but despite them – they all related deep in their core by COMMON SENSE. Today’s Agile or Lean concept is somewhere deep down inside us – respect people, trust your team, continuous improvement, learning on our mistakes, reduce waste, prioritisation – these are characteristics of true professionals and remarkable leaders! Unfortunately, we have lost them somewhere on the way…
These qualities are universal despite what we want to achieve: build the car, develop software, start a new business, or anything else. We just needed to rediscover them.
In Summary
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