Rising Above It All: The Art and Science of Organizational Transformation

Rising above It All

The Art and Science of Organizational Transformation

Copyright © 2012 by John L. Lee

All rights reserved. No part of this book may be used or reproduced by any means, graphic, electronic, or mechanical, including photocopying, recording, taping or by any information storage retrieval system without the written permission of the author except in the case of brief quotations embodied in critical articles and reviews.

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ISBN: 978-1-4759-3065-8 (sc)

ISBN: 978-1-4759-3066-5 (hc)

ISBN: 978-1-4759-3067-2 (e)

Library of Congress Control Number: 2012911309

iUniverse rev. date:   04/13/2016

CONTENTS

INTRODUCTION

1.   INTRODUCTION TO TRANSFORMATION

2.   THE DEMING STORY

3.   PERSONAL TRANSFORMATION

4.   CULTURAL TRANSFORMATION

5.   RULES OF PHASE III BEHAVIOR

6.   TOOLS TRANSFORMATION

7.   SYSTEMATIC PROBLEM-SOLVING

8.   PROBABILITY STATISTICS

9.   CONTROLLING PROCESSES

10. CLOSING THOUGHTS

This book is dedicated to the following:

My parents,

Jim and Edna Lee,

whose sacrifices for their children literally wore them out.

I will never be able to repay you.

Thanks!

My lovely wife, whom I deeply love,

Rita

My children, who are the pride of my life,

Craig

Chad

Brian

Jason

My grandchildren,

for whom I wrote this book

INTRODUCTION

This book was written to teach you how to keep your business alive. The average life expectancy for Fortune 500–type companies is between forty and fifty years. There are many arguments for why organizations die at such a young age. This book looks at the problem from the perspective of a quality consultant.

I have spent my whole career learning how to make an organization’s primary competitive advantage one of product or service quality. I have documented my findings in hundreds of hours of online training programs, which include such topics as Six Sigma, quality engineering, reliability engineering, quality auditing, Lean, and Theory of Constraints. I am one of eleven people who hold fourteen of the eighteen ASQ (American Society for Quality) certifications. I have implemented and taught these principles to approximately 150 corporations over the last two decades. I currently serve as president of Alpha Training and Consulting, which is a full-service quality consulting firm.

I am a sought-after lecturer and an adjunct faculty member for eight different universities and colleges. I received my mechanical engineering degree from BYU and my post-graduate degree in business administration from the University of Phoenix.

Rising above It All argues that the reason companies have such short life spans is because they do not understand how to effectively transform themselves. The book defines organizational transformation as evolving to higher levels of sustained performance. I have found that most companies are capable of evolving to a given level of performance, which I refer to as the 95 percent level. One of the problems in transformation is that the skill level needed to reach the 95 percent performance level is not the same skill set that is needed to rise above the 95 percent level of performance. Most organizations do not understand this phenomenon, and as a result companies will eventually go extinct as customer expectations rise above the 95 percent performance levels.

Rising above It All breaks organizational transformation into three subtransformations:

• Personal Transformation

• Cultural Transformation

• Tools Transformation

I argue that most companies skip the personal and cultural transformation and jump right into the tools transformation, which is the reason companies die at such a young age. The fundamental problem is that an organization must have a culture that supports modern-day analytical tools or the tools will not effectively work within the borders of the organization. I define what a functional culture looks like and the leadership skills necessary to achieve it. Rising above It All defines leadership as the ability to change culture and introduces a model of human behavior that will help the reader understand how to become a leader who has enough influence to evolve organizational culture, which is key to long-term organizational survival.

This is not a rehash of old ideas introduced under a redesigned book cover. This information is meant to be informative, new, revolutionary, and at times, perhaps, controversial. This information came from my experiences of living life. Although it is being published as a business book, you will find that it is that and much more.

The writing of this book was not a natural act for me, and I could not have completed such an act without the patient help of my chief editor and friend Dorothy Openshaw. The reason I took on this challenge is really quite simple—I just want to make a difference. When I started lecturing on the way I viewed life and business, I realized that it inspired people. Many people told me that my simple lecture changed their lives. They asked me to write a book, and so I did. In short, the target audience for this book is you. I hope it inspires you to create more effective organizations so we can improve upon the human condition. I truly believe that we are in the dark ages of our human potential. I hope to teach you how to rise above these dark ages into a new and more enlightened understanding of what we call life. Only you, the reader, can judge my success or lack thereof.

The book starts out with a definition of organizational transformation. It then develops a mathematical argument for why transformation is necessary. If you don’t like math, this may be the more challenging element of the work. I tried to make it as understandable as my capability allows, so for some I may have oversimplified the explanation. Whatever may be the case, please exercise patience as you come to understand the fundamental argument for organizational transformation. This will not be the most inspiring part of the work but must be well developed and understood by the reader if the end result is to experience any lasting value. After objectively understanding the necessity for transformation, the book will explain the complexities of organizational transformation through defining the three fundamental elements of transformation mentioned earlier: personal transformation, cultural transformation, and tools transformation.

Ultimately, my hope is that you, the reader, will be inspired by your newfound knowledge and go out and make the world a better place for the people and organizations that you serve.

CHAPTER ONE

INTRODUCTION TO TRANSFORMATION

Transformation Defined

We will begin our discussion with a definition of organizational transformation. Organizational transformation is evolving to a higher level of sustained performance. Next we will discuss the question Why is organizational transformation necessary? I have included some artwork to help us answer this question (see Figure 1). The objective of this exercise is to fill the bucket full of water. To do this, I have set up some plumbing so I can start and stop the flow of water into the bucket and reach the objective of filling the bucket full of water. Before continuing our discussion, let’s first stop and talk about probability statistics.

Figure 1

In probability statistics there are two general problem statements: the and statement and the or statement. What will Figure 1 be? Will this be an or statement problem—Valve #1 must work or Valve #2 must work or Valve #3 must work to fill up the bucket? Or is it an and statement—Valve #1 must work and Valve #2 must work and Valve #3 must work to fill the bucket full of water? The answer to this question is that it’s an and statement— to fill the bucket, Valve #1 and Valve #2 and Valve #3 must work. Once Valve #1 and Valve #2 and Valve #3 work properly, I can successfully fill the bucket with water.

Fortunately, the and statement is relatively easy to calculate. In the and statement analysis, all we need to do is simply multiply the probabilities together. This is assuming independence between events. By independence I mean that whether Valve #2 fails or does not fail, it will not impact the failure rate of Valve #3 or Valve #1. So if one valve fails it will not impact the probabilities of the other valves’ performance. This is what we refer to as independence. In this example we are assuming independence, and once we assume independence, we can simply multiply the probabilities together to give us the overall probability of success (filling the bucket full of water).

And/Or Statements?

You’ll notice that I have labeled the reliability of each of the valves. Valve #1 is .95 (95 percent), Valve #2 is .95, and Valve #3 is .95. This may seem like a relatively good probability, but when you multiply them all together, notice what happens.

Figure 2

Three And Statements

Figure 3

Under the assumptions given, the probability of Valve #1 working and Valve #2 working and Valve #3 working is 85.7 percent. The important thing to remember here is that as we add more and statements, our probability of success goes down.

Figure 4

Notice in Figure 4 that we added three additional valves. In the last example we had three valves, and now we have six valves, meaning that we have six and statements. Notice that the probability of success, or reliability, of each of the valves remains the same at .95. But now we multiply the .95 by itself six times and we end up with a result of .735, or 73.5 percent. So the probability of Valve #1 and Valve #2 and Valve #3 and Valve #4 and Valve #5 and Valve #6 working is 73.5 percent. Again, notice that as we add more and statements our probability of success goes down.

Six And Statements

Figure 5

Looking at Figure 5, you will notice that we have decided to buy some more reliable valves. So instead of 95 percent reliability, we have .9995, or 99.95 percent. We have improved the probability of our and statements here, and when we multiply .9995 by itself six times we end up with 99.7 percent. Notice that the and statement formula is really a rather simple formula. There are two numbers involved—first the number of valves necessary, or the number of and statements, and second the reliability of each and statement.

We can improve the reliability in two ways. We can either improve our reliability of success on specific and statements or we can reduce the number of and statements. Those are the only two options.

Ten Thousand And Statements

Figure 6

Figure 6 shows symbolically that we have ten thousand and statements, so we’re assuming ten thousand and statements or ten thousand valves. Notice that I don’t really have enough room to put ten thousand valves, so it’s just symbolic. But the point is this: as time goes along, we keep adding and statements to the consumer’s life.

Just a couple of generations ago, your grandparents or great-grandparents lived in the horse and buggy days, and there weren’t a lot of and statements compared to today. They didn’t have televisions; they didn’t have automobiles; they didn’t have computers or cell phones. That’s why we call it the horse and buggy days—they had a horse and a buggy. All right, they probably also had a house. However, the house probably didn’t have electricity, at least early on in their lives. They probably didn’t have running water either. So there were relatively few and statements, which made for a rather simplistic life that most likely had its advantages and disadvantages.

Since then, over the last couple of generations, we have added many and statements into our lives. Today I have three televisions in my house; with my business I have around twelve computers. I have radios, printers, electricity, and running water in a house that has valves and other kinds of mechanisms involved to make everything work properly. I have a couple of water heaters, a couple of heaters, and a couple of ovens; the list goes on and on. I think we have four or five cell phones in the family. The and statements have gone exponential and have done so very quickly.

How long do you think it took to go from the Wright Brothers’ first powered flight to the creation of the SR71 Blackbird? The SR71 Blackbird is an airplane used by the United States Air Force that is said to be capable of flying at Mach 3 (three times the speed of sound, or approximately 2,304 mph). So again, how long do you think it took to go from the Wright Brothers’ first flight to Mach 3 in the SR71? Would you believe it was only sixty-one years? Which one of the two do you think had more and statements? Obviously the SR71 or the Mach 3 airplane had many more and statements than the Wright Brothers’ plane did. The velocity of change is really mind-blowing if you think about it.

This brings us to the problem in society of how we manage these and statements to the point that all our machinery and processes will still function in a way that’s acceptable.

Let’s refer back to the last figure and do some math. Let’s assume that we have a machine with ten thousand and statements. I’m certain the automobile has at least ten thousand and statements, and probably more. I have a friend who went to look at a car the other day and upon returning said, John, you wouldn’t believe it—it has seven computers! And I thought, Wow, that’s a lot of and statements. Of course, he was excited at all the functionality. I wasn’t quite so excited about it, because I know the and statements and therefore have an idea of the probability of success.

Let’s do an example problem. Let’s say that all the and statements had a probability of success of 95 percent, or .95. So if you take .95 and multiply it by itself ten thousand times, guess what you get? Zero—for all practical purposes anyway. Actually there are 222 zeros after the decimal point, followed by the number 172. Would you like to buy a car whose probability of not violating its specification limits or its and statements is a decimal with 222 zeros and a number behind it? I wouldn’t think so. Consumers will not buy that type of product or service, at least not after the word of poor quality gets out.

Now let’s play around with that and statement a little bit. Let’s say that instead of 95 percent we get our "and" statement, or probability of success, up to 99.73 percent. Wow! That’s very close to 100 percent. That means only a .27 percent chance of not being successful, or 2.7 times in a thousand. That sounds pretty good to me. I suspect that it does to you also. However, if we take that .9973 and multiply it by itself ten thousand times, guess what we get? For all practical purposes, it’s zero again. Actually, this time there are eleven zeros past the decimal point and then the number 181. This is a terrible probability of success. Consumers will not tolerate this kind of performance in the products and services they purchase.

Now let’s say we get very serious with our and statements and we run them up to 99.9996 percent. Sounds much better; boy, we’re getting very close to 100 percent now. But let’s multiply that number by itself ten thousand times. So .9999964 multiplied by itself ten thousand times gives us 96.5 percent, or .965. This is much better than the past examples. In fact, it shouldn’t come as a surprise that at the time of this writing, the .9999964 is the standard in the automotive industry. Organizations that create and statements that go into an automobile must build those and statements to a minimum success probability of 99.99964 percent. So, again, if you multiply the .999996 by itself ten thousand times you will get a reliability of 96.5 percent. Now get this: if you take one of those nines out of the probability of success, which would make it .999964 (four nines after the decimal point instead of five), and you multiply .999964 by itself ten thousand times, the overall probability of success drops from 96.5 percent to 69.7 percent, and that is just from dropping one of the nines. It comes down to this: you must learn to manage your and statements or your and statements will manage you. Or even worse yet, your incapable and statements will manage your customers’ lives. This being the case, the customer will move to someone that can manage their and statements.

What I hope you see here is that there’s a big difference between 99.73 percent and 99.9996 percent, although they’re both very close to 100 percent when we look at them individually. When we multiply them by themselves ten thousand times, there is a big difference. There is even a big difference if you change your probability of success from 99.99964 percent to 99.9964 percent (drop one nine).

Now is probably a good time to ask you a question. What do you think will happen in the future? Will and statements keep increasing? Or do you think they’ll decrease? If you said that you feel the and statements will increase in the future, then I’m with you. I agree with that, and as a result, that 99.9996 percent may not be good enough in the future. Chances are we’ll have to keep increasing that probability of success. By the way, 99.9996 percent is another way of saying six sigma, which we’ll talk about later.

Figure 7

In Figure 7 we have a rather simple but very important model. This is a model for transformation. It describes the history of transformation, why transformation is necessary, and how we can go about having a successful transformation. Now notice the round symbol with the 2 percent in it and the arrow rising up to the 95 percent, and then there’s that semicircle just below the 95 percent symbol. That semicircle represents the act of transformation (evolving to a higher level of sustained performance). Notice that down below the 95 percent symbol, there is also, symbolically, a brick wall with an arrow at the bottom. The model suggests that if you can get over the wall (transform), then you can potentially increase your and statement probability of success up to 99.9996 percent and beyond.

We’re going to tear this model down and go over each piece separately, and when we put it all back together you’ll understand a lot more about transformation, why it’s necessary, and what we have to do to make it happen.

Figure 8

In setting up our argument for transformation (evolving to a higher level of sustained performance), let’s go over some important events in history. In the mid-1700s the Industrial Revolution was in its embryonic stage—and beware, the "and" statements are about to take flight. The Industrial Revolution is what took us from the horse and buggy days to where we are today with all these and statements. Don’t get me wrong—all these and statements tend to improve the human condition. Because of these additional and statements we are able to cure diseases that were not curable in the past, we are able to control our environment with such systems as air-conditioning, we are able to take pictures of distant planets, we are capable of communicating to worldwide audiences in just seconds, we are able to solve problems in seconds compared to what once took months or years, and we can literally travel around the world in a matter of days. Generations of the past could not even imagine what we are capable of accomplishing in one lifetime. In short, we can stuff more life into a lifetime than anyone in history was even capable of imagining—all because of these wonderful and statements.

In the end these and statements have created opportunity. The good news is that these and statements will continue to grow even more exponentially into the future, and future generations will be given opportunities that we today cannot even imagine. Therefore, we had better get very good at managing and statements if we expect to have a place in the future of building products and providing services in this environment of ever-increasing and statements. You must always remember that as and statements increase, the consumer will become less patient with dysfunctional and statements, thus making organizational transformation a necessity and not just a nicety. In summary, and statements and customer expectations will continue to increase exponentially into the future.

Now let’s study the history of the expanding and statements. The dramatic expansion of the and statement started in the mid-1700s when there was a lot of excitement going on in the intellectual world. This period of time was the pre-Industrial Revolution, and scientific societies started showing up throughout Europe. One of these societies was named the Lunar Society. The Lunar Society operated out of the Soho house located in Birmingham, England. This is very much a historical building of great significance. At the Lunar Society, scientists and philosophers would gather together in the nighttime and run scientific experiments. They wouldn’t run them every night: they’d only run their experiments when there was a full moon, because back then they didn’t have street lights—talk about fewer and statements—so they would run these experiments only when there was a full moon so the members of the society could safely walk home at night.

One of the members of this Lunar Society—in fact one of the leaders—was named Matthew Boulton. He was a key member of the Lunar Society. Matthew loved to build artistic things out of metal. He built swords and trinkets that people could hang up on their walls, and that’s what he did for a living.

Matthew Boulton

There were many members of the Lunar Society. Some of the more famous ones included James Watt, the man who came up with a more efficient steam engine, which would ultimately power the Industrial Revolution and in turn would ultimately power the number of and statements found in society.

James Watt

Josiah Wedgwood

Steam Engine

(Free software Foundation, Inc.)

Sample of Wedgwood Pottery

Other famous members included Benjamin Franklin, who showed up for several of the experiments, as did Thomas Jefferson.

Josiah Wedgwood was also a member of the Lunar Society and is given credit for creating specialized labor in the pottery industry and essentially using it to usher in the Industrial Revolution. What do I mean by specialized labor? First, you have to understand that Josiah Wedgwood had a disease when he was a young man or a young boy, most likely smallpox, which injured his leg. In the meantime—I don’t know if it was through his family or a friend—but he got involved in the pottery industry. Josiah had a difficult time turning the potter’s wheel with only one healthy leg, so he sat around and brainstormed on how he could make the industry better, make it more profitable, and make better pottery for the customers, and he did that. He started by specializing his own labor and later expanded the idea throughout the factory. One person would be on the potter’s wheel and build the pottery. Someone else would become a specialist at baking these pots, and then someone else would paint them. A fourth person would decorate them. He leveraged people’s talents to make the best pottery. He also experimented a lot and developed some of the glossiest finishes in the pottery industry. He would sell his pottery to the kings and queens of England, and then, of course, everyone wanted it and he became a rather wealthy gentleman.

Not only did Josiah Wedgwood come up with specialized labor in the pottery industry, he was also a staunch abolitionist in Europe and was famous for having created the symbol for European

abolitionists that said, AM I NOT A MAN AND A BROTHER? He made these symbols in a coin-type shape and handed them out to everyone in an effort to help them question the issue of slavery.

Josiah Wedgwood was famous on many fronts, but perhaps he was most famous because of his grandson, Charles Darwin. Another thing that was rather interesting about Josiah Wedgwood was that he really took quality seriously. He’d walk around with his cane and if he saw a plate that didn’t meet his standards, he would smash the plate with his cane and yell out to the factory workers: This is not good enough for Josiah Wedgwood. I enjoy reenacting this seen whenever the opportunity is provided.

Charles Darwin

A further point of interest is that Josiah Wedgwood’s factory is still running today and still makes Wedgwood pottery.

Another important individual in the mid-1700s was Honoré LeBlanc. Mr. LeBlanc was a very famous gunsmith in France and was the first individual to fabricate gun parts to allowable tolerances. This most likely began when customers would bring in their guns to LeBlanc and say, Hey, I broke the trigger on my gun. Could you build me another one just like it?

And he’d say, Well, where’s the broken part? and the customer would answer, Well, I broke it and it’s gone. Since he didn’t have any standard or print to work off of, he’d hammer out another part and put it on the gun; maybe it worked as well as the other one and maybe it didn’t, and usually the customers were disappointed because they had become accustomed to the way the gun worked before the part broke. Anyway, it bothered Honoré Le Blanc that this problem existed, so he thought, Hey, what if I created standard parts so that I could have replaceable parts? It was his dream that he’d have guns that he could interchange parts with, so he tried to convince his fellow Frenchmen of the possibilities of this new and radical idea.

As it turns out, Honoré LeBlanc’s fellow Frenchmen were not overly impressed with this new idea. They saw it as a threat to their employment and social status. As a result, Le Blanc instead sold the idea to an American gentleman. This man was Thomas Jefferson, the American ambassador to France at the time. Thomas Jefferson was extremely impressed with the idea of interchangeable parts. He realized that such a system would allow the United States to build up its gun industry and make it less dependent on European armories.

Thomas Jefferson

George Washington

Thomas Jefferson’s friend and ally in the cause of interchangeable parts was George Washington. George, it turns out, had had some bad experiences with European suppliers of guns during the Revolutionary War. For example, at one point Congress purchased a relatively large number of weapons from France, and France gave them an excellent deal as they considered themselves allies to the American cause (they desired to embarrass the British). But when the guns arrived on the battlefield, very few of them were capable of functioning, which hindered the odds for a successful revolution.

In summary, Washington and Jefferson were not overly impressed with their dependence on foreign suppliers for American soldiers. This revolutionary system of interchangeable parts would also allow the Americans to build up a gun industry in the northern part of the United States. This was important because there was always a fear that eventually the United States would break out in civil war over the issue of slavery, and this new idea would allow them to build up the weapon industry in the northern states relatively quickly. In short, both Thomas Jefferson and George Washington were very impressed with the possibilities of this new radical idea of interchangeable parts. It was a revolutionary idea for the ultimate in revolutionaries.

Eli Whitney

Eli