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Mike Micklewright

Quality Insider

I’m Sorry—the Recession is My Fault, Part 2

And we must do something about it.

Published: Thursday, February 19, 2009 - 08:13

In part 1 of this series, I blamed myself for the recession. Actually, I blamed all quality professionals but I was trying to be polite. I also explained what one of our challenges is, if we hope to have a hand in turning the economy around.

I asked, “Why don’t we have more quality-type people at the highest levels within a company? How can we promote quality ideals at the highest levels? How can we get more quality people to run organizations?”

In this article I pose the second challenge.

Challenge No. 2

We must ask ourselves, “How can we be more proficient in spreading the word of quality, the word of Dr. Deming, and the word of stability in the markets; the benefits of control charts at all levels of any organization, or state or federal government; and the evils of greed and short-term thinking?” And then we must do something about it.

Sending Wall Street to Jail

While writing this article, I was also reading an article by Roger Parloff with the same title as this section, from the Sept. 19, 2008, edition of Fortune Magazine. I read with horror the following paragraph regarding the role of prosecutors of the Wall Street CEOs whose companies we are now bailing out:

     “The job of the prosecutors is not to ferret out the root causes of what went wrong with the economy. That’s a task for historians. The prosecutors are to look for unambiguous, intentional wrongdoing…”

No wonder our government, judicial system, Wall Street, and CEOs are so screwed up. Essentially, no one will ferret out root causes. As a result, new band-aids (laws) will be passed and new CEOs will develop new schemes to work around the new laws and new problems will occur. If there’s no effort to get to the root causes of these major issues on Wall Street, we will never improve.

From the same article, a lawyer who advises corporations said anonymously, “The reality is, you’ve put your finger on one of the most difficult situations that will come up in counseling executives of corporations. You can’t lie. You’re trapped between serving the best interests of shareholders and the legal requirement not to lie. You need to thread the needle.”

As an example from the same article, Matt Tannin, the Bear Stearns hedge fund manager, wrote in an internal e-mail on April 4, 2007, “If we believe the [Bear Stearns internal report is] anywhere close to accurate, I think we should close the funds now … If [the report] is correct, then the entire subprime market is toast.” On April 25, 2007, three days after writing this e-mail, he told investors, “So from a structural point of view, from an asset point of view, from a surveillance point of view, we’re very comfortable with exactly where we are.”

The system encourages him and all the other CEOs to lie. The system is awful. Prosecuting CEOs isn’t going to improve or change the system. The system that encourages Wall Street’s focus on the short term and that encourages CEOs to lie must change for the benefit of Wall Street and all of its investors and employees. The system must encourage long-term focus and honest disclosure of problems without being punished. Is this not what we want within our own organizations?

Finding the root cause by asking “Why?” five times or more, must be determined for the following questions:

  • Why does the system encourage lying?
  • Why does Wall Street not know or use root cause analysis?
  • Why are our judicial system and the public so focused on blaming people rather than fixing the problems?
  • Why do CEOs (and politicians) feel that they deserve more because of the position they hold? Why are they so greedy?

One possible answer to the fourth question is below.

Why are CEOs and politicians so greedy?

It starts young. Perhaps the system within which we are educated is what’s to blame. It makes some of us feel that we deserve more just for doing our job. A system that rewards children with gold stars or grades is a system that encourages children, and then grown-ups, to work for rewards and not for increasing their knowledge, not learning for the shear joy of learning, and not for increasing the quality and profitability of a company. Our current system of awarding grades in school and performance evaluations or bonuses at work encourages us focus to on ourselves. It’s greed.

President Obama recently selected Chicago public school CEO, Arne Duncan, as his secretary of education. (It must be a bummer going from CEO to secretary.) Arne’s gone beyond rewarding children in the public school system with grades and gold stars. He instituted a program to reward children with money for grades.

In the pilot program, up to 5,000 freshmen at 20 Chicago public schools will be paid for good grades. The students are measured every five weeks in math, English, social sciences, science, and physical education. An A nets $50, a B equals $35 and a C still brings in $20. Students will get half the money up front and the other half upon graduation. A straight-A student could earn up to $4,000 by the end of his or her sophomore year.

Children will now do whatever it takes to get good grades, including cheating, lying, and bribing teachers. These are the same traits that we see exhibited by the CEOs that have lead us into this recession. Children will care less about learning for the sake of knowledge and more about manipulating the system for personal gain.

The children of the Chicago public school system may even one day become Illinois governors and expect to gain more personal money in exchange for selling a senate seat vacated by the president, who appoints a public school system CEO as secretary of education, so that the same system could be rolled out nationwide, thus encouraging more unethical behavior and greed. This is all we need. My home state of Illinois already has a Republican governor in jail for greed and will soon send a Democratic governor to jail for greed. No wonder Arne Duncan had the title of CEO, not superintendent.

Dr. Deming’s 10th principle was, “Eliminate work standards (quotas) on the factory floor. Substitute leadership. Eliminate management by objectives, numbers, and numerical goals. Substitute leadership.” He warned us about the evils of performance reviews, grades in schools, gold stars—management by objectives. We have ignored these principles and we have gone backward. The future doesn’t look any brighter. I also see no evidence that leadership will be substituted.

I’m sorry I didn’t do more to educate more people about the evils of grading systems and performance reviews. I apologize because I didn’t see the evils of these systems, because I was the type of person who looked forward to receiving my report card and I asked for performance reviews. I’m a little weird.

Challenge No. 4

We must ask ourselves, “How can we educate those who establish our educational systems that grades (and definitely money) aren’t the means to encourage our youngsters to want to gain knowledge and learn for intrinsic reasons?” Then, we must do something about it.

The automotive industry and constancy of purpose

I can remember when I began my career with the Saturn Corp. of General Motors in 1985. Saturn was going to be a new small-car company that would be, in its own right, profitable and compete head to head with Toyota and Honda. We were taught a little bit about the Toyota Total Development process and some of us were taught that we should each be as good, if not better, than Toyota in the areas that we controlled as the engineers developing the manufacturing process. Some of us took this lesson seriously, most didn’t. Many of the Saturn leaders at that time were from the Pontiac Motor Division and had been tutored directly by Dr. Deming. Some of Dr. Deming’s points and principles were evident in the early years, but they soon died out as Saturn became more and more integrated into General Motors.

For a short time, though, when Saturn was a reactive response to poor U.S. car quality and the loss of the small-car market to Japan, it seemed that General Motors was at least looking to the future and embracing Deming’s first point: “Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs.”

Today, Deming’s first point, and for that matter almost all of his points, have long since been forgotten. Saturn today is now fully integrated into General Motors and produces cars of average quality. Toyota and Honda already have a seven-year lead in the development of hybrid vehicles, as the Nov. 30, 2008 article from The Washington Times, “Geared for Happiness,” reported. In 2005, as worldwide demand for oil increased dramatically and gas prices were increased exponentially, GM, Ford, and Chrysler focused their efforts on producing highly profitable SUVs and trucks. The Big Three were once again not prepared, as they hadn’t been prepared three decades prior. Today, GM, Ford, and Chrysler have relatively few fuel-efficient options to offer the public. Although gasoline prices have decreased, once the global economy picks up, the price of gasoline will skyrocket once again and easily pass the highest levels experienced within the last year. While all of this was happening over the last few decades, GM and Chrysler didn’t address many of their other leadership and organizational issues. So they had to fly to Washington in their private jets, tails between their legs, to request a bailout from the U.S. government—and the taxpayers—because they couldn’t stay “competitive and stay in business, and provide jobs.”

I worked in the automotive industry for about three years. I apologize for not doing my part once again and for not speaking up more as a quality professional about the short-sightedness of the automotive world.

ASQ’s code of ethics

Why do I feel responsible for not doing enough? Because I know that as a quality professional, I, and we, aren’t doing enough to spread the word of “quality first” and the ideals of our quality God, Dr. Deming.

Additionally, I have the following certifications from ASQ: Six Sigma Black Belt (though I tried to sell this in my article entitled “Black Belt for Sale”), manager of quality/organizational excellence, quality auditor, and quality engineer. The ASQ code of ethics is located on the back side of each certificate. It states:

    Fundamental Principles
     “ASQ requires its members and certification holders to conduct themselves ethically by:
“Being honest and impartial in serving the public, their employees, customers, and clients.
“Striving to increase the competence and prestige of the quality profession, and
“Using their knowledge and skill for the enhancement of human welfare.”

It’s the in last two principles that I believe I’m the weakest and that we’re very weak as a profession. We need to change. We need to improve. We aren’t upholding these principles!

Challenge No.5

We must ask ourselves, how can we as quality professionals, not just ASQ certification holders or members, better support and promote the above three principles throughout the highest levels of business, education, industry, health care, and government?” And then we must do something about it.

At the beginning of part 1 of this series, I asked you to name the modern-day politicians who best exemplify the Seven Deadly Sins of greed, envy, gluttony, sloth, lust, pride, and anger. The last one is a group of people, not a politician. Here are the answers:

1. Greed—Illinois Governor Rod Blagojevich
2. Envy—Senator Hillary Clinton
3. Gluttony—Senator Ted Kennedy
4. Sloth—President George W. Bush
5. Lust—New Jersey Governor Eliot Spitzer
6. Pride—Vice president Joe Biden
7. Anger—U.S. taxpayers

Discuss

About The Author

Mike Micklewright’s picture

Mike Micklewright

Mike Micklewright has been teaching and facilitating quality and lean principles worldwide for more than 25 years. He specializes in creating lean and continuous improvement cultures, and has implemented continuous improvement systems and facilitated kaizen/Six Sigma events in hundreds of organizations in the aerospace, automotive, entertainment, manufacturing, food, healthcare, and warehousing industries. Micklewright is the U.S. director and senior consultant for Kaizen Institute. He has an engineering degree from the University of Illinois, and he is ASQ-certified as a Six Sigma Black Belt, quality auditor, quality engineer, manager of quality/operational excellence, and supply chain analyst.

Micklewright hosts a video training series by Kaizen Institute on integrating lean and quality management systems in order to reduce waste.