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From Paul Spencer of Second Nature Solutions, a conversation about the complexities and nuances of building resilient family enterprises, especially in the face of economic and political uncertainties that loom on the horizon. See more at secondnature.solutions.
Welcome to Resilience Talk hosted by
Paul Spencer of Second Nature Solutions.
Let's dive in.
Paul Spencer: So I was talking with a
friend of mine, um, about the morality of
business and really the conversation was
how often do we make financial decisions,
um, p and l decisions, economic decisions
over the moral, um, side decision
making or maybe even the humanity.
Decision making.
So, um, the example that he was describing
was more of letting people go, right?
Making an economic decision versus,
uh, basically a humanity decision.
And so I thought it was an
interesting conversation.
Um, a lot of it resonates with me
when I think about Deming and in
his 'cause he wrote out of crisis in
82, I believe, or 83, probably 83.
And in there's got, he's got the seven
deadly sins, and one of those sins is
the emphasis on short term profits.
He talks about how, um, that if
we're, and really he's thinking
of more of a corporate side, so
thinking about shareholders and,
and dividends and bankers, and those
are the kinds of words that he uses.
Um, but his, one of the deadly sins
that he talks about is the emphasis
of short-term profits, right?
Is um, is something that we.
Really focus on a lot.
And at the detriment of the long
term vision, the long what he calls
the, the, um, the constancy of
purpose, that's what he calls it.
So that's in his 14 points
is constancy of purpose.
Um, and what that means essentially
is having a vision and knowing
out in front of you years.
And an aim, and where am I
going and why am I doing this?
And that is what gets you
to a destination, right?
And so when you have that constancy
constancy of purpose, that helps
frame all your decision making.
So anyway, one of the deadly sins, again,
as I already said, the emphasis of short
term profits means that now we're starting
to look at, uh, what's the revenue
projections for the end of the month.
And, uh, here it is on the 27th, what
are we gonna do in the next three days
in order to shore up our monthly numbers
and what is it that we're gonna be
doing this quarter so that when we, um.
Release our, uh, our earnings report
that we'll get a good, uh, shareholder
announcement or what are we gonna
do for our dividends and right.
And all of those things, if we
take the timeline goes shorter
and shorter and shorter.
And so now we're just looking
right in front of us, right in
front of us, right in front of us.
And his whole point is that,
um, if you get into that mode.
Then you get blindsided about all
the things that are coming at you
because you don't have constancy of
purpose, you don't have a vision, and
you don't know where you're going.
So anyway, I thought that was interesting.
The, uh, thinking for me is that we
haven't really talked a lot about demming.
Ha that's a joke.
I know you guys, uh, you hear
me talk about dimming all the
time and, um, I would say that.
There's really maybe only one or
two of you that are really good
students of Deming that you really
can go inside and out of, um, all
the different philosophies of Deming.
Why, why those things are in place,
what that means for you and how you
actually wanna think and manage and
govern your, your, your organization.
The rest of you tend to hear me say it.
Um, I speak about it.
I, uh, put it in terms, maybe you could
say layman's terms and terms that you
can understand, but I guarantee you
haven't dug up any demming and you
haven't looked into it any further than
maybe, maybe what Paul has told you.
And, uh, you know, for me, um, I
started, uh, I was trying to think of
when I started using Deming explicitly.
It's probably.
In 2014 ish, somewhere in there,
um, when I went to my first, uh,
two day seminar, uh, for Deming
seminar up in Dayton at at Aileron.
And, uh, we were just
still fairly new in PO yet.
Um, and really even maybe it
kind of, maybe I'll give you a
little bit of a life story here.
So in.
And with the Agile manifesto with
software development, that was
all derived up, I think, I believe
they were up in Detroit, maybe.
Um, and it was a, it was a set
of software developers who were
working in, um, car manufacturing
and they had taken some of these.
Lean manufacturing principles and
applied them to software development
and that's called the Agile Manifesto.
And that's really where a lot of
the agile development came from.
And that was around 2000.
Um, and that was early on in my career,
and I was blessed to be able to join
a team in 2003 that really was really
invested in all these ways of thinking
and really a philosophy and a mindset.
Um, about how we could build
software in a different way.
And really it was just, it was lean,
it was lean manufacturing and really
the roots of it, which I didn't know
at the time, were all rooted in Deming.
And so we had built, um, lots of
different enterprise businesses.
Not businesses.
Um, a lot of enterprise software
systems projects based on
that philosophy with Agile.
Did a lot of coaching.
I did a lot of executive coaching,
building different development
teams for, I don't know, probably
about 10 years, about doing that.
And then we founded Pom yet around
this whole concept of, um, teams
as a service, which in about 2012
or 13 in there was still, um.
Pretty novel idea in that, um,
at that time it was very rare
to allow a consulting group or a
consultant who's a develop on your
development team to not be on site.
So even if you provided two or
three developers, uh, to help you
with, uh, some kind of software,
uh, initiative that you have.
They would be on site, typically.
And so what we did is we created a teams
as a service and we formed our own teams.
They lived in our office.
We had our own philosophy, which is where
the harmonics way concepts come from.
Um, we had our own way of managing our,
our people, our, our software systems,
how we integrated, how we built software,
craftsmanship, all those things.
All came out of all of that.
Um.
A lot of the thinking around
it was from agile development.
Now we were, I would say at that time,
very well versed in Agile and the way it
works and sometimes the way it didn't, we
knew the fault, uh, the failure modes, the
fault lines that were involved with that.
And so we had kinda morphed
into, um, our own ideal.
Way of, of managing and doing it.
So it wasn't, uh, scrum and it
wasn't purely, uh, agile framework.
Uh, there was scale and all
these different crazy things
that have come out of all that.
Um, but we just did it in a way that
just held more to the Agile manifesto
and to be able to iterate and get
feedback loops and have high quality.
So anyway, uh, that's kind of
my roundabout way is, um, Stacy.
Who was our president at the time
suggested that I go to a Deming seminar.
Um, and that was around
that 2014 15 timeframe.
And, um, when I went.
Um, in my head I was thinking, how can
I learn more about lean manufacturing?
And at that point I had studied
a lot of lean manufacturing.
I love going outside of, uh, at
that time the software industry.
Going into more physical things, which
is what manufacturing is, and really
taking a lot of those principles and
bringing 'em back into what we were doing.
I, I, to me, that's really fun.
Um, and I love learning as,
as you guys know, and reading.
And so that's really what
I was thinking about.
The Deming seminar is, oh, another
deep dive in the lean manufacturing
and how could we, how could I think
about other aspects of further
improving our development processes?
Um, what I didn't know is by the time I
went through that two and a half days,
so really three days is I had notes and
notes and notes and notes, all kinds of
ideas and pages on how to actually run PO
yet, so not as just the development team
and how we're gonna deliver software,
but how we're gonna run the company.
Using Deming.
Um, and I had never really
even considered that before.
I'd never even thought of, oh, you, we
could do the whole sales side, we could
do the accounting side, we could do the
HR side, um, using the Deming philosophy.
And so, uh, that led to me
coming back and obviously.
I enjoy learning and
thinking about these things.
So I'm presenting to the, to our
company about all the ideas that
I have and what I learned and what
we're gonna do differently and letting
them explore some of those things.
Um, and so what ended up
happening is we built ette.
Uh, through the Deming philosophy,
and we were really good at it.
And, uh, we were really different
and unique, uh, than the other,
uh, software, um, consultancies.
Uh, we had a different approach to it
and we had really awesome people because,
uh, again, I think it was our nature.
It was our nature to, to build that out.
But I think with the framework
of what Deming gave us.
We had some things to hang him onto.
And really, if, looking back on it, the,
the harmonic's way, um, which wasn't Carl
Harmonic's way at the time, it was just,
uh, ideas and principles that Rob had came
up with, um, for us to build our culture.
They're very Deming focused.
We didn't know they were Deming focused.
They weren't derived
from Deming in any way.
Um, but they are tied in very, very
closely to what the, the values
and principles that Deming had.
So we had a natural fit for all of it.
Um, and so it just seemed to,
to just easily mesh with us.
Um, so, and the reason why I'm telling
you this is because, uh, the whole
idea of what Deming is all about.
Um, if you can really understand
what he's getting at, it's
a very powerful framework.
Very concise, but it fits
in so many different ways.
And really, he started putting
these things, these things
together back in the fifties.
So it's an old framework.
He wrote the book in the
early eighties, right?
This thing has been around forever.
Um, but very few of you are aware of it or
know of it, or you may have the bias that
it's a manufacturing thing and it is not.
It obviously lives in
manufacturing, but uh, it is not
solely a manufacturing thing.
So, fast forward, um,
several years probably in.
Somewhere in 17, 18 or
19, somewhere in there.
Um, I went back to, to my friend
Kelly Allen, who was, um, at the
time, he was leading those seminars
for the, for the Deming Institute.
And I asked him if I could join,
um, being a facilitator, um,
because I told him at the time that.
Um, I've taken everything that
I think I know about Demming and
applied it to running Pom yet.
Um, and that's as far as I can go with
it, but I don't know if I did it right.
I don't know what I don't know.
And the one thing I do
know is that if I teach.
Then I will learn more, right?
Just by the ne necessity of
having to explain it to somebody
and them asking good questions.
And then now I have to explain why that
is the way that is or why the philosophy
is that way, or maybe not, I don't know.
Um, so, uh, and Kelly's a good friend of
mine and, uh, now many years later, and
at the time we had stayed in touch through
the first seminar that I had gone to.
Um, and it, and it's
such a beautiful thing.
He said, he didn't
really ask any questions.
He said, why don't you
come to the next seminar?
Um, and then we'll see what we can do.
So I, I joined as a, a participant.
That was the second time I,
I've been to the seminar.
Um, again, learned more
things just by doing that.
Um, and then I got to go on a nice roller
coaster ride with Kelly and we traveled.
Um.
Uh, did some private seminars,
um, did lots of projects together.
Um, still good friends.
Um, and I think that that's the reason why
I'm telling you all this is because, um,
Deming is just not a buzzword for me, and
I don't think, uh, you're giving yourself
a bit of a disservice to think it's just
a Paul thing or it's just a buzzword that
you don't really need to think about.
Um, you'll just let Paul kind of.
Uh, guide you along, which is obviously
why I'm here and why I work with you.
Um, but the more you can jump into some
of the Deming aspects, the better off
you'll be because you'll be able to
see the world, the whole world around
you, um, in a completely different way.
Um, so anyway, kind of just
go back to the beginning.
So when my, uh, when
we're, when I'm having this
conversation with my buddy, um.
And he's talking about the, that
moral compass and those things.
And uh, I think it just naturally
goes back to Deming for me is like,
well, Deming talked about that.
With the emphasis on short term profits.
He talked about that in his, uh,
system of profound knowledge around
psychology, which is, uh, yes, we
have processes and systems and,
and, um, understanding variation
within, uh, the outputs that we have.
But we have humans in the system, and we
have to understand our humanity, right?
The psychology of how people operate.
How they think, what their behaviors are,
what their biases might be in or, because
that's another input into the system.
And I think it's just so cool that
he's put all that together because
when you start to put, um, uh, frame
of reference through psychology.
Appreciation of a system and
you say, what's the moral side?
What's the economic side
versus the Hu humanity side?
Deming gives you a framework
to run through that.
Now that doesn't make mean, and it's
black and white and oh, the answers
are right there, but it gives you a
way to kinda run through, um, some
of the decisions that you may have.
Um, one other thing too that I
think is very interesting is.
Um, Deming has these 14 points and
then he is got the seven deadly
sins and then he is got SOPK, which
is system of profound knowledge.
Um, and I'm gonna repeat these.
The system of profound knowledge
is appreciation for a system, which
we all know 'cause we've talked
about it a million times, is how our
processes are visible and transparent
and how they connect, right?
And then knowledge of variation.
There's only four aspects to the,
to the SOPK appreciation for a
system knowledge of variation.
We have to know that you can't
get 25, 25, 25, 25, 25 every time.
You'll get 23, you'll get
50, you'll get 18, right?
And you have a natural variation.
It'll go up and down.
It's super important to have
an understanding of that theory
of knowledge is, uh, like what
we talk about all the time.
How do we experiment with that?
In in Deming's world, he would say,
what's A-P-D-S-A plan, do study act.
What's the PDSA that we can run
to learn to improve the system?
And in my terminology, I say,
let's experiment with that
and how can we experiment?
The last one is the psychology,
which I just explained.
So those four basic tenants.
Um, you can hang every decision
that you make across, uh, within
your, within your, um, organization.
Um, but you can also get a richness
around, um, the confidence that you
have around being okay with being wrong.
Why, why, why is it okay to be wrong?
Because we have a theory of
knowledge and the theory of
knowledge states that you don't know.
It's just a theory now, you may
be able to say, oh, um, I'll be
able to get a million dollars this
year, uh, more than last year.
Okay, well, what's the percentage of that?
Well, that's a 50%
increase from last year.
Okay.
What's your theory that that'll work?
Right.
It's just a theory until you go prove
it tomorrow and the next day and next
week and the next week, uh, it's still
just a theory and you have to be able
to adjust and run those experiments in
order to achieve your aim in that case.
Um, so anyway, I thought that
was an interesting topic.
Um, there's so many different
levels with Deming, um,
that I wanna encourage you to
go out and, uh, maybe explore
some of the Deming website.
Um, grab a Deming book and read it.
Actually read it, you might enjoy it.
Um, and you know, there's another
thing in here too, which is, um,
because I work closely with the
Deming Institute, um, they have an
awesome portal called Deming Next.
And there's so many different
training modules, different, um,
it's a, it's an LMS system that, um,
there's so many cool little things
in there that you can do continuous.
Training, um, with your staff
and your executive teams.
And if you're looking for something
to have access to that, then just
send me a note and, um, and we can
get those things set up for you.
Um, but anyway, uh, these
things exist out there.
Meaning Deming has answers to a
lot of the questions you may have
specifically around this one, which
was what's the moral decision?
And, uh, there's never gonna be,
well, this is the moral decision.
There's a, there's a huge
variation around that, right?
Um, but if you have a framework in place,
it helps you to have more confidence in
the types of things that you're up to.
And plus, why wouldn't you do it?
It's a lot of fun.