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2002-04-12 - 10:45 a.m.

The Ford Focus is the best selling car in the world and I have been driving a new one for the last day and a half. I can see why its so popular. The puzzle is why with such a success Ford is doing badly at a corporate level. The short answer must be that they need more Ford Focus style success but even so, its a surprise that things have gone quite so badly wrong.

Ford have taken up the Six Sigma approach enthusiastically. Last year in Detroit I heard the woman who is in charge of all North American production explain what they were doing and I was genuinely impressed. Most people these days have bought enough snake-oil in the past to have an instinct over whether something is "just another inititiative" or more solidly grounded. Six sigma sounded good in those terms not least the claim that Ford had mapped their aggregate customer satisfaction index through to shareholder value, ie by generating more satisfaction (as measured) they genuinely believed that the result would be a higher stock price - real end to end thinking.

Anyway yesterday I met Michael George who lives in Dallas and has linked Six Sigma to the Toyota Production System (commonly known as lean). He was clearly one of the early Westerners to really get to grips with lean - say in the mid 1980s - and I think he has met the great guru Taiichi Ohno. Michael really does seem to have brought the two systems together.

He made a number of really good points - not least about the importance of value stream mapping. I was pleased to hear this as I went all the way to Cannes to learn value stream mapping quite early on. I was dictating a note on the beach and the sound of the waves got on the tape which caused some raised eyebrows back at the ranch. I also managed to meet a very innovative guitarist while eating a fish meal in the town square - exploiting the style of using two hands on the fretboard - which I first saw practised by Fred Frith. This guy had developed the guitar so that it had more strings - with some tuned in interval of fifths. So it was good value all round (honest) plus the fact that I had a lucky hit with the CEO of the largest auto supply company in the world - by pitching the UK initiative that I have been working on into his company's approach to the same thing.

Six sigma brings together a lot of practical statistics while lean is much more intuitive and visionary. I have just pulled out the book called "Open The Window: Its A Big World Out There". Subtitle - The Spirit And Ideas that Created Toyota. Maybe you'll get the feel of this from a paragraph:

*Toyoda Sakichi was always saying things like the following to to Kiichiro - never try to design something without first having hands on experience. He also said: Before you say you can't do something try it. Kiichiro who learned much from Sakichi said: How can you expect to do your job without getting your hands dirty.*

In Birmingham some six Japanese engineers kindly loaned by Toyota, Nissan and Honda teach some 40 carefully selected young British engineers their practical approach.

I met Toyoda-san who is the heir apparent in the Toyota dynnasty in Yokohama a year ago and we joked about the success of this initiative. Tim from the embassy thought this was very much a bulls-eye.

Michael says that you should select improvement projects on the basis of their potential for improving Return On Invested Capital. That is basically right - the main problem is whether there is enough data to support such a selection exercise. But I think there may be a real lesson here in terms of thinking about the stocks of human capital - all the special things we know how to do like writing recording playing and the bits of inventory - completed recordings never marketed etc . Then thinking about the processes which convert that stuff into listener satisfaction - and picking one and trying to improve it.

One of the great things about the Toyota system which the west misses is its lightness. So a Toyota Value Stream map may be literally done on the back of envelope - in the expectation that having done the improvement - in about a month or so - then the vision itself will have been improved and a new map needed.

My next big revenue earning project is likely to be in the area of how some of this stuff can be made available to people in their 20s entering the industry. I have been working on the design for about six weeks. I have dirtied my hands on this stuff especially about ten years ago but I will need soon to repeat that process.

I was lucky that when I was helping to run an outfit in the past that did some of this I was working to a non-standard business metric - not profit. It was a unit output measure - how much output was generated by a pound in the cost account. The interesting part was that output was not just the volume measure (student-days) but was adjusted by an overall quality index - say like the Ford system sketched above. This measured satisfaction on four service dimensions and beneath that were around 50 specific customer interfaces evaluated on a 4 point nominal scale. So we could improve performance without having to cut costs ruthlessly but by driving up quality.

The hard part on the creative side of the house is that feedback data is very very sparse. There are ways through that I think but thats another story.

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