GA 170 | How to See Past the Numbers with Bill Waddell

You're listening to episode 170 with Bill Waddell.

Welcome to the Gemba Academy Podcast, the show that's focused on helping individuals and companies achieve breakthrough results using the same continuous improvement principles leveraged by companies such as Toyota Del Monte and the U.S. department of Defense. And now, here's your host, Ron Pereira.

Hey there. This is Ron Pereira with Gemba Academy and I'd like to welcome you to another edition of the Gemba Academy podcast. As always, thank you so much for taking time out of your day and your week to listen to the show and for watching our Lean and Six Sigma training videos over at Gembacademy.com we definitely appreciate each and every one of you. Now, for Those in the US hopefully you've had a nice 4th of July week and I know everybody's back into the swing of things now, but hopefully you had some time to relax with your family and enjoy the day. So today on the show we are going to play the audio portion of a keynote talk that Bill Waddell gave. This is actually from 2015. We were looking through some of our older videos and conferences and looking for some that we can share here on a podcast. And Bill's talk was especially interesting to me. He gets into some quite different topics that most Lean thinkers aren't talking about. And in particular he's kind of talking about the so called fuzziness of numbers. And then he really gets into the importance of people and moral leadership. So his talk is about, oh, it's right around 20 minutes or so and so it's a shorter talk. Now, early in the talk he refers to a book that you need to be able to see the video to know what the book is. But the book is called Fuzzy Thinking and we're gonna link to that in the show Notes. So if anybody wants to check out that book, Bill talks about it quite a bit. Again, it's called Fuzzy Thinking. And so go to the Show Notes and you'll find those show notes over@gembapodcast.com and just look for episode 170. And then the last thing that I want to mention is we do offer a full 3 day trial access to Gemba Academy. So if you did want to watch this whole video, definitely hit us up. Go to gemba academy.com and you'll see the buttons there to, to try us out, kick the tires, so to speak. And you'll find this particular talk in our Gemba Academy Live section. Then the, then within Gemba Academy Live there's a section for events and then this is in the lean Leadership Week 2015 suite of videos. And I think there's 14 other videos. Jamie Flinchbaugh, Michael Ballet, Mike Wrobleski, Brian Mescal, Kim Barnas, Sam McPherson, Joe Murley, Orifium So tons of amazing Lean thinkers spoke at this, this particular conference, so I'd encourage you to go check those out as well. Again, show notes for this particular episode can be found over@gemba podcast.com just look for episode 170. Okay, enough from me. Let's get to the show.

Jim Hunsinger asked me some time ago to talk on people, process and prosperity. And I asked him, well, what does that mean? And he said, whatever you want it to mean. And so I decided what it means is people. And forget about that process and prosperity stuff. We'll deal with that some other time. We're just going to talk about people. And what I want to do here in my brief 20 minutes is introduce two ideas to you and then with any luck, I'll tie them together at the end so you can see how they collect collectively. Make sense? But accountants are numbers people. I often joke about the best line I ever heard in my 11 lean accounting summits was the time the CFO from Parker Hannifin described engineers as people who were good with numbers but didn't have the personality and social skills to go into accounting. But you're viewed as the numbers folks. But we need to talk about numbers a little bit. I also tell people that in fact it's true my degree is in accounting and I spent the first couple of years of my life in accounting. But after 30 some years I'm fully recovered from the experience. But I went from accounting into supply chain at one point had implemented led the implementation of nine different back in those days, MRP2 systems or ERP systems. And I was completely bought in. I was certified by Apex. I suppose I still am at the fellow level, which means you're an MRP wizard and a cost accounting expert. And that was my religion. That's what I did. That's what I did very well. It served me very well in my career. And then I read a book and this is 20 some years ago and I've never been able to get the concepts out of my mind and they've influenced my entire view of manufacturing, of systems, of accounting, and it really turned everything upside down. It's this book. Surprised to find it's still in print. I don't recommend it to anybody. The last 2/3 of it are pretty arcane Engineering stuff, but it's a concept called fuzzy logic. And Bart Cosko is an uber achiever out of California. He's a lawyer, he's a PhD in electronics, he plays in the Los Angeles Philharmonic Orchestra and is a world class level surfer. He's one of those guys that does everything over the top. And he wrote this book and it's about something called fuzzy logic. That's an engineering concept, but the beginning of it, he explains numbers and it gets into the difference in Eastern and Western philosophy. And for those of you who haven't dug into it, who have better things to do with your time, math and philosophy are very much interrelated. People like Bertram Russell were great mathematicians and the philosophers and the mathematicians are, are very much linked. But fuzzy logic goes something like this. If I asked the folks here that when you get home Friday night, count the number of apples in your house, send me an email and tell me what the number is. Does anybody here think you would have a difficult time with that? Easy enough, simple. Count the apples, give me a number. But it wouldn't be that simple because you'd get home and somebody here would say, well, I got this apple here that my kid took a bite out of and put back in the bowl. Do I count it or not? I got a half a dozen apples that my wife chopped up and made into an apple pie. So they're sitting there, there's six apples, but they're all cut up. Should I include them or not? I got a jar of applesauce over here. I got a wax apple sitting in this bowl on my coffee table. You get back to me and say, need some clarification. What exactly are you talking about here? Because the answer to that question of how many apples do you have? Depends on why I want to know. Sometimes something's an apple and sometimes it isn't. It depends on what I want the information for. Same thing if I asked you to take a break here and go out and count the cars in the parking lot. Simple task. Go out there and count them up, come back here with a number. But you couldn't do it because you'd immediately come back and say, what about small pickups? Do you want minivans? You want these crossover vehicles? What about full size pickups? I need more definition, I need more clarity. I can't just count the cars. I could ask you to go count the chairs in your house. Again, simple, easy number. No, you can't. You'd come back and say, what about this love seat? Is that two chairs? Is that one chair, is it? Not a chair at all. Give me specifics. I'd have to narrow it down. But even if I said I just want whole, uneaten apples, unprocessed, uncut, up, I just want apples, real apples, that would still be pretty shaky because you might get back to me and say, I got six of them. But those six aren't really equal, are they? No, two of them are really the same. Some are bigger, some are smaller, some are juicier, some taste better. You don't have six identical things. And the message of the book was that math is not real. Numbers aren't real. They don't exist. Numbers are nothing but an attempt, a necessary attempt by science to try to define a fuzzy world. The real world is full of messiness and variables and apples that aren't the same in all different ways and shapes and forms of apples. But we got to deal with that somehow. Somehow we got to get our arms around it. So we invented math. But there is no such thing as six. There are only apples of all different shapes and sizes. And when I read that, and the more I thought about that, and he got into the fact that we've all been taught that if B is greater than A and C is greater than B, then by definition C is greater than A. That's basic logic, part of Western philosophy. We can divide things, we can section it off, we can say this is this and. And that is that. But Eastern philosophy is a little different, and it's where fuzzy thinking came from. And in Eastern philosophy is B is greater than A and C is greater than B, then C may or may not be greater than A. It all depends on how you want to define A, B, and C in all of your different applications. Depends on why you want to know about the apples. And once you start thinking about that and you realize that very many things in this world don't really have a numerical value. In fact, the more important it is, the less you can quantify it. If you have children, can you quantify them? Can you hang a number on each one? The unimportant stuff? You can. How many times did they make their bed? How many days did they remember to brush their teeth? But can you quantify whether they're kind, whether they're respectful, whether they're responsible? The important things about the kid? No. Can't even come close. Nobody could hang a number on that. And so now you have this factory that's full of a thousand different variables and hundreds of different people. And the notion that you can Hang numbers on that, especially on the people, is just wrong. There's no number that you can put on people, and it's wrong to try to put numbers on people. Headcount is a horrible number. It's a terrible thing to measure. It doesn't come remotely close to capturing what you've got there. Managing by the numbers is bad in and of itself, but managing people by the numbers is just plain wrong and terribly, terribly inaccurate and harmful both to the people and to the business. You can't put a number on people. Do you have enough people in your engineering department? Depends. Same with the apples. To do today's workload, maybe the future, I don't know. To develop them, to cross train them into doing other things. I don't know. So what good is that head count number? What do you want to do with that? And do you really think if you can count eight heads that all eight of those heads are identical and equal and interchangeable, you could swap out any one for another one and still have the same thing? Of course not. You can't manage the business by the numbers, and you especially can't manage people by the numbers. And you don't want to be managed by the numbers. You know that's true. And you don't manage your family by the numbers either, do you? None of you do. That's concept number one. The second concept I want to talk to you about is one that's recently been in the news, and that's our Pope who just came to visit. I happen to be a Catholic, which means I'm all in on measuring stuff and getting get out of jail free cards. You know, we were big on that. You used to be able to buy get out of hell free cards. And then we got in trouble 500 years ago for that, but we still kind of do it a little bit. And so I actually read all 70 pages of the Pope's encyclical because that probably is going to buy me a few hours out of purgatory. In fact, I wouldn't be too surprised if just having to listen to me doesn't get you 20 minutes out of purgatory, but what the Pope said, and it's terrible how we are in the US we're all so polarized and divided. You know, we're either hardcore conservatives or we're hardcore liberals. And we think the whole world revolves around our political worldview. And of course, every time the Pope spoke, people wanted to jump up and proclaim, either he's completely in disagreement, he's all in with Obama, or he's all over on this side. And the fact is he could care less about American politics, and he wasn't writing or talking about it at all. What he said about the environment and what he said about people is that there's a basic moral standard to which people are entitled. And part of that, where it got into the environmental stuff, is it's his position, and it's awfully hard to disagree with that. He believes that God created man. God created the universe. Man requires clean water to drink, clean air to breathe, fundamentals to human existence, the basic input for human life, and that clean air and clean water are not something to be earned or deserved or granted by government, that those are fundamental human rights that everyone is entitled to, and that's that moral standard. And that moral standard also includes things like child labor, the ability to make enough money to eat. Not a real high standard, but that people have the right to live. The thing that we put in the Constitution about that inalienable right to life, along with liberty and the pursuit of happiness, and he said that that's not negotiable, but it was all there at the beginning. When man was first put here, he had the water, he had the air, had access to food, didn't have all our wonderful technology, didn't have a lot of other things that add the quality of life, but had the basic necessities to live. And his point was that we now have an unintended consequence with globalization. In the United States and in Western Europe, Canada, Australia, we have laws that are way above that moral standard. We're out fighting over the next iteration of the Clean Air act, but we're not worried about whether Americans can breathe when they walk outside of the building. So we're not too concerned about it here. We've worried about that over the years. We've passed laws to prevent things like child labor, to make sure that our factories are safe, that people aren't working around toxic stuff, that there are sprinkler systems in the buildings. We've said those are all basic moral necessities. It's the right thing to do. And so we're operating way up here. And the Pope could care less about what we're doing with the environment. That's not his concern at all. What he is concerned about is that globalization has taken us into a lot of places where either there is no law or. Or the rule of law isn't respected. There are a lot of places where the air is unbreathable. Parts of China, parts of Southeast Asia, there are places where the water is undrinkable, where human beings are treated miserably, and we do that because it's within the law, but it's below the moral standard. When he attacked capitalism, he wasn't talking about anything wrong with our free enterprise system. The Vatican's been all in on free enterprise and capitalism for a long time. But what he has said is when we make money by operating in countries where we can operate legally but below that basic moral standard, then that's wrong. And that we have a basic obligation to people, whether they're in this country or another country, no matter where they're working, if they're making our products, then we have a moral obligation to make sure that we're not having them do that and in the process poisoning the air and the water and living in danger when they're within the factories. If you go back two popes ago won't make everybody read this whole thing, but this is the heartening part of this, because this isn't a new message out of the Vatican and it certainly is not a Catholic message, it's a Christian message, it's a Muslim message, it's a Jewish message. It's a message anybody of faith and anybody who believes that there are things more important than themselves says the same thing and preaches the same message. But what two popes ago said was that business management cannot concern itself only with the interests of the proprietors, but must also assume responsibility for all of the stakeholders who contribute to the life of the business. The workers, the clients, the suppliers, the community. Sounds exactly like what we talk about when we talk about what Lean is all about. All of the stakeholders have to come along for the ride. And he criticized recent years. The cosmopolitan class of managers emerged, answerable only to shareholders who were basically anonymous. But he sung the praises, the last line here. By contrast, though, many far sighted managers today are becoming increasingly aware of the profound links between the company and where it operates. What Lean is all about, the lean culture, what you read in the book that was passed out there, what you'll hear from all of the cultural experts and all the people who preach Lean culture, is that you need to be those far sighted managers, you need to be the farsighted managers that the Pope talked about, and where it all comes together is in the end, it's all about people. That's all anything is about, isn't it? That's all life is about. It's all business is about. It's all about people who we sell to, who we work with, who we live with, the people that we love, the people that live in our neighborhood. And so if there are two messages that I can give you today, people are not numbers. And be that farsighted manager that the Pope talked about that understands that there is a basic moral right that we can pursue through Lean and it makes all of this worthwhile. You notice there's a quote in the book there from production manager at a place called West Paw Design, and I need to surrender the stage to the next speaker. But it was a classic and he said that. And West Paw Design is a very lean organization, a phenomenal organization in Bozeman, Montana. And what he said he loves working at Bozeman because he or at West Paw because every Friday he gets to go home feeling good about what he did and feeling good about what he's doing with his life. No regrets. He doesn't have to worry about who lost and how they operated that week because everybody won. So there you have it. No numbers. Be farsighted.

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