At the Rona Consulting Group (see "sister sites" at the left), my partners and I help health care organizations transform themselves into quality-conscious institutions capable of making money by employing the principles of the Toyota Management System. Most of the activities we undertake involve teams chartered using Toyota's famous A3 knowledge management system (after which this humble blog is named).
What is an A3?
"A3" refers to a large European paper size (297 x 420 millimeters or 11.69 x 16.54 inches) that is functionally equivalent to the Imperial tabloid (11 x 17 inches). Toyota uses A3 size paper to document its myriad improvement projects and the various team charters and reports generated in the course of project management. These documents are all referred to as "A3s." (For more details, see my book, Hoshin kanri for the lean enterprise (Productivity Press, 2006) or visit my web site (again, see "sister sites" at left) of the same name.)
How does an A3 work?
Essentially, an A3 creates a team charter that is a framework for a collaborative, multidisciplinary, scientific investigation of a problem. Every A3 requires the team leader or "author" to specify a quantitative improvement target and to integrate that target into a succinct narrative that that inspires or compels others to participate in the improvement process. This target statement--and supporting database--provide the framework for gathering and communicating the data that supports analysis and corrective action.
So how is this relevant to health care?
It plunges us into the beating heart of evidence-based health care. Every A3 document rests upon the scientific logic of the Deming Cycle of Plan, Do, Check, and Act (or PDCA). PDCA refers to the planning, doing, checking of a scientific experiment to improve work processes; the "A = acting" bit of PDCA refers to the publication of a new standard based upon a successful, verified experiment.
Tell me again how this is relevant to health care...
So tell me again how this is relevant to health care in some way that is not relevant to other industries? You've got me there, because evidence-based improvement is capable of cutting through the defenses of all types of entrenched interests, including the considerable defenses of management and organized unions universal to industries of all persuasions, including manufacturing and service industries, which of course include the health care industry.
It becomes clear.
Now it becomes clear, at least to the economist in me--I am a trained economist and economic reasoning is a principle unifying thread in this blog--why health care is a "special case," so to speak. Health care is an industry that has the usual, conservative management hierarchy plus multiple unions of considerable power. Actually, I prefer to refer to unions as "guilds." All guilds tend to restrict economic freedom in order to enhance the financial power of their members. Health care's guilds wield very considerable power (for starters, who has not heard of the American Medical Association?), power more potent perhaps (?) than the guild of the United Autoworkers.... In this connection, see Sharon Begley's cheeky Newsweek article, "Why Doctors Hate Science" (http://www.newsweek.com/id/187006).
Moreover, this economically dire situation (dire, that is, from the perspective of a free-market-loving economist) is compounded by the fact that health care organizations tend to have very few competitors, domestic or foreign (although this is changing as the costs of health care rise and the relative costs of travel fall). Predictably, this exacerbates the traditionalist perspective of management and reinforces the monopolistic tendencies of health care's guilds.
At a stroke, we have a logical explanation for a) why health care is relatively (or abnormally) poor with respect to quality and cost, not to mention the ability to adapt to changes in its environment; and b) why the scientific, evidence-based approach of Toyota's A3 knowledge management process is so very very relevant.
An inconvenient truth.
As Jesus so very inconveniently once said, "The truth shall set you free." Toyota's A3 process of PDCA (plan, do, and check your experiment, and then act on the results by publishing new standards) is a rigorous, truth-telling process that any industry may benefit from. But with all of its noncompetitive limitations--entrenched bureaucracy, multiple and powerful guilds, and a pronounced lack of competition--health care will (as surely as night follows day) benefit more than most.
Tom Jackson
Portland, Oregon
Tuesday, April 28, 2009
Monday, April 27, 2009
Escape from the Panopticon
This post is a continuation of "The paradox of the Panopticon," posted on April 25, 2009...
The way out of the Panopticon is through organizational redesign and transformation based upon the Toyota Way. In other words, to escape the Panopticon, we must transform organizations into lean enterprises, which have two critical features:
As every good American should know, and as Jeremy Bentham--architect of the Panopticon--himself taught, the greatest social good is achieved when we let every individual decide for himself or herself how best to conduct his or her affairs. Naturally, to escape the Panopticon, we should want to design organizations that preserve the benefits of free market thinking as much as possible.
The Toyota Motor Company has done something very much like this for large business organizations in the form of kaizen or continuous improvement. At Toyota, it is the job of all employees to find defects and fix them, in as close to real time as possible, without asking for permission. Toyota's model is perfectly general, having been successfully applied in many industries, including healthcare. So long as the scientific method is employed in doing so, employees as well as managers are empowered to implement countermeasures on the spot. In effect, a lean enterprise is a community of scientists conducting and acting upon their own experiments in an internal market for organizational knowledge. In this sense, a lean enterprise is radically decentralized and thus is like that most extreme example of radical decentralization: the free market.
Cybernetic control
With all of those empowered employees running around, however, radical decentralization might degenerate into anarchy without an appropriate control mechanism. Who is to say that employees will not pursue their own experimental interests at the expense of the organization's?
We said that to escape the Panopticon, organizations should be as much like free markets as possible. How are free markets controlled? In a word, they are "cybernetic." The term "cybernetic" is from the Greek for "self-steering." When economists say that they expect markets to "self-correct," they are referring to the cybernetic quality of markets to return to equilibrium without government intervention. When we refer to cybernetically controlled organizations, we are not referring to computerized controls, but to the natural tendency of appropriately designed organizations to "self-correct" without executive intervention.
This is a far cry from management accounting, the control mechanism employed by most large organizations in the world today. Management accounting mirrors the Panopticon and Foucault's Discipline and Punish more readily than the laissez faire of the marketplace.
Within a lean enterprise, hoshin kanri is the mechanism that provides the coordinating benefits of organizational control--including financial control--without compromising the utilitarian ideal of freedom by instilling in every employee a common notion of the organization's strategy. Through an elaborate process of negotiation called catchball, all managers within the lean enterprise establish both the financial targets and the process improvements by which those targets will be met. For a more detailed explanation, please see my earlier post, "What is lean management?" The result of this process is a system that is essentially cybernetic.
What does this mean?
Lean organizations like Toyota are able to produce goods and services at much higher quality and far lower per unit costs and with far fewer layers in their management hierarchies than Panopticons like General Motors:
Tom Jackson
Portland, Oregon
The way out of the Panopticon is through organizational redesign and transformation based upon the Toyota Way. In other words, to escape the Panopticon, we must transform organizations into lean enterprises, which have two critical features:
- Radical decentralization of decision making; and
- Cybernetic control of quality and finance.
As every good American should know, and as Jeremy Bentham--architect of the Panopticon--himself taught, the greatest social good is achieved when we let every individual decide for himself or herself how best to conduct his or her affairs. Naturally, to escape the Panopticon, we should want to design organizations that preserve the benefits of free market thinking as much as possible.
The Toyota Motor Company has done something very much like this for large business organizations in the form of kaizen or continuous improvement. At Toyota, it is the job of all employees to find defects and fix them, in as close to real time as possible, without asking for permission. Toyota's model is perfectly general, having been successfully applied in many industries, including healthcare. So long as the scientific method is employed in doing so, employees as well as managers are empowered to implement countermeasures on the spot. In effect, a lean enterprise is a community of scientists conducting and acting upon their own experiments in an internal market for organizational knowledge. In this sense, a lean enterprise is radically decentralized and thus is like that most extreme example of radical decentralization: the free market.
Cybernetic control
With all of those empowered employees running around, however, radical decentralization might degenerate into anarchy without an appropriate control mechanism. Who is to say that employees will not pursue their own experimental interests at the expense of the organization's?
We said that to escape the Panopticon, organizations should be as much like free markets as possible. How are free markets controlled? In a word, they are "cybernetic." The term "cybernetic" is from the Greek for "self-steering." When economists say that they expect markets to "self-correct," they are referring to the cybernetic quality of markets to return to equilibrium without government intervention. When we refer to cybernetically controlled organizations, we are not referring to computerized controls, but to the natural tendency of appropriately designed organizations to "self-correct" without executive intervention.
This is a far cry from management accounting, the control mechanism employed by most large organizations in the world today. Management accounting mirrors the Panopticon and Foucault's Discipline and Punish more readily than the laissez faire of the marketplace.
Within a lean enterprise, hoshin kanri is the mechanism that provides the coordinating benefits of organizational control--including financial control--without compromising the utilitarian ideal of freedom by instilling in every employee a common notion of the organization's strategy. Through an elaborate process of negotiation called catchball, all managers within the lean enterprise establish both the financial targets and the process improvements by which those targets will be met. For a more detailed explanation, please see my earlier post, "What is lean management?" The result of this process is a system that is essentially cybernetic.
What does this mean?
Lean organizations like Toyota are able to produce goods and services at much higher quality and far lower per unit costs and with far fewer layers in their management hierarchies than Panopticons like General Motors:
- Womak and Jones (in their groundbreaking The Machine That Changed the World) estimated that a lean enterprise produced twice the product in half the time at half the normal defect rate with a fraction of the required work-in-process inventory; moreover,
- lean enterprises require fewer managers (at its height, GM had as many as 33 layers of management, while Toyota has about 9.)
Tom Jackson
Portland, Oregon
Saturday, April 25, 2009
The paradox of the Panopticon
In his book, Discipline and Punish (1975), French philosopher Michel Foucault characterized modern organization as a Panopticon, a special type of prison. The brainchild of British utilitarian, Jeremy Bentham, the design of the Panopticon gives its Warden complete control over his Prisoners through a clever combination of spatial organization and mirrors. From his exalted place at the center, the Warden can see the activities of all the Prisoners in all places at all times. Of course, it is not possible for the poor Prisoners to see when they are being observed by the Warden. (Bentham's blueprint for the Panopticon appears below.)
Foucault's analogy is perfect. From French architect Le Corbusier's "machines for living," to the office cubicle, to the security camera, to the monitoring of employees' internet traffic, to airport X-ray machines, to RFID implants, to the mind-control technology of Steven Speilberg's Minority Report, the Panopticon resonates with our own experience and expectations of Big Business, Big Government, and George Orwell's Big Brother. Of course, 9/11 has lately redoubled Big Brother's diligence and intensified the claustrophobia and paranoia of the Prisoners.
The Panopticon is a trap, of course, for the Warden as well as the Prisoners. For while the Warden may observe what the Prisoners are doing, the Warden may never know what the Prisoners are experiencing. Or thinking. Not even coercive interrogation can help. All of which impoverishes the poor Warden, intellectually and socially as well as economically, as game theorists have explained for over half a century in a famous example known as the Prisoners' Dilemma. Economist Oscar Morgenstern and mathematician John von Neumann showed in their groundbreaking Theory of Games and Economic Behavior (1948), that, assuming that Prisoners are forbidden to coordinate their responses to the Warden's questions, the result of interrogation will be to limit social utility by denying shortened jail terms or even freedom to either or both Prisoners. I should hasten to add that there is an implicit assumption in the Prisoner's Dilemma that the Warden's compensation package turns not upon truth-based convictions, but upon convictions at any cost. In other words, the Warden is not rewarded for punishing the right Prisoner, but for punishing any Prisoner. The Warden can only interrogate Prisoners imprisoned in the Panopticon. Who knows whether or not the Warden has imprisoned the Guilty One?
The Prisoners' Dilemma is a potent criticism of Bentham's utilitarian philosophy, which holds that individuals pursuing their own interests naturally creates the greatest utility for society as a whole. If we accept Foucault's concept of the Panopticon is a correct characterization, then we must also conclude that modern organizations are inherently stupid, for clearly the Panopticon is not structured for learning.
In future posts I will explain how we may all--Warden as well as Prisoners--escape the Panopticon through better organizational design.
Tom Jackson
Portland, Oregon
Foucault's analogy is perfect. From French architect Le Corbusier's "machines for living," to the office cubicle, to the security camera, to the monitoring of employees' internet traffic, to airport X-ray machines, to RFID implants, to the mind-control technology of Steven Speilberg's Minority Report, the Panopticon resonates with our own experience and expectations of Big Business, Big Government, and George Orwell's Big Brother. Of course, 9/11 has lately redoubled Big Brother's diligence and intensified the claustrophobia and paranoia of the Prisoners.The Panopticon is a trap, of course, for the Warden as well as the Prisoners. For while the Warden may observe what the Prisoners are doing, the Warden may never know what the Prisoners are experiencing. Or thinking. Not even coercive interrogation can help. All of which impoverishes the poor Warden, intellectually and socially as well as economically, as game theorists have explained for over half a century in a famous example known as the Prisoners' Dilemma. Economist Oscar Morgenstern and mathematician John von Neumann showed in their groundbreaking Theory of Games and Economic Behavior (1948), that, assuming that Prisoners are forbidden to coordinate their responses to the Warden's questions, the result of interrogation will be to limit social utility by denying shortened jail terms or even freedom to either or both Prisoners. I should hasten to add that there is an implicit assumption in the Prisoner's Dilemma that the Warden's compensation package turns not upon truth-based convictions, but upon convictions at any cost. In other words, the Warden is not rewarded for punishing the right Prisoner, but for punishing any Prisoner. The Warden can only interrogate Prisoners imprisoned in the Panopticon. Who knows whether or not the Warden has imprisoned the Guilty One?
The Prisoners' Dilemma is a potent criticism of Bentham's utilitarian philosophy, which holds that individuals pursuing their own interests naturally creates the greatest utility for society as a whole. If we accept Foucault's concept of the Panopticon is a correct characterization, then we must also conclude that modern organizations are inherently stupid, for clearly the Panopticon is not structured for learning.
In future posts I will explain how we may all--Warden as well as Prisoners--escape the Panopticon through better organizational design.
Tom Jackson
Portland, Oregon
Subscribe to:
Posts (Atom)