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The Operations Management Talk

Updated on March 2, 2016

Believe it or not, there is a scientific way to run a business. That scientific way will also consistently outperform gut instinct.

Now that you’re up and running your business, you are making several decisions. Many of those decisions could have long lasting effects on your future ability to do business. The important thing to remember is in the 21st century, mistakes cost a lot more than they used to.

This is the operations management talk. I like to get it out of the way every time I have a new client. To accurately paint this picture, I have to tell you about the Hawthorne Effect.

The Hawthorne plant of Western Electric was a progressive place to work in the 1920s, kind of like how Google is today. It was one of the first major manufacturers to employ women, among other things. At some given point, they decided to conduct more than a few studies to increase production. Two men of immediate consequence would come out of this: Elton Mayo, and W. Edwards Deming.

Western Electric began with turning the lights on the factory floor up. To their amazement, production went up. Unfortunately, everything began to normalize again shortly. Then they turned the lights down, gave people two hour lunch breaks, uniforms, bonuses, you name it. The same thing happened every time. The conclusion of the study was that the leading causal factor in the increased production was

The Presence of People in Lab Coats.

This effect is known as the Hawthorne Effect

Elton Mayo would go on to teach at the Harvard school of business and become one of the fathers of modern HR. He would proclaim that everything is about the person. I don’t care too much for Elton Mayo. This is about the other scientist Deming. W. Edwards Deming believed that job design, and quality of a product are the only essential factors in increasing production. He would latter construct the, “Red Bead Experiment,” proving that statistical process control, and job design are the essential ingredients in business success.

The Scientific Method in Business

The scientific method is as follows:

  • Ask a Question
  • Form a Hypothesis
  • Experiment (scientifically with controls)
  • Analyze the Results (from data, not your opinion)
  • Come to a conclusion
  • Share that conclusion with peers for review

Granted, there are more steps in there, but that’s the general idea. Where Deming is concerned, it’s very important to understand that there is a difference between random outcomes, and causal events. The single worst thing you can do in your business is change your product because of one outcome. Unfortunately, this happens all the time. Think about how many times you change the settings on something because one thing happened one time. We call this tampering.

Tampering can, and will, kill your business. In my early days, I had the distinct misfortune of working on a plastic extrusion system, where the company actually went bankrupt because the settings on the machine were constantly being adjusted.

Just so you know, there is a way to test several factors at once. Its called Design of Experiments or DOE. I will discuss more about that method in my Six Sigma article. Until then, you can read about it here.

I highly recommend that you seek out a PMP, or a Six Sigma expert if you are operating any kind of product, or service, oriented business.

As always, your comments are greatly appreciated. I love to answer questions.

Thank you,
Martin Bammes


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