 The appropriate tool for addressing human performance is that simple black box. It is not that this is some sort of necessity for understanding but a great convenience when it comes to focus. It avoids common distractions and redirections. The value of the black box is focus on the essentials. We are human. There are things that we own. A business is created as a being. It has nothing of its own. Its very purpose comes from people who create and maintain it. It survives on what people give to it and does what people decide that it is to do. As a matter of our own convenience and comfort, we recognize a business as a person, as having some level of persistence and a purpose. As a family business, a farm has the purpose of the family that owns it. We see actions as taken on behalf of the farm. This was interrupted when we addressed governance activities under the direction of a leader. It could be actions of a general in waging a war. Actions of a ship's captain in directing a crew are actions of a king. These brought in the concept of privilege, the privilege of one human being to direct the time, effort, and other resources of other people. We have addressed the founding of the United States and that dream of a government authorized by the people to serve the people. It was interrupted by leader preference for privileged rule and general public tolerance. We have addressed the American Industrial Revolution and the resolution of the chaos it created in business with the modern corporation. It accepted leader preference for privileged rule as supported by public leaders. Our visual tool is the engineering black box and it shows that symbiotic relationship between the business and its customers. For performance improvement, it gives a graphic of a waste, a way to see potential improvements. The corporation does not own itself. We have a broken relation with corporate owners, with traders, harvesting the value that would otherwise go to owners. Again, the waste was there to see. With employees, the waste is indicated by directions that add nothing to their performance efforts and distract them from performance. We have covered a lot of ground in a very short time. We have opened the black box to see what had to be within it, convert its inputs into its outputs. It was there that we discovered the natural function and value of management. It delivered its output to the performance areas of the business. It was a support function for those who completed the performance cycle with business customers. As business customers were the ones who got to value business products, so those who received management support products would be able to value what they received. This provides a sense of value for management, for what it has to accomplish for the organized effort. We see this in terms of what the foreman must do to successfully support his workers' efforts. Then we come to a barrier. Corporate management was working to a different purpose. It was focused on the exercise of privilege. It was running things for the purposes that it recognized. It was working to goals and objectives rather than support. Corporate leadership hired subordinate managers to see to performance matters. Leadership used administrative management to run their organizations. It then operated through delegation of authority and responsibility to subordinate managers, providing for evaluation of their individual efforts by what they delivered back to their superiors. It did work, but also isolated subordinate leaders, rewarding them for what they accomplished as individuals. And while not actually addressing the graphic, we begin to look at waste in management. We can see where goals and objectives of leadership can cause management costs without contributing to performance. We looked at anomalies and structure that seem appropriate under the concept of administration, but interfere with delivery of value or even deny it. It is now time to address the performance of management. It is not simply to look at what has been accomplished, but to explore the currently unthinkable potential for managing over a corporate effort from outside its corporate enclosure. It is time to look at customer management, to assure delivery of what customers value, to look at employees as people and at corporate owners and investors as those who provide purpose. We are addressing how we, as the only party in interest in our economy, are going to get the greatest value back for the time and effort and resources we commit to corporate endeavors. This is a huge step away from common understandings, which is why the review above is so important. It is that mammoth step from being beneficiaries of what rulers and barons of industries have decided to being the ones who are ultimately in charge of our human economy. We are all in this together. The economy is ours to manage. This is empowerment on a whole new level. Frederick Taylor just opened the door. He showed that people working together are far more effective than people trying to run things. He showed that empowerment was more than just a family matter. It was possible in our corporate efforts. While it was initially applied only in the work environment, we have learned to see possibilities in all corporate human endeavors. So let us jump right into this. Our purpose, our human performance purpose is gaining what we value through the operation of our economy. Our general focus, one that our culture provides, is understanding that we are the beneficiaries of what leaders do. It is that us and them lesson that leaders are the ones who hold power. It is a lesson that we are impotent, powerless, just peasants who are to serve those who have privilege. Honor our knowledge of history. This is a long-standing misconception. The lesson of feudal rule is set before you and it is a lesson of stability. It is a lesson of a people who found a way to live under that feudal concept that seemed to work for just about everyone. People did live fairly well under that system and did not become so oppressed that they rebelled. It was a system that worked. Privilege-based civilization was functional. And then came the American Revolution, people who sought personal freedom, who claimed their ownership of government. They worked to form a new alternative, a republic that was authorized by the people to provide for their unity and welfare. And then came Frederick Taylor and his like. They worked to demonstrate a different way for people to come together so that it was so good it blew away the existing privilege-based structure, even when those who accepted the benefits of privilege would deny it. The new subject is our citizen management over our economy. It is a potential of ownership that has been actively and effectively discouraged in the past. But here we are, seeing a potential that was subject to past distraction. And even more on point you have been presented with the reaction of privilege to performance matters and it is consistent and persistent. You have already observed most of that reaction. The only change will be in scope and area of action, but our economy is working. It is working well and we are improving it. Our answer is already known. Privilege does work just not very well. The economy is not going to be improved because privilege always resists any improvement effort it does not direct. That is the nature of privilege. How do we manage an economy? We already have some answers. It begins with something that we are to gain through its operation. We also have the three main human values of freedom, prosperity and support for trust relations. These are essentially universal. With the economy our focus is prosperity. We even had a working definition for prosperity. It is getting such income from committing our time and effort to economic pursuits that we have economic opportunities. We have choices in when and where we expend what our efforts have earned. These are opportunities to set our own consequences. It is to have enough to live well and then some. Most certainly our prosperity as citizens and human beings is the purpose that we can set upon our economy. It is our purpose and we are the owners. And once the blocks of knowledge we have gained start to fall in place it is one aha moment after another as they come to fit together to form a magnificent whole. There is no such thing as a perfect economy. Our purpose will vary from one person to the next and will change over time. We do not have a clear end result to define a final accomplishment. It is even as it was in production environment that there is no such thing as an ultimately efficient process. Our management function will not be any sort of perfect economy. It will be toward improvement. Our first effort will be toward recognizing and eliminating waste. Again, it is just another block of knowledge that we already have but it is time for us to look at it as a use of ownership in our economy. To this point we have been looking at the operation of business entities but not as elements of a manageable economy. Consider your vision of the separation of management and labor. Consider the cost that is inherent in a competition between two elements of business and the waste that this has already put upon our economy as a whole. That cost is staggering. The deeper you get into trying to identify it the greater it appears to be. It is a cost to the owners and we are the owners. It is a cost to the employees and we the people are also employees. It is a cost to the customers paid in higher prices and we are the ultimate customers. It is an internal cost where competition kills performance. It is a management cost where it robs management of its operating efficiency and all this waste just adds up and it all takes away from us. What we are addressing here is just a small piece of this. It is learning to be part of the solution, part of that people who have something to accomplish through owning and operating our national economy. Our vision for action is that we are the only party in interest. If it is not serving people like you and me it is not serving us. Our intelligent efforts include the primal knowledge that we are human beings and that we do not like change. We are going to resist any change until there is such an expectation of benefit that it supports our personal investment in change. Our active focus starts with our performance purpose with that management which is to accomplish something. Management is to gain a valued results through the efforts of those who are managed. It is visible. Management is measured by how much it costs to gain performance through those who are managed. As technical support, I offer the metric of comparing hours of human effort in management and support systems to the hours of human effort in completing the performance cycle with customers. While this is highly variable, I have been able to generalize it to some extent subject, of course, to your later verification. Small business and family businesses generally seem to operate with each hour in management related efforts supporting four to six hours of performance effort in larger corporate efforts with layers of authority that same hour in management seems to support two to three hours of productive effort. Yes, it is not only that bad, but we are experiencing a slow and steady growth in management efforts relative to performance. This is a challenge to even grasp the enormity of what you have been able to see in this. The very vision of performance has been denied through our culture. Those who have not had an experience such as you are receiving here will be shocked that you might even consider such a thing. Those who are trained to privilege leadership will take active offense. You cannot measure management that way. We are special. This is understandable and expected. Privileged leadership sees its purpose and duty as running things and for performance, they hire people to do that for them. But then there is a cruel response to put things into perspective. Then it seems that you are not doing a very good job of exception management. Your management system isn't running things very well. If you are employed by that corporation, this is not an observation that you raise unless you have another job waiting somewhere else. This measurement of management is taboo and trying to bring it up will encourage hostile reaction. Our next effort will be to learn from the experience of Dr. Deming. He was educated as a statistician but came to a unique knowledge of business management through application of quality control to the performance of organizations. He quickly saw the challenge of the existing privilege approach to management though he defined it in other terms. He noted the damage being accomplished by administrative leadership in terms of interference with otherwise well-functioning performance areas. The center of his recommendation was wholly consistent with mathematics approaches. If you have something that is working, you step back and let it work. For perspective, if your horse is pulling the plow and doing a good job of it, you do not apply the whip. It was another of those pesky horse sense approaches that business leadership have been actively avoiding. He seemed especially down on the use of goals and objectives. Leadership generated distractions from simple performance. These seemed to him to interfere with getting results through those who were working. Dr. Deming was a teacher but his message did not resonate with us leaders with those people who had businesses to run. And so Dr. Deming languished in his profession. Business leadership gave no more effect to his vision than it had to the contrary teachings of scientific management. The people who mattered did not have time to test out Dr. Deming's theories of leadership. It is hard to argue with math but leaders turned a deaf ear to him. They had too much to do already, businesses to run. World War II was pivotal for Dr. Deming. The destruction of Japan's industrial base gave a unique opportunity. The political United States stepped in to provide support for the new Japanese industrial base, one more like ours. We had, after all, outproduced them as one of the factors that led to their loss. Our business culture clashed with the Japanese cultural base. They were actively looking at alternatives and noticed a strident and challenging voice in Dr. Deming. He was invited to present his general approach to a technical audience in 1950. It was a single day, presenting the intelligence of stabilizing production and pulling back from the exercise of privilege and management. The audience found that better agreement with their culture and his understanding of business and applied some of its principles in their productive efforts. Their industry all but exploded in capacity. It only took a few years for them to not only recover but become an international economic power. This did not go unnoticed. Dr. Deming was invited to speak at industrial development in a number of other nations in Europe. When they started applying some of the same principles, their industries also churned into higher gear. But in the United States, the fence was still in place. Dr. Deming was just another voice that seemed unwilling to accept the reality of privilege. If Dr. Deming wanted to test out his theories, he would have to do it on those broken economies that didn't know any better. And so he was once again put in his place and American industry went on its way. Or at least they did until foreign products began showing up on American stores. Everybody knew these foreign products couldn't compete with what Americans produced. American industry saw this as a different problem. Those stupid American customers didn't know enough not to buy foreign products. The answer was to educate them to the rightness of supporting their own industry. But it was not working. Americans bought based on their own needs and wants and did not honor American industry and American leadership. Competition is a hard mistress. They had to actually listen to what this radical Deming was preaching. Maybe there was something to be learned here. And so Deming was given a little recognition. Most of his blathering made no sense in the administrative management environment, but there were a few things to try. They did back off from trying to convince customers to see things their way. They eased off from trying to run by things by slogans and mottos and got more subtle in their work on corporate culture. But there were also a few nuggets to harvest. The most appealing was Dr. Deming's call for a continuing search for improvements. This could be translated into something that they could generally get behind. They heard continuous improvement and that became a new direction for interference in production, violating the first principle of Dr. Deming's approach. There is a wonderful consistency here where Taylor's principles reduced worker efforts, leadership set to using that to more effectively set demands upon those commoner working employees. Where Dr. Deming's stabilized performance, the same leadership set to applying continuous improvement to authorize their management-driven changes in production. The lesson so amazingly demonstrated is in the stability of privilege and its remarkable resistance to changes, even improvements. The typical leader's grasp on privilege is so great that the failure of the business is more acceptable than taking instruction from the wrong people. The lesson was personal with me. I was educated in industrial engineering with teachings of scientific management as part of that foundation. The challenge was that even professional education addressed scientific management as a partly failed experiment while it was able to get remarkable increase. It was presented as being at the cost of dehumanizing workers. It wasn't until I actually read what he wrote that I realized that this was the opposite of what was real. The lesson for us is in the potency of our culture. It not only misrepresented these men whose efforts served everyone, presenting remarkable performance increases as being failures. The lesson for us is in the reality of the cost of change. It is not a matter of benefit for all being universally accepted. Our history points out that even wildly beneficial change will face rejection by leaders who feel privileged. For intelligent change, this must be part of our personal investments. Not only will the change have to be sufficient in value to overcome our own natural preference for stability, but it will have to enlist the personal support of others. For our action, we are the source of all power, both economic and political. We do not have to enter into competition with those leaders who have been hired to work for us. There is ever so much more here for the student of performance. It is learning to see how privilege reacts to a contrary reality. For us, the focus is on our human consistency. On the very stability that is self-imposed by privileged leadership, there is a consistency that can be relied upon by all of us when it comes to leadership reaction to change efforts. It is that we know what the human reaction will be before we even start upon a change effort. The reaction is not just something to be overcome. It is something to be planned. It is a potential to incorporate what hostile leadership will certainly do into actions that become a change. It is a new door into human potency, our potency. So what was the reaction of industrial leadership when the reality of performance came knocking? The first direction was to seek the political protection which all privileged people feel entitled to receive. It was tariffs. It was economic interference to keep the unwanted and so foreign competition from bothering American industry. Our federal government leadership did provide some additional recognitions of privilege. There were a smattering of tariffs. There were some additional benefits provided to American industry to provide a screen from those aggressive foreign producers. Here is where we can see what opening. It is a consistent mindset of privilege that problems are caused by other people. It addresses a sort of self-imposed blindness to leadership causing their own problems. The problem as seen by leadership is not fully executing what they know they should be doing. For our purpose, the leader focus on what they do instead of what they accomplish is going to be a constant. Another aspect is that outsiders, those who might not be in leadership, do not really matter if they cannot see the benefit of what leadership does in its intensive efforts at affecting or running the organization. They are mistaken. In short, privilege is right in what it does. Any variation from the reasonable demands of proper and effective administration is a challenge to be resolved. It is the focus on the stability of privilege that provides a basis for reacting to commoner challenges. As a side matter, this gives some explanation to the almost universal rejection of measuring management performance. It is not addressed to how well the principles of administration are being followed. There are these slogans and protestations of being the best we're failing to reach customers. So it was a call to patriotism, a call to buy American. It was a call to social consciousness that these foreign products were less expensive because foreign manufacturers were using slave labor. It was morally wrong to support them. Privileged leadership in our American labor arrangement joined in on this, that it was built by non-union workers who had no voice. Look for the union label. It had some effect, but it was only temporary. Customers bought to meet their needs and wants not to honor American workers, nor American businesses. If the foreigners could produce an acceptable and useful product at less expense, then it's what many people would buy. Even in government, that bastion of privilege, the effect was temporary only. No public leader wanted to explain why he or she was spending additional tax dollars to support American industry. As another irritant, there was a new development during World War II, and it was called Operations Research. It was exactly the wrong direction for administrative understanding. It was application of performance thinking to problems in management. It addressed outcomes, working on problems like how to best place military positions to intercept and handle external assault efforts. It was designed to tell managers the way to optimize management support for performance. There it was again, telling employees how to do their jobs, directing those who had delegated authorities and responsibilities to what they were to do, without reference to leadership goals and objectives. It was another assault by scientific management on privilege. It was non-leaders telling employees what they had to do. The reaction to Operations Research has been much like that to traditional industrial engineering. The leaders demonstrate significant preference for hiring the right people to take responsibilities for work in this area. For industrial engineers, they showed a strong preference for those who have experience and orientation to management programs that are promoted from senior level. For OR analysis, the preference is for those who are heavy in mathematical analysis instead of traditional applications of performance in productive efforts. If leaders prefer to employ people with one set of skills over those with an alternative, then the schools will skew their teachings to support their student customers. At the same time, American industry had to deal with an increasing flow of goods produced by foreigners and customers were not going to act the way American leadership preferred. It is the nature of privilege that commoners are supposed to be the source of wealth. But then, American citizens have never been commoners. As commoners, the people are notoriously independent while they may be swayed by advertising. They are only temporarily attached to any manufacturer's products. Most of the time, they will at least look at other products that meet their needs instead of just doing what some business leader sets as a goal for sales. And if the foreign product is just as serviceable but less expensive, many will purchase it instead. The challenge to American industry was not competition. That is an administrative redirection. That is all about us and them competition. The challenge is serving American customers as they make their own purchase decisions. The customer does not pick winners and losers. Customers make their own decisions. It was privileged leadership denying that all-important symbiotic relationship with customers. Their goals were creating and selling their products, not entering into a mutually beneficial relationship with customers. The basic disconnect is probably best indicated by the modern leadership in setting policies to deal fairly and pleasantly with all customer interactions. It is an attempt to instill this in the culture of the business, providing rewards for excellent customer service and training in how to interact with them. They have made it a goal. Operating a business is not a goal. It is the lifeblood of the organization. It is what brings people together to accomplish what all people value. That was not their focus. American industries focused on producing the right products for a reasonable price. There was no teaming with customers unless it was personal with the individual employee who dealt directly with customers. Reality is an actual intrusion of foreign business into the United States. It is foreign products that are being designed and manufactured for American customers right here in the United States. They make use of American workers and American equipment and they sell their wares to American customers. Success or failure in performance has nothing to do with goals and objectives. It has nothing to do with advertising how good products really are. It is a measure of reality. It is a reality that our American management systems do work but are very expensive and are arranged to interfere with the efficient operation of the organization's performance cycle with customers. The bigger management efforts get and the more they focus on doing the right things, the greater the interference becomes. The size and complexity of our management systems grew and so did its cost. Cost is real and putting that cost on customers is not working to good effect. Reality can be temporarily denied but not forever. By the 1960s, the size and cost of our management systems was having a real impact on business. Customers were increasingly deciding to direct their purchases to foreign products. In the 1960s and 70s, the situation was becoming much like a scandal with businesses seeking economic protection as privileged entities. Something had to change. It was forced. American industry finally had to face their own internal challenge of wasteful practices in their management systems. The preferred approach has been generally defined as management improvement. Administrative management does not change itself. Its first product is stability. In amazing consistency with past efforts, efforts that caused the problem, they instituted management improvement programs. In a repetition of what had denied the larger benefit of Taylor's work or Demings, our business leaders selected specific efficiency techniques and hired the right people, mainly contractors, to do their improvements for them. They eliminated rework, concentrating on doing management work right the first time. They set goals and objectives on each program so that it could be managed more effectively. And with each success in meeting these goals, they went back to the basics and increased the scope and depth of these improvement efforts to accomplish even more improvement. As this involves adding new people and meeting goals and objectives instead of focus on performance, the cost just continues to rise. It has been getting harder and harder to hide the reality. Our corporate business leaders are unable to even see that there is a challenge in the size and complexity of management systems. Somehow they avoid seeing that someone has to pay for all these management workers and that the cost is going to be passed to customers. We are back to the split between management and labor. No amount of administrative management improvement is going to accomplish much of anything so long as that internal division remains. The first and most important management purpose is bringing the resources of the business together to gain a productive result. Modern management continues to struggle on its internal efforts without really attending to the purpose for management.