 The very purpose for my chosen field of performance engineering is to provide technical support for those who have things to get done. It just began with Taylor's scientific management and his study of how to best assure productive output. In this work, we are looking at how much work a structured organization should be able to get done in a time period as an ongoing effort. For our larger purpose, it is looking for performance through any structured effort by people. We are the key to all performance. We are the ones who have something to get done by all efforts. And behind all our corporate efforts, there is someone's purpose. People work together when they share in that purpose. They can work for pay and accept the corporate purpose, or they can so value that some result that they volunteer to take part. If people are to come together, it will be based on a purpose. That purpose becomes concrete when it can be measured with an accepted difference between success and failure in achieving that purpose. At the time of this writing, the norm for large business management is goals and objectives. It is purpose set by those who run the corporation. Other employees are hired to manage the operation of the corporation or to work in it. Employees are paid for their participation and earning their living is the shared purpose for participation. It is not support for the leaders running things. People invest their personal resources of time and effort in the expectation of earning pay. People also have social values that arise when they share a purpose, even if it is purchased to serve a third party purpose. The value of shared purpose is both personal and universal in the sense of being human. Employment is not like the family relation where the newborn has to accept the purpose of parents. Employment is always an economic decision, an investment that the person makes to gain a valued result. Corporate owners have their own purpose in their investment and ownership. It generally includes some return on their investment. They expect to gain what they value from the operation of the corporate entity. Leadership has assumed privilege that they are hired into positions based on authority to run the corporation. This is not regular employment in the sense of others. Modern leadership assumes the mantle of leadership, which is personal responsibility for the larger operation of the business. In this, they currently are educated, trained, and otherwise oriented in taking their action for the good of the corporation. They accept responsibility to set their purposes on subordinate employees, recognizing their own expertise as a basis for action. We have a disconnect from the purpose of owners and investors. The modern leader accepts responsibility for running the larger effort that serves the purpose of so many others, investors, customers, and employees. There is a general knowledge for their actions. Administration does get things done. And this is the process that these senior employees have learned to apply in the running of the corporation. They too make investments, as in the improved automation system addressed at length in our earlier sessions. They too look at cost and benefit and strive to answer that investment question of whether they can afford to do what they know to be the right things. The administrative decision to accept the investment for improved automation will be in accord with their own best understandings. The challenge is that their purpose is not the purpose of performance. Their purpose centers on properly and effectively running the organization. They hire subordinates to do the performance thinking for them so that they can concentrate on what senior leadership should be doing. Measuring the performance of management is a rude awakening and is almost in total discord with their purpose. Measuring how much it costs to gain performance is not their problem. That is what they hire subordinate managers to take care of. The immediate challenge is that performance is a reality. And it is the purpose of the owners and investors who hire these leaders into positions of authority. Performance orientation is able to get things done far more effectively than what leadership has accepted as its role in the larger business effort. Measuring that performance just brings focus on that reality. A reality that would appear to devalue what leadership does. Where leadership has assumed authority they do not have to accept such measures. But the challenge only becomes more sharply defined as we try to measure organizational operation. The size and cost of management has been rising steadily for many decades. And it is reflected in the number of people that have to be hired to keep their workforce to their tasks. The authority based approach as backed by a witness of history is able to run the organization. Their history indicates improvement in this purpose that they are increasingly able to do those things that keep everything running. The challenge of course is that same challenge encountered with scientific management. Performance orientation works a lot better for the purpose that serves the owners and investors and the employees and customers. Does someone have to be in charge if we are to get things done? I have had the distinct pleasure of working in groups of performance professionals who gather for a performance purpose. And it is wonderful to watch. It does not even have an authority structure though it may have someone who is there as a manager to serve the function like that of a foreman. But with performance people they all look to what has to be accomplished and the effort generally starts with one volunteering to take on the effort for which they appear to be most suited. Others grab a piece as they feel most able to handle it. And when it is pretty much done then the highest ranking member notes the scraps. Those efforts that still have no volunteers usually requesting that one of the members who has a lighter load than the others take it on. It just happens. Performance people team. Consider the common example of who has to be in charge of a family if it is to get things done. Does a stay at home wife and mother have to be directed to her homemaker duties? Families team even if one does feel privileged to lead. People team because it gets things done. What we have done in the study of human performance is to codify our knowledge of performance and introduce a few simple tools like the black box and pairing principle. And even the most rudimentary use of black box. It is clear that the value of any operation is determined by its inputs and outputs. The corporation's profitability is determined by how much it takes to operate and the value customers accept as its productive output. Every black box entity, every performance entity receives inputs from outside of itself, converts these into outputs and delivers that output to someone outside of itself. The value of any output is determined by those who receive it, not those who produce. This relationship is most obvious when examining the symbiotic relationship between a business and its customers. Value is always and only determined by customers. On a production line, the results of individual workers are valued by the one who receives the in-process work for the next operation. It is what continues their ability to be a success in assuring their part of the production group's performance. If a production line worker fails to deliver the in-process work to that next in line, everyone thereafter also fails in their part of the effort. Workers value their reliance upon one another. The same sort of trust relation is appropriate for work groups receiving inputs from other work group efforts. They trust each other to provide what they need to be a success at what they do. So how do we measure the value of the work that a production line worker accomplishes? The answer is that the measure is relatively meaningless. The real measure is what the work group is able to do with that worker doing his or her part of the larger effort. The product of the work group only has value as it is received by someone outside of itself, someone who will be in a position to evaluate it. So how do we measure the value of the work that a production work group accomplishes? The answer is that the measure is relatively meaningless. The measure is what the larger business is able to deliver to customers because that work group did its part of the larger effort. If your effort is to yield a group product, then those who receive that product are the ones who receive the value of your work. It is a corporate effort, a team product. So how do we address the value of the material handler in the work group? It is not some separated value that the material handler will generate, but a contribution to the product of the work group. The success of the group in delivering its productive output is not just the success of the workers in the group, but also that of the foreman and the material handler. They all succeed as a team or they fail as a team. They are in the effort together. So we come to the larger corporate organization with many work groups pursuing their corporately defined purposes. It all comes together in a corporate product, some good or service that gets delivered to business customers to earn income. As with the brake pedal pin, all these performance efforts have to work to assure that the value product of the business gets delivered to its customers. Success in delivering that product to customers is success for all of the groups. Value to deliver the product is just as much a disaster for the internal group as one internal group is for any other, whether they were locally successful or not. It is very much like the operation of the basic work group, with work groups in place of the workers and business management in place of the foreman. The value of the support effort is not determined by its ability to deliver a service. It is determined by the needs and wants of those who receive the support. If the support satisfies those needs so that the supported groups are a success, then the support effort is a success. Support is its product, not support office accomplishment. And then we have another vision, one that is even less acceptable to those who would run the business. The material handler does not answer to the authoritative management. Material handler is assigned to a production group as a working asset, a great convenience in assuring optimum performance from the team efforts of those who do production, those who create and deliver the group's productive result. The material handler answers to the foreman of the group, the one who has performance responsibility. But again, we have to address the division between management and performance. It is maintained by senior leadership. The challenge is the supply support effort being approached as an assigned support for production. It answers to senior leaders based on a job description for its supply officers and a supply mission to fulfill. To really support performance, it should be moved to the performance side, answering to production management and serving the production groups that can value its support services. It needs to be part of the team effort that delivers product to those outside the organization. Consider the U.S. Army supply system. Their assigned action was directive authority over the most central functions of the supply activity, with individual facilities maintaining supply support organizations that service installation operations. These support groups serve local administrative leaders who answer to the authority of more senior officers. The more senior supply system define those support systems to be used by local supply support groups. To see the basis for such a system, consider that senior leadership hires subordinates to do the performance and then separates them from management and support. What happens if support groups migrate to the other side of the divide? Who is left on the management side? All that is left is authoritative management and its management support people like auditors and lawyers. It would open itself up to claims that the organization doesn't need to do what these leaders would be doing. It could be addressed as waste and the subject to elimination. Privileged leadership produces stability. It will not initiate any change like that and will resist others who would try to do it. We have two basic performance understandings for gathering people to get things done. The first is that people teaming are far more effective at getting things done than people in a well-structured and intelligently designed corporate endeavor. The other is that things still get done when there is nobody running things. In an approach to establishing a more effective organization, we have the witness of success accomplished in the working areas of business. They worked to good effect when first set in place in the early 1900s and have continued to work well in spite of administrative attempts to run things more effectively. Performance has been dropping off for many decades as the cost and challenges of administrative orientation continue to distract from performance to other purposes. We have also seen that leadership is unlikely to ever change things on its own. It will continue to do what it has done in the past as it counts this a success. It has been successful at running things and it is still able to get things done through the efforts of others. Even a few glaring examples as in the loss of debase as a program or the entrance of foreign autos into the American market do not shake the belief that there is something both right and necessary in having someone running things. So what can we do? The first step is getting things done and it is to have something valuable to accomplish. It is only where we have something to accomplish that we will be able to set things in motion. The end result we can value is a management system that serves performance, a system that is remarkably more effective at delivering value to customers than what we now have. We also know that change is received as a cost rather than a benefit. Whatever we might promote as a change, we will have to overcome that cost if it is to have any chance of acceptance. We also know that cost of management is not a consideration in administration. We are just focused on what people do instead of the results of their actions. Our tool is investment, a present expenditure based on a likely benefit to be gained as a result. Our organization level investment will, in accord with Black Box approach, be an increase in the value received by customers or a decrease in the cost we incur in creating and delivering that value to customers. It will be in terms of organizational inputs and outputs. Our focus has been drawn to management performance orientation in production areas, and it has accomplished a good focus on minimizing operating costs. But the cost of the management above performance continues to rise. Our most obvious candidate for improvement is elimination of waste. We can find this in management and support systems. The good news is that we have identified a way to do this. It is arranging support systems to answer to those who receive the support. Instead of the senior leader assignments and directives, it is to promote teaming of support efforts with those who are supported. Support groups attempt to team already. That is certainly true. It is true for those who work in the supporting offices. But that is not supported as a management purpose for those leaders who now attempt to run the organization. Our first change will be to measure what will have value as an output from the support efforts. It will be to give effect to the evaluation of those who receive the support as internal customers. One immediate change is to what is asked of the support group. The directive is that internal customers do not have to use this group's services. If the service has to be so little value that the internal customers decide to get support in other ways, then it makes no sense to try to force a customer relationship upon them. If it is a supply function, this requires going to those performance groups who receive the supply support and having them evaluate the service they receive in terms of how it assures the productivity of each supported group. As a general rule, if the group ever has to stop its central performance for lack of supplies, that indicates a failure in supply support, an exception matter that should have been brought to higher management immediately for action. Again, common supply effort would not be responsible for supply, only for satisfying the needs of customers for supply. If a supervisor refuses the service and has problems, that is between that supervisor and his boss. The support person is responsible for providing the support, not for what receivers do or do not accomplish in their own responsibilities. The reorganization to accomplish this includes shifting the groups that support performance to answer to the production manager above its customers. It is to be mentioned to provide what these performance groups need to perform their productive functions. The group is to be evaluated as a group by those who receive its services. If there are people who refuse to team, it is a matter for the production manager to handle it as an exception, either assuring that the foreman has a workable plan of action without the support, or that his foreman will take personal responsibility for working without what is offered. This is team building. It is promoting subordinates working together to assure a commonly valued result. There is little basis for any demands for support ever being issued. It is the support group's responsibility to know their job, to know what support is needed. There is unlikely to be a requirement for any records keeping outside the group beyond a receipt to show what supply actually was provided to them. Even that is minimized to normal business records. Support is a production management responsibility. The need for and the use of any specific support service is a matter for the manager's investment. It is justified where the cost of having the separated support is lower than the cost incurred if that support is not provided. The preference of the support group manager or the production manager are not definitive to the one who is responsible for overall result of their interactive efforts. The production manager provides management support to all of them. It may include such directives and assignments as seem appropriate for efficient and effective operation of the organization's production effort. We have to start somewhere in addressing the split between labor and management. There is no kind way to address this split or witness to its continuation. We start with the purpose of management which is bringing the resources of the organization together to gain a performance result. It is a management responsibility. There is no labor responsibility to come together with management. The duty to promote unity in the business effort is clearly on business leadership. The fact of the division is not in question. The responsibility is not in question. The divide between management and labor is a reality. It is a witness to the failure of senior business leadership to perform this duty. Privilege does not accept blame for what it does. If things do not work out, the historical leader reaction is to blame someone else for what has happened. In the separation of management and labor, the blame has been placed on the American worker and on their unions. The challenge is there for all to see. We have a singular purpose provided by the owners and investors, and that is the profitable operation of the business. When it comes to hiring people, we find two purposes. Workers are hired to provide time, skill, and effort. Management people are hired to fulfill the requirements of their jobs. Do either of these address the profitable operation of the business? If profitability is lost, has anyone actually failed in what they were hired to do? Such performance questions are not asked. Even asking such questions would be considered hostile to senior leadership. The ones most directly responsible for profitable operation in the business are those in senior leadership. Metrics put the leader in an awkward position of being in charge when things go wrong, and the division between management and labor is a threat to performance. I also note that privilege does not accept consequences for its actions. If a strike cripples the business and it reports a loss instead of a profit, it is blamed on those workers in their union that represents them. For our performance purpose, we have to see things in a new light. There is a powerful approach when addressing organization management. If the people are not together in their efforts, then management is not doing its job. The organization cannot be effectively managed until the rift between management and labor has been eliminated. The word eliminated is intentional. This division is a source of distraction from performance. It is time and effort that are wasted in competitive alternatives. Maintaining that division is work that accomplishes no valued result. It yields nothing that will increase the value that customers receive, and it raises costs instead of containing them. There is much that can be gained by teaming management and labor, and it is a way that leadership can accomplish a success. The performance direction is also well known and established. It is people who have a common purpose who come together to gain a result that they all can value. Management and labor work together quite well in the production environment. So where is the difference? How can management work well for a small group and face contest in more senior management efforts? The answer is right there. It is differences in purpose. It is a management that is focused on running the organization and a production effort that is focused on completing the cycle with customers that earns income. People serving different purposes can easily end up in contests or even conflict. They resist teaming and disempower each other. Looking at this from outside our own employment allows us a somewhat less personal vision. The very concept of master and servant law was to provide a way to address one person's purpose being served by other people. I see no challenge in people choosing to rent out their time and effort for pay. Earning pay is valued by people in general, and teaming among paid workers is both common and valued. Challenge arises when the worker's purpose comes in conflict with the purpose of those who employ them. Challenge arises when management is not focused on gaining results through employees, as with a foreman being rewarded for meeting social goals for minority employment. Again, giving effective time and effort to meeting leader goals and objectives is not likely to have any real value to workers. And having someone singled out and specially honored for non-performance efforts is a true discouragement for those who are focused on getting things done. It is the challenge of being hired to do performance and then to be rewarded for something else. It raises a level of chaos in the workplace. It is that very division and purpose that has created the split between management and labor. And it is the basic reason that there are labor unions to run interference and leadership to benefit the workers. If management and labor work together for the same valued result, there would be no basis for having a labor union. Management teaming with labor would lead to the elimination of the union, and its cost would no longer be passed to customers as higher prices. This speaks to the political nature of our industrial environment. The union leadership also functions as privileged. Business leaders would sooner work with other privileged leadership to find common ground for joint efforts than to work with commoner workers. Change is not likely to come from or even receive support from privileged business or labor leaders. If there is to be a change, it will have to come from those who have something to gain and is most likely where they share a sense of value in what has to be changed. Most people taking this course will find themselves employees of one organization or another and should be able to see the waste. Our purpose here includes not only seeing it yourselves, but being able to help others see it and to realize that it can be changed for the better if sufficient agreement can be reached. It includes having the tools to seek for that sort of agreement and knowing how to approach changes that are likely. Our most immediate and most challenging observation is based on the concept of owner management over the leadership of the organization they own. What is it that the owner investors have to gain through the operation of little leadership function? It is the basic performance management concept of the black box. What is the result of senior leadership that others will receive and value? What is the measurable difference between success and failure in the leadership of the larger corporate effort? Modern senior leadership is going to be hostile to even asking the question. That is a given. It would deny privilege, requiring leadership to actually accomplish something. The very purpose of privilege is avoiding such questions and generally includes firing or otherwise punishing anyone who might ask it openly. That is the nature of privilege. It treats us privileged people as special. The reality of performance has never concerned itself with the benefits of privileged people as their own value. It rather focuses on the black box concept of what value is produced for those outside of the leadership effort. Privileged leadership produces structure and stability. They produce authority-based support for subordinate leaders. Quite simply, those who are teamed for a productive purpose do not need authority-based structures to gain performance. Our performance orientation provides a different vision entirely. There are some real leader services provided, as in planning for future action, steering the general operation of the business for long-term operation. There is teaming with owner investors to serve the needs and wants of those who give purpose to the organization. The rest should be subject to elimination. It is waste, unless it is valued by someone outside of the leadership family. And then privilege has no value to anyone else. The first and most obvious waste is in hiring someone else to operate the organization. That is the value the leadership is supposed to provide. If the effort of leadership are not valued by those who are managed, it will not contribute to performance. Whatever else it is doing can be eliminated. Today's management improvement efforts are generally a waste. Value is only found in what management delivers to those who are managed, not in the process that is used to deliver it. The lesson from the early 1900s is still there waiting for recognition by leadership that working with and supporting performance is at least twice as effective as trying to boss over them. It is as true for human beings in management as it is for human beings in production. The organizational purpose is maintaining a performance cycle with customers who receive the benefit of what the organization delivers to them. Performance management measures how much it costs to deliver value product to customers. The senior management purpose is gaining that organizational purpose through those who are generating and delivering product to organizational customers. Performance management measures how much management costs to have its beneficial effect upon performance. It is based on investment. How much is expended on management to gain a performance effect on those who are managed. The senior leader metric is how much is expended on senior leadership to gain beneficial impact through the management system it services. The final concept for us is that ultimately practical reliance upon history. We have a history of an acceptance of common statistics. In this course we are addressing how people with different purposes can use statistical approach to come to agreement on an action. Our business history example is product testing. How can a seller and a buyer come together for trusting each other without actually inspecting each item that is sold? One answer is statistical sampling. It is how many items in a sample drawn from a lot of products must pass inspection if the entire lot is to be accepted as a production unit. Our practical answer, both historically accepted and as a matter of ongoing business, is acceptance of a lot when the statistics indicate less than 120 chances that the lot could be unacceptable. It is generally addressed as 95% reliability. At that point there is general agreement between buyer and seller on a lot of items being accepted or rejected as a unit. Our acceptance of this level of reliability is generally human. It is when people accept that they are in agreement. For our purposes it is a general level of reliability that will support people coming together for a purpose. If a sample of people have reliability at this level we will generally accept what is indicated by the sample of people will be acceptable for the larger population from which the people are drawn. This will be developed in later lessons into a general technique for bringing people together in their direction to leaders on how people are to be represented. Our next discussion will deal more specifically with the challenges that have been placed on industry in general by insistence upon a concept of management improvement that serves senior leadership instead of performance.