Disruption, Mission, Measurement, and Families

By Kevin Meyer

It's time for a smorgasborg to clear out a few articles I've been meaning to write about, so prepare to bounce a little all over the place!

First off, with a hat tip to Jason Yip, is an article on how disruption could destroy Apple, Tesla, VCs, and academia.

The problem with Apple:

Successful innovative products like the iPhone are usually based on
proprietary technology because that is how the dominant business carves
out, protects and builds its top market position. But at some point as they get better and better, they start to exceed what people actually need or are willing to pay extra for.

And Tesla:

“Who knows whether they will be successful or not,” he said. “They
have come up with cars that in fact compete reasonably well and they
cost $100,000 and god bless them.”

“But if you really want to make a big product market instead of a
niche product market, the kind of question you want to ask for electric
vehicles is, I wonder if there is a market out there for customers who
would just love to have a product that won’t go very far or go very
fast. The answer is obvious.

And VCs:

“Venture capital is always wanting to go up market. It’s like the Rime of the Ancient Mariner.
'Water, water everywhere and not a drop to drink.' People in private
equity complain that they have so much capital and so few places to
invest. But you have lots of entrepreneurs trying to raise money at the
low end and find that they can’t get funding because of this mismatch. I
think that there is an opportunity there.”

And finally, academia:

“Right now, Harvard Business School is investing millions of dollars
in online learning, but it is being developed to be used in our existing
business model, and we’ll sell it to other universities to use in their
existing business models.

“But there is a different business model that is disrupting this in
addition to online learning. It’s on-the-job education. This model of
learning is you come in for a week and we’ll teach you about strategy
and you go off and develop a strategy. Come back later for two weeks on
product development. You learn it and you use it. These are very
different business models and that’s what’s killing us.”

“Fifteen years from now more than half of the universities will be in
bankruptcy, including the state schools. In the end, I am excited to
see that happen.”

And that's why some of us are so excited about the likes of Gemba Academy.  Watch a few of the over 440 lean and six sigma video training modules, and try the concept.  Then come back for more.  As often as you want, for one price.

This weekend The Wall Street Journal ran an article on agile and lean guys that are bringing those concepts home, and using them to improve how their families run.  Some of us have dared do such a thing, with sometimes interesting results.

A new generation of parents is now taking solutions from the workplace
and transferring them home. From accountability checklists to family
branding sessions, from time-shifting meals to more efficient conflict
resolution, families are finally reaping the benefits of decades of
groundbreaking research into group dynamics.

When my wife and I adopted the agile blueprint in our own home, weekly
family meetings with our then-5-year-old twin daughters quickly became
the centerpiece around which we organized our family. The meetings
transformed our relationships with our kids—and each other. And they
took up less than 20 minutes a week.

Ok admit it.  How many of you have applied 5S to your garage and kanban to your pantry?

Dan Rockwell penned a post quoting our friend Karen Martin's recent book, The Outstanding Organization. 

“I think there’s so much time and effort wasted on setting forth mission statements and vision statements…” Karen Martin, author of, The Outstanding Organization.”

Compelling vision doesn’t cure sick organizations. Martin said, “Many
organizations have these lofty visions and they can’t even deliver
product to customers…”

I've never been a fan of vision and mission statements.  They are either too vague and therefore useless, or too specific and therefore constraining.  And don't get me started about organizations that claim "employees are our greatest asset."  Right before they whack a few.  Instead figure out some core principles, and live them.

Bill Gates penned an op ed for The Wall Street Journal on the importance of finding good measurements in order to tackle the world's problems.

In the past year, I have been struck by how important measurement is
to improving the human condition. You can achieve incredible progress if
you set a clear goal and find a measure that will drive progress toward
that goal—in a feedback loop similar to the one Mr. Rosen describes.

This may seem basic, but it is amazing how often it is not done and
how hard it is to get right. Historically, foreign aid has been measured
in terms of the total amount of money invested—and during the Cold War,
by whether a country stayed on our side—but not by how well it
performed in actually helping people. Closer to home, despite innovation
in measuring teacher performance world-wide, more than 90% of educators
in the U.S. still get zero feedback on how to improve.

Bill goes on to describe how developing new measurement methods, leading to improved goals, led to health care improvements in Ethiopia, very recent efforts to finally eradicate polio, and education.

Speaking of measurement, and along the lines of our Fun With Statistics series,The Wall Street Journal recently published an article describing how inconsistencies in measurement methods sometimes lead to the wrong conclusions.  The author referred specifically to a widely-publicized study that seemed to indicate that health care outcomes in the U.S. were falling behind the rest of the world.  But when you dig deeper you discover that even the study's authors suggested the opposite.

As the report points out, the U.S. has the highest
infant-mortality rate among high-income countries. Again, this isn't a
good indicator of the quality of the American health-care system. The
elevated U.S. rate is a function of both the technological advancement
of American hospitals and discrepancies in how different countries
define a live birth.

Doctors in the U.S. are much more
aggressive than foreign counterparts about trying to save premature
babies. Thousands of babies that would have been declared stillborn in
other countries and never given a chance at life are saved in the U.S.
As a result, the percentage of preterm births in America is
exceptionally high—65% higher than in Britain, and about double the
rates in Finland and Greece.

Unfortunately, some of the premature
babies that American hospitals try to save don't make it. Their deaths
inflate the overall infant mortality rate. But most premature babies are
saved, largely because America's medical research community is
exceptionally innovative.

Thanks to such technologies, the U.S.
neonatal mortality rate has dropped to just 5% today from 95% in the
1960s. The Institute of Medicine report ignores one of America's chief
health-care assets: the country's superiority in medical innovation.

But of course you have to dig a bit to discover those nuances, and in the meantime the simple headline is the news.  Think about where else that could be happening…

And speaking of babies, many probably haven't noticed how the birth rate in developing countries, including the U.S., has declined over the last few decades.  The impact can and perhaps will be significant.

Forget the debt ceiling. Forget the fiscal cliff, the sequestration
cliff and the entitlement cliff. Those are all just symptoms. What
America really faces is a demographic cliff: The root cause of most of
our problems is our declining fertility rate.

The fertility rate is the number of children an average woman bears
over the course of her life. The replacement rate is 2.1. If the average
woman has more children than that, population grows. Fewer, and it
contracts. Today, America's total fertility rate is 1.93, according to
the latest figures from the Centers for Disease Control and Prevention;
it hasn't been above the replacement rate in a sustained way since the
early 1970s.

America's middle class fertility rate is 1.6.  And China, with it's one child policy?  1.5.  Who needs a policy when you do it to yourself?

For two generations we've been lectured about the dangers of
overpopulation. But the conventional wisdom on this issue is wrong,
twice. First, global population growth is slowing to a halt and will
begin to shrink within 60 years. Second, as the work of economists
Esther Boserups and Julian Simon demonstrated, growing populations lead
to increased innovation and conservation. Think about it: Since 1970,
commodity prices have continued to fall and America's environment has
become much cleaner and more sustainable—even though our population has
increased by more than 50%. Human ingenuity, it turns out, is the most
precious resource.

The impact?

Low-fertility societies don't innovate because their incentives for
consumption tilt overwhelmingly toward health care. They don't invest
aggressively because, with the average age skewing higher, capital
shifts to preserving and extending life and then begins drawing down.
They cannot sustain social-security programs because they don't have
enough workers to pay for the retirees. They cannot project power
because they lack the money to pay for defense and the military-age
manpower to serve in their armed forces.

The solution?

Conservatives like to think that if we could just provide the right
tax incentives for childbearing, then Americans might go back to having
children the way they did 40 years ago. Liberals like to think that if
we would just be more like France—offer state-run day care and other
programs so women wouldn't have to choose between working and
motherhood—it would solve the problem. But the evidence suggests that
neither path offers more than marginal gains. France, for example,
hasn't been able to stay at the replacement rate, even with all its
day-care spending.

Which leaves us with outsourcing our
fertility. We've received a massive influx of immigrants from south of
the border since the late 1970s. Immigration has kept America from
careening over the demographic cliff. Today, there are roughly 38
million people in the U.S. who were born elsewhere. (Two-thirds of them
are here legally.) To put that in perspective, consider that just four
million babies are born annually in the U.S.  If you strip these immigrants—and their
relatively high fertility rates—from our population profile, America
suddenly looks an awful lot like continental Europe, which has a
fertility rate of 1.5., if not quite as demographically terminal as
Japan.

Sort of changes the immigration debate, doesn't it?  Dig deeper.  You might learn something that flies in the face of the headline.