Comment by DanielHB | Hacker News Reader

Comment by DanielHB | Hacker News Reader

I remember reading an anecdote about this stuff from the book The Essential Deming by W. Edwards Deming the "father of the quality movement and was hugely influential in post-WWII Japan".

It talked about some company moving oil around in barges, the setup was unprofitable and a new manager was brought up to fix it. He created metrics of the business, but didn't put any goals or goalposts for the barge crews and other managers in the company.

All he did was simply print the metrics and glue them on every barge of the fleet weekly. Soon the whole project was massively profitable. Apparently the captains of the barges would compete with each other to see who could save more money, without any penalties for the low performing nor any rewards for the high performing barges.

One thing that was very surprising is that the barges were given freedom to choose where to source materials and, more importantly, the fuel. Before the metrics the captains would pick whatever was closest no matter the prices, after the metrics the captains would, on their own, try to source fuel from the cheapest place that they could. No amount of central planning could have been as optimal as the prices fluctuated a lot from day to day, so whenever a captain saw a good deal he would re-fuel.

It turns out that empowered people want to do a good job and want to save money.

The barge company in question is Koch Industries (yes, that Koch Industries). Starting in 1982 they leveraged Deming’s ideas, realized 30% profits, and pushed it far enough to enter the dark side.

> Koch’s dedication to Deming’s ideas eventually led the company into several sticky situations, not the least being targeted in a Senate Select Committee investigation for oil theft in 1988, a direct result of immense internal pressure on employees as part of its continuous improvement program.

[1]

This is powerful stuff. When you empower people and set a goal, they will do anything it takes to hit that goal, including breaking the law.

[1] https://commoncog.com/deming-paradox-operational-rigour/

Half of the point of Deming's books is that you should not set goals. Measure yes, but not goals. Especially not tied to incentives like bonuses or promotions.

> It turns out that empowered people want to do a good job and want to save money.

You have to be careful here. In your example those captains didn’t really care about their job they cared about getting the high score. Metrics, KPIs, etc work but only when they’re setup perfectly aligned with your actual business goals. Measure/score the wrong thing and you’ll get nowhere.

For example, what if the metric posted was distance traveled by a barge. You’d have captains taking the longest routes possible just to get the high score instead of shipping the most product per unit time which is what the manager would have intended.

And Deming has a ton to say on this. Lots of very practical advice on how to measure the right things, yet also avoiding relying too much on measurements. It is unfortunately quite complex and not easily digestible as pop management advice.

I love Out of the crisis by Deming and Some theory of sampling.

I think business people understand the value of setting high level goals and giving autonomy to accomplish them.

It’s a good sign if your job works this way. Unfortunately this tends to mostly be applied at the VP level. Engineers are modeled as expensive pieces of an equipment to optimize and derisk.

> I think business people understand the value of setting high level goals and giving autonomy to accomplish them.

I think a lot of business don't, at least on the lowest levels of the org chart.

I worked at place that did this. They had screens of plant output everywhere so everyone knew how they were doing. It was unavoidable.

At a factory it's easy to know how many widgets were made. It's tricky with software.

This works when people can compete on something measurable. But when you have teams split into feed, messaging, and ads, something else might be needed to measure value.

No one ever told Deming that value couldn't be measured accurately for a particular business.

> who could save more money

Sounds good, but how did the "metrics" expose which individual decision-makers were responsible for any improvement or deterioration?

I've often speculated about a radical interpretation of this idea, inspired by a old video game (whose name I forget). In the game, you rule a kingdom, but unlike, say, Civilization, you don't directly manage things. You set goals and create quests, like "slay this monster and get some reward." And the quests would inspire heroes to join your kingdom, and things would grow from there. Iirc, you create incentives around your economy as well.

Imagine if there were product goals ("implement feature X") with some reward [1] attached and you could leave it up to teams or individuals to claim that goal if they desired. You could choose the goals you wanted to claim, recruit coworkers to help you, (eg, self form teams). PMs/Management would basically be in charge of allocating rewards for the goals.

I imagine it'd be a terrible system in practice for a number of reasons, but I enjoy thinking about ways you could attempt to make it workable. For example,

[1] rewards -- I don't think you could tie rewards directly to people's paychecks. Do that too much and I think you'd create perverse incentives. But perhaps things like swag, gifts, time off, or just bragging rights, honor, and glory might work.

[2] coordination -- a danger would people redundantly working on the same goal. You'd need a way to prevent that.

[3] other perverse incentives -- you might get an overabundance of folks choosing the "fun" goals, for example. (After all, engineers may be more motivated by that than other things.) Here I imagine the rewards for unsexy things would need to rise over time if nobody opted for them. Or, you make first dibs on some other "fun" goal the prize for achieving a less fun goal.

Majesty I & II were implemented like your idea of this game…

Majesty! That was it, thanks!

>It turns out that empowered people want to do a good job and want to save money.

This has more to do with Japanese culture than anything. Do that in America, and you just get signs with 'Over 99 Billion Served' It becomes meaningless to everyone.

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