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Ma8: Revolution and Evolution
Margin by Retraice
On before and after launch, and the six-sigma of Bill Smith. (With a philosophical and arithmetical digression in the PDF notes.)
Air date: Wednesday, 28th Oct. 2020, 5 : 30 PM Pacific/US.
1 Enjoy the revolution
Before the launch of a business, or a particular product or service, there is time and space to do amazing things. After the launch, evolution and Darwin take over, which is a bit less fun.
The six-sigma of Bill Smith
Six-sigma is 3.4 defects per million units. 'Sigma' is a statistical term that refers to standard deviations from a mean. If you produce 10 million units, a six-sigma process can produce essentially perfect quality in all but 34 of those 10 million units. The 34 units fall outside the sixth standard deviation from the mean unit, however you're measuring it. It's very close to perfect.
Smith's 1993 write-up of the idea is superb.1
Defects
A defect is 'a failure to satisfy a customer'—anyone from the end user to a co-worker.2
Measurements and experiences
A dissatisfaction—of any sort, of anybody involved—is a defect. If that's not vague enough, we can also imagine multiply dissatisfied customers, as in, 'I'm unhappy with more than one thing'. So our magic unit is … experiences? Two kinds in particular—satisfaction and dissatisfaction?
We're not counting dissatisfied customers or 'defective' products. We're counting experiences—of customers, colleagues, partners—everybody. If (dis)satisfaction experiences are easy to count when dealing with tangible things like parts and components, it is because there is something concrete in the world that corresponds to the subjective experience. If a piece is the wrong size, or a box has the wrong number of things in it, an unhappy customer almost has to report their experience in order to resolve the physical problem.3
But how do we count experiences that correspond, say, to a moment in an mp3 playback, or an impression of an image, which do not correspond to concrete objects and are therefore unlikely to be reported? It's not obvious.
We can't measure what a person thinks; we can only measure what a person does.
START: A philosophical and arithmetical digression on satisfaction, ratios and counting...
Disclaimer: Within the below discussion there are attempts to explain—by untrained, non-professionals—simple, profound, widely misunderstood mathematical concepts such as quantity, ratio, and percent. We are neither mathematicians, nor teachers, nor practiced at this in any way other than by trial, error and reflection. The work below was done in response to a perceived need. Proceed with charity.
If you're quick and confident with arithmetic, or don't care for philosophy, skip this section. For the rest of us:
Why we're counting
Let's assume we have a way of counting experiences. If we're able to count two kinds (satisfaction and dissatisfaction), what is the point of counting them? The point is to do our business in such a way that our quality level is 'six-sigma' good, i.e. that we have almost zero 'defects' (dissatisfaction experiences). 'Almost zero' = 3.4 dissatisfactions (or fewer) per 1 million experiences. (Really, we should say 'per 1 million satisfaction-or-dissatisfaction experiences connected to our product or service', since we shouldn't be counting (including in our scope of concern) experiences that are not connected, or are neither satisfying nor dissatisfying. But we'll take that for granted.)
'Ratio' is a word for something in the mind
Since we're using the word 'per', we're in the mysterious realm of ratios, rates, fractions and division. There is a fuzziness and confusion in the world of mathematics about the difference between a ratio and a rate.4 You, yourself, will have to decide how to use these words, and how to translate them when you hear others use them. We've found no technical difference between the two concepts, only typical usage differences.
We recommend the following:
Percentages
If you're confused by percentages, try this: Because 'cent' is Latin for '100', always translate "percent" into "per cent" and then "per 100". So "6%" is "6 of something for every 100 of something".
- 6% of 100 = 6
- 6% of 200 = 12
- 200% of 1 = 2
- 200% of 100 = 200
And 2/1 = 200% because if I can make 2 widgets for every 1 widget that you make, then if you make 100 widgets, I'll have made 200, i.e. 200 per your 100, i.e. 200 per cent, 200 percent, 200%.
How the words 'ratio' and 'rate' are used
If we look at typical uses, things become a bit more clear.
Paradigm uses of 'ratio' and 'rate':
- Ratio of boys to girls (measured in humans)
- Ratio of wins to losses (measured in games)
- Rate of speed (measured in miles per hour)
- Rate of interest (measured in percent-of-principle per year)
The difference seems to be that ratios are comparing things that are fundamentally the same (humans, games), while rates are comparing things that are fundamentally different (miles vs. hours, dollars vs. years), but there are exceptions.
Expert opinion
Practically:
"A ratio is a reckoning of the relationship of one thing to another. Mathematically speaking, it is the relationship gotten by dividing two things."6
"A rate generally involves a 'something else,' either two different kinds of units (such as distance per time), or just two distinct things measured with the same unit (such as interest money per loaned money)."7
Philosophically:
"[m]agnitudes of the same kind can be related to one another by ratios, and ratios can be compared with each other because they are relations perceived by our minds. In fact, the word for ratio, both in Greek and in Latin, is the same as the word for 'reason' or 'explanation' (logos in Greek, ratio in Latin). From the beginning, 'irrational' (alogos in Greek) could mean both 'without a ratio' and 'unreasonable.' "8
Aesthetically:
"The noun ratio is derived from the third principal part of the verb reor, reri, ratus, which means to think. If a line is divided at a point into two parts in such a way that the ratio of the larger part to the whole line is the same as the ratio of the smaller part to the larger part, then the common ratio is called the golden ratio because the rectangle whose base and altitude are the larger and smaller parts created by such a division is, according to those competent to have an opinion on such a matter, the most aesthetically pleasing of all rectangles that may be formed by dividing the given line and taking the parts to be the dimensions."9
Historically:
The roots of the word 'irrational', in both the mathematical and philosophical sense, reach all the way back to the ancient Greeks' difficulty comprehending , which is the length of the diagonal of a square with sides 1 unit long. The historian Carroll Quigley says that the Greeks' refusal10 to accept the fundamental irrationality of space (and therefore reality), as demonstrated by , is what killed ancient science because it denigrated observation, testing and experiment.11
Also, the mathematics teacher Steven Schwartzman says the word ratio is deeply connected to the word read:
"The Indo-European root underlying Latin ratio is plausibly ar- 'to fit together,' so that the Latin ratio developed from the idea of fitting numbers together in the sense of comparing them. Related borrowings include arthritis, a disease of the joints (where bones are fitted together), and adorn (to fit things together in a decorative way). Also related is native English read, to fit words together to make sense out of them."12
More practically, a ratio is:
"[a] comparison of two like quantities by dividing one by the other."13 [emphasis added]
Back to business
The two quantities we're comparing are like because they're both experiences: satisfaction(s) and dissatisfaction(s). If we chose a different kind of thing, such as 'customer complaints' or 'broken widgets' we might obscure what we care about. If a widget is broken and it doesn't bother the customer, it's not a defect; if a customer is dissatisfied but doesn't complain, it is a defect.
Number sizes
We're going to be dealing very large numbers, like 1,000,000 and 10,000,000, and very small numbers, like 34 and 3.4 and 0.0000034. Why? Because we want to do a lot of business and waste very little of it. If we produce 10 experiences and 1 is dissatisfying to a customer, we've wasted 10% of our time and energy.14 Wouldn't it be nice to waste nothing, and convert all of our work into good customer experiences (and therefore revenue and profit)? Well, 3.4 in 1,000,000 is very close to 'nothing', so that's our aim, and those are the sorts of numbers we have to handle.
Drawing the invisible
We're going to try to represent these big and small numbers, and the mysterious relationship between them (the ratio), with text on a page. But it's crucial to remember that numbers are invisible and mysterious and they float around and do not care whether someone tries to draw them. The exact same ghostly number can be drawn in different ways, as long as we all agree on the rules of drawing. We can agree that the drawing '1' is a drawing of the number we call 'one', and we can also agree that the drawings '1/1' and '2/2' are also drawings of that same invisible number. Always remember that the number is not on the page, because it's invisible; only the drawings of it can be on the page, and there are many different drawings of a given number. The same applies to ratios and other mathematical ghosts.
Statements about the invisible
So lets look at the ratio of 3.4 dissatisfaction-experiences per 1 million total experiences. (The use of a colon ":" between the numbers is an abbreviation of the ÷ symbol.)15
This is a mathematical statement (hence the = sign). The statement says: 'These two drawings are of the same ratio.'16 Alternatively, it says 'These two mathematical expressions represent the same mysterious, invisible thing'.
In more familiar notation:
Or:
All three drawings are of the same, mysterious, invisible thing.
Thinking about the invisible
So, our magic number is 0.0000034? 0.0000034 what? 0.0000034 dissatisfactions per 1 experience? What does that mean? Let's put it back in original form: 3.4 dissatisfactions per 1,000,000 experiences. How can we have 3 + 0.4 dissatisfactions? It's still not clear.
What if we think in percentages? Does that help? We can convert this magic number, or ratio, into a percentage ('per one hundred'): if our magic ratio can be expressed as "0.0000034 per 1" then it can also be expressed as "0.00034 per 100", or "0.00034%".
So we want a 0.00034% defect ratio (or lower). What does that mean? Let's try notation again:
This says '3.4 one-millionths is the same mysterious number as 34 ten-millionths'. I.e., if we can only have 3.4 dissatisfactions in a million, we can only have 34 dissatisfactions in 10 million.
autoIn more generous notation, it looks like this:
This equation says 'the left mysterious ratio relationship is the same as the right mysterious ratio relationship'.
We've added the parentheses to remind you that we're talking about a ratio, not the two individual numbers and the division operation that are the components of it. It's like we're talking about a box, and you can see inside the box, but we're talking about the box as a whole. In this case, we're saying these two boxes are the same on the outside, even though they're different on the inside. But this kind of box, with these exact dimensions on the outside, is what we care about. This is six-sigma quality.
The 3.4-per-1,000,000 ratio is the same as approximately 1 defect per 300,000 experiences, because:
So if we want 34 or fewer dissatisfactions per 10,000,000 experiences, we can also say that we want approximately 1 dissatisfaction (or fewer) for every 300,000 experiences. Calculating our dissatisfaction ratio
To calculate our dissatisfaction ratio (or 'defect' 'rate'), we first get the total number of (relevant) experiences:
autoWe then want to put the number of experiencesdissatisfaction over the number of experiencestotal and see if the equivalent number (or ratio) is higher or lower than 0.0000034, aka 0.00034%, aka 3.4 per 1 million, aka 34 per 10 million, aka (approximately) 1 dissatisfaction per 300,000 experiences.
The other invisible thing
The real problem is counting the experiences. Remember, it's not the units of product, or customer complaints, or anything else that's easy to measure. We're interested in the experiencesdissatisfaction, a quantity of phenomena in the world that are hard to observe, and therefore hard to count.
If we're manufacturing, say, a radio, then we know how many of them don't pass final inspection, or get returned by customers as defective. But those are just the most obvious experiencesdissatisfaction. What about dissatisfaction within oneself, or of a colleague? What about multiple dissatisfactions in a single moment? Or with a single unit? The key is in the counting, and in counting experiences, we will have to reflect further on our businesses.
...END digression Six-sigma literature is mostly garbage
Acronyms and jargon are often the antithesis of clear thinking and expression, as six-sigma books and articles tend to prove.
Any dissatisfaction, any 'customer'
By Smith's and Motorola's definition, any experience of dissatisfaction on the part of any person involved in the business is a defect.17
However, faults that go unnoticed by the company are unlikely to be noticed by the customer.18
Revolution is before production
Revolutionary changes are only practical on paper; once production starts, evolution takes over.19
There's nothing revolutionary coming out of Google or Apple or Samsung or Toyota anymore. We can say that Tesla was doing revolutionary things recently, but only before they started production.20
Darwin's territory
Revolution is bloody and merciless, but you probably have to at least like it (if not love it the way you should love the revolutionary phase) to do well in business.
Precision, tolerance, and simplicity
You've either gotta sharpen your aim, or pick a bigger target, to improve your quality.
Here's what's good:
- precise processes;
- tolerant designs;
- fewer parts.
Alternatively: checklists, fail-safes and simplicity.
A defect at Retraice, Inc.
We put up an incorrect show image, and the mistake was totally predictable and unnecessary.
Fixing is more expensive than preventing.21
We have many checks in place, even though we're a simple podcasting company, because we're trying to be very high quality. Most podcasts are not. Compare Youtube—how many hours are uploaded every day, and how many are actually watched?
Checklists
See Gawande on the importance and power of checklists, especially in aircraft and hospitals.22 On the nature of improving, see also Gawande.23
Don't be a wantrepreneur
Enjoy it, but don't stay in the revolutionary phase for too long.
References
Gawande, A. (2009). The Checklist Manifesto: How to Get Things Right. Henry Holt and Co., Kindle ed. ISBN: 978-0805091748. Searches: https://www.amazon.com/s?k=978-0805091748 https://www.google.com/search?q=isbn+978-0805091748 https://lccn.loc.gov/2009046888
Gawande, A. (2011). Better: A Surgeon's Notes on Performance. Henry Holt and Co., Kindle ed. ISBN: 978-0805082111. Searches: https://www.amazon.com/s?k=978-0805082111 https://www.google.com/search?q=isbn+978-0805082111 https://lccn.loc.gov/2006046962
Gouvêa, F. Q. (2008). From numbers to number systems. (pp. 77–83). In Gowers (2008).
Gowers, T. (Ed.) (2008). The Princeton Companion to Mathematics. Princeton University Press. ISBN: 978-0691118802. Searches: https://www.amazon.com/s?k=978-0691118802 https://www.google.com/search?q=isbn+978-0691118802 https://lccn.loc.gov/2008020450
Klaf, A. A. (1964). Arithmetic Refresher. Dover. ISBN: 0486212416. Searches: https://www.amazon.com/s?k=0486212416 https://www.google.com/search?q=isbn+0486212416 https://lccn.loc.gov/64018856
Liker, J. (2004). The Toyota Way: 14 Management Principles from the World's Greatest Manufacturer. McGraw-Hill. ISBN: 0071392319. Searches: https://www.amazon.com/s?k=0071392319 https://www.google.com/search?q=isbn+0071392319 https://lccn.loc.gov/2004300007
Lo Bello, A. (2013). Origins of Mathematical Words: A Comprehensive Dictionary of Latin, Greek, and Arabic Roots. Johns Hopkins University Press. ISBN: 978-1421410982. Searches: https://www.amazon.com/s?k=978-1421410982 https://www.google.com/search?q=isbn+978-1421410982 https://lccn.loc.gov/2013005022
Peterson (2001/10/23). Rate vs. ratio. mathforum.org. Author name given only as 'Doctor Peterson'; we were unable to find a first name. http://mathforum.org/library/drmath/view/58042.html Retrieved 30th Oct. 2020.
Quigley, C. (1961). The Evolution of Civilizations. Macmillan (reprinted by Liberty Fund 1979). ISBN: 0913966576. Searches: https://www.amazon.com/s?k=0913966576 https://www.google.com/search?q=isbn+0913966576 https://lccn.loc.gov/79004091
Russell, B. (1938). The Principles of Mathematics. W. W. Norton & Company, 2nd ed. ISBN: 0393314049. First published in 1903, 2nd ed. with new introduction 1938. Citations are from 1996 reprint. Searches: https://www.amazon.com/s?k=0393314049 https://www.google.com/search?q=isbn+0393314049 https://lccn.loc.gov/38027192
Schwartzman, S. (1994). The Words of Mathematics: An Etymological Dictionary of Mathematical Terms Used in English. The Mathematical Association of America. ISBN: 0883855119. Searches: https://www.amazon.com/s?k=0883855119 https://www.google.com/search?q=isbn+0883855119 https://lccn.loc.gov/93080612
Smith, B. (1993a). Six-sigma design. IEEE Spectrum, 30(9), 43–47. September 1993. https://www.scribd.com/document/419712315/Six-sigma-Design-Quality-Control Retrieved ca. 1st Feb. 2020.
Smith, B. (1993b). Total customer satisfaction as a business strategy. Quality and Reliability Engineering International, 9(1), 49–53. https://onlinelibrary.wiley.com/doi/abs/10.1002/qre.4680090109 Retrieved ca. 1st Feb. 2020.
Index Apple, 5
Google, 5
Samsung, 5
Tesla, 5 Toyota, 5
Youtube, 5
1Smith (1993b). See also Smith (1993a).
2Smith (1993a) p. 43.
3Of course, we can imagine a customer dissatisfied with the number of cup-holders in a car, a physical problem that yet probably won't be reported back to Toyota. Side-note: see Liker (2004) pp. 229-230 on the engineer who drove a Toyota minivan all over the U.S. in order to find design improvements, one of which was increasing the number of cup-holders.
4See Peterson (2001/10/23) for a thoughtful discussion.
5A quantity, let's say, can be either a multitude or a magnitude. A multitude is countable, discrete, like apples. A magnitude is fluid, continuous, like string. We don't have to imagine breaking up each apple into an apple, but we do have to imagine breaking up a string into centimeters. Using these terms this way is a choice, not a fact. These words correspond to deep, complicated ideas. Cf. Russell (1938) p. 159 ff.
6Schwartzman (1994) p. 183.
7Peterson (2001/10/23)
8Gouvêa (2008) p. 79.
9Lo Bello (2013) p. 270.
10For example: Socrates, Plato, and to some extent Aristotle.
11Quigley (1961) pp. 90-91.
12Schwartzman (1994) p. 183.
13Klaf (1964) p. 159.
14We'll set aside the value of learning from mistakes and experience, for the purpose of simplicity.
15Klaf (1964) p. 160.
16A statement that two ratios are equal is called a proportion—Klaf (1964) p. 168. Although, the roots of the word are in Latin and mean 'with respect to one's share'—Lo Bello (2013) p. 260.
17Smith (1993a) p. 43.
18Smith (1993a) p. 44.
19Smith (1993a) p. 47.
20Cf. Quigley on how outward-looking, purposeful social instruments tend to become, over time, inward-looking, vested social institutions. Quigley (1961) p. 101-103.
21During the livestream, we said 'kanban' cord, but the Toyota term for the stop-assembly-line cord is 'andon', and it's more often a button. Liker (2004) p. 23 and p. 130. This correction will be mentioned in Ma9.
22Gawande (2009).
23Gawande (2011) p. 2.
