Homozygosity - That's The Problem!

by BILL WADDELL

Whether it is talking to a group of company executives, speaking before a local APICS chapter, or writing the blog, there is an ever present challenge in my line of work to come up with a clever, amusing, unique angle concerning American manufacturing.  I learned long ago that there is a sure fire cure for the occasional bout of writer's block in the elite Eastern academic world.  The Knowledge at Wharton folks can always be counted on to write something incredibly stupid.  Go ahead and click here to read a story about how Toyota is really screwed by all of this economic upheaval, but they are better off than GM, and how they really didn't take over the auto industry, they just didn't go into free fall like GM, and how they have half of GM's inventory, and they haven't laid anybody off, and, and, and well - they are still really , really screwed.

A guy by the name of Mory Taylor who runs Titan Tire and had an obscure run for President a while back hit the nail on the head in explaining how it is that so many people from such prestigious institutions are in such important positions and have fouled things up so thoroughly.  He said, "The biggest hoax in this country is that Harvard is going to make you smart. Harvard just gives you connections."  He is absolutely right. 

You might have noticed that I rail a bit about Wall Street - the mortal enemy of lean manufacturing - but as the stock market is on the trash heap, Bernie Madoff is being led off in chains, we taxpayers are sending billions to bail these clowns out, and there are 900+ fraud investigations underway, a bit of gentle, constructive criticism on my part seems justified.  The fox responsible for keeping an eye on the Wall Street hen house is the SEC.  Let's take a look at their history:

Bill Clinton (Georgetown, Oxford, Yale) appoints Arthur Levitt (Williams College - an elite private school in Massachusetts) who presides over the Enron debacle.  Levitt is succeeded by Paul Carey (Colgate).  George W Bush (Yale, Harvard) takes over and appoints Harvey Pitt (St Johns), followed by William Donaldson (Yale, Harvard).  When their collective deregulation  of investment banking gives us the Bear Stearns fiasco, we get Christopher Cox (Harvard MBA and Harvard Law). And of course we have a complete meltdown of the capital markets as described previously. Now we have Barack Obama (Columbia, Harvard) who has put Mary Schapiro at the helm (Franklin & Marshall College, George Washington).  Yeah - I know that these are not all Ivy League, but $50K a year to go rub elbows with the elite at Franklin & Marshall or Williams College assures that you are a member of the same country club as the boys and girls at Harvard and Yale.

Notice a pattern here?

If you live west or south of 37th and O Street in Washington, D.C. you are out of the club. 

The New York Stock Exchange is the same - or NYSE Euronext as it is now known following the swallowing up of all of the stock exchanges in Europe. 12 American members - 12 eastern elite academic folks.  One guy dabbled in the Chicago Commodities Exchange for a while (although the UK is where he is most comfortable hanging his hat) - the rest, it would appear, have no knowledge that anything exists west of the Allegheny Mountains.

Now there is nothing wrong with the northeastern part of the US, and I am sure that all of these schools are just fine, but after a while too much of anything is too much. When we have nothing but rich folks from the northeast appointing and doing business with other rich folks from the northeast, the inevitable mutations of the DNA start to kick in. 

There is an old saying that 'great minds think alike'.  Probably, but I've noticed that morons think alike too.  In fact, people with similar backgrounds and experiences tend to think the same, no matter what.  So when a few of these eggheads get the notion that lean is just some factory fad, that outsourcing everything to China is a marvelous thing, that the Dow Jones is the only measure of the economy that matters, and that manufacturing is for the ignorant masses and that service is where the real future lies - in short, they all drink the same 'world is flat kool-aid' - well it really doesn't matter how much common sense to the contrary is coming from the heartland - NO ONE IS LISTENING!  If you are in D.C. the only voices you hear are from the guys who sat next to you in the same college lectures, belong to the same tennis club you do, and drink the same brand of scotch you do at the same private club you belong to in Manhattan.

We make much noise about our lack of cultural diversity, blaming it on racism, sexism and bigotry.  No doubt there is shamefully plenty of that to go around.  However, thinking that we become more diverse simply by electing a black President, appointing a woman to the SEC Chairmanship, or sprinkling in a Hispanic here or there is inherently more racist.  It presumes that Barrack Obama must think differently than George Bush or Bill Clinton simply because he is black. In fact, all of them are shaped more by their preppy backgrounds and the people from those preppy places with whom they have surrounded themselves, than they are by gender or skin color.

I noticed that Bill Clinton didn't look to any of the good ol' boys in Arkansas to run the economy - he looked to his old Yale cronies.  And putting a cowboy hat on a guy from Phillips Academy prep school, Yale and Harvard didn't make George Bush a Texan.  And Barrack Obama would be the only South Chicago homeboy to matriculate at a $17,000 a year private prep school, Columbia and Harvard.  They ran back to their eastern-elite academic comfort zones when it came time to make big economic decisions, and with Obama we are roaring down the same roads. Save the bankers and brokers - who all went to the same schools and belong to the same clubs - bail out GM and its Harvard MBA CEO. 

Put Timothy Geithner (Dartmouth, John Hopkins) and Lawrence Summers (President of Harvard) in charge of fixing the automotive industry.  Wuddya think - are they going to endorse lean, or do you suppose they might look to the same failed Ivy League solutions?  Given that both of them know all about Georgetown U, but are unlikely to be able to name a single significant idea that came out of Georgetown, KY, I am betting on the Ivy League.

According to Wikipedia, inbreeding is breeding between close relatives, whether plant or animal. If practiced repeatedly, it leads to an increase in homozygosity of a population - consisting of only a single copy of a particular gene in an otherwise diploid organism.

So that's the problem.  We keep copying the Harvard gene over and over again, while the rest of us members of the Great American diploid organism - the ploid trying to re-eneregize manufacturing with common sense - are increasingly marginalized.

Comments

[Tim Gallion]

Wow, I've never heard the problem explained so well.

[Bill Waddell]

Thanks Tim. I'm guessing neither of us went to Harvard.

Bill

[Kurt]

Bravo. Could not agree more. Our government is such an elitist 'club' that if one doesn't have the 'right' pedigree then one is not as 'smart' as they are...not an expert. Contrary to that thinking, Henry Ford said “The moment one gets into the 'expert' state of mind a great number of things become impossible.” Pretty sharp guy but he did not consider himself an expert.

["Appalachian American"]

Bill,

The total cost to the country of the "East Coast’s" social, financial, and diplomatic engineering efforts has been truly staggering. After seventy five years under the yoke of this region, the culture has been so changed that we as a people have now grown accustomed to handouts.

I fear further leadership (Corporate, Financial, Political, and Diplomatic) from this bunch will lead to our ultimate ruin. A kind of economic drowning by debt and/or hyper inflation that leads to the downfall of our currency and country. A decay of a magnitude and scope that not even Warren Buffett could escape.

The kind of leadership we need today in America is the kind you often see in Japan. Executives with humility that show determination to leave the company and its stakeholders better off when their tenure ends. These kinds of leaders often concentrate upon making excellent products, customer service, and the development of technology that customer’s value. America needs leaders who concentrate less upon their own compensation and more upon the value their companies are creating for the society in which they operate.

If we are headed for a future in which America’s private companies produce goods and services of the same level of quality and service as our Federal, State, and Local Governments, then our days are numbered.

We will end up with a future in which the equilibrium is simply the lowest common denominator.

[Bryan Lund]

Bill,

2010 and 2012 isn't all that far off. Contrary to popular beleif, we surround them.

[Anon]

Calling the president a "homeboy" isn't very P.C.... I'm surprised you haven't been called out on that Bill, you should choose your words more carefully as to not distract from your strong content and message

[Bill Waddell]

I don't spend much time worrying about political correctness, as you may have noticed. That said, I did not intend to call the President a "homeboy". I meant to insinuate that he is an elite Ivy League snob, occasionally passing himself of as a homeboy for political purposes, just as George Bush passed himself off as a Texas cowboy, and Bill Clinton passed himself off as an Arkansas good old boy.

[Paul Todd]

Excellent stuff Bill. This brings me back to an important aspect of the Respect for People concept in lean: Don't assume that the traditional cast of "smart people" has all the answers - whether we're talking about managers and engineers in a factory or prep school alums in government. You've hit on the need for genuine diversity, not the PC-approved sprinkling of tokens in an organization.

[John McGrann]

Great summation Bill. If we (US) are going to compete in this world than our manufacturing must be lean. As you clearly detailed, the folks in the beltway do not get it!

Hopefully, lean will bubble up to the "tipping point" where it is obvious, even to those kool-aid drinkers in Washington, that lean makes sense. Perhaps this downtrodden economy will be the impetus of a lean surge?

[Jill Jusko]

It's easy to outline what you believe is the problem. Less easy is the solution. Are you suggesting that simply importing folks from schools other than Yale, Harvard and the like would resolve our problems?

[Louis English]

How true! Add corporate boards and NE consulting firms to that list. In my 20 years of lean experience the best clients I have worked with were entrepreneurs. The worse were large established corporations full of young, well connected MBA's looking for an argument.

[Bill Waddell]

Thanks for the comment/question, Jill.

I beg to differ that it is easy to identify the problem. It has taken me thirty years of manufacturing management, consulting and research experience to identify it, and the problem does not seem to be too clearly identified in the eyes of our leadership in Washington.

Second, idenification of the problem is, by itself, an big step. Meaningful discussion of solutions can only occur when the problem is known.

Third, as a matter of fact, yes. Simply getting folks into positions of power from a diversity of academic, geographic and professional fields will be a huge improvement. Simply finding professors from MBA programs at other colleges will not necessarily accomplish much. Far too many of them are in a 'me too' mindset with the folks from Harvard when they should be thinking more for themselves. But how about getting a few engineering people involved? One characteristic of the elite Eastern schools is a dearth of engineering competence. Many of these people came from schools that do not even have engineering programs, and those at Harvard and Yale are shabby side shows compared to schools like Purdue.

Finally, how about getting sucessful manufacturers involved - and a CEO of a company that has closed plants left and right and outsourced manufacturing to China does not qualify as a "successful manufacturer".

I don't have all of the answers by any means, but getting diversity of ideas is a big step in the right direction.

Reading the book I wrote with Norman Bodek - Rebirth of American Industry - will give you a pretty good idea of where we need to go.

[Jill Jusko]

The response is appreciated.

[david foster]

The former CEO of Eaton (I think it was) had an interesting story about an experiment he once conducted. When attending cocktail parties with people he didn't know, sometimes he would introduce himself by mentioning he ran a large industrial company. Other time, he'd talk about his educational background. (He was 50 or so at the time)

He said that people were usually much more interested in talking with him when he took the second approach.

Now, maybe he was just going to strange cocktail parties...or maybe this points up something pretty warped about standards of value being applied by many people.

[kathleen]

I asked Eric to guess who wrote this piece and only read the first paragraph aloud to him. He said instantly "Bill Waddell" and we both laughed. Again, good to have you back.

[Keerthi]

We in Asia have been missing the opportunity to read Waddell brand of explanation for a while, loud and clear Sir!

How come it is rare to hear about scandals in manufacturing, that could trigger a recession or even a big D? Is the leverage at the heart of the ailment?

[Costikyan Jarvis]

I always enjoy challenging Bill, so here it goes.

In the spirit of full disclosure, I attended some of the evil schools that you mentioned: Hotchkiss (for boarding school), St. Lawrence (college) and Harvard. My wife, a good Irish Catholic, claims that I am such a WASP that I wear shirts to cover my wings. I am also the fifth generation of ownership of a manufacturing business located (and manufacturing) in New England. As a graduate of one of the Executive Education programs (OPM) at Harvard Business School, I can provide a first account that I hope contradicts some of Bill’s statements.

First, my professors were very diverse. They came from North America and Asia and had a variety of experiences. They had worked in private industry and some still served on boards of various companies. I enjoyed some more than others, but they were all excellent.

More important was the student body. I, and most of my other classmates, learned more from each other than our professors. Of the 143 people in the course, 45 are from the United States (about 30%). So yes, we were all located in Boston, but we came from all over the world. Also, almost all of my classmates are involved in private enterprise. I think we had 1 or 2 who worked for a public company.

Interacting with people from India, China, Italy, South Africa, UAE, Brazil, and other nations provided all of us with a diverse and global perspective. I would also add that the participants were from a wide variety of industries. Some of the industries represented were: farming (he is a mushroom farmer), energy (both wind power and good old oil exploration), bio-tech, high technology, real estate, and even manufacturing.

I can not speak for the other programs, but if you ask my fellow classmates why they chose Harvard it is clear – we feel that Harvard is the best. Yes it is the best in our minds (we decided to spend the money), but there is no doubt that the institutions that you mentioned attract some of the best professors and students from all over the world.

I believe that the very concentration of individuals that you attack, is, in fact, a great strength. By putting all these people in close physical proximity, great debate, creativity and research is achieved. In much the same way that Toyota draws strength from their and their suppliers close proximity to Toyota City, the Northeast, and Boston in particular, draws great strength from the proximity of some many gifted and talented people.

I did a little research into the leadership of Toyota and learned something relevant to this discussion.

In Toyota’s Board of Directors can be found at the following link: http://www.toyota.co.jp/en/about_toyota/executives/index.html. If you research the backgrounds of these leaders you will learn that Fujio Cho (Chairman), Katsuhiro Nakagawa (Vice Chairman), Kazuo Okomoto (Vice Chairman), Kyoji Sasazu (Executive Vice President) and Mitsuo Kinoshita (Executive Vice President) all attended the same university (University of Tokyo). The other interesting thing is that the future president of Toyota, Akio Toyoda, has a MBA degree from the very evil location mentioned in Bill’s blog – Boston, MA. Akio graduated from Babson University in 1982.

If the leader of leading lean manufacturing organization has a MBA from the Northeast, and 5 of the top 9 leaders of the company all graduated from the same university, I think blaming the universities of the Northeast for our current troubles may be missing the “common sense” that Bill is advocating.

["Appalachian American"]

Bill,

I think he may have a point.

Wasn't Ford's demise started when the East Coast educated "Dupontites", the so called professional managers took over. That group's led them for more than 60 years in the wilderness.

Maybe the best gift General Motors will ever get is Toyota's next president being a "US East Coast" educated MBA?

I like the fact that Harvard is educating the world as well. No need to "poison" only your own drinking water.

Time will tell on the Toyoda scion I suppose. Eiji was an Engineer and didn't seem to do too bad a job. The founder's son was another Toyota president from the sciences and he also didn't do too bad a job.

Honda is a company that has a long string of presidents from the research side of the company. They seem to be doing fairly well these days also.

The Japanese also place far too much emphasis upon their "East Coast." I suspect that having a degree from Tokyo University isn't enough to overcome "Wrong headed" thinking. Mass Production is mass production, and cost cutting at the expense of everything else (something the MBA's) seem to have a talent for, produces similar results no matter the creed or locale.

[Joseph]

Bill, bravo for continuing to open our eyes. Ignore the hecklers!