^[1] Deloitte Center for the Edge. Measuring the Forces of Long-Term Change: The 2009 Shift Index. 2009. http://www.edgeperspectives.com/shiftindex.pdf.

^[2] Deloitte Center for the Edge. Measuring the Forces of Long-Term Change: The 2009 Shift Index. Friedman, T. "Start-Ups, Not Bailouts." New York Times, Apr. 3, 2010. http://www.nytimes.com/2010/04/04/opinion/04friedman.html?hp.

^[3] I am indebted to Hans Samios, a manager at Intergraph Corporation in Alabama, who contacted me and suggested that I check out what was happening in software development firms.

^[4] The term was also used in Culbert, S. A., and McDonough, J. J. Radical Management: Power Politics and the Pursuit of Trust. New York: Free Press, 1985.

^[5] Pirsig, R. Zen and the Art of Motorcycle Maintenance. New York: Morrow, 1974, p. 94.

^[6] As explained in Chapter Four, much of the thinking behind client delight as a goal builds on the work of Fred Reichheld: The Ultimate Question: Driving Good Profits and True Growth. Boston: Harvard Business School Press, 2006. See also: "Wow?" Net Promoter Blogs, Sept. 23, 2008. http://netpromoter.typepad.com/fred_reichheld/2008/09/wow.html.

^[7] Rust, R. T., Moorman, C., and Bhalia, G. "Rethinking Marketing." Harvard Business Review, Jan.-Feb. 2010, pp. 94–101.

^[8] Hamel, G. "Moonshots for Management." Harvard Business Review, Feb. 2009, pp. 91–98 at 92.

^[9] "Towers Perrin Global Workforce Study." 2007–2008. http://www.towersperrin.com/tp/getwebcachedoc?webc=HRS/USA/2008/200802/GWS_handout_web.pdf. Conference Board. "U.S. Job Satisfaction at Lowest Level in Two Decades." Jan. 5, 2010. http://www.conferenceboard.org/utilities/pressDetail.cfm?press_ID=3820. See also the Deloitte Shift Index: "75 to 80 percent of the workforce lacks passion for the work they perform on a daily basis. This is particularly significant given the strong correlation between Worker Passion and more active participation in knowledge flows. If companies are serious about more effective participation in knowledge flows, they must find ways to draw out greater passion from their workers." Deloitte Center for the Edge. Measuring the Forces of Long-Term Change: The 2009 Shift Index. 2009. http://www.deloitte.com/us/shiftindex. Similar results, with country variations, are reported in a European Working Conditions Survey, "Eurofound," discussed in Bolton, S. C., and Houlihan, M. (eds.). Work Matters: Cultural Reflections on Contemporary Work. New York: Palgrave Macmillan, 2009.

^[10] Cohn, M. Succeeding with Agile: Software Developing Using Scrum. Upper Saddle River, N.J.: Addison-Wesley, 2009, p. 101.

^[11] Hamel, G. "Moonshots for Management." Harvard Business Review, Feb. 2009, pp. 91–98.

^[12] Falling return on assets: The return on assets for U.S. public companies had declined by 75 percent since 1965: Deloitte Center for the Edge. Measuring the Forces of Long-Term Change: The Shift Index. 2009. http://www.edgeperspectives.com/shiftindex.pdf.

Declining innovation: The proportion of truly innovative products in corporate portfolios decreased by more than 30 percent between 1990 and 2004: Smith, P. G. Flexible Product Development. San Francisco: Jossey-Bass, 2007.

Declining trust in brands: The percentage of trustworthy brands has declined from 52 percent to 22 percent in just eleven years. Gerzema, J., and Lebar, E. "The Trouble with Brands." Strategy and Business, May 25, 2009. http://www.strategy-business.com/article/09205.

High-performance teams are rare: Only 2 percent of teams could be considered high-performance teams. Logan, L., King, J., and Fischer-Wright, H. Tribal Leadership: Leveraging Natural Groups to Build a Thriving Organization. New York: HarperBusiness, 2008.

Outsourcing has diminished the capacity to compete: Pisano, G. P., and Shih, W. C. "Restoring American Competitiveness." Harvard Business Review, July-Aug. 2009, pp. 114–125.

New entrants to the workplace are less willing to accept traditional management practices: Tulgan, B. Not Everyone Gets a Trophy: How to Manage Generation Y. San Francisco: Jossey-Bass, 2009.

^[13] Paul's tale is fictional and does not portray any actual company or individual. It is inspired in part by Crawford, M. Shop Class as Soulcraft: An Inquiry into the Value of Work. New York: Penguin, 2009.

^[14] Alan's tale is fictional and does not portray any actual company or individual. It is inspired in part by de Botton, A. The Pleasures and Sorrows of Work. New York: Penguin, 2009, chap. 8.

^[15] Nathalie's tale is fictional and does not portray any actual company or individual.

^[16] Ben's tale is fictional and does not portray any actual company or individual. It is inspired in part by Crawford, Shop Class as Soulcraft; Gladwell, M. "The Sure Thing." New Yorker, Jan. 18, 2010, pp. 24–29.

^[17] Connie's tale is fictional and does not portray any actual company or individual.

^[18] Drucker, P. Post-Capitalist Society. New York: HarperBusiness, 1993.

^[19] Berlin, I. The Crooked Timber of Humanity: Chapters in the History of Ideas. New York: Random House, 1959, p. 2.

^[20] Drucker, P. Post-Capitalist Society. New York: HarperBusiness, 1993, p. 65.

^[21] De Botton, A. The Pleasures and Sorrows of Work. New York: Penguin, 2009, p. 244.

^[22] "2007–2008 Towers Perrin Global Workforce Study." http://www.towersperrin.com/tp/getwebcachedoc?webc=HRS/USA/2008/200802/GWS_handout_web.pdf.

^[23] This paragraph draws heavily on Fred Reichheld's blog and the subsequent discussion, posted Sept. 23, 2008, at http://netpromoter.typepad.com/fred_reichheld/2008/09/wow.html.

^[24] Where the firm has the good fortune to find itself in a quasi-monopoly position, like Microsoft between 1990 and 2010, the milking of the cash cow may go on for some time in extraordinary quantities. But an inability to innovate will eventually catch up with any organization. For instance, Microsoft has had difficulty in competing with Google on search and in competing with Apple on mp3 players. Now cloud computing poses a threat to its Windows quasi-monopoly.

^[25] Martin, R. "The Age of Customer Capitalism." Harvard Business Review, Jan. 2010, pp. 58–65.

^[26] Drucker, P. Post-Capitalist Society. New York: HarperBusiness, 1993, p. 43.

^[27] Scholtes, P. The Leader's Handbook: A Guide to Inspiring Your People and Managing the Daily Work Flow. New York: McGraw-Hill, 1997. Chandler, A. The Visible Hand: The Managerial Revolution in American Business. Cambridge, Mass.: Harvard University Press, 1977.

^[28] U.S. Department of the Army. Mission Command: Command Control of Army Forces. Aug. 2003. www.dtic.mil/dticasd/sbir/sbir043/a30a.pdf.

^[29] Scholtes. The Leader's Handbook. Although it has been suggested that manager was a new term at the time, the term was in use in England as early as 1705 to mean someone who manages a business. The Compact Edition of the Oxford English Dictionary. New York: Oxford University Press, 1971.

^[30] Beaman, K. V. "Boundaryless HR: Human Capital Management in the Global Economy: An Interview with Christopher Bartlett." June 2002. http://www.jeitosa.com/resources/karen_beaman/Bartlett-Interview.pdf.

^[31] Stewart, P. "The Management Myth." Atlantic Monthly, June 2006, pp. 80–89 at 81.

^[32] Taylor, F. W. The Principles of Scientific Management. Charleston, S.C.: Forgotten Books, 2008, p. 2. (Originally published 1911.)

^[33] Quoted in Crawford, M. Shop Class as Soulcraft: An Inquiry into the Value of Work. New York: Penguin, 2009, p. 105.

^[34] Between October 1912 and October 1913, the Ford Motor Company had to hire fifty-four thousand men to maintain an average workforce of around thirteen thousand. Ciulla, J. B. The Working Life: The Promise and Betrayal of Modern Work. New York: Three Rivers Press, 2001.

^[35] Hammer, M., and Champy, J. Reengineering the Corporation. New York: HarperBusiness, 1993.

^[36] Hammer and Champy. Reengineering the Corporation, p. 7.

^[37] Davenport, T. H. Process Innovation: Reengineering Work Through Information Technology. Boston: Harvard Business School Press, 1992.

^[38] Hammer and Champy. Reengineering the Corporation, p. 30.

^[39] Hammer and Champy. Reengineering the Corporation, p. 103.

^[40] Hammer, M. Beyond Reengineering: How the Process-Centered Organization Is Changing Our Work and Our Lives. New York: HarperCollins, 1997. An NFL football game has another curious analogy to the traditional U.S. corporation: although the typical NFL game lasts more than three hours, only 6 percent of the total—eleven minutes—is actually spent playing with the ball and attempting to move it forward. The other 94 percent of the time is spent sitting, standing around, and talking about playing rather than actually playing. Biderman, D. "Eleven Minutes of Action." Wall Street Journal, Jan. 15, 2010. http://online.wsj.com/article/SB10001424052748704281204575002852055561406.html?mod=djemMTIPOFFh.

^[41] Pisano, G. P., and Shih, W. C. "Restoring American Competitiveness." Harvard Business Review, July-Aug. 2009, pp. 114–125.

^[42] Department of the U.S. Army. Mission Command.

^[43] Deloitte Center for the Edge. Measuring the Forces of Long-Term Change: The Shift Index. 2009. http://www.edgeperspectives.com/shiftindex.pdf.

^[44] Friedman, T. "Start-Ups, Not Bailouts." New York Times, Apr. 3, 2010. http://www.nytimes.com/2010/04/04/opinion/04friedman.html?hp.

^[45] Kotter, J. A Sense of Urgency. Boston: Harvard Business School Press, 2009.

^[46] Pink, D. Drive: The Surprising Truth About What Motivates Us. New York: Riverhead Books, 2010.

^[47] Hamel, G. "Moonshots for Management." Harvard Business Review, Feb. 2009, p. 91.

^[48] Reichheld, F. The Ultimate Question: Driving Good Profits and True Growth. Boston: Harvard Business School Press, 2006.

^[49] Ohno, T. Taiichi Ohno's Workplace Management, trans. Jon Miller. Milketo, Wash.: Gemba Press, 2007.

^[50] Whether the product is actually shipped is a marketing question. Overly frequent releases and updates can be an annoyance to clients in some situations, particularly when new releases entail additional training for users.

^[51] Reichheld, F. The Ultimate Question: Driving Good Profits and True Growth. Boston: Harvard Business School Press, 2006. See also Jones, T. O., and Sasser, W. E. "Why Satisfied Customers Defect." Harvard Business Review, Nov.-Dec. 1995, pp. 88–99.

^[52] Takeuchi, H., and Nonaka, I. "The New Product Development Game." Harvard Business Review, 1986, 64(1), 137–146.

^[53] The early history of iterative approaches in software development is described in detail by Craig Larman and Victor Basili in "Iterative and Incremental Development: A Brief History." Computer, 2003, 36(6), 47–56. Iterative approaches to work build on the 1930s work of Walter Shewhart, a quality expert at Bell Labs who proposed a series of short "plan-do-study-act" (PDSA) cycles for quality improvement: Shewhart, W. Statistical Method from the Viewpoint of Quality Control. New York: Dover, 1986. (Originally published 1939.) Starting in the 1940s, quality guru W. Edwards Deming began vigorously promoting PDSA, which he later described in Out of the Crisis. Cambridge, Mass.: MIT Press, 1982. Tom Gilb also explored PDSA application to software development in later works in Software Metrics. New York: Little, Brown, 1976.

^[54] Ohno, T. Toyota Production System: Beyond Large-Scale Production. New York: Productivity Press, 1988.

^[55] Deming. Out of the Crisis.

^[56] See, for example, Denning, S. The Springboard: How Storytelling Ignites Action in Knowledge-Era Organizations. Burlington, Mass.: Butterworth Heinemann, 2000. Simmons, A. The Story Factor. San Francisco: Perseus Books, 2001. Denning, S. The Leader's Guide to Storytelling: Mastering the Art and Discipline of Business Narrative. San Francisco: Jossey-Bass, 2005. Denning, S. The Secret Language of Leadership: How Leaders Inspire Action Through Narrative. San Francisco: Jossey-Bass, 2007.

^[57] Takeuchi and Nonaka, "The New Product Development Game."

^[58] In 1986, in "The New Product Development Game," Takeuchi and Nonaka had compared a new holistic approach to innovation to the sport of rugby, where the whole team "tries to go to the distance as a unit, passing the ball back and forth." In 1991, DeGrace and Stahl, in Wicked Problems, Righteous Solutions (Upper Saddle River, N.J.: Prentice Hall, 1990), referred to this approach as Scrum. In the early 1990s, Ken Schwaber used an approach similar to Scrum at his company, Advanced Development Methods. At the same time, Jeff Sutherland, John Scumniotales, and Jeff McKenna developed Scrum at the Easel Corporation. In 1995, Sutherland and Schwaber jointly presented a paper, "The SCRUM Development Process," at the Object-Oriented Programming, Systems, Languages & Applications (OOPSLA) Conference '95 in Austin, Texas, its first public appearance. Schwaber and Sutherland collaborated during the following years to merge their writings, their experiences, and industry best practices into what is now known as Scrum. Continuously updated information about the hundreds of companies implementing Scrum are available at "Firms Using Scrum." http://scrumcommunity.pbworks.com/Firms-Using-Scrum.

^[59] "The Agile Manifesto." 2001. http://agilemanifesto.org/. For the twelve principles behind the manifesto: http://agilemanifesto.org/principles.html. The Agile Manifesto was a conceptual breakthrough. But nine years later, some aspects could do with some review, particularly more emphasis on delighting clients as the goal of all work, satisfying customers versus working software, providing a rationale for the use of self-organizing teams, enhanced emphasis on transparency, and more explicit emphasis on interactive communication.

^[60] Examples of such gains can be seen at Systematic Software, Salesforce.com, OpenView Venture Partners, and Xebia, as discussed in Chapter Eleven.

^[61] Liker, J. K., and Hoseus, M. Toyota Culture: The Heart and Soul of the Toyota Way. New York: McGraw-Hill, 2008, p. 106.

^[62] Some "big-bang" implementations are reported to have been successful, for example, at Salesforce.com, as reported by Mike Cohn's Succeeding with Agile: Software Development Using Scrum. Upper Saddle River, N.J.: Addison-Wesley, 2009, and discussed in Chapter Eleven.

^[63] Tomasello, M. Why We Cooperate. Cambridge, Mass.: MIT Press, 2009. De Waal, F. The Age of Empathy: Nature's Lessons for a Kinder Society. New York: Crown, 2009.

^[64] Reichheld, F. The Ultimate Question: Driving Good Profits and True Growth. Boston: Harvard Business School Press, 2006, p. 118.

^[65] For example, Rothman, J. Manage It! Your Guide to Modern, Pragmatic Project Management. N.p.: Pragmatic Bookshelf, 2007.

^[66] Sennett, R. The Craftsman. New Haven, Conn.: Yale University Press, 2008.

^[67] McKibben, B. Deep Economy: The Wealth of Communities and the Durable Future. New York: Holt, 2008.

^[68] Pollan, M. In Defense of Food: An Eater's Manifesto. New York: Penguin, 2009.

^[69] Crawford, M. Shopcraft as Soul Class: An Inquiry into the Value of Work. New York: Penguin, 2009.

^[70] Cited in Thomas, K. (ed.). The Oxford Book of Work. New York: Oxford University Press, 2001, p. 168.

^[71] Collins, J., and Porras, J. I. Built to Last: Successful Habits of Visionary Companies. New York: HarperCollins, 1994.

^[72] Kotter, J. Leading Change. Boston: Harvard Business School Press, 1996, p. 81.

^[73] Hamel, G. The Future of Management. Boston: Harvard Business School Press, 2007, p. 63.

^[74] Hamel, The Future of Management, pp. 107–108.

^[75] General Motors Company. "Our Mission: 'Re: Invention: See How We Are Reinventing the Automobile and Our Company.'" Accessed Jan. 20, 2010, at http://www.gmreinvention.com/?brandId=gm&src=gm_com&evar24=gm_com_topnavigation.

^[76] Pink, D. Drive: The Surprising Truth About What Motivates Us. New York: Riverhead Books, 2010.

^[77] Hamel, The Future of Management, p. 64.

^[78] Toyota articulated the principal goal of its North American subsidiary as follows: "As an American company, contribute to the economic growth of the community and the United States." Liker, J. The Toyota Way: Fourteen Management Principles from the World's Greatest Manufacturer. New York: McGraw-Hill, 2003, p. 80. When Toyota decided to close its Fremont plant in 2009 because of financial pressures bearing down on the company, it became apparent that economic growth of the community is not Toyota's principal goal after all. See the discussion of Toyota in Chapter Nine.

^[79] Drucker, P. Management: Tasks, Responsibilities, Practices. New York: HarperCollins, 1973, p. 61.

^[80] Drucker, Management, p. 62.

^[81] For instance, a public sector organization like the World Bank has many stakeholders, including the governments of developing countries, the population of developing countries, the governments of developed countries, the contractors that bid for contracts, the nongovernmental agencies that have an interest in development, and interest groups pursuing specific issues in which the World Bank plays a role, as well as academics and interested citizens. If the World Bank tries to satisfy all of these stakeholders equally, it will end up satisfying none of them, and it will lose sight of its principal mission of reducing or eliminating global poverty. Assigning priorities among the stakeholders is key to accomplishing its mission.

^[82] May, M. The Elegant Solution: Toyota's Formula for Mastering Innovation. New York: Free Press, 2006, p. xi.

^[83] Crawford, Shopcraft as Soul Class, p. 186.

^[84] Schwaber, K., and Beedle, M. Agile Software Development with Scrum. Upper Saddle River, N.J.: Prentice Hall, 2001.

^[85] Martin. "The Age of Customer Capitalism."

^[86] Berle, A., and Means, G. The Modern Corporation and Private Property. New York: Macmillan, 1932.

^[87] Jensen, M. C., and Menckling, W. H. "Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure." Journal of Financial Economics, 1976, 3(4), 305–360.

^[88] Andrews, F. "A Man of Words Is Still Partial to One: Loyalty." New York Times, Dec. 29, 1999.

^[89] Reichheld. The Ultimate Question. Furlong, C. G. "12 Rules for Customer Retention." Bank Marketing, Jan. 5, 1993, p. 14.

^[90] The missions of these organizations also reflect in varying degrees a focus on customer delight. For example, for Philips: "Royal Philips Electronics of the Netherlands is a diversified Health and Well-being company, focused on improving people's lives through timely innovations" (http://www.usa.philips.com/about/company/index.page). For Zappos: "We've aligned the entire organization around one mission: to provide the best customer service possible. Internally, we call this our WOW philosophy" (http://about.zappos.com/). Intuit: "Intuit: Going Beyond Innovation: As the world evolves, so do we. Yet we remain driven by our passion for inventing solutions to solve important problems, perfecting those solutions and delighting our customers" (http://about.intuit.com/about_intuit/).

^[91] Reichheld. The Ultimate Question, p. 7.

^[92] "A Comcast Technician Sleeping on My Couch." http://www.youtube.com/watch?v=CvVp7b5gzqU.

^[93] Negroni, C. "With Video, a Traveler Fights Back." International Herald Tribune, Oct. 29, 2009. The video is available at "United Breaks Guitars" (http://www.youtube.com/watch?v=5YGc4zOqozo).

^[94] Reichheld. The Ultimate Question, p. 4.

^[95] ExxonMobil: Guiding Principles. http://www.exxonmobil.com/corporate/about_operations_sbc_principles.aspx.

^[96] Walmart: What We Do. http://walmartstores.com/AboutUs/8123.aspx.

^[97] The Chevron Way. http://www.chevron.com/about/chevronway/.

^[98] ConocoPhilips: Who We Are. http://www.conocophillips.com/EN/about/who_we_are/Pages/index.aspx.

^[99] GE: Citizenship. http://www.ge.com/company/citizenship/index.html.

^[100] GM: Our Mission. http://www.gmreinvention.com/?brandId=gm&src=gm_com&evar24=gm_com_expleftnav_ourmission.

^[101] One Ford Mission. http://www.ford.com/about-ford/company-information/one-ford.

^[102] AT&T: Corporate Profile. http://www.att.com/gen/investor-relations?pid=5711.

^[103] HP: About Us. http://www.hp.com/hpinfo/abouthp/.

^[104] Valero: Our Business. http://www.valero.com/OurBusiness/Pages/Home.aspx.

^[105] Bank of America: Helping Us All Move Ahead. http://ahead.bankofamerica.com/?cm_mmc=EBZ-CorpRep-_-vanity-_-EE01VN0004_ahead-_-NA.

^[106] Citibank: What Citizenship Means at Citi. http://www.citigroup.com/citi/citizen/data/citizen09b.pdf.

^[107] Berkshire Hathaway. The Berkshire Hathaway Web site has no explicit goal. It can be inferred from the site that the firm's goal is to make money for its shareholders. www.berkshirehathaway.com.

^[108] IBM: IBM Basics. http://www.ibm.com/ibm/responsibility/basics.shtml.

^[109] McKesson: About Us. http://www.mckesson.com/en_us/McKesson.com/About%2BUs/About%2BUs.html.

^[110] JP Morgan Chase: Business Principles. http://www.jpmorganchase.com/corporate/About-JPMC/business-principles.htm.

^[111] Verizon: Commitment and Values. http://responsibility.verizon.com/home/approach/commitment-and-values/.

^[112] Cardinal Health: Our Promise. http://www.cardinal.com/us/en/aboutus/promise/index.asp.

^[113] CVS Caremark: Our Company. http://info.cvscaremark.com/our-company.

^[114] Procter & Gamble: Our Purpose. http://www.pg.com/company/who_we_are/ppv.shtml.

^[115] Command-and-control bureaucracy is the logical way to structure and manage a firm whose only goal is making money or producing goods and services. Thus, if the goal of the firm is merely to produce 1 million widgets, then you build a widget factory that will need as little labor as possible in a country where the labor is cheapest and most compliant and can be told what to do. Your firm will achieve significant economies of scale and have the lowest labor costs. The only problem: Are there buyers for your 1 million widgets? There's the rub.

^[116] Downsizing and outsourcing are sometimes the right choice. In some circumstances, usually due to prior bad management, a firm has no option but to downsize or outsource. However, these solutions tend to tear apart the social fabric of an organization. After it happens, management may be able to reweave the social fabric of the organization and eventually get back to self-organizing teams, but the staff will probably be bracing for the next downsizing or outsourcing rather than giving their all to the work. Even when reweaving the social fabric of an organization is successful, the process is lengthy and costly.

^[117] "The man who chases two rabbits," Confucius said, "catches neither." As Al Ries and Laura Ries point out in their book, War in the Board Room, the goal of traditional managers is typically growth to achieve economies of scale, and that leads to trying to please everyone. Instead of chasing one rabbit, they often start chasing two or even more. Ries, A., and Ries, L. War in the Boardroom: Why Left-Brain Management and Right-Brain Marketing Don't See Eye-to-Eye—and What to Do About It. New York: CollinsBusiness, 2009.

^[118] The World Bank, for instance, faces a bewildering array of people and institutions, each wanting different things from it. The governments of developing countries want cheap, hassle-free money. People in developing countries want their lives to be better. The governments of the developed countries want various policies to be pursued by developing countries and try to use the World Bank as a lever to attain their goals. The shareholder governments want to put less money into the organization but have more control over its activities. Contractors want lucrative procurement deals to come their way. Nongovernmental organizations and public interest groups want the World Bank to give priority attention to "their" particular issue. Faced with these divergent claims on its attention, the management of the World Bank was unable for over fifty years even to come to closure on a mission statement for the organization. It was only in 1998 that the organization finally agreed that its mission was "to fight poverty with passion and professionalism for lasting results." More than a decade later, the World Bank is still working through the implications of that decision. But at least it has made a start toward identifying its primary stakeholders: people who live in poverty.

^[119] See the discussion of the Kano model in Scholtes, P. The Leader's Handbook: A Guide to Inspiring Your People and Managing the Daily Work Flow. New York: McGraw-Hill, 1997. See also "Kano Model." http://en.wikipedia.org/wiki/Kano_model.

^[120] Conley, C. Peak: How Great Companies Get Their Mojo from Maslow. San Francisco: Jossey-Bass, 2007, p. 144.

^[121] Conley. Peak.

^[122] Conley. Peak.

^[123] O'Connell, P. "Taking the Measure of Mood." Harvard Business Review, Mar. 2006.

^[124] Arnold, K. "You Can Never Go Back!" Sept. 18, 2009. http://maketeamworkhappen.com/2009/09/18/you-can-never-go-back/.

^[125] Gladwell, M. "Open Secrets." New Yorker, Jan. 8, 2007.

^[126] Gladwell. "Open Secrets."

^[127] Gervase of Canterbury. The Historical Works of Gervase of Canterbury. London: Longman, 1879–1880.

^[128] "Assize of Clarendon." N.d. http://www.economicexpert.com/a/Assize:of:Clarendon.htm.

^[129] In 997, Aethelred, king of the English, published a code of laws at Wantage, which became known as the Wantage Code. It required "twelve senior thegns" (that is, knights) to publish the names of notorious or wicked men in their districts. Wormald, P. The Making of English Law: King Alfred to the Twelfth Century. Oxford: Blackwell, 1999, 1:8.

^[130] Huscroft, R. Ruling England, 1042–1217. Harlow, U.K.: Pearson, 2006, p. 182.

^[131] Page, S. The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools. Princeton, N.J.: Princeton University Press, 2007.

^[132] Because both the law and the facts were unclear, the question that the jury was being asked to address was a mystery. In civil cases, where the law is clear and the issue is a simple question of fact, the issue may become a puzzle.

^[133] Takeuchi, H., and Nonaka, I. "The New Product Development Game." Harvard Business Review, 1986, 64(1), 137–146.

^[134] Takeuchi and Nonaka. "The New Product Development Game," p. 141.

^[135] Csikszentmihalyi, M. Flow: The Psychology of Optimal Experience. New York: Harper Perennial, 2008, p. 3. (Originally published 1990.)

^[136] The task force's recommendations were approved in their entirety with one exception. We had come up with an ingenious simplification of the procedures that pleased everyone. However, we also realized that the organizational culture that had created the morass of paperwork would reassert itself unless something was done. So to get to the root cause of the problem, we recommended continuing our work and resolving the problem of procedures in a more fundamental way. Our recommendation was not accepted, and the team was disbanded. This was a minor disappointment compared to the exhilaration that we all felt at having apparently resolved a problem that had stymied the management for fifteen years. But several years later, the kudzu was back.

^[137] Orsburn, J., and others. Self-Directed Work Teams: The New American hallenge. New York: Irwin, 1990, pp. 5–6.

^[138] Katzenbach, J., and Smith, D. The Wisdom of Teams, Creating High-Performance Organizations. Boston: Harvard Business School Press, 1993, p. 3.

^[139] Follett, M. P. Dynamic Administration: The Collected Papers of Mary Parker Follett: Early Sociology of Management and Organizations. New York: Routledge, 2003.

^[140] Mayo, E. The Social Problems of an Industrial Civilization. Boston: Harvard Business School, 1945, p. 72. Cited in Stewart, M. The Management Myth: Why the Experts Keep Getting It Wrong. New York: Norton, 2009.

^[141] Barnard, C. I. The Functions of the Executive. Boston: Harvard College, 1938.

^[142] Maslow, A. H. "A Theory of Human Motivation." Psychological Review, 1943, 50, 370–396.

^[143] McGregor, D. The Human Side of Enterprise. New York: McGraw-Hill/Irwin, 1960.

^[144] Work in America: Report of a Special Task Force to the Secretary of Health, Education and Welfare. Cambridge, Mass.: MIT Press, 1971.

^[145] Peters, T., and Waterman, R. In Search of Excellence: Lessons from America's Best-Run Companies. New York: HarperCollins, 1982.

^[146] Amazon.com video. "Gary Hamel on Building Organizations for the Future." N.d. http://www.amazon.com/Future-Management-Bill-Breen/dp/1422102505/ref=sr_1_1?ie=UTF8&s=books&qid=1252325341&sr=1–1.

^[147] Pseudo-teams were so abundant by the 1950s that William Whyte devoted a large part of his book, The Organization Man, to attacking the managerial practices of manipulating people in groups. Whyte, W. The Organization Man. New York: Simon & Schuster, 1955.

^[148] Bryant, A. "All for One, One of All, and Every Man for Himself." New York Times, Feb. 22, 1998. Ciulla, J. B. The Working Life: The Promise and Betrayal of Modern Work. New York: Three Rivers Press, 2001.

^[149] Hackman, J. R. Leading Teams: Setting the Stage for Great Performances. Boston: Harvard Business School Press, 2002.

^[150] Survivor bias is a statistical error in which studies on the remaining population of entities are fallaciously compared with the historic average despite the fact that the survivors have unusual properties. The phenomenon is common in finance in comparing mutual funds, and it is pervasive in management writing. Thus, the management analyst examines a population of firms that are implementing the idea being discussed: eventually one or more firms applying the idea are found that have done consistently well. The analyst, who may or may not be aware of all the failed efforts, writes an enthusiastic paper and sends it to a business magazine, which publishes it. Readers are greatly impressed with the idea but are puzzled as to why their own efforts to replicate the successful firms are less successful. See "Survivor Bias." N.d. http://en.wikipedia.org/wiki/Survivorship_bias.

^[151] Buffett, M., and Clark, D. Warren Buffett's Management Secrets: Proven Tools for Personal and Business Success. New York: Scribner, 2009.

^[152] The discussion of intrinsic and extrinsic motivation draws on Dan Pink's presentation at TED on the surprising science of motivation: http://www.youtube.com/watch?v=rrkrvAUbU9Y; and his book, Drive (2010). Tom Coens and Mary Jenkins propose replacing traditional performance reviews with individual responsibility for the employee's own development: Abolishing Performance Appraisals: Why They Backfire and What to Do Instead. San Francisco: Berrett-Koehler, 2002. Jeff Sutherland offers an interesting approach to handling performance evaluation: "Agile Performance Reviews." http://jeffsutherland.com/2006/11/agile-performance-reviews.html.

^[153] When the CEO's salary is more than three hundred times that of a production worker, it will be hard for them to have a collaborative working relationship. Paumgarten, N. "Food Fighter." New Yorker, Jan. 4, 2010. Even Barron's magazine accepts that Wall Street compensation is excessive: Bary, A. "Diet Time!" Barron's, Jan. 25, 2010. http://online.barrons.com/article/SB126420745187633649.html?mod=djembwr_t.

^[154] A team of twelve is good for diversity, but it's not optimal for problem solving. If the team is diverse, seven plus or minus two is a better rule.

^[155] Lao Tzu. Tao Teh King Interpreted as Nature and Intelligence (A. J. Bahm, trans.). New York: Unger, 1958, #64.

^[156] McCourt, F. Angela's Ashes. New York: Touchstone, 1996.

^[157] The company has just a handful of staff, geographically dispersed, who are highly qualified. They are masters of their craft and deeply committed to the goal, and they trusted each other implicitly. With technology, software services, and an Internet-based product that they are selling, it's scalable in the sense that thousands of users can log in from all over the world, ordering millions of dollars of product a month through a Web site that is run by a couple of people.

^[158] Ohno, T. Taiichi Ohno's Workplace Management (J. Miller, trans.). Milketo, Wash.: Gemba Press, 2007, p. 53.

^[159] Ohno. Taiichi Ohno's Workplace Management, p. 53.

^[160] Ohno. Taiichi Ohno's Workplace Management, p. 53.

^[161] Ohno. Taiichi Ohno's Workplace Management, pp. 56–57.

^[162] Ohno. Taiichi Ohno's Workplace Management.

^[163] Larman, C., and Vodde, B. Scaling Lean and Agile Development: Thinking and Organizational Tools for Large-Scale Scrum. Upper Saddle River, N.J.: Addison-Wesley, 2008.

^[164] Poppendieck, M., and Poppendieck, T. Implementing Lean Software Development. Upper Saddle River, N.J.: Addison-Wesley, 2007.

^[165] Womack, J. P., Jones, D. T., and Roos, D. The Machine That Changed the World. New York: Rawson Associates, 1990.

^[166] Reinertsen, D. G. Managing the Design Factory: A Product Developer's Toolkit. New York: Simon & Schuster, 1997, p. 1.

^[167] Poppendieck and Poppendieck. Implementing Lean Software Development, pp. 133–134.

^[168] Takeuchi, H., Osono, E., and Shimizu, N. "The Contradictions That Drive Toyota's Success." Harvard Business Review, June 2008, pp. 96–104.

^[169] May, M. The Elegant Solution: Toyota's Formula for Mastering Innovation. New York: Free Press, 2006.

^[170] Quadrant Homes. Annual Report. 2008. http://quadranthomes.com/pdf/reports/QHannualReport2008_full.pdf.

^[171] Conley, C. Peak: How Great Companies Get Their Mojo from Maslow. San Francisco: Jossey-Bass, 2007, p. 89.

^[172] Catmull, E. "How Pixar Fosters Collective Creativity." Harvard Business Review, Sept. 2008, pp. 64–72.

^[173] Kelley, T. The Ten Faces of Innovation: IDEO's Strategies for Defeating the Devil's Advocate and Driving Creativity Throughout Your Organization. New York: Broadway Business, 2005.

^[174] Shewhart, W. Statistical Method from the Viewpoint of Quality Control. New York: Dover, 1986. (Originally published 1939.)

^[175] Deming, W. E. Out of the Crisis. Cambridge, Mass.: MIT Press, 1982.

^[176] In Out of the Crisis, Deming makes occasional references to the centrality of the customer, but the main thrust of the book is internally driven quality improvement. Deming's famous fourteen points for management, for instance, make no mention of the customer or client. Some writers, however, suggest that the customer was central to Deming's thinking. See, for example, Kilian, C. The World of W. Edwards Deming. Knoxville, Tenn.: SPC Press, 1992; Poppendieck and Poppendieck. Implementing Lean Software.

^[177] Larman and Vodde. Scaling Lean and Agile Development.

^[178] Jones, C. Applied Software Measurement: Global Analysis of Productivity and Quality (3rd ed.). New York: McGraw-Hill, 2008.

^[179] Woodward, E., Surdek, S., and Ganis, M. A Practical Guide to Distributed Scrum. Armonk, N.Y.: IBM Press, 2010.

^[180] Stalk, G. "Time—The Next Source of Competitive Advantage." Harvard Business Review, July-Aug. 1988, pp. 41–51.

^[181] Kniberg, H., and Skarin, M. "Kanban and Scrum—Making the Most of Both." http://www.infoq.com/resource/minibooks/kanban-scrum-minibook/en/pdf/KanbanAndScrumInfoQVersionFINAL.pdf. See also "Kanban and Scrum—Making the Most of Both." http://www.infoq.com/minibooks/kanban-scrum-minibook. And also Henrik Kniberg's blog: "Kanban vs Scrum," Apr. 3, 2008. http://blog.crisp.se/henrikkniberg/2009/04/03/1238795520000.html.

^[182] The iterative work method does have the additional transaction cost at the end of each iteration. Theoretically the iterations could become so short and frequent that the savings from iterative work patterns would be outweighed by increased transaction costs. Steps can be taken, however, to lower the transaction cost of a process cycle or not reduce the iteration cycle beyond the point where transaction costs outweigh the gains. See Larman and Vodde, Scaling Lean. See also Ohno. Taiichi Ohno's Workplace Management.

^[183] Beck, K. Extreme Programming Explained: Embrace Change. Upper Saddle River, N.J.: Pearson, 2004, p. 136.

^[184] Gilb, T. Competitive Engineering: A Handbook for Systems Engineering, Requirements Engineering, and Software Engineering Using Planguage. Burlington, Mass.: Butterworth Heinemann, 2005.

^[185] The description of the Polaris program draws on Poppendieck and Poppendieck. Implementing Lean Software Development; and Sapolsky, H. The Polaris System Development: Bureaucratic and Programmatic Success in Government. Cambridge, Mass.: Harvard University Press, 1972.

^[186] Ironically, the Polaris experience came to symbolize working in accordance with a plan. That was because Smith had used Program Evaluation and Review (PERT) charts to persuade Congress to give him the Polaris funding. Smith explained to Congress that the money wouldn't be wasted because he would be using an innovative new scheduling system: the PERT chart—a dramatic improvement over the Gantt chart. Rather than presenting work in orderly bars, a PERT chart connects events with arrows so that multiple dependencies can be reflected. The lesson that the U.S. Congress derived from the experience was that PERT charts work. PERT was so successful as a public relations device that in due course, Congress required the U.S. Navy to use the PERT system.

A subsequent independent review by military expert Harvey Sapolsky showed that the use of PERT charts had little to do with the success of Polaris. What the PERT system was good at was persuading the Congress to keep funding the program. It was a brilliant public relations facade by which Smith ensured continued funding of the program by progress.

Sapolsky attributed the success of the Polaris program not to PERT but to Smith's technical leadership, his laser-like focus on synchronizing increments of technical progress, the emphasis on testing, a deep sense of mission among all participants, and the iterative approach to developing components. This iterative approach resulted in significantly more capability, faster delivery, and lower cost than the traditional way of doing work sequentially, and implementing the ultimate plan in one go. Sapolsky. The Polaris System Development.

^[187] Kelley, T. Ten Faces of Innovation: IDEO's Strategies for Beating the Devil's Advocate and Driving Creativity Throughout Your Organization. New York: Doubleday, 2005. If developing prototypes is costly, using a pay-as-you-use contract may be an option.

^[188] Larman and Vodde. Scaling Lean and Agile Development.

^[189] Cohn, M. User Stories Applied: For Agile Software Development. Upper Saddle River, N.J.: Addison-Wesley, 2004.

^[190] Mike Cohn's blog: "Advantages of the Story Template: 'As a user, I want...'" Apr. 26, 2008. http://blog.mountaingoatsoftware.com/advantages-of-the-as-a-user-i-want-user-story-template.

^[191] Cohn, M. Succeeding with Agile: Software Development Using Scrum. Upper Saddle River, N.J.: Addison-Wesley, 2004.

^[192] Shook, J. Managing to Learn: Using the A3 Management Process to Solve Problems, Gain Agreement, Mentor, and Lead. Cambridge, Mass.: Lean Enterprise Institute, 2008.

^[193] Cohn. Succeeding with Agile.

^[194] May, M. E. The Elegant Solution: Toyota's Formula for Mastering Innovation. New York: Free Press, 2006.

^[195] As an example, Columbia University's College of Physicians and Surgeons offers The Program in Narrative Medicine. http://www.narrativemedicine.org/.

^[196] Benefield, G. "Rolling Out Agile in a Large Enterprise (Yahoo)." In Proceedings of the 41st Hawaii International Conference on System Sciences. 2008. http://www2.computer.org/portal/web/csdl/doi/10.1109/HICSS.2008.382.

^[197] Stalk, G. "Time—The Next Source of Competitive Advantage." Harvard Business Review, July-Aug. 1988, p. 41.

^[198] For an excellent discussion of the counterintuitive nature of queues, see Larman, C., and Vodde, B. Scaling Lean and Agile Development: Thinking and Organizational Tools for Large-Scale Scrum. Upper Saddle River, N.J.: Addison-Wesley, 2008, chap. 4.

^[199] The reason for having lists is that a flow system (kanban) was better in this context than iterations. Granvik says: "You've got football. You've got school. You've got dinner. You've got laundry. God knows what else. So adding any extra burden is difficult to plan ahead. So that's why we have the system with the lists. It's more a flow style of work."

^[200] Sutherland, S., Jakobsen, C., and Johnson, K. "Scrum and CMMI Level 5: The Magic Potion for Code Warriors." In Proceedings of the 41st Hawaii International Conference on System Sciences—2008. 2008. http://jeffsutherland.com/scrum/Sutherland-ScrumCMMI6pages.pdf.

^[201] Graban, M. Lean Hospitals: Improving Quality, Patient Safety and Employee Satisfaction. Boca Raton, Fla.: CRC Press, 2009, pp. 156–157.

^[202] The goal is to delight the ultimate customer—in this case, the patient. The doctor is the intermediate customer. As part of its thinking about the ultimate customer, the team should be thinking how to do work in a way that enables intermediate clients like the doctor to deliver more value to ultimate customers sooner. It is not enough that the intermediate client's needs have been met. The question is whether the intermediate client has been enabled to delight the ultimate client.

^[203] By focusing on long production runs, traditional management is slow in identifying quality problems. Stopping a long production run is psychologically difficult. Long production runs tend to distract management from preventing problems rather than fixing them after they have occurred. It also tends to make fixing problems more expensive. In long production runs, generic problems may be building up that may be found only when everything is done. Once the problem is identified, the scale of the problem to fix is much bigger because it affects a large volume of inventory. Long production runs lead to large inventory buffers and delays. Management gets used to shelving problems rather than solving them on the spot. Long production runs almost guarantee the waste of overproduction. They are less flexible in the marketplace, hampering the organization in adjusting to unexpected fluctuations in demand. This situation leads to inventory that has to be gotten rid of, which means price reductions and rebates to move it.

From the perspective of the whole organization, not just the production process, long production runs tend to increase costs. This is the startling finding from Toyota. Once the turnaround of short production runs is mastered and all the costs to the total organization are included, the apparent economies of scale from long production runs tend to dissolve.

^[204] Although value stream mapping is often associated with manufacturing, it is also used in logistics, supply chain, service industries, health care, software development, and new product development.

^[205] For a good discussion of value stream mapping, see Poppendieck, M., and Poppendieck, T. Implementing Lean Software Development. Upper Saddle River, N.J.: Addison-Wesley, 2007. The originator of value stream mapping in Toyota, Shigeo Shingo, suggested drawing the value-adding steps horizontally across the map and the non-value-adding steps in vertical lines at right angles to the value stream. The vertical line is the "story" of a person or work station, and the horizontal line represents the "story" of the product being created. The object is to accelerate the horizontal story of delivering value to the customer by reducing or eliminating the steps represented by vertical lines. In most large hierarchies, much of the activity is represented by vertical lines because it doesn't add value to the ultimate customer. A value stream map dramatically draws attention to this fact.

^[206] Stalk, G. "Time."

^[207] Williams, C. MGMT. Mason, Ohio: Thomson South-Western, 2009. Financial Times. Mastering Strategy: The Complete MBA Companion to Strategy. Upper Saddle River, N.J.: Prentice Hall, 2000. A Guide to the Project Management Body of Knowledge (PMBOK Guide) (4th ed.). Newtown Square, Pa.: Project Management Institute, 2008. Rothman, J. Manage It! Your Guide to Modern Pragmatic Project Management. Raleigh, N.C.: Pragmatic Bookshelf, 2007.

^[208] Ohno, T. Taiichi Ohno's Workplace Management (J. Miller, trans.). Milketo, Wash.: Gemba Press, 2007.

^[209] For example, in 2008, management at Systematic Software noticed that several of its software teams were much more productive than the others. One of the successful practices they used was making sure that work was ready. The other was finishing tasks quickly. The projects had improved "flow of implementation of story" from 32 percent at the start of 2008 to 59 percent by the end of the year. Jakobsen, C., and Sutherland, J. "Scrum and CMMI—Going from Good to Great: Are You Ready-Ready to Be Done-Done?" 2009. http://agile2009.agilealliance.com/files/WHI0001%20ScrumCMMI%20from%20Good%20to%20Great%201_11.PDF.

^[210] When Systematic Software investigated why several of its teams were more productive than the norm, they found a principal reason was that the team had paid particular attention to ensuring that the work introduced into an iteration was ready to be worked on. A checklist is now used to ensure that the things to be worked on are properly prepared for implementation in the iteration. By thinking systematically about what is to be addressed before work begins, the formal planning meetings became more efficient because the team knew what the features and the stories were about. Jakobsen and Sutherland. "Scrum and CMMI—Going from Good to Great."

^[211] Cohn, M. Agile Estimating and Planning. Upper Saddle River, N.J.: Prentice Hall, 2005.

^[212] Planning poker is a variation of the Delphi method. It is commonly used in Agile software development. The method was described by James Grenning in 2002 (http://renaissancesoftware.net/papers/14-papers/44-planing-poker.html) and later popularized by Cohn. Agile Estimating and Planning.

^[213] A strict Fibonacci series would be: 1, 2, 3, 5, 8, 13, 21, 34, 55, 89. The modified series is better suited as a tool to reflect broad orders of magnitude. See FAQs. http://store.mountaingoatsoftware.com/pages/faqs. Also see "Planning Poker." Wikipedia. http://en.wikipedia.org/wiki/Planning_poker.

^[214] Poppendieck and Poppendieck. Implementing Lean Software Development.

^[215] Ressler, C., and Thompson, J. Why Work Sucks and How to Fix It: No Schedules, No Meetings, No Joke—the Simple Change That Can Make Your Job Terrific. New York: Portfolio, 2008.

^[216] Just as the phantom traffic jam can be caused by having cars moving at different speeds, so management requests to expedite specific items cause the overall speed of the team to slow down. The managers may miss the fact that the overall flow is slower because their specific request was handled promptly.

^[217] A "flow" or kanban approach is illustrated by the example of Björn Granvik at the start of this chapter. For a discussion of the implications, see "Kanban and Scrum—Making the Most of Both." http://www.infoq.com/minibooks/kanban-scrum-minibook. See also Henrik Kniberg's blog: "Kanban vs Scrum," Apr. 3, 2008. http://blog.crisp.se/henrikkniberg/2009/04/03/1238795520000.html.

^[218] Cross, R., and Thomas, R. J. Driving Results Through Social Networks: How Top Organizations Leverage Networks for Performance and Growth. San Francisco: Jossey-Bass, 2009, p. 80.

^[219] Radical management practices enabled OpenView Venture Partners to initiate a culture of working fewer hours and no weekends while getting much more done. Sutherland, J., and Altman, I. "Take No Prisoners: How a Venture Capital Group Does Scrum." Aug. 2009. http://jeffsutherland.com/SutherlandTakeNoPrisonersAgile2009.pdf.

^[220] Liker, J. K., and Hoseus, M. Toyota Culture: The Heart and Soul of the Toyota Way. New York: McGraw-Hill, 2008, pp. 27–28.

^[221] At PatientKeeper, a software development firm in Boston deploying radical management practices throughout its operations, several years of hard work were needed before work was routinely completed at the end of an iteration, where the software was fully tested, deployed, and operational and the clients were satisfied with what had been deployed. When that was accomplished, client delight and revenues grew exponentially. Poppendieck and Poppendieck. Implementing Lean Software Development, pp. 95–98.

^[222] Gloria Steinem has used this quote in speeches. FreedomForum.org.http://www.freedomforum.org/templates/document.asp?documentID=15030. Compare it with: "You will know the truth, and the truth will set you free" John 8:32.

^[223] World Bank commitments increased from an annual level of about $1 billion in 1968 to over $13 billion in fiscal 1981. http://web.worldbank.org/WBSITE/EXTERNAL/EXTABOUTUS/EXTARCHIVES/0,,contentMDK:20502974~pagePK:36726~piPK:437378~theSitePK:29506,00.html.

^[224] These paragraphs draw on John Blaxall's reminiscences: "Remembering Robert S. McNamara: Seizing the Reins." Sept. 15, 2009. http://1818members.wordpress.com/2009/07/09/remembering-robert-s-mcnamara/#comments.

^[225] As a young division chief at the time, I encountered McNamara only occasionally. When I did see him in action, I was bowled over by his energy and his eloquence. McNamara dazzled me, as he did everyone else, with his intelligence, articulateness, and grasp of numbers. His ability to absorb information and put it in a meaningful context was extraordinary. He could sit for hours while a score of executive directors of the World Bank's board spoke and then summarize the disjointed discussion simply, clearly, and logically, and explaining some viewpoints more convincingly than the original speakers.

^[226] An internal review of the bank's loan portfolio, "Portfolio Management: Next Steps—A Program of Actions" (Washington, D.C.: World Bank, 1992), also known as the Wapenhans report, was leaked to the public. It reviewed the quality of the bank's portfolio and found that the bank was not enforcing 78 percent of the financial conditions in the loan agreements. Using the bank's own criteria, the reviewers discovered that 37.5 percent of recently evaluated projects were unsatisfactory, up from 15 percent in 1981. The report linked the decline in project quality to a "pervasive" "culture of approval" for loans, whereby bank staff members perceived the appraisal process as merely a "marketing device for securing loan approval," and "pressure to lend overwhelms all other considerations." Hunter, D., and Uall, L. "The World Bank's New Inspection Panel: Will It Increase the Bank's Accountability?" 1993. http://www.ciel.org/Publications/issue1.html.

^[227] The pressure to lend was a widely perceived phenomenon. Senior World Bank vice president Warren Baum, recalls: "My biggest problem with McNamara came from his relentless pressure on the staff to do more and faster lending. One couldn't argue with him, since he wouldn't admit that he did it, or that there was any friction between lending more or lending better (one of my responsibilities). Not in the long run, but in daily operations, staff felt continuing pressure to reach or exceed lending targets that could lead to cutting corners or making mistakes." Baum, W. "The Maplewood Messenger: The Robert McNamara That I Knew." http://1818members.files.wordpress.com/2009/07/warren_c-_baum_about_robert_mcnamara.pdf.

^[228] Crawford, M. Shop Class as Soulcraft: An Inquiry into the Value of Work. New York: Penguin, 2009.

^[229] Frankfurt, H. On Bullshit. Princeton, N.J.: Princeton University Press, 2005.

^[230] In McNamara's case at the World Bank, it wasn't his first experience of trusting too much in the numbers. It had happened to him during the disastrous Bay of Pigs invasion of Cuba in 1961, for which he was responsible as secretary of defense. It had happened to him in Vietnam, where his visits were legendary. He would scurry around "looking for what he wanted to see; and he never saw nor smelled nor felt what was really there, right in front of him." Halberstam, D. The Best and the Brightest. New York: Random House, 1972.

^[231] "In those times, the universities were teaching the wrong things. Neither Galileo nor Descartes, for example, was able to pick up the mathematical skills he so desperately needed during the course of his university education. Galileo had initially studied medicine at Pisa but left before completing his degree, and in 1583 started learning mathematics at his father's house from the Florentine court instructor Ostilio Ricci, who taught military fortification, mechanics, architecture, and perspective. Descartes similarly learned his mathematics in a practical context: having studied law at Poitiers, he picked up and refined his mathematical skills in the armies of Prince Maurice of Nassau and Maximilian I, to which he was attached from 1618 to 1620." Gaukroger, S. The Emergence of a Scientific Culture. Oxford: Clarendon Press, 2006.

^[232] Even in science, the march toward truth proceeds not in straight lines but through a series of peaceful interludes punctuated by intellectually violent revolutions. Kuhn, T. S. The Structure of Scientific Revolutions. Chicago: University of Chicago Press, 1996. The truth in science may also be diverted by political or financial pressures: Greenberg, D. Science, Money, and Politics: Political Triumph and Ethical Erosion. Chicago: University of Chicago Press, 2003.

^[233] Campbell, J. The Liar's Tale. New York: Norton, 2001.

^[234] Larman, C., and Vodde, B. Scaling Lean and Agile Development: Thinking and Organizational Tools for Large-Scale Scrum. Upper Saddle River, N.J.: Addison-Wesley, 2008.

^[235] Mann, D. Creating a Lean Culture. New York: Productivity Press, 2005, pp. 62, 65.

^[236] Ohno, T. Workplace Management (J. Miller, trans.). Milketo, Wash.: Gemba Press, 2007.

^[237] Culbert, S. A. Beyond Bullsh*t: Straight-Talk at Work. Stanford, Calif.: Stanford Business Press, 2008, pp. 76–77.

^[238] Ohno, T. Taiichi Ohno's Workplace Management (J. Miller, trans.). Milketo, Wash.: Gemba Press, 2007, p. 15.

^[239] Bremner, B., and Dawson, D. "Can Anything Stop Toyota?" BusinessWeek, Nov. 17, 2003. http://www.businessweek.com/magazine/content/03_46/b3858001_mz001.htm.

^[240] Liker, J., and Hoseus, M. Toyota Culture: The Heart and Soul of the Toyota Way, New York: McGraw-Hill, 2009, pp. 27–28.

^[241] Senge, P. The Fifth Discipline: The Art and Practice of the Learning Organization. New York: Doubleday, 1994. Garvin, D. A., Edmondson, A. C., and Gino, F. "Is Yours a Learning Organization?" Harvard Business Review, Mar. 2008, pp. 109–116.

^[242] O'Reilly, C., and Pfeffer, J. Hidden Value. Boston: Harvard Business School Press, 2000, p. 82.

^[243] Womack, J. P., Jones, D. T., and Roos, D. The Machine That Changed the World. New York: Rawson Associates, 1990.

^[244] The model for the Ford production initiatives at Hermosillo was Mazda. Starting in 1979 with a 7 percent financial stake, Ford began a partnership that resulted in a variety of joint projects. During the 1980s, Ford increased its stake by another 20 percent. According to John Cotter, president of John J. Cotter & Associates, who worked with Ford for many years as a start-up consultant, the strong results at Hermosillo were emulated with the UAW at the Romeo engine plant in Michigan. However, internal bickering prevented learnings from either experience from being adopted elsewhere in the company. Success in a large political company like Ford makes a small number of people look good and a large number of others look not so good. So the people who end up looking less good have every incentive to deny the success of the offending initiative.

At Romeo, there was also a career issue for the directors at engine division headquarters who didn't like the decentralization of control that came with the new design: engineering and production were now colocated and worked on everything together. So they eventually forced the successful start-up plant manager to resign and replaced him with a succession of more conservative appointments.

^[245] Liker, J. The Toyota Way. New York: McGraw-Hill, 2003, p. 10. See also Vasilash, G. S. "Oh, What a Company!" Automotive Design and Production, Jan. 12, 2005. http://www.autofieldguide.com/articles/030501.html.

^[246] Sutherland, J. "Hyperproductive Distributed Scrum Teams." July 21, 2008. www.youtube.com/watch?v=Ht2xcIJrAXo.

^[247] Ohno, T. Toyota Production System: Beyond Large-Scale Production. New York: Productivity Press, 1988. (Originally published 1978.)

^[248] Ohno, Toyota Production System, pp. 4, 77.

^[249] Toyota. "Human Resources Development." In Environmental and Social Report 2003. 2003. http://www.toyota.co.jp/en/environmental_rep/03/jyugyoin03.html. Liker and Hoseus. Toyota Culture.

^[250] O'Reilly and Pfeffer. Hidden Value, p. 187.

^[251] O'Reilly and Pfeffer. Hidden Value, p. 192.

^[252] O'Reilly and Pfeffer. Hidden Value, p. 196.

^[253] Womack, Jones, and Roos. The Machine That Changed the World, p. 87.

^[254] See, for instance, "Lean Manufacturing." http://en.wikipedia.org/wiki/Lean_manufacturing.

^[255] At the time of the Audi cases, acceleration was handled by mechanical controls. Electronic throttle controls (ETC), which began to be introduced in 2003, sever the mechanical link between the accelerator pedal and the throttle. ETC facilitates the integration of features such as cruise control, traction control, stability control, and precrash systems. Much of the engineering involved with ETC deals with fault management and the detection of possible errors.

^[256] Whoriskey, P. "NHTSA Chief Says Rate of Toyota Complaints Was 'Unremarkable.'" Washington Post, Mar. 11, 2010. http://www.washingtonpost.com/wp-dyn/content/article/2010/03/10/AR2010031003876.html.

^[257] "Toyota, Lexus Slip in Key Dependability Study." ABC News, Mar. 18, 2010. http://abcnews.go.com/Business/wirestory?id=10135349&page=1.

^[258] "Toyota Chief Says Training Lapsed amid Fast Growth." Forbes, Mar. 17, 2010. http://www.forbes.com/feeds/ap/2010/03/17/business-as-japan-toyota_7444913.html.

^[259] On October 4, 2009, Brian Lyons, the spokesperson for Toyota, said: "It is conceivable we could develop software so that if the gas pedal and brake pedal were hit at the same time, the brake pedal wins. We have several ideas in mind." Jensen, C. "Toyota Seeks Solution on Mats." New York Times, Oct. 4, 2009. http://query.nytimes.com/gst/fullpage.html?res=9907E6DD163DF937A35753C1A96F9C8B63&scp=60&sq=toyota&st=nyt.

^[260] In an interesting interview, Alan Mulally explained how he introduced continuous improvement into the traditional management culture at Ford: "On Leadership: Ford CEO Alan Mulally on Catching Mistakes." Washington Post, Mar. 17, 2010. http://www.washingtonpost.com/wp-dyn/content/video/2010/03/17/VI2010031700340.html.

^[261] "Toyota President Urges Workers, Dealers to Work Toward New Start." Japan Today, Mar. 5, 2010. http://www.japantoday.com/category/business/view/toyota-president-urges-workers-dealers-to-work-toward-new-start.

^[262] Larman, C., and Vodde, B. Scaling Lean and Agile Development: Thinking and Organizational Tools for Large-Scale Scrum. Upper Saddle River, N.J.: Addison-Wesley, 2008. It is striking that at Toyota, no incremental improvement is too small to be worth looking at. The result is around a million improvements proposed and implemented each year. See May, M. The Elegant Solution: Toyota's Formula for Mastering Innovation. New York: Free Press, 2006, p. xi.

^[263] Dennis, P., and Womack, J. Getting the Right Things Done: A Leader's Guide to Planning and Execution. Cambridge, Mass.: Lean Enterprise Institute, 2007.

^[264] Ohno. Toyota Production System. See also "5 Whys." http://en.wikipedia.org/wiki/5_Whys.

^[265] Larman and Vodde. Scaling Lean.

^[266] One of the characteristics of Jeff Sutherland's initial Scrum team back in 1993 involved systematically exposing the team to outside views from neighboring companies, universities, and consultants within the firm. In this way, the team was continually prodded to do better. Similarly, Procter & Gamble has drawn on outside ideas to improve the company's innovation productivity by 60 percent. The strategy presumed that for every scientist at P&G, there were at least two hundred outside the company who could do similar work. Lafley, A. G., and Charan, R. The Game-Changer: How You Can Drive Revenue and Profit Growth with Innovation. New York: Crown, 2008.

^[267] Even radical management is not "the best practice" of management. It is simply the best management practice I know of at this time. Even if it is adopted in every organization in the world today and yields the benefits I am suggesting, people will in due course discover an even better way to manage.

^[268] Drucker, P. Post-Capitalist Society. New York: HarperBusiness, 1993, p. 56.

^[269] Ariely, D. Predictably Irrational: The Hidden Forces That Shape Our Decisions. New York: HarperCollins, 2008, p. 68.

^[270] Superiors appropriate or preempt what they want or receive tribute from subordinates. Conversely, in healthy authority ranking relationships, superiors demonstrate noblesse oblige: they provide for subordinates who are in need and protect them. Fiske, A. "The Four Elementary Forms of Sociality: Framework for a Unified Theory of Social Relations." Psychological Review, 1992, 99, 689–723. One reason that the modern workplace has become so toxic is that organizations felt compelled by market forces to scrap noblesse oblige. Repeated downsizings showed that they were not able or willing to look after their workers in a time of need. Authority became the pure exercise of power without reciprocity.

^[271] Fiske. "The Four Elementary Forms of Sociality."

^[272] Ariely, Predictability Irrational.

^[273] See Todd, R. The Thing Itself: On the Search for Authenticity. New York: Riverhead Books, 2008.

^[274] Stalk, G., Lachenauer, R., and Butman, J. Hardball: Are You Playing to Play or Playing to Win? Boston: Harvard Business School Press, 2004.

^[275] See Sutherland, J. "Hyperproductive Distributed Scrum Teams." July 21, 2008. http://www.youtube.com/watch?v=Ht2xcIJrAXo. Schwaber, K. "Scrum et al." Sept. 5, 2006. http://www.youtube.com/watch?v=IyNPeTn8fpo&feature=PlayList&p=DE357C4045F1038F&playnext=1&playnext_from=PL&index=17. Poppendieck, M. "The Role of Leadership in Software Development." May 6, 2008. http://www.youtube.com/watch?v=ypEMdjslEOI&feature=PlayList&p=3A5E1DE6E9C76D0A&index=0&playnext=1.

^[276] Denning, S. The Leader's Guide to Storytelling. San Francisco: Jossey-Bass, 2007. Denning, S. The Secret Language of Leadership. San Francisco: Jossey-Bass, 2007.

^[277] Williams, C. MGMT. Mason, Ohio: South-Western, 2008, pp. 279–280.

^[278] Denning. The Secret Language of Leadership.

^[279] Denning. The Leader's Guide to Storytelling.

^[280] For detailed accounts of such adversarial encounters, see Pollan, S., and Levine, M. Lifescripts: What to Say to Get What You Want in Life's Toughest Situations. Hoboken, N.J.: Wiley, 2004. In most of the more than one hundred scenarios laid out in this revealing book, the end result is an apparent "victory" for the speaker. But a careful reading of the interactions suggests that the outcome generally remains full of tension, with an aftermath of bitterness at the exercise of power. In each case, the speaker "wins" the battle but is at risk of losing the war.

^[281] Handy, C. Gods of Management: The Changing Work of Organizations. New York: Oxford University Press, 1978.

^[282] Avery, C. M. Teamwork Is an Individual Skill: Getting Your Work Done When Sharing Responsibility. San Francisco: Berrett-Koehler, 2001.

^[283] For instance, when David Axelrod spoke on 60 Minutes on November 4, 2008, election night, he described the mood within the Obama campaign team: "We believed in the candidate and we believed in the cause, and we believed in each other. And by the end of this thing, over two years, you forge relationships and we're like a family. The hardest thing about this is that it's ended now. It's like the end of the movie, M*A*S*H. The war is over. We're all going home. And we want to go home. But on the other hand, it's sort of a bit of melancholy, because we've come to love each other, and we believe in each other and we know that this will never be the same. We went through this experience and it was a singular experience and it will never be the same." 60 Minutes, Nov. 4, 2009.

^[284] See, for example, "Pericles Funeral Oration." In Thucydides. History of the Peloponnesian War. New York: Penguin Books, 1954.

^[285] Alexander, C. The Timeless Way of Building. New York: Oxford University Press, 1979, p. 13.

^[286] For example, contriving to create crises, canceling luxurious perks, using consultants to force more open discussion, banning senior management "happy talk" or bombarding workers with information about opportunities. Kotter, J. Leading Change. Boston: Harvard Business School Press, 1995; Kotter, J. A Sense of Urgency. Boston: Harvard Business School Press, 2009.

^[287] Quinn, R. E. Building the Bridge as You Walk on It: A Guide for Leading Change. San Francisco: Jossey-Bass, 2004.

^[288] For example, Kotter. Leading Change.

^[289] The organization was the World Bank, and the idea was knowledge management. My idea was to complement the World Bank's traditional role of lending money to developing countries to relieve poverty with a major effort to share our knowledge with the millions of people who make decisions about poverty. A detailed account of the change process is contained in two of my books: The Springboard (Burlington, Mass.: Butterworth-Heinemann, 2000) and the Introduction to The Secret Language of Leadership (San Francisco: Jossey-Bass, 2007).

^[290] Two adaptations were important. First, most other organizations at the time were pursuing knowledge management as a tool to improve efficiency or win more business. In the World Bank, knowledge sharing was more important to improve organizational effectiveness. Second, most other organizations at the time were pursuing knowledge management as a way of sharing knowledge inside the organization. In the World Bank, the idea was adapted to include sharing knowledge outside the organization.

^[291] Kahan, S. Getting Change Right.

^[292] Could one describe the period as "happy"? It depends on what is meant by happiness. If happiness is a state of passive contentment, no: most days were filled with worry about the scale of the difficulties we faced. By contrast, psychologist Tal Ben-Shahar defines happiness as a process: "Attaining lasting happiness requires that we enjoy the journey on our way toward a destination we deem valuable. Happiness, therefore, is not about making it to the peak of the mountain, nor is it about climbing aimlessly around the mountain: happiness is the experience of climbing toward the peak." Ben-Shahar, T. http://www.talbenshahar.com/. If happiness is the experience of climbing toward the peak, then yes, we were happy.

^[293] Studies suggest that most successful ideas for big change enter the organization from people at the upper-middle part of management, not the top. Davenport, T., and Prusak, L. What's the Big Idea? Boston: Harvard Business School Press, 2003.

^[294] Sutherland, J. "Hyperproductive Distributed Scrum Teams." July 21, 2008. http://www.youtube.com/watch?v=Ht2xcIJrAXo. Sutherland, J., Schoonheim, G., Rustenburg, E., and Rijk, M. "Fully Distributed Scrum: The Secret Sauce for Hyperproductive Offshore Development Teams." Agile Conference Publication. Aug. 2008. http://ieeexplore.ieee.org/xpl/freeabs_all.jsp?arnumber=4599502.

^[295] Radical management doesn't mean abandoning planning, ceasing to look ahead, forgetting about budgets, neglecting customers, failing to assess risks, or ignoring real-world constraints. At the same time, a plan, as practiced by Robert McNamara, which is simply a bunch of numbers, is a weak instrument. Tables of numbers tend to ignore critical quality issues (see Chapter Eight). A better approach is to use the concept of a business model, which is a story that explains how an organization will operate. It gives the theory of the business and is a story set in the present or near future. The narrative is tied to numbers as the elements in the business model are quantified. The business model answers questions like: Who is the customer? And what does the customer value? How do we make money in this business? What is the underlying economic logic that shows how we can deliver value to customers at an appropriate cost? Its validity depends on its narrative logic (Does the story hang together?) and the quantitative evidence (Do the numbers add up?). In an iterative approach, the story and the numbers are updated as the situation evolves. One keeps on asking: Is it still realistic, knowing what we now know? See Magretta, J. "Why Business Models Matter." Harvard Business Review, May 2002, pp. 87–92; Denning, S. The Leader's Guide to Storytelling. San Francisco: Jossey-Bass, 2005.

^[296] Sutherland, S., Jakobsen, C., and Johnson, K. "Scrum and CMMI Level 5: The Magic Potion for Code Warriors." In Proceedings of the 41st Hawaii International Conference on System Sciences—2008. 2008. http://jeffsutherland.com/scrum/Sutherland-ScrumCMMI6pages.pdf.

^[297] Moore, G. "Scrum Element: VC Applies Efficiency to Portfolio Firms." Boston Business Journal, Dec. 18, 2009. http://www.bizjournals.com/boston/stories/2009/12/21/story3.html. Moore, G. "OpenView Hopes Scrum Efficiency Will Spark Investing." Mass High Tech: The Journal of New England Technology, Dec. 18, 2009. http://www.masshightech.com/stories/2009/12/14/daily62-OpenView-hopes-scrum-efficiency-will-spark-investing.html.

Sutherland, J., and Altman, I. "Take No Prisoners: How a Venture Capital Group Does Scrum." 2009. http://jeffsutherland.com/scrum/SutherlandTakeNoPrisonersAgile2009.pdf.

^[298] "The Year of Living Dangerously." Scrum Gathering 2008 Stockholm—Salesforce.com. http://www.slideshare.net/sgreene/scrum-gathering-2008-stockholm-salesforcecom-presentation.

^[299] Cohn, M. Succeeding with Agile: Software Development Using Scrum. Upper Saddle River, N.J.: Addison-Wesley, 2009, p. 12.

^[300] Fry, C., and Green, S. "Large Scale Agile Transformation in an On-Demand World." 2007. http://trailridgeconsulting.com/files/salesforce_agile_adoption_2007.pdf.

^[301] Hackman, J. R. Leading Teams: Setting the Stage for Great Performances. Boston: Harvard Business School Press, 2002.

^[302] Denning. The Leader's Guide to Storytelling. Denning. The Secret Language of Leadership. Kahan. Getting Change Right.

^[303] Denning. The Leader's Guide to Storytelling.

^[304] Mills, C. W. The Sociological Imagination. New York: Oxford University Press, 2000, p. 171. (Originally published 1959.)

^[305] Some will even pause long enough to ask themselves: Why did Warren Buffett focus his investments on companies where the people love what they are doing? Buffett, M., and Clark, D. Warren Buffett's Management Secrets: Proven Tools for Personal and Business Success. New York: Scribner, 2009.

^[306] De Botton, A. The Pleasures and Sorrows of Work. New York: Pantheon, 2009. http://www.amazon.com/Pleasures-Sorrows-Work-Alain-Botton/dp/037542444X/ref=ntt_at_ep_dpi_2.