Thursday, April 15, 2010
Wednesday, April 14, 2010
Toyota Crisis Aggravates Internal Management Feud - WSJ.com
The 2005 Vision also pushed Toyota to implement kakushin, or revolutionary innovations, in vehicle design and manufacturing. That included efficiency drives to reduce costs, not only through conventional means, such as simplifying designs and using cheaper materials, but also by changing the way cars are engineered. For example, engineers were pushed to combine functions into fewer parts and systems. Their aim: cut the number of components in a car by half.
Talking to engineers and mid-level executives, Mr. Toyoda said the rapid expansion exceeded the company's ability to assure the quality and reliability of each model. He called on the engineers, seated inside an auditorium at Toyota's global headquarters, to shift their mindset and attain the "resolve to make a big turn from emphasizing volume to quality," according to a summary of the speech reviewed by the Journal.
The nonfamily executives acknowledge they made some mistakes. One says a large number of inexperienced contract engineers hired from outside agencies—an effort to save money as they tried to boost engineering capacity—led to at least some of the increase in quality glitches.So, in summary, the "Toyota way" gave way to the "GM way", and maybe the "GE way" (in the case of contract engineers, which is a current trend in many companies.)
Monday, April 5, 2010
Economists need their own uncertainty principle : Nature News
Andrew Lo and Mark Mueller of the Sloan School of Management at the Massachusetts Institute of Technology, in Cambridge, suggest that what economists grappling with uncertainty need is a proper taxonomy of risk — not unlike, as it turns out, Rumsfeld's infamous classification. In this way, they state, risk assessment in economics can be united with the way uncertainties are handled in the natural sciences. It may then become clearer where conventional economic theory is a reliable guide to planning and forecasting, and where its predictive value fails.
They call for more support of postgraduate economic training to create a cadre of better informed practitioners, who are more alert to the limitations of the current economic models, such as those used to calculate expected daily returns on investments in a 'business-as-usual' market. They point out the dangers of devolving business management decisions to financial analysts who have become accustomed to thinking that their models capture all there is to say about economic risk. But to truly eliminate the ruinous false confidence engendered by the clever, physics-aping maths of economic theory, why not make it standard practice to teach everyone who studies economics at any level that their models apply only to specific and highly restricted varieties of uncertainty?The original paper(draft) of Lo and Mueller can be downloaded from http://arxiv.org/abs/1003.2688