Boeing Co. (NYSE: BA) CEO, Jim McNerney, is managing a 159,300 employee aircraft manufacturer with $66.4 billion in sales and $4 billion in profits (both 2007 figures). If you're running a small business or aspire to start one, is there anything you can learn from McNerney that could help you achieve your business goals? Yes.

Portfolio is publishing my eighth book, You Can't Order Change, which studies how McNerney manages Boeing. To write this book I interviewed people who worked with McNerney and scrutinized how he manages people, strategy, operations, and communities. What I discovered is that McNerney has come up with very effective techniques for addressing 11 common CEO challenges.

Though McNerney is far from perfect -- for example, Boeing's popular 787 Dreamliner is two years behind schedule -- here are six such techniques that I think are the most useful to small business leaders:

• Make your people 15% better. McNerney motivates people to get 15% better every year -- and in so doing, boosts financial performance. Specifically, he focuses on people who have the potential to change due to their openness, courage, and teamwork. And he views his job as removing the bureaucratic obstacles that keep them from "igniting." To get there, he encourages the flow of information up and down the line. He gets phenomenally talented jerks out of the line, and he invests in leadership development.

Continue reading Six small biz tips from a CEO who flies right

Six small biz tips from a CEO who flies right originally appeared on BloggingStocks on Sun, 04 Jan 2009 18:30:00 EST. Please see our terms for use of feeds.

Six Sigma Pricing: Improving Pricing Operations to Increase Profits by M. and N. Sodhi should be required reading for everybody in business, whether in finance, sales, or marketing. This is the most accessible, non-jargon-filled explanation of Six Sigma processes I have read. Using case studies, the authors prove that, just as Six Sigma procedures can be used to define, analyze and reduce defects or deviations in manufacturing processes, these same procedures can be applied to the complicated realm of pricing to examine and then reduce "defects" or fluctuations in pricing. Using Six Sigma methodologies company-wide will help everyone involved in setting and abiding by published prices understand that repeated, unnecessary, unauthorized differences between list prices, discount prices, invoice prices, and realized prices have a direct and usually negative impact on a company's bottom line.

Pricing consistency and control is internal to a company to a large extent. Deviations from list prices do happen primarily because different people in different departments have different goals: greatest profit for people in finance, market share for those in marketing, volumes of sales (and sales bonuses) for salespeople. The authors argue that companies need to build cross-functional pricing teams so that representatives of all groups involved with pricing can have input into how and why pricing is set the way it is for maximum company profitability.

Even readers unfamiliar with basic statistics can benefit from this book. Chapter 7 includes a basic nontechnical overview of the statistical tools involved in Six Sigma analysis. The point of this book is not to teach HOW to implement Six Sigma procedures in pricing processes, though Chapter 6 provides enough basic information to get a team started. Rather, the authors prove WHY companies should implement Six Sigma methodologies to stem "profit leaks." Numerous graphs, tables, and flow charts provide visual reinforcement of the information in the text. Each chapter contains a brief summary. Chapter 13 provides a useful checklist of steps to take, and in what order, to deploy Six Sigma thinking across nonmanufacturing processes in order to better control the outcome.

Book review: Six Sigma Pricing originally appeared on BloggingStocks on Sun, 30 Sep 2007 10:10:00 EST. Please see our terms for use of feeds.

Most of what I write about draws on my experience as an investor over the last four decades, and my investment company interests. However, my role as an architect has taught me many valuable lessons as well. One of my most cherished lessons comes from the United States Marines Corps.

Constant Mission Improvement
The concept of Constant Mission Improvement was presented to me in early programming and design meetings for an aircraft maintenance training facility at the U. S. Marine Corps Air Station, Camp Pendleton, CA. There is nothing complex about the concept. Simply stated, everything shall be reviewed on a constant basis for potential improvement, and if something can be improved then strive to make it happen. This means that each team member, owners representatives designers, engineers, managers and the rest shall be on the look out for ways to make the project better all the time.

Think of Jack Welch's adoption of the Six Sigma program; disciplined, data-driven approach and methodology for eliminating defects (driving towards six standard deviations between the mean and the nearest specification limit) in any process.

Think of what eBay (EBAY) should be doing and is not.

Continue reading GOOGLE, APPLE use U.S. Marine's Constant Mission Improvement!

GOOGLE, APPLE use U.S. Marine's Constant Mission Improvement! originally appeared on BloggingStocks on Wed, 06 Sep 2006 17:31:00 EST. Please see our terms for use of feeds.

Either General Electric Co. (NYSE: GE) needs to do a better job of explaining its business to investors or it needs to change its corporate strategy. As reported in today's New York Times [subscription required], despite its efforts to explain the value of its processes, GE's stock remains 43% below its August 2000 peak of $58.69.

To be fair, GE did well in 2003 and 2004, beating the market while posting 30.7% and 20.7% returns respectively. However, in 2005, the stock fell 1.4% and it is down 3.9% so far this year.

GE, which under Jack Welch and previous leaders, has been perceived to be a global leader in management techniques, is now trying to sell itself to investors based on four "processes":

• Innovation/Cross-Selling. GE notes that its research department has developed new products and services which it uses in its different divisions. For example, it developed sensors used in medical devices and security systems. And it cross-sells financing and fleet management;
• Lean Six Sigma. GE has been using this technique for streamlining business processes and cutting costs for years. Under current CEO Jeff Immelt, GE has added Lean to the Six Sigma mix;
• Net Promoter Score. GE scores its customers on whether they would recommend GE; it labels each as a detractor, neutral, or a promoter; and it calculates the score by substracting the detractors from the promoters; and
• Deep Bench. GE has been allowing its operating managers to present at analyst meetings rather than requiring Immelt do all the presenting. This is intended to let investors know that GE has many talented managers.

Continue reading GE's conglomerate discount

GE's conglomerate discount originally appeared on BloggingStocks on Wed, 16 Aug 2006 08:47:00 EST. Please see our terms for use of feeds.