So often we go through our days fighting the current fire and stashing a little time away for the long term projects. It isn’t until a radical change comes to light that it often leads one to have a double-take. Sometimes the double-take is that two second ponder and then back into the trenches. Other times, it spawns a whole thought process that causes one to critically analyze the how’s and why’s of the ways things are done.
Several weeks ago I was engaged in a lengthy engagement with a geothermal engineer whose company was struggling under the weight of the current economic climate. Although the geothermal energy represents a constant and almost infinite energy source, its adoption has been stymied because of several key factors.
During our numerous discussions, a concept that Tony had been pondering for some time came to light. Through our discussions he referred to it as ‘margin of error’. The concept of margin of error finds its basis in the world of statistics, wherein the margin of error defines the credibility of the data. For Tony, he defined it as the amount of deviation from doing the job ‘right’ that is permitted.
In following the seed of Tony’s thought I found that the amount of error we tolerate in business is so complex and so multi-faceted it is amazing. Why is it that an earthquake in Haiti creates devastation while a similar quake else where doesn’t? This was the point Tony made. From our discussion, it became apparent that tolerable error in this type of case is rooted in socio-economics. Simply the regulatory bodies don’t exist in Haiti to adequately oversee construction of buildings.
However, in business the same deviations from ‘acceptable limits’ exist. Recently it made the news where an investment banker had years of tenure with his employer because of falsification on his resume. When questioned how this could happen, the hiring committee rested on ‘we didn’t have the bandwidth to complete a full and thorough background check.’ About a decade ago, a Stoney Creek (Ontario) doctor was found to be practicing without a license, for almost a decade. The investigation revealed extraneous entries in his past were never thoroughly investigated. Recently a person on the ‘no-fly’ list made it onto an international flight.
What, I feel, is evolving consists of a mode of behavior where workers are doing the basic that is required and often less than the minimal. So long as no one identifies the less than satisfactory performance, it simply goes unknown. Unknown, until the deviation is so critical that it is a full blown problem. It seems that our quest to output more from less has driven us to the realm of higher degrees of personal acceptable error. This concept was reinforced by a recent engagement with a statewide food distributor. The main receiver, Sandy, has a comic framed on her desk. The comic depicts a manger approaching an employee saying ‘Why aren’t you working?’ The employee responded with, ‘I didn’t see you coming.’
Although Tony refers to the concept of margin of error, there is an accounting concept that is analogous to the behavior; materiality. The concept essentially says that if the amount of the change is enough to cause a reasonably prudent person to make an alternate decision, the amount of the change is significant; or material.
What ever the term, margin of error or material exception, it points to a business mantra of ‘it’s all about ME’. Possibly economic recovery may find its roots in a kaizen like philosophy of continually striving for making a better product and not making it better for ME!