I don't want to hijac this thread, but I would make an explanatory response to the below 3 statements/points:
This was news back when mouser wrote that piece...1. Old news and hindsight:
...most startups are designed to sell big before failing rather than being successful.
...share risky predictions instead of explaining away stuff...
Yes, as I wrote:
When I read that theatlantic.com article though, I thought it was so busy analysing and criticising Digg - in hindsight and after the fact - that it could well have missed the point about the lack of definition (nebulousness) of Digg.
- and...2. Startups collapsing:
Whilst I am not sure whether it is true - at least, not since the Dot.com
bubble burst - that:
"...most startups are designed to sell big before failing rather than being successful."
- (because that could presumably suggest some kind of fraudulent intent behind an IPO), it does nevertheless seem...3. Prediction of collapse:
...to have been born out in practice that the simple application of the theoretical approach of process Statistical Control described enables the user to predict
- given knowledge of the business processes involved - with some accuracy, whether a business is likely to go down the progressive path towards collapse that Deming described:
- Fail to make sales.
- Lose customers.
- Lose market share.
- Make a net loss.
- Go bust.
I apologise if I wrote what I did in a confusing way, but this 3rd point was what I was working towards with:
With a dreadful statistical certainty, it seems that they must fail.
There could be other examples in progress - e.g., interestingly, to an onlooker, Facebook might seem as though it is making all the right moves to follow suit.
And you would do this by the application of simple Statistical Control process charts.
Statistical Process Control charts won't tell you whether the IPO was a fraud, but, if you have knowledge of the business processes involved, then they will
tell you something about the degree of statistical control of the business processes, and that would point the likely way ahead. It would also give you some idea of what you might need to do to repair the situation if the process was on the path towards collapse that Deming described.
So the tool enables both prediction and
diagnosis. That can be very constructive.
In Facebook's case, they seem to have been and to still be going through dynamic change of their business processes. A process that is in a state of dynamic change (e.g., process change thrashing) cannot be in statistical control, nor can it (by definition) be categorised as anything higher than CMM Level 1 or 2. There's a lot they could do - and probably are doing - to get back on a stable business process track.
I recall Deming saying something to the effect that he had spent a good deal of his life translating
something that he had found very complex to understand that his teacher (Shewhart) had taught him - the mathematical/statistical theory relating to processes in Statistical Control - into simple terms that people could understand, and then communicating that to business.
He said that it was
very simple, but that people seemed to find it difficult to understand.
In my case at least, he was right on both
There's an interesting reference to this in Wikipedia, here
Dr. Shewhart's boss, George D. Edwards, recalled: "Dr. Shewhart prepared a little memorandum only about a page in length. About a third of that page was given over to a simple diagram which we would all recognize today as a schematic control chart. That diagram, and the short text which preceded and followed it, set forth all of the essential principles and considerations which are involved in what we know today as process quality control."
Shewhart was alive March 18, 1891 â€“ March 11, 1967, but the profound statistical theory of the process control chart approach seems to have been little-used and not generally taught in business schools.
Deming was alive October 14, 1900 â€“ December 20, 1993, and was only listened to by Western industrialists because he was regarded (by the Japanese) as having laid the foundation for Japan's rise from a shattered post-war economy to huge economic prosperity. That is, "He must have done something
I am not sure to what extent Deming/Shewhart is currently taught or even understood in business schools, but I have seen plenty of evidence to suggest that it's node widely understood.
It is ironic that when I had the opportunity to attend one of Deming's a 4-day seminars when he was 84 years old, that what he was talking about to the 300 or so attendees was, for most of them, completely new.
Furthermore, they were ignorant, and some of them resisted accepting what he said because it killed some sacred MBA cows and thus went against their paradigms and beliefs. Though Deming was not new to me (I had read about him and watched TV documentaries about him, and had asked
to be sent to the seminar by my employer), I was one of those ignorant ones, and I am ashamed to admit that the penny only started to drop on the morning of the 3rd day.