Tuesday, November 19, 2013

Young Communists Grappling with the Toyota Production System in Nikita Krushchev's Russia

I'm reading "Red Plenty" by the British writer Francis Spufford.  It's about the mid-20th century moment when the Russians truly believed, for a moment, that their socialist vision of plenty might actually come to pass, that they might overtake America and sit on top of the heap.  It vividly portrays real and fictional characters grappling with some of the problems of pulling this off.  

Turns out some of what they were grappling with resonates with our challenge of making construction projects more efficient.  Take this short dialogue;  it's just-in-time delivery, long before the Toyota Production System:

(The scene is a cocktail party.  Two young mathematicians, handsome Valentin and nerdy but enthusiastic Kostya, are chatting up a slightly older, attractive fruit fly geneticist)
Kostya:  'So the economic task is to allocate our limited resources in the most efficient way possible.  The socialist economy tries to do that by pushing factories to do more every year.  But here's the catch.   We don't want them to do more.  We really want them to do the least they can possibly do that will still fulfill the plan.  Yet the targets they're given don't make that possible.  The target for a transport enterprise, for example, is given in ton-kilometers.  They're supposed to move the greatest weight they can over the greatest distance they can--which is hopeless, it should be exactly the other way around, so long as everyone who needs stuff moved is happy.  We need new targets.  And luckily, thanks to Valentin's boss, Professor Kantorovich, who is standing just over there, the mathematical means exist to create them.'  
Attractive fruit fly geneticist:  'Not ton-kilometers?  
Kostya:  'No; and not kilowatt-hours of electricity either, or liters of refined gasoline, or square meters of spun nylon.  Did you know that last year more than half of the hosiery delivered to shops was sub-standard?'   
Attractive fruit fly geneticist:  'Let's say that I had an anecdotal appreciation of that fact, from trying to put some on.'  
Valentin:  'Kostya really knows how to talk to girl, don't you think?' said Valentin.  'No, no, go on: league after league of malformed stockings….'  
Kostya:  'The point being that it was incredibly hard for the stores to send the bad stuff back to the knotting mills, because it all counted towards their output targets.  What we need is a planning system that counts the value of production rather than the quantity.'  
And that's what we need on construction projects.  With traditional fixed price contracting,  the schedule of value is like the ton-kilometers of a transport business; like the factory under a quota, individual contractors like the hosiery factory are not easily inclined to tear out and redo defective work; like the goal for the Russian economy, the goal is to produce value.

And so here I will paraphrase for our purposes ….
Attractive fruit fly geneticist:  'The value to whom?'
Valentin:  'Good question,' said Valentin.   
Kostya:  'Not just the value to the [Trade Contractor], or even to the consumer, because that only gives you [low bid fixed priced contracting] again, surging to and fro, doing everything by trial and error.  It's got to be the value to the whole [Project]; the amount it helps with what the whole [project team] is trying to do in [the planned construction] period.   

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