David W. Kammler, Professor
Southern Illinois University Carbondale
In the early days of Communist Party rule in Poland, the State Central Committee ordered the Commissar for Building Materials to improve the productivity of the eight factories where iron was turned into nails. The Commissar was a well-trained bureaucrat who decided to implement quantitative management techniques (which he only partially understood).
I must carefully define a measure of performance that will enable me to identify and reward increases in “productivity,” he thought to himself. After some reflection he drafted a memo informing the eight Directors that during the coming year they would be evaluated by using the performance metric
The Commissar was filled with self-satisfaction as he anticipated the presentation he would give to the State Central Committee, precisely quantifying the annual productivity increases.
The ambitious (but unscrupulous) Director of the Wroclaw nail factory, Stanislav Nowak, read the Commissar’s memo and immediately called his counterpart at Poznan. Dear comrade, he said, we are all being pressured to increase productivity and I know that you have been having difficulties with your outdated press for making boxing nails (the 2½" long 8d nails used to attach boards to studs and rafters when building a house). I have a surplus boxing nail press here at Wroclaw that I am willing to swap for your little used wire brad machine since mine is almost beyond repair. And so he traded Wroclaw’s only boxing nail press (the adjective “surplus” being a socialist white lie) for a second machine for producing wire brads (tiny ½" nails occasionally used for small trim work). He made a similar offer to the Director of the nail factory at Lublin, obtaining a third brad press in exchange for his machine for making framing nails (3½” long 16d nails used to fasten studs, joists, rafters, etc. when framing a house).
Throughout the year the Wroclaw factory concentrated on the production of wire brads. Workers who had previously been assigned to the boxing nail and framing nail presses now produced tiny wire brads. Workers who had previously produced roofing nails, finishing nails, etc. during the day were reassigned to the night shift where they made still more wire brads. At the end of the year, the Commissar carefully calculated the figure of merit for each factory. The nail factories at Poznan, Lublin, Gdansk, Szczecin, Katowice each had a noticeable increase in productivity with scores of 1.12, 1.11, 1.08, 1.05, 1.07. But by concentrating on the production of wire brads Stanislav Nowak had achieved a productivity metric of 8.15, in spite of the fact that he had only processed 20% of his iron allotment for the year! The delighted Commissar rewarded the successful Director by assigning him a villa, and he rewarded each of Nowak’s workers with a kilogram of bacon and a large basket of rutabagas.
As one might expect, the storage warehouse at Wroclaw was filled with keg upon keg of unneeded wire brads. Moreover, since the iron that should have been used to make boxing nails and framing nails was also sitting in the Wroclaw warehouse, Polish carpenters began to experience times when the supply depots ran short of the nails they needed most for house construction. The Commissar took note of the situation and reasoned as follows. I will ask the State Central Committee to “solve” the national nail shortage by increasing the iron allotment for each of my factories. (Commissars are always looking for an excuse to ask for additional resources!) Of course, the real reason for this year’s slight shortage of boxing nails and framing nails is that in spite of its outstanding productivity the Wroclaw factory was unable to process all of its annual allotment of iron. I can easily remedy the situation by changing my productivity metric to encourage the conversion of iron into nails. With supreme confidence in his analysis, he informed the Directors of his eight nail factories that for the coming year the productivity metric would be
The Directors of the nail factories at Gdansk and Szczecin invited Nowak to conduct seminars on “The Wroclaw wire brad strategy for productivity enhancement”. They were envious of the stunning success of their colleague at Wroclaw and eager to implement the methods that led to his recognition and reward. They were absolutely delighted when he “reluctantly” agreed to exchange two of his wire brad presses for their seldom used machines for making log spikes (8" long 80d nails used for constructing wood bridges, log cabins, etc.). The Director at Katowice made a similar deal, exchanging his log spike press for the Wroclaw tack machine. After all, he reasoned, tacks are only slightly larger than wire brads so the same management principle must certainly apply.
Throughout the year workers at the Wroclaw plant fed iron into the four log spike presses, keeping them running day and night. Time and again additional iron allotments were obtained from the State Central Committee to keep the factory humming. When the Commissar computed the annual productivity metrics, he was dumbfounded. The nail factories at Gdansk, Szczecin, Katowice that adopted the “tiny is better” strategy had the disappointing production metrics of .22, .21, and .26, respectively. The factories at Czestochowa and Krakow, with Directors who routinely ignored any and all management directives, had lackluster metrics of .98 and 1.01. But the factory at Wroclaw had a production metric of 21.30! This time Nowak was given a Polonez (Polish luxury car) with a driver, and each of his workers received a kilogram of bacon and two large baskets of rutabagas.
The Wroclaw warehouse was now filled with keg upon keg of unneeded wire brads and keg upon keg of unwanted log spikes. Since only four of the eight factories were still producing boxing nails and framing nails, the shortage was now acute, with construction delays of 1-2 months being common during the critical summer building season. The State Central Committee wrote a formal memo to the Commissar, ordering him to investigate the situation and take immediate steps to correct the problem.
It’s merely a matter of choosing the right metric, the Commissar said to himself. Since he had learned a bit of statistics during his school days he was able to identify precisely what had gone wrong during the previous two years. A productive factory must make nails of various sizes to serve the needs of our building trades, he reasoned, so we want the standard deviation of the nail size to be large, not zero as has been the case at Wroclaw during the past two years. A productive factory must also turn a lot of iron into nails. And in view of the current crisis it seems best to focus on annual production rather than some measure of year to year improvement. With this in mind he created the productivity metric
When this management directive was received at Poznan, Lublin, Gdansk, Szczecin, and Katowice, the discouraged (demonstrably unproductive!) Directors had no idea what it meant and no absolutely incentive to find out, so they decided to follow the example of their peers from Czestochowa and Krakow and simply keep on doing exactly what they had done the year before. They could not comprehend why the production of minuscule wire brads or massive log spikes was regarded as meritorious at a time when the Polish building trades were starved for common boxing nails and framing nails.
Meanwhile, the canny Director of the Wroclaw plant once again ordered his workers to maximize their production of log spikes throughout most of the year. Just before the year ended, he asked them produce an identical number of tiny wire brads. (This made the standard deviation of the nail weight approximately half that of a massive log spike.) And for the third year in a row, the Wroclaw factory was judged to be the most productive in all of Poland, with a performance metric 36.2 times larger than that of the next best factory. The Commissar publicly congratulated Comrade Nowak and his workers at the Wroclaw nail plant for a job well done, and bemoaned the fact that in these hard economic times he was unable to offer them even token rewards for their outstanding achievement.
Unfortunately, the national shortage of boxing nails and framing nails was now so severe that thousands of carpenters were unemployed and the whole economy was depressed. The members of the State Central Committee were greatly displeased with the Commissar. After all, they had clearly identified a problem and told him to solve it, but in spite of his best efforts things had gone from bad to worse. He was given one last year to remedy the situation.
Our factories must be made to produce nails that our carpenters can actually use, he reasoned. We cannot encourage them to make nails that sit rusting in their warehouses. With a sudden flash of inspiration he created a corresponding measure of performance
He winced as he realized that this metric reeked with the foul smell of capitalism, but he was desperate and could think of nothing else to try.
The Directors at Poznan, Lublin, Gdansk, Szczecin, Katowice, Czestochowa, and Krakow were shocked to receive a management directive that violated their most deeply held Marxist convictions, so once again they ignored the memo and continued with the same production schedule they had used for the past two years. In contrast, the devious Nowak immediately recognized that the Commissar could not very well chastise him for adopting a capitalist response to an intrinsically capitalist directive. For the third year in a row, he ordered his workers to produce as many log spikes as possible and then left Wroclaw for a six-week holiday at an exclusive Black Sea resort. At the end of the year, he took these log spikes together with all of the log spikes and wire brads from his warehouse (i.e., virtually every nail that his factory had produced during the previous four years!) to a local firm that made tracks for the Polish railroad. He sold the whole lot at half the going rate for scrap iron. And this year, Nowak’s production metric was 9.2 times larger than that of his closest competitor!
The State Central Committee summarily dismissed the Commissar for Building Trades and initiated a search for his replacement. Two weeks later, the Committee met to consider resumes of the applicants. Comrades, said the Chairman as he studied what appeared to be a most promising vita, I believe that I have identified a leader who can set us on a Five Year Plan that will rejuvenate our failing economy. During each of the past four years Stanislav Nowak, the Director of our nail factory at Wroclaw, has led his workers to be the most productive in our nation. I have never seen such consistently high measures of productivity. These numbers do not lie. Even in this severe depression, his workers are 9 times more productive than those at any other nail factory. And so Stanislav Nowak was named Commissar of Building Trades for all of Poland, a most remarkable honor for a man who managed a factory that had produced absolutely nothing but high performance metrics during the previous four years.
MORAL: When we lose sight of our purpose, we inevitably become unproductive, no matter what numbers we generate to prove otherwise.Permission to copy: You may share copies of this story with anyone who might enjoy thinking about its implications in academia. Such samisdat publication (or to use the equivalent Polish phrase podziemna publikacja) is in keeping with both its setting and with its message.