Bad Profits – the GoDaddy Example

A recent example of a company squeezing customers for ‘bad profits’ is being demonstrated by GoDaddy:

Fred Reichheld wrote a great article in his 2012 LinkedIn article Is Your Company Hooked on Bad Profits? (read here  It focused on how this damages a company’s reputation, hinders growth and creates opportunity for competitors, using common airline practices as an example.

Common sense you think – yet missed by many CEO’s.

What are bad profits?

Earnings at the expense of customer relationships.

They leave customers feeling coerced, misled and ill-treated.

(in Canada? think of the last time you felt nickel & dimed by your cellular provider Telus, Rogers or Bell).


The Godaddy example:

We signed up for Godaddy Website builder over a year ago to test concepts and show the developers we hire how each business website needs to look so they can code the associated back end.  Godaddy’s plan is to sign up annually paying an initial lump some which covers the monthly fees; they offered to prorate this if customers discontinued prior to the end date – this flexibility is one of the reasons we signed up.

Certain limitations with their website builder required us to start using another product [Squarespace], and when we called to disconnect two of our subscriptions, they refused to honour their agreement.

This wouldn’t be as big a deal if was minimal – one site only has 3 months left; but Godaddy said since we were 3 days past the annual renewal date for the other site we would be charged for a full year.

Most companies will over look a couple days to maintain a positive client relationship.  Using this to charge a full year against the original terms is an example of bad profits.

We still have other products with them providing revenue, so why would we be forced to cover more than consumed?  Is Godaddy really struggling to such a degree?  If so (and we doubt it), it only serves as a disincentive to customers.

This is such a small amount to our operations it’s immaterial – we’ll be fine without the money –  it’s Godaddy’s move to knowingly charge for undelivered goods that’s destroyed our trust.  We buy several products from them; are they going to take advantage of customers with products on similar billing platforms?

It’s not worth the time searching for another vendor to relocate our remaining business with them to, but when one comes to our attention we’re moving away from Godaddy’s shifftee practices to scrape ‘bad profits’

When will the City of Calgary adopt Continuous Improvement?

Several city of Calgary employees have completed the Mount Royal Lean Course and are looking for opportunities to apply it.  A colleague is meeting with another city official this month to suggest the cities adoption of continuous improvement to improve operations.

Here are some examples of current governance practices have been applied in other cities & states:


Jacksonville Police Force
– cut over $30 million from budget without costing a single job – see below
Erie Country Police, NY
Whatcom Country Sheriff

Grand Rapids Fire dept. and Parking Services – see below

Healthcare (countless examples in both Canada & US)
– Seattle Children’s Hospital, Univ Texas Cancer Center, ThedaCare, Virginia Mason
– UHN – Toronto General Hospital, North York General Hospital, Five Hills Health Region,
– Sask., St. Joseph’s Health Centre, Hotel-Dieu Grace Hospital


Melbourne, Australia
Cape Coral, Florida
South Lake, Texas
Cincinnati, Ohio
Grand Rapids, Michigan – see below


Minnesota – see below


Saskatchewan – All services
B.C. – Provincial healthcare

Jacksonville Sheriff Office

– Cut over $30 million from budget without costing a single job

– The Sheriff’s Office Continuous Improvement Unit supports internal training and development of the department’s employees and officers, all of whom are primarily responsible for finding and implementing improvement opportunities every day, and has trained more than 1,500 officers and civilian staff in lean concepts and tools.

– Lean gets better results than the conventional approaches used in other government offices. Ideas are more innovative, employees are more engaged, and the department gets faster and more substantial performance results.

– Reduced hiring school crossing guards from 90 days to 7

– Addressed unaffordable detention facility overcrowding problem panel recommendation to build new wing of 684 new beds at a cost of $32 million, by applying lean and create 894 beds for $84 thousand; created new capacity that saved taxpayers millions.

– Employee suggestions went from about 3 per year to more than 100;  All are responded to within 35 days, and about ½ are implemented.

Grand Rapids, Michigan

– Applied to Public Library, purchasing process, engineering design process
– Engaging employees and providing the best possible service to city residents

Fire department
– Increased the percentage of first time compliant businesses, dramatically reducing the need for re-inspections
– Processing inspection violation letters has been decreased over 50%, from 10.3 hours to 4.5 hours on average, doubling the number of inspections they can complete a year

Parking Services
– Reduced customer wait time from 20 days to 12 minutes, and processing time from 32 to 14 minutes

Community Development Dept., Housing Rehabilitation & Accounting Dept
– Home rehabilitation loan processing wait time of 20 weeks and internal processing time of 28 hours
– The initial improvement reduced homeowner wait time to 12.5 weeks and internal processing to 21 hours.


Water Permits
– Reduced work time by up to 40% and waiting time by up to 60%
– Permits issued a month faster
– Estimated annual savings from the improvement: $255,000 and 5,000 staff hours

Construction Trades Licensing
– Administers over 120,000 licenses for individuals and contractors performing construction services
– Estimated time savings from the improvement: 65% for new licenses (29 days to 10 days), 62% for renewals (10 days to 4 days)

Dept. of Human Services
– Appeal time reduced from 87 days on average to less than 1 month
– Estimated annual savings from the improvement:$ 960,000

Lean Food Banks

Some examples of lean applied to food banks and emergency situations:

In 2011 Toyota approached the New York food bank and to provide support not in the form of funding, but in the form operational expertise.  Like many organizations, they predictably said it wouldn’t work.

Changes included the following results:

  • wait time for dinner cut to 18 minutes (20% of the time) from as long as 90
  • At a Staten Island food pantry, the time people spent filling their bags was reduced to 6 minutes (54% of the time) from 11
  • at a Bushwick, Brooklyn warehouse, volunteers cut the time it took to pack one box of supplies for victims of Hurricane Sandy to 11 seconds (6% of the time) from 3 minutes – see video link below

Full article here:

In Lieu of Money, Toyota Donates Efficiency to New York Charity, New York Times

After hurricane Sandy struck New York city causing extensive flooding, power outages, and damage requiring evacuation in Oct. 2012.  This created a situation where relief agencies had difficulties keeping up with food demand as much as 6 months later in the Rockaways, Long Island, NY.

Toyota teamed up with the NY Food Bank to deliver hundreds of thousands of meals to hungry people impacted by the hurricane.  A great example of skills-based volunteerism.

Toyota donates one meal for each view the video received.

3P Principles Used to Achieve Flight


The Wrights unknowingly used a principle of 3P for product development: Nature has already figured it out.

One of the less known lean concepts 3P is evident in the Wrights efforts to design an aircraft.  They probably did not follow todays 3P format, but its guiding principle of using examples from nature to find new processes and designs is evident.  The flight mechanism already existed in nature through several species, and the Wrights identified this in birds using wing warping to achieve control.

“On the basis of observation, Wilbur concluded that birds changed the angle of the ends of their wings to make their bodies roll right or left.  The brothers decided this would also be a good way for a flying machine to turn—to “bank” or “lean” into the turn just like a bird—and just like a person riding a bicycle, an experience with which they were thoroughly familiar.  Equally important, they hoped this method would enable recovery when the wind tilted the machine to one side (lateral balance).  They puzzled over how to achieve the same effect with man-made wings and eventually discovered wing-warping when Wilbur idly twisted a long inner-tube box at the bicycle shop.”

The Resurgence of Knowledge Based Development (Lean Product & Process Development)

…continued from last post

The backwards development methods rooted from computer use continued and spread in engineering, and aeronautics phased out the Wrights invention while phasing in computer use (to the present day conventional engineering practice).

However in Japan following World War II, industry was in ruins leaving many unemployed, and a primary source of engineers for Toyota became previous aeronautical engineers accustomed to using the Wright brother’s methods.

Toyota adopts Knowledge Based Development

These engineers started designing cars using knowledge based product development, and it was integrated within an organization reliant on learning.

Understanding the different circumstances Toyoda faced relative to Ford shows why it fit Toyota:

Leadership Experience

  • Henry Ford had 20 years direct experience as a craftsman & engineer
  • whereas Kiichiro Toyoda was the only formally trained engineer in the company, had limited experience, and only 6 months touring the US.

Geographic Location

  • Ford was in Detroit, population over 1.5 million, an industrial center providing access to skilled craftsmen, tooling, equipment & suppliers;
  • It was also close to universities & educated engineers

Therefore Ford was in a position to give orders & direct others.

  • Toyota was at Koromo in 1937, a small village of 15,821 surrounded by rural farming area far from cities; no skilled craftsman or suppliers; and sourcing raw materials was difficult
  • It was away from universities, which produced few engineers who mostly would stay in Tokyo and work for Nissan, therefore technical knowledge was not readily available
  • No one knew how to make a car, suitable steel or how to form it, nor design & build engines or tooling, so orders could not be given
  • Kiirchiro didn’t know what to tell his people to do, and they wouldn’t have known how to do it; his perspective was “Let’s all learn as much as we can, as fast as we can, and work together to create something our customers will buy. My job is the same as yours: to learn as fast as I can.”

Toyoda evolved practices encouraging universal learning.

Management Style

  • Ford grew using a command and control system where Ford himself directed
  • “Conventional development process is based on getting people to follow orders.”
  • Toyota Motor Co. evolved into an organization optimized for learning.
  • Toyota has built a development process “around the goal of learning.”

To break this down further (according to Ward’s research):

The idea behind ‘Conventional Management’ is there is one best way to do anything;
–          An expert can measure, analyze and design a ‘best way’ to do the job
–          managers tell people who actually do the work to follow the standard process prescribed by the experts
–          employees are to “Do as I tell you”Conventional management is based on two 17th century assumptions:
1.       Order in any system must be created by a greater intelligence operating from outside the system
2.       systems are predictable.

Management’s job just then be to tell people to follow the one best way, and the company should run as designed.

‘Modern science’ shows
–          order emerges from interactions inside certain kinds of systems
–          most systems are NOT predictable.Therefore, lean management’s job is to continuously help order emerge by learning and helping others to learn, which is easier than telling people what to do.

Lean Product & Process Design

Knowledge based development fit the Toyota learning environment, and the combination turned into what’s commonly referred to now as lean product & process design.  This enabled Toyota to become “Twice as fast, twice as efficient, and twice as profitable as its best US competitors.”

The resurgence of knowledge based design is in its initial stages, and most engineering companies are so far behind they have not even heard of check sheets, A3 reports, limit & trade off curves, or the creation of reusable knowledge through set based design, or establishing cadence and flow.

Contrast this with your design and engineering effort – do you skip to design something and have to refine it several times for it to work?  Are you experiencing redesign loops because of this?

Or are you one of the few who produce knowledge first to base the design on?

More importantly, what are you going to do if you have to compete with a company using this superior method?

The Foundation of Knowledge Based Development (Lean Product & Process Development)

Wright flyer knowledge based development.jpg

What the Wrights Really invented

Not flight – birds figured that out (see 3P principles used to achieve flight).  Two `uneducated’ brothers operating a bicycle business, with limited resources, at about $1000 over 5 years, achieved powered flight on the 3rd attempt.  In the process of designing an aircraft they created a different way of developing products.

Their biggest accomplishment may not have been an airplane, but the development process advancing design and engineering.

What the Wright brothers are NOT famous for:

Deciding the ‘problem of flight’ too difficult to invent an aircraft – and failure (crashing) would mean death – they decided to study and advance the knowledge of flight instead.
(In Wilbur’s words "add my mite to help on the future worker who will attain final success.")

The approach of creating reusable knowledge – instead of designing an airplane – laid the foundation for the development process known as Knowledge Based Development.

Knowledge Based Development

The Wright Brothers used a systems approach to studying flight and its 3 main barriers:

  1. Wing Construction
  2. Power generation & application
  3. Dynamics once in air

Breaking the problem into its components, and moving forward with an intentional & planned approach to studying each they began by understanding what was already learned.


1900 1st kite.jpg

Requesting all information on wing design & construction from the Smithsonian, the Wrights proceeded with designing various kites and gliders to better understand the construction and behaviour of wings.

1. Wing Construction

Wright Wind Tunnel Test Data.jpg

Early on gliders did not behave as predicted and the brothers almost gave up.  Determined to learn and contribute to the advancement of aeronautical knowledge they persisted through the lowest point, and discovered the aerodynamic tables (in use for 100 years) were wrong – not their assumptions.


The only time they could test gliders was in the late fall when their bicycle business was slow and before winter set in, so another way to rewrite the aerodynamic tables had to be found.  They made a small homebuilt wind tunnel, to test airfoils, varying the parameters to establish lift and & drag graphs.  Based on the new aerodynamic data they built fresh gliders and tested.

2. Power & Control

With confirmation the new wings performed according to their theories, they moved to address the challenges of power and control.

The systems approach of addressing a larger problem (flight) by breaking it into components enabled them to define the weight allotment and power requirements for the engine.  Unable to source an appropriate lightweight engine, their shop mechanic created one (in 6 weeks) while the brothers addressed power to thrust conversion.

Their prior development of aerodynamic tables provided the insight that a propeller is a spinning wing.  By reusing the knowledge they had created on airfoils, the Wrights developed efficient propellers for thrust – also in 6 weeks concurrently with the engine.

3. Dynamics in Air

The final component was control of the craft once in the air, where they recognized the problem of flight consisted of both building an airplane as well as learning to fly it.

The ability to control the aircraft was from adapting ‘wing warping,’ used to modify lift of the wings.  Through wing warping they created basic ailerons – the last flight component – to simultaneously control pitch, yaw and roll of an aircraft.

pitch roll yaw.JPG

The ability to control the aircraft was from adapting ‘wing warping,’ used to modify lift of the wings.  Through wing warping they created basic ailerons – the last flight component – to simultaneously control pitch, yaw and roll of an aircraft.

Overall Flight System

After obtaining all 3 individual knowledge components of powered flight, they could proceed with combining the sub-components and addressing the overall flight system.

When they finally built the aircraft, they set about learning to pilot, recognizing the pilot would be a fundamental part of any craft that would fly.


The Difference in Approach:

The Wrights purposely set out to create the knowledge necessary to design a flying machine,

rather than trying to just designing a flying machine.

Conventional engineers create a design they think will work, and keep refining it until it (hopefully) does;

Instead of this, the Wrights methodically followed a plan of study and analysis to generate knowledge (a process creating the same knowledge they needed to solve the ‘problem of flight’ first), then followed with designing within those limits.


  • conducted cycles of learning to
    • explore possibilities while narrowing the set of potential solutions
    • (safely) discover the limits of what worked - and more importantly what did NOT
  • tested the limits and evaluated trade offs
  • designed alternative solutions in sets as they tested the limits of their design

Because of their methods, the Wrights knew they had solved the problem of flight before physically demonstrating it.


The New Aircraft Development Method

Although the intent was only to study of flight and contribute in the advancing aeronautical knowledge, the process they followed was so effective the resulting innovation was the airplane.

Through the Wrights method for generating the knowledge to demonstrate flight, they invented a different way of product development.


NACA pin logo.JPG

In 1915 the NACA (National Advisory Committee for Aeronautics) was founded to undertake, promote, and institutionalize aeronautical research - “the duty of the advisory committee for aeronautics to supervise and direct the scientific study of the problems of flight with a view to their practical solution”

In 1920 Orville Wright was appointed to its board and its direction became to promote aviation through applied research which NACA researchers pursued through in-house wind tunnels, engine test stands, and flight test facilities.

Knowledge based development continued to be successfully used in aeronautics, and the NACA exhaustively cataloged aerofoils,

“recording lift and drag as functions of Reynolds number and angle of attack.  This set of trade off curves was used by airframe designers to quickly determine how something like lift to drag ratio changes with angle of attack for any of the 78 aerofoil sections.” 


NA-73X Robert Chiltons flight April 1941.jpg

These played a key role in producing the cutting edge wing profiles for the North American P-51 Mustang during World War II.  In 6 months it was designed and put into flight;

  • specifications were finalized and order placed in March, 1940;
  • the aerofoil prototype complete in September, 102 days after order;
  • and the aircraft made its maiden flight on Oct 26, 149 days after.

Development team members that were interviewed said the key was knowing most of the trade-off curves prior to beginning development.  Despite the need from WWII, without the Wrights knowledge based development methods this pace could not have been achieved.

And yet it disappeared.

So what happened to it?

1950 computer vacuum tubes.jpg


The Computer Age interrupted Knowledge Based Development

The developers said the aeronautics industry started using computers and reversed the process.  They stopped initially generating the knowledge to base the design on.

With computers, engineers started skipping right to design, then simulated after to learn; then redesigned, then re-simulated, etc. introducing the predictable redesign loops common in engineering today.  The practice of capturing data in the form of physical limit and trade-off curves phased out, the time for bringing a fighter plane into production grew to 20 years, and we almost lost the Wrights invention.

The Resurgence of Knowledge Based Development

The next post covers Toyota’s adoption of Knowledge Based Development and details its resurgence now as Lean Product & Process Development.

(There seems limited research on the origins of knowledge based development, additional documentation is welcomed)



References (were not tracked at the time of writing this, therefore some may be missing):

Lean Product and Process Development 2nd Edition.  Allen Ward

The Lean Machine: How Harley-Davidson Drove Top-Line Growth and Profitability with Revolutionary Lean Product Development.  Dantar Oosterwal

"**The poor lift of the gliders led the Wrights to question the accuracy of Lilienthal's data, as well as the "Smeaton coefficient" of air pressure, a value which had been in use for over 100 years and was part of the accepted equation for lift." – contrast this with the engineering methods that have also been in use for over 100 years.

The experiment confirmed their suspicion that either the standard Smeaton coefficient or Lilienthal's coefficients of lift and drag–or all of them–were in error.

They then built a six-foot (1.8m) wind tunnel in their shop and between October and December 1901 conducted systematic tests on dozens of miniature wings . The "balances" they devised and mounted inside the tunnel to hold the wings looked crude, made of bicycle spokes and scrap metal, but were "as critical to the ultimate success of the Wright brothers as were the gliders."

The devices allowed the brothers to balance lift against drag and accurately calculate the performance of each wing. They could also see which wings worked well as they looked through the viewing window in the top of the tunnel. The tests yielded a trove of valuable data never before known and showed that the poor lift of the 1900 and 1901 gliders was entirely due to an incorrect Smeaton value, and that Lilienthal's published data were fairly accurate for the tests he had done.

made basic wind tunnel tests on 200 wings of many shapes and airfoil curves, followed by detailed tests on 38 of them. The tests, according to biographer Fred Howard, "were the most crucial and fruitful aeronautical experiments ever conducted in so short a time with so few materials and at so little expense."

"Wilbur made a March 1903 entry in his notebook indicating the prototype propeller was 66% efficient. Modern wind tunnel tests on reproduction 1903 propellers show they were more than 75% efficient under the conditions of the first flights, "a remarkable feat", and actually had a peak efficiency of 82%."

"They turned to their shop mechanic, Charlie Taylor, who built an engine in just 6 weeks in close consultation with the brothers."



Flight brawl. Will more money make it work?

Beijing Int airport.jpg

An article today reports a 4 hour delay caused an onboard brawl at Beijing Capital International Airport, stating China has “spent billions on building some of the largest and most modern airports in the world but its planes seem unable to run on schedule.

Did throwing more money at the problem solve it?  Does the amount spent determine how modern something is?  Organizations commonly jump to the solution that allocating more money (or people) to problems will address them – without understanding the problem.

Airline example:

According to OAG, the highest on time performance is in the 80 – 90%+ range.  In the US, Fortune reports Hawaiian Airlines had the best on-time performance at 88%.

In 2013, only 18% of Beijing Capital airport’s flights departed on time, according to the aviation research company FlightStats, making it the worst major airport in the world in terms of punctuality.  China Daily states Beijing flights averaged 73 minutes late last year – the shortest time period among mainland cities.

According to another article “In 2014, Chinese crew members and passengers spent a total waiting time of 122 million minutes, or 232 years, for their aircraft.

Where are the problems?

In an unrelated article, the Telegraph pointed out airlines that operate very large airports with many departures a day have more challenges to face with the sheer volume of movements, which can show themselves as longer waiting times to taxi, waiting for a gate to become available to offload passengers at, etc.”  Here we’re seeing some symptoms that need to be explored to discover the problems.

Could it be that airport size is causing these problems, and spending less could result in a more modern airport?

The amount of money spent does not qualify anything as being ‘the most modern’ nor does something being the ‘largest.’

What’s Modern?

We argue an open field without the gigantic airport infrastructures common today, where planes run on schedule over 98% of the time, and passengers have the best experience & lowest wait times, (in turn having the lowest footprint and associated building & operating costs), would be the most modern.  Interested?  Contact us