The W. Edwards Deming Institute Blog

Transforming the Organization – Deming Podcast with David Langford

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This is the 3rd Deming Institute podcast with David Langford: CEO and Founder of Langford International and Deming Institute Advisory Board member. Download the podcast.

David begins by talking about why it is best to focus where you actually can have influence. It doesn’t do much good to worry about the national education system or state eduction system if you have no influence on those. Focus where you have influence. He discussed this idea in this clip from his presentation at the Deming Conference a few years ago: You are the top of your system. As he says in this podcast:

I learned to teach the students the largest circle over which you have influence may be you.

If so, take a look at your situation. Take a look at the data. Where you are satisfied, just continue doing what you are doing. For those things you want to improve, experiment to improve and monitor the results.

I liked David’s response on how, for example, a principle should start improving. Should he start saying what we are going to be doing differently?

“No, start thinking. Start studying the current situation.”

I don’t know where we got the impression that thinking was just an excuse to do nothing. Probably because those doing nothing say we need to study things more or have a committee study things and such things as a way of doing nothing. I can understand frustration with those delays. But we need to spend a great deal more time thinking. We should “Manage” (and act) less and think more: then when we act, do so in the ways that will have the most positive impact.

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Quality Beginnings: Deming and Madison, Wisconsin

This post in an excerpt from The Quality Leadership Workbook for Police by Chief David Couper and Captain Sabine Lobitz.

While the intense focus on quality movement in the 1980s did not become the dominant way to run an organization like many of us thought it would, it still became one of society’s major influences. Culturally, we can see it in current television episodes of ‘Undercover Boss’ and ‘Bar Rescue.’

The idea that how we work (even how we live) should be a process of continuous and constant improvement is not new. Many of the values inherent in the quality movement are the values of America. For example, to manufacture a product that is of high quality, durable, and sold at a fair price is the basis of our economic system. It also applies to the delivery of services.

Service, like a product, can be delivered to a customer with the intent to not only meet but exceed a customer’s expectations. None of us like to receive shabby services that fall far below our expectations. The value that ‘the customer is always right’ continues to be important in our nation’s manufacturing and service sectors.

Moreover, the delivery of high quality police services needs also to be a working value in our nation. Of course, it is a lot easier to generate customer appreciation when police do something for a person versus something perceived to be against their interests like issuing a traffic ticket, telling someone they cannot do something, or arresting them.

But we must understand this: police are more effective in their difficult work when citizens support them. And any measure of police effectiveness is always dependent upon whether citizens perceive their police to be fair, honest, and controlled in the use of force.

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Dr. W. Edwards Deming’s ideas first took root in Japanese industry after World War II. Many years later there began a growing movement in our own country to use his methods not only in American industry and business, but government as well. The City of Madison and its police department were part of that national movement.

Deming’s teachings had a strong influence in Madison. Under Mayor Joseph Sensenbrenner (1983-1989), there was a near-total involvement by city employees in applying Deming’s work to city government. These were Madison’s golden years as government, business, and educational institutions worked together to make quality an organizational lifestyle in Madison. Deming helped us to see police work as a system capable of being improved.

We also learned the value of collaborating with and learning from others outside of law enforcement. We came to see that the systems for which we were responsible, were dependent on others around us (like when we realized the important systems-link between poverty, jobs, education, and crime). Most of all we saw the work we did as a system – and a system that could be improved.

Deming believed that a worker’s lack of information profoundly hampered the process of improving products and delivering services. Along with Dr. Walter Shewhart, he developed an improvement cycle that will be familiar to anyone who has studied problem-oriented policing: Plan, Do, Check, Act. They believed that if this cycle of improvement is maintained, and if leaders are willing to disregard unsupported ideas, the quality of work, products, and services will consistently improve, customers will be satisfied, and costs will be reduced.

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Doug Hall on Using Systems Thinking to Power Strategy, Innovation and Growth

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In this podcast (download), Doug Hall, CEO and founder of Innovation Engineering and Eureka! Ranch shares his approach for taking Dr. Deming’s ideas systems thinking and applying that to strategy, innovation and growth.

Doug shares the story of how his father introduced him to Dr. Deming and systems thinking in the late 1970’s. Doug’s father worked at Nashua Corporation, which was one of the early corporate adopters of Dr. Deming’s philosophies. Later Doug took that systems mindset to the Proctor and Gamble brand management department.

We found it to be extremely difficult to get teams to stay with it [PDSA]. They would do it once [one cycle through the PDSA cycle] and then just blow it off.

In the podcast Doug talks about their strategies for helping people use PDSA (instead of avoiding it). I strongly suggest anyone interesting in using the PDSA cycle well read and continually reference, The Improvement Guide.

As Doug says it is often a challenge to get organizations to systemically experiment to achieve improvement but when they do, using the PDSA cycle, results can be exceptional.

Related: Deming Podcast with Bob Mason and Clare Crawford-MasonOne-Piece-Flow Projects Create the Best Conditions for True Creativity


W. Edwards Deming Videos On Demand

The W. Edwards Deming Institute has made The Deming Library and other videos with Dr. W. Edwards Deming available on demand via the internet. We offer 7 programs to chose from.

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Dr. Deming’s Four-Day Seminar (1992)
This option provides access to 12 hours of Dr. Deming’s lectures and demonstrations from Dr. Deming teaching his famous 4 day seminar. The video is from Dr. Deming’s presentation to an audience of more than 500 managers at General Motors in 1992.

The Four-Day Seminar thoroughly covers The Deming System of Profound Knowledge™; we offer a comprehensive study guide for individual and group learning.

Topics covered include: Optimization of a System, Leadership and Management of People, PDSA and Responsibility, Some Lessons in Variation and People Learn in Different Ways.

cover image of Deming Starter Library videos

The Deming Starter Library (2 hours 53 minutes) is comprised of several selections from The Complete Deming Library. We offer a study guide for the collection.

  1. The Prophet of Quality reviews the life of Dr. Deming, his education, professional career, and the origins of his overarching principle of continuous improvement.
  2. The 14 Points for Management covers the essential actions that Dr. Deming believed managers must take to transform and build a successful organization.
  3. Understanding Profound Knowledge reviews Dr. Deming’s system of thinking on which all practices must be based to achieve continual improvement of the organization, its people, and products or services.
  4. The Red Bead Experiment features the famous exercise designed by Dr. Deming that demonstrates how an individual’s performance at work is directly tied to and limited by the nature of the system they are working within.
  5. Lessons of the Red Bead Experiment – The lessons learned in the experiment include failing because management did not understand or improve the system, and realizing that exhortations will not improve productivity.

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Creativity Inc. – Using Deming’s Ideas at Pixar

cover of Creativity Inc.

Ed Catmull co-founded Pixar with Steve Jobs and John Lasseter. In Ed’s book, Creativity, Inc.: Overcoming the Unseen Forces That Stand in the Way of True Inspiration, he discusses how important Deming’s ideas were to his efforts to help make Pixar what it is today.

As we struggled to get Pixar off the ground, Deming’s work was like a beacon that lit my way.

it wasn’t until the 1980s when a few companies in Silicon Valley, such as Hewlett Packard and Apple, began to incorporate them. But Deming’s work would make a huge impression on me and help frame my approach to managing Pixar going forward.

One of the challenges in learning how to be a manager is you see similar statements from managers that create systems that are very different in fundamental ways from what they say. So you see quotes like Ed’s in his books and figure that is similar to what most executives writing books says.

John and I had very conscientiously tried to make sure that everyone at Pixar had a voice, that every job and every employee was treated with respect.

Treating employees with respect and creating systems that allow people to be engaged and contribute is critically important. Pixar has done that. What is important is creating management systems that support the such statements. Making the statement matters very little; I see such statement much more often than I see evidence of management systems that are based on such beliefs.

How each company adopt the management concepts W. Edwards Deming proposed will be different. That helps make Deming’s management ideas powerful but it also disappoints some in that there is no simple management recipe to follow. We learn from reading what others have tried. And we learn from what worked. But we can’t just copy; we need to understand what the principles (the theory) behind what they did and understand how to apply those principles in our organization.

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Deming Podcast with Dick Steele, Chairman of Peaker Services

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This podcast (download) features Dick Steele, Founder and Chairman of Peaker Services and member of The Deming Institute Board of Trustees. Dick discusses his company’s transformation and their continuing application of the Deming philosophy.

Peaker Services remanufactures locomotive engines and designs electrical control systems for large power applications.

Dick shares how attending a Dr. Deming’s 4-day seminar in 1988 led to the company dropping performance appraisals the following week.

On a personal note, I think one of Dick’s smartest decisions was to hire Ian Bradbury as the CEO (when Dick stepped down as CEO while remaining as the chairman). Ian is still the CEO. See some clips of Ian presenting at the Deming Institute conference: Deming 101 with Ian Bradbury, Deming 101: Theory of Knowledge and the PDSA Improvement and Learning Cycle, Knowledge About Variation and Deming 101: Understanding Systems.

Some examples of decisions Dick made with an understanding that much of what is important cannot be measured (and the benefits of making the changes cannot be measured). First, as mentioned they eliminated performance appraisal.

We did institute a scholarship program where every person in the company has a $7,000 scholarship every year to use pretty much as they wish…

If an employee has an idea for an improvement he is pre-authorized to spend $2,500 of company money to make that improvement.

Related: Improving Problem SolvingBaking Apple Pies Using the Deming Management SystemManage what you can’t measure


A Bad System Will Beat a Good Person Every Time

A bad system will beat a good person every time

W. Edwards Deming, February 1993 Deming Four Day seminar in Phoenix, Arizona (via the notes of Mike Stoecklein).

So what was Dr. Deming trying to convey with this quote? It wasn’t an attempt to get people to give up trying because failure was certain. It was a attempt to get people to understand the importance of the system and the futility of trying to focus on blaming people for failures.

As Deming said we are being destroyed by best efforts. Trying harder, to do what you understand as your job, when the system is broken often results in more damage. Don’t just do something, stand there (and think).

So if a bad system will be beat a good person every time what can you do? You have to focus not on trying harder within the current system but on changing the system so that success is built into the system. Relying on heroic measures is a poor way to manage.

Related: The System Will Produce What It’s Capable of Producing94% Belongs to the SystemWe are being ruined by people putting forth their best effortsEffort Without the Right Knowledge and Strategy is Often Wasted

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Cooperating with Competitors

cover image of The New Economics

W. Edwards Deming included this example of businesses cooperating with competitors in The New Economics for Industry, Government, Education:

My automobile, sitting in front of my house, would not start. I called Bill at the Exxon station not far away. When the man from the Exxon station came, I noted that he was in a truck owned by his competitor across the street.

How smart these people are, I perceived. Each station owns one truck. By borrowing the competitor’s one and only truck, if it be idle, both stations provide to their customers service equivalent to ownership of perhaps 1.8 trucks, at the cost of owning only one. Advantages: these stations both retain business of customers at lowest cost. Even further cooperation: one station stays open late one night, the other stays open late the next night.

It is a great example, showing how it is possible to find solutions that help business and customers by thinking in unconventional ways. These types of cooperation are not unheard of but I think we could benefit from more thought given to ideas that initially make us think it is an unworkable and crazy idea.

I was actually reminded of this idea by a headline on two American football teams being willing to share a new stadium near Los Angeles if they can’t get individual stadiums built (with huge funding from taxpayers) near their current location.

Now in the stadium example I fear it is mainly a negotiating tactic to back their current cities into providing huge concessions. The concessions local governments grant for stadiums are widely seen by economist as foolhardy: I agree. But if the choice is between wasting lots of taxpayer money on 2 stadiums or doing so on 1 stadium, closing 1 stadium they share is the lessor of two bad options. The correct option is to let them build the stadium if it is economically wise without taxpayer giveaways. The New York Giants and New York Jets share a stadium in New Jersey.

The idea of finding cooperative solutions with competitors is something I support. As with most any strategy there are considerations that impose limits on how far things can go. Cooperative solutions have to be found that benefit each competitor and also that benefit customers. In the USA, and most other places I would imagine, there are legal limits on collusion to harm consumers with anti-competitive agreements.

In a previous post we discussed how, in applying Deming based management principles as a business strategy, Hallmark Building Supplies cooperated with customers (some of which were also competitors). That post also includes a webcast of Louie Paynter discussing his experiences.

I think examples of these cooperative solutions with competitors from our readers would be of interest to all of our readers. Please share examples from your organization with us by including a comment below.

Related: Tyranny of the Prevailing Style of ManagementDr. Deming Video: Managing the Organization as a SystemManaging the Supplier Relationship (a systems view)


Deming in Education: Education as a System

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In this podcast (download) David Langford becomes the first repeat guest. David is the CEO and founder of Langford International and a Deming Institute Advisory Board member.

David continues discussing his thoughts on using Deming’s ideas to improve education. By looking at education as a system and examining what the goals are you find a need to change the focus of school.

It is easy to compare grades on a test. But it is highly questionable if those numbers tell you much. Many studies show students will study for a test and then forget nearly everything so they have no long term learning. When you focus on test results it sure seems like focusing on what is easy to measure instead of what is really desired. As Ackoff put it (f-law 51, from his book Management f-Laws):

Managers who don’t know how to measure what they want settle for wanting what they can measure.

What David talks about is the importance of creating powerful learning experiences. Those experiences students will retain that learning over the long term. When your focus is on learning you ask yourself what will make student want to learn? That is different than what will make students want to get a good test score.

David, in the podcast:

The system coming out of the last century basically made learning flexible but time rigid. Its called the grading system. Set an arbitrary due date, [say] Friday. Then by Friday, do any amount of work you want, any poor quality level you want as long as you get it to me by Friday. So the schedule drives everything and teachers and parents get frustrated when my child is getting a C or D or B.

A lot of that is psychological they [the student] realizes there is no way I am going to get an A or do this level of work in the arbitrary time limit. So I’ll just do whatever I need to do and get whatever I get and then people just start responding to the extrinsic motivators.

Dad doesn’t get mad at me as long as I get at least a C, ok. So you have kids coming in and saying what do I have to do to get a C. I have to get at least a D average to play basketball. Ok, what do I need to do to get a D average.

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Related: Monta Akin on The 20 Year Deming Journey at the Leander Independent School DistrictHow Did We Do on the Test?Dr. Deming Video: System Improvement for Educators and Managers
Deming Podcast: Andrea Gabor on Management at Ford, GM and the USA Education System


Peter Drucker Advocated a Ratio of 20 to 1 for CEO to Average Worker Pay

Dr. Deming didn’t directly address executive pay as far as I know. Executives were paid well and without much detrimental impact on companies historically. In the 1980s many CEOs started treating corporate treasuries as personal bank accounts and problems exploded. Peter Drucker had no issue with high and reasonable CEO pay, as things became more and more abusive he spoke out more and more strongly about the damage being done by CEOs and those allowing such behavior. Since that time things have progressively and dramatically worsened as pay for senior executives exploded.

Rick Wartzman, Executive Director of the Drucker Institute, wrote, in 2011, to the Securities and Exchange Commission in support of requiring public companies to disclose the pay of their typical worker compared to the pay of their chief executive.

When it came to the relationship between a CEO’s pay and that of the average worker, Drucker advocated a ratio around 25 to 1 (as he suggested in a 1977 article) or 20 to 1 (as he expressed in a 1984 essay and several times thereafter). Widen the pay gap much beyond that, he said, and it makes it difficult to foster the kind of teamwork and trust that businesses need to succeed.

“I have often advised managers that a 20 to 1 salary ratio is the limit beyond which they can not go if they don’t want resentment and falling morale to hit their companies,” Drucker explained (At last year’s World Economic Forum in Davos, Switzerland, those looking to cap runaway CEO pay came to refer to the 20 to 1 mark as “the Drucker principle.”)

In a 2004 interview, Drucker elaborated further: “I’m not talking about the bitter feelings of the people on the plant floor… It’s the midlevel management that is incredibly disillusioned” by king size CEO compensation.

I agree with Drucker’s reasoning and the Drucker Institute’s continuing to take a stand against the bad practice of so many CEOs today. If someone wants a lot of money to lead your organization and they are qualified, fine. If they won’t run your organization for less than a king’s ransom find someone who is more interested in leading your organization than in treating it as their personal bank account.

It is hard to know how strongly Dr. Deming would feel about the problems caused by the current epidemic of overpaid executives. I feel strongly he would have vigorously objected to the damage being done to corporations and the management system by such practices. But that is my opinion, and it is possible I am wrong. Though I don’t know of any prominent Deming practitioners that support the current practices.

I have written about the problems caused by such practices over the years. In fact, I include it in what I call the 2 new deadly diseases: extremely excessive executive pay and the broken patent and copyright systems.

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