The W. Edwards Deming Institute Blog

Understanding and Misunderstanding Variation

Guest post by John Hunter.

This webcast shows Mike Stoecklein’s presentation, Understanding and Misunderstanding Variation in Healthcare, at the 2015 Deming Research Seminar.

The companion research paper that Mike wrote, Understanding and Misunderstanding Variation in Healthcare is packed with additional information on the topics he discusses and includes a summary of interviews with 40 individuals from 33 healthcare organizations and consulting companies regarding three areas of inquiry:

  1. the current state of healthcare management’s understanding and responding to variation when they have data,
  2. their current understanding of how the principle of variation applies when data are not present (including the management of people), and
  3. a description of what is being taught and advice given around the principle of “understanding and managing variation.”

In the talk Mike referenced Dr. Deming’s quote from If Japan Can… Why Can’t We:

American management thinks that they can just copy from Japan—but they don’t know what to copy!

Mike goes on to elaborate about this problem:

We think we can merely lift the methods and techniques that we see in great companies, like Toyota and others, and that we can have it [a strong and effective management system] as well. What we don’t understand is that our prevailing systems are based on these things, such as the short term focus, focus on the numbers, focus on results, focus on people (it’s a shame and blame sort of a culture), you divide the organization into parts and you manage the parts… [but] it is the interaction of the parts that is important, and then we try to manage from the office, we try to manage from the board room, we don’t go around and we don’t really understand what is going in the work world, and we infuse competition we don’t have collaboration and we think we are going to get the same results you see with a Toyota Production System, or something else, but we don’t. Because those systems are not going to drive those outcomes.

Read the rest of this entry »


Post-Harvey Restoration: Consider a Deming-Based Approach

Guest post by Lori Fry, originally featured as a post at https://dignityatworkproject.com/    Follow this link to listen to our first podcast with Lori.

 

The effects of Hurricanes Harvey and Irma will be felt for years. AccuWeather has reported the cost of recovery efforts will exceed $290 billion. That’s BILLION. With a “b.”   And that’s just hard costs: clean-up, replacement of vehicles and belongings, home repair and reconstruction.  That does not account for lost wages, lost business revenue, lost businesses, and worst of all, loss of life.

The 2017 hurricane season highlights the high cost of short-term decisions that have long-term and often incalculable consequence. While we can’t prevent severe weather, we can control what how we prepare for it – and in doing so, we can mitigate those losses that we often don’t know about until it’s too late.

Not by accident I’m sure, CBS news aired “Sea Change: How the Dutch confront the rise of the oceans.”   Henk Ovink, Netherlands’ water ambassador – the water envoy for the King of the Netherlands, spent two years in the United States working in areas affected by Superstorm Sandy. “I said to [his US colleagues],” said Ovink, “did you think about preventing the disaster? And they were like, ‘preventing the disaster? No, we couldn’t. We have to make sure we RESPOND FASTER.” It gets better…He went on to suggest to his colleagues, “…suppose that there is no disaster because you prepared better?” Prevention wasn’t on the radar – their first inclination was RESPOND FASTER.

This week, 60% of Floridians – all of Florida – are without electricity.  Florida Power & Light indicates many will be without power until September 22 (11 day outage).  Two weeks ago, toxic waters flooded Houston’s streets, businesses and homes; and chemical plants went up in flames. And Katrina swamped New Orleans a decade ago.  Following Katrina, we found out The Army Corps of Engineers feared the New Orleans levees would fail.  On the heels of Harvey, The Atlantic Monthly reported (August 28) that “catastrophic floods have been anticipated for some time,” and the Houston Chronicle “called flood control the city’s ‘most pressing infrastructure need,” and blamed inaction on a lack of funding.

What the Dutch seemed to know, and what we have yet to systematically embrace is that the price of inaction (employing hope as a strategy) far exceeds the cost of prevention.

For 1,000 years, the Dutch have been waging war with the ocean, because 26% of the country is below sea level. In 1997, the country built a massive storm surge barrier – the Maeslant Barrier – to safeguard Rotterdam for the future.  The cost of engineering and building the barrier could be calculated: time and materials. In contrast, it’s nearly impossible to calculate the total cost of the losses associated with our recent severe weather.

I don’t know the extent to which the Dutch are acquainted with Dr. Deming’s theory of management – but their approach brings Point #1 of Dr. Deming’s 14 Points for Management to mind: create a constant purpose toward improvement.

  • Plan for quality in the long term (at some point, there will be another hurricane)
  • Resist reacting with short-term solutions (if the levee design was tested and failed, learn from it; don’t simply reuse it)
  • Don’t do the same things better – find better things to do (consider PREVENTION over responding faster)
  • Predict and prepare for future challenges, and always have the goal of getting better (the next storm could be a decade away or tomorrow; – use available time to your advantage)

The Dutch – through the building of Maeslant Barrier – show us that we have much to gain by investing in continuous improvement; Houston demonstrates that we have much to lose if we don’t.


Management by Extremes

Post by Bill Bellows

In the spirit of standardization that is growing in popularity in organizations around the world, is there room for diversity?   That is, is variety really the spice of life, or does it represent a non-value added effort, if not simply waste?    In other words, should variation always be reduced to zero?   Is there a place for an aircraft manufacturer to offer their airline customers 108 shades of white paint, as did an aerospace company in the 1990s?   Or, would it be better to remove color as a potential market place differentiator and, instead, offer “Any color you like, as long as it’s white”?   And, what about inventories?    From waste to non-value-added efforts to defects, is less always better for the system at hand, striving for zero?  In consideration of the manufacturing concept of “single-minute exchange of dies,” why not “single-second”?    In regards to finances, what can be said about cost goals?    Should they, as well, always be less-is-better, in which case we buy on price tag alone, shunning Dr. Deming’s fourth point (from his infamous 14), even when selecting a surgeon?   Can the same be said for cycle time?   Is faster always better?   At what expense and, with what return on the investment?  Is less fat always better, or, do whales, as well as humans, have body fat for a reason?   What about salt intake?   Is less always better?    In late-breaking health news, a recent New England Journal of Medicine study found higher risks of high blood pressure for excessive salt intake, yet higher mortality from “cardiovascular causes” for low salt intake.    Might there sometimes be value in a middle ground goal?

While organizations pronounce that “standards are everything,” what can be said of the limits to uniformity and variability reduction pursuits, pulling towards zero?   Does context matter?  In consideration of a greater system, is less variation always better, with a goal of zero?   Should everything be standardized, including language and right-handedness?   Or, should advancements in the implementation of standardization include a context for advocating when and where to pursue standardization?   At times, multiple languages and multiple software systems, assisted by translators, might provide a more systemic solution.   That is, a more economically viable solution, in which the investment in variety is off-set by the systemic savings.

From Zero Defects to “Just-in-Time” production, zero remains an admired stretch goal and also represents one of the two endpoints of “Management by Extremes.”   The other is infinity, as in the pursuit of better, coupled with the ambition to continually improve.   For example, a friend once shared her work goal of recruiting, week after week, new members to a health club.   Upon suggesting to her supervisor that adding more members would eventually require a facility with more space and more exercise equipment, without which lines would form and members would defect to competitors, she was advised to focus on recruitment.    Meanwhile, working in isolation, while pulling in an opposite direction, a co-worker focused on reducing costs by not investing in additional space and equipment.    As expected, customers came and left.   I liken this organizational behavior to my left wrist and right wrist being given different goals for pulse, not to mention my lungs being given an independent respiration goal, with my urinary system, vision system, and pulmonary system given their own goals.   What would happen to my body if these goals were simultaneously achieved?   While pulling in opposite directions, mindful of many of Dr. Deming’s admonitions (“People get awful tired, get nowhere, pulling in opposite directions.”), would I live long to tell about it?

In reviewing goal setting, let me also flash back to my engineering training in heat transfer and fluid mechanics, when my graduate school advisor drilled me and my peers on how to address the technical assignments we would receive once employed.    “There will be situations,” he predicted, “where you will be given five minutes to perform an analysis and, in most cases, there will be three possible answers; zero, one, and infinity.”   He coached us on how to quickly assess the context and choose from these three options.    Little did I appreciate how often zero and infinity would appear together, as stretch goals, as they do in Management by Extremes.   Years later, in my studies of “Robust Design” under the mentorship of Genichi Taguchi and Yuin Wu, I was reminded of the grouping of “zero and infinity” as two of the three common goals when applying Dr. Taguchi’s “methods” of quality improvement.    An early consideration was the selection of the performance (quality) characteristic for the product or process being improved, and its corresponding goal.   Characteristics which were ideally zero were known as “Smaller-is-Best.”   Those ideally infinite were labeled “Larger-is-Best.”   The third category was reserved for situations where a finite value was ideal.   As with salt intake, these were branded “Nominal-is-Best” characteristics.   Upon reflection, Dr. Taguchi and Yuin Wu eventually explained the potential systemic weakness of both “Smaller-is-Best” and “Larger-is-Best” goals and encouraged the wider use of “Nominal-is-Best” goals, with appreciation of a greater system for end use.

Standardization or diversity?   Mind the Choice, consider the greater system at hand, and let context be your guide.


Are you a systems thinker?

Post by Bill Bellows

A few decades before The Big Bang Theory introduced television audiences to fictional theoretical physicist Sheldon Cooper, with guest appearances by Stephen Hawking, astronomer Carl Sagan was one of the most well-known non-fictional US physicists.   Amongst Sagan’s research interests was the search for extra-terrestrial intelligence, including the odds of finding it amongst the planets surrounding his estimated “billions upon billions of stars.”  Sagan was also known to have once offered his advice to chefs, specifically on how to prepare an apple pie.  “If you wish to make an apple pie from scratch,” he offered, “You must first invent the universe.”   With a similar regard for seeing systems, the 19th century Scottish-American conservationist John Muir once reflected, “When we try to pick out anything by itself, we find it hitched to everything else in the universe.”   Such wide views surely qualify Sagan and Muir as systems thinkers, where a system, to borrow from organizational theorist Russell Ackoff, “is more than the sum of its parts, an indivisible whole.   It loses its essential properties when it is taken apart.    The elements of a system may themselves be systems, and every system may be part of a larger system.”

An apple pie, like an automobile or a football club, can be taken apart, but, to do so, one is left with disconnected components, not quite the same as an after-dinner sweet.  Whether collecting a list of ingredients for baking, or preparing for holiday travel, each element in a plan is eventually joined to the other elements to achieve the successful output of the system.   In his book, The Checklist Manifesto, physician Atul Gawande offers his readers to great advantage.   We are pragmatists and have things to do besides construct lists with infinite detail. By way of example, consider the response of our then 7-year old son to the question of how to prepare his favorite lunch, a grilled cheese sandwich. “Easy”, he said, “you only need three things – bread, butter, and cheese.” This is a very practical list and one that would match the responses of a fair number of readers.  But, one might ask, what about the rest of the universe to which these three things are hitched?   Well, of course, it depends on our starting point. Given the initial condition of a ready supply of cheese, butter, and bread, plus a hot frying pan, this is all one would need.   Given the “10 foot view” of “bread, butter, and cheese”, would any of us be regarded as a systems thinker in comparison to Sagan and Muir?

Using a favorite example for constructing a checklist, I recently asked six audiences of college students to list at least five things they need to wash a table, with the subject table in another room.   In borrowing an illustration from Dr. Deming, responses in each session included water, soap, a bucket, a sponge, a towel to dry it, and someone to do the work.    Similar to “bread, butter, and cheese to make a grilled cheese sandwich,” this is a very practical list, regarding preparation of the ingredients.   Typically missing from the “List 5 things needed to wash a table” list is consideration of the eventual use of the table, perhaps for dining, arts and crafts, or playing cards.

Given these anecdotes from Carl Sagan, John Muir, and our son, what does it mean to be a systems thinker?   To think of the big picture?   If so, how big?   One light year?  Two?   Perhaps we are all systems thinkers and we would be better served to shift our focus from asking “Who is a systems thinker?,” perhaps implying some of us are and others are not, to asking “How big a system should we think about?” and “Why was this size chosen?”

Simply put, what is the boundary of the system in question and why was this size chosen?  Both questions offer insights on thinking patterns that are of potential interest when systemic solutions are needed.   To borrow from Dr. Deming, “The boundary of the system……may be drawn around a single company, or around an industry, or as in Japan in 1950, the whole country.   The bigger the coverage, the bigger be the possible benefits, but the more difficult to manage,   The aim must include plans for the future.”


The Funnel Experiment with Brian Hwarng

Guest post by John Hunter.

This webcast shows Brian Hwarng’s presentation, The Funnel Experiment, at the 2015 Deming Research Seminar. As Brian says:

The purpose [of the funnel experiment] is to demonstrate, by theory, the losses that are caused by tampering.

Chapter 9 (“The Funnel”) of The New Economics is a good source to learn more about the funnel experiment.

Brian discusses the impact of interactions on results. The funnel experiment illustrates that the impact of results are dependent on other factors. This insight is critical to understanding Deming’s ideas and applying them.

Organizations are complex systems with many interdependent parts. When making decisions it is important to not just have data but to understand how that data reflects an interaction of many factors to create a specific result. Over-simplification is often one of the problems in most organizations. Seeing results as the responsibility of the person close to the result is a symptom of such thinking. Even as system as simple as the funnel experiment shows that interactions are a natural part of any system. Dr. Deming knew this and made appreciation for a system an integral part of his management system.

When people react to individual results (when those results are merely the expression of the natural variation within the system) the problems and variation related to that process increase. Instead organizations need to develop systems to measure process results over time and use the PDSA cycle to experiment and learn how to improve the capabilities of the process in order to continually improve the results.

Read Dr. Hwarng’s paper: Insights and Innovations via the Expanded Funnel Experiment.

View the slides for the Dr. Hwarng’s funnel experiment presentation.

Related: We Need to Understand Variation to Manage EffectivelyKnowledge of Variation


The Transformed Map of a Recovering Management Accountant

This post is an excerpt from Ed Baker’s book (pages 140-141), The Symphony of Profound Knowledge, which was created in partnership with Aileron.org.

About Aileron

At Aileron, we fervently believe privately held business fuels free enterprise and raises the quality of life for us all. As businesses move beyond the start-up phase, a systematic approach to your business is critical to sustainable and strategic growth. We call this approach Professional Management, and have developed a system to implement it influenced by Dr. W. Edwards Deming and other great thought leaders. Dr. Deming’s timeless teachings have been, and will continue to be, a driving influence because we see his philosophies work.

Aileron is proud to support the illuminating, alternative perspective of Dr. Deming’s teachings and philosophy presented in Ed Baker’s book, The Symphony of Profound Knowledge.

 

Dr. Tom Johnson, an economist and self-described “recovering management accountant,” is well known for his early contributions to the traditional accounting profession. His books Relevance Lost, coauthored with Robert S. Kaplan, and Relevance Regained, focused on improving the information available to management accountants. Johnson underwent a transformation of his own thinking and for more than two decades has been working to help others in the accounting profession understand that traditional financial management tools of MBR (Management by Results), by trying to optimize performance of individual departments and functions, suboptimize the performance of the enterprise as a whole.

I spent four days with Professor Johnson in June 1992 at one of Dr. Deming’s seminars. He is a proponent of Deming’s System of Profound Knowledge and especially of a whole-system ecological view of enterprise. He proposes that business and economic organizations should be viewed as natural living systems, with all that this view implies for financial management. In his writings, especially in his book Profit Beyond Measure, coauthored with Anders Bröms, Johnson presents this view as an alternative model for accounting and financial management professionals. In that book and other articles (e.g., “Manage a Living System, Not a Ledger”), Johnson explains that better cost information, such as activity-based costing (ABC), will not provide a long-term method of reducing manufacturing costs. The focus must be on managing work activities as components of an ecosystem. Based on the assumption that financial results emerge from complex interactions and nonlinear feedback loops, in the way that outcomes arise from the interrelated parts of a living system, attempting to control those results with linear accounting information is both wrong and possibly destructive to enterprise in the long run. Johnson therefore recommends that management view financial results as the outcomes of operations that behave according to the principles that govern a natural living system.

Processes are the means to achieve ends. Managerial accounting focuses on the ends. “Managing by Means” (MBM) is the term that Johnson uses in Profit Beyond Measure to describe financial management thinking that comes from an ecological map of the enterprise as a living system. The philosophy and methods of management change dramatically from using financial targets to drive results to how and why results are going to be achieved. Johnson explains that MBM can produce quantitative measurements, but it helps to understand that those measurements have emerged from a system of relationships. Accounting models must be able to evaluate the contribution to performance of the quality of interrelationships between different activities and functions in a business. Methods to achieve this are explained in Profit Beyond Measure.

 


Selling Horses and Seeing Systems

Post by Bill Bellows

Midway through graduate school, while employed through the summer months in an engineering position, I joined fellow interns in an after-hours outing at a local pub.   With our internships coming to an end, we invited our department manager to join us.   Unlike the technical questions we answered all summer long, our manager took the opportunity to challenge us with a down-to-earth business question.    Instead of the queries W. Edwards Deming used to probe senior executives, including “What business are you in, what business will you be in 5 years from now, 10 years from now?,” our manager asked us to explain the difference between crime and business.    We stretched to offer explanations that might impress a member of management with our embryonic business acumen.    After he allowed us to exhaust our textbook answers, he enlightened us with his trouble-free answer; “business is legal and crime is illegal.”    In consideration of the fine line between business and crime, poet Robert Frost once offered his advice on the secret to selling a horse; “Take care to sell your horse before he dies. The art of life is passing losses on.”    Yet, what can be said of those who will receive these losses, be they co-workers, customers, or, more broadly, fellow members of society?

In reports on the BBC News, questions have been raised about Google parent’s Alphabet’s tax bill in the UK.    Specifically, are they paying enough?    A few years ago, similar questions were raised about Apple and their US tax bill.   Given their record profits, should they be paying more in taxes?   Or, are they, along with Google, electing to pay the minimum amount needed to comply with the current tax laws?   While the phrase “tax loophole” is often used by the media to explain these corporate behaviors, if the laws were changed once again, would one be surprised to learn that they have both found yet another way to minimize their tax bills?   Could it be that the “loophole” designation overlooks the ability of anyone meeting a requirement to do so minimally?

As with asking our then teenage daughter to be home by midnight, could we complain if she arrived at 11:59pm?   Or, is this a loophole?    If we changed the requirement to 11:00pm, would a 10:59pm performance be surprising, if not labeled a loophole?   No more so than what happens when a friend, a university professor, assigns the question, “List at least 20 ways to do X,” as homework to his design students, and receives a list of exactly 20 ideas from each student when their answers are submitted.

With binary simplicity, what is legal is not illegal.   What is alive is not dead.   What is good is not bad.  What is on-time is not late.   What meets requirements is not delinquent.   I refer to this “Pass or Fail” logic as category thinking.    In everyday practice, we use a finite number of distinct categories to differentiate answers to questions such as “Are you a citizen of the United Kingdom?” and “Does your car have gas?” or to display commands on man-hunt posters “Wanted: Dead or Alive.”    By contrast, continuum thinking offers the possibility of an infinite number of answers when the inquiry shifts from “Does your car have gas?” to “How much gas is in your car?”

The many differences between category and continuum thinking might be mistakenly perceived as philosophical.    In a very pragmatic sense, our ability to think about, see, and manage systems depends on which mode of thinking one activates, category or continuum.    To better appreciate this finding, consider a “supply chain” inquiry I have posed in seminars and presentations across the United States and United Kingdom, as well in the Middle East and Asia, where the answer has proven to be independent of location or the type of organization which has hosted me.    This question borrows from the use of a grading system in a classroom setting, where (in the US), grades range from the category of outstanding (“A”), to good (“B”), to average (“C”), to poor (“D”), and failing, (“F”).    On a continuum, scores will typically extend from a high of 100 to 60, with 60 as the transition point from degrees of good to failing, all the way down to 0, perhaps extending into negative territory.

Given this classroom grading context, my “supply chain” inquiry is “What letter grade, or numeric score, is required by (“external”) suppliers to your organization for all parts, components, or elements purchased?”    And, the same question can be asked about the letter grade requirements for “internal” suppliers, handing off to internal customers (i.e., co-workers).   From aerospace procurement to the automotive and biomedical industries, extending to the construction industry and healthcare, quality is almost universally defined according to a tradition of “conformance to requirements” for each element of the system, a system of managing “interchangeable components” which dates back at least 200 years.   From the operation of a hospital (where medical staff members must meet requirements) to the integration of “completed” software modules into a final product, these efforts remain in heavy-duty use today, with an ultimate quality goal of “Zero Defects” in each element of the system.   In such a binary system, good elements are those which meet requirements and bad elements are those which do not.    Once again, what is good is not bad.    Assigned tasks are either complete or incomplete.    Asking one’s young son or daughter to put his or her books in their bedroom may well result in them being placed inside the doorway to their room.   For, what is in is not out.

What is often surprising to learn is that the letter grade requirement is not an “A,” but rather a “D,” which often translates to 60 on a numerical scale.   As with the difference between an ”A-element” and a “D-element,” differences between elements scored as 60 and 70, 80, 90, 95, and 100 are invisible, on an element level, in this widely used supply chain quality protocol, even those with standards characterized as “advanced.”   In such a system, might the secret to selling a component be to sell it before it fails?

Once, when confronted by the realization of his organization’s “Pass or Fail” procurement system, a seminar attendee responded by sharing his new-found frustration with this protocol.   “So,” he replied, with a degree of irritation, “I should go home and instruct my daughter to get passing grades in school.”   When asked how he arrived at this conclusion, he replied “Because you said there’s nothing wrong with a Pass or Fail system.”   As a point of clarification, I explained that although the current procurement system defaulted to the category thinking of “Pass or Fail,” I encouraged him to engage others in Minding the Choice between defining quality through category thinking and when to define quality through continuum thinking.   Note that Dr. Deming’s definition of quality – “A product or service possess quality if it helps someone and enjoys a sustainable market,” can be viewed on a continuum when viewing help as relative as opposed to as absolute.   Such a system allows for help to be continually improved, as economically justified (see my post, Hair Cuts and Continuous Improvement, for added clarification of why improvements may not always be a worthy investment.)

As for semantics and pragmatism, what are the economic consequences of integrating aerospace, automotive, medical, and construction elements and components, or a team of horses, with letter grades of “D” versus letter grades of “A”?   One need not look far or dig deep to find economic losses revealed by integration challenges, if not delayed deliveries of next-generation products, unknowingly constrained by the 18th-century quality standard of “conformance to requirements.”  One need not look far to find meetings being called to explore and examine the paper trails of modules and components labelled “bad,” yet with little earlier effort (perhaps labeled non-value-added) to monitor their letter grades, “A,” “B,” “C,” or “D,” and prevent “bad” from occurring.   From wedding planning to an invoice payment system, one need not look far to find excessive integration efforts for elements and components labeled “good,” the very losses described by Robert Frost in the context of dying horses.    On one occasion, when I explained the potential for integration losses from “good” elements to a manager responsible for element integration, she realized she was, at the very moment we met, experiencing a sizeable loss.   When I suggested she contact those suppliers who had provided her with the “good” elements, for closer examination of their respective letter grades, she shrugged and replied, “There‘s no one to call in our current system.  All the elements are good.”

More to follow in this saga in my next post, to be released next week.


Book Review – Against All Odds: The Story of the Toyota Motor Corporation and the Family That Created It

Post by Bill Bellows

Once upon a time, well before his name entered lean folklore, Taiichi Ohno graduated from industrial school and earned a position with Toyoda Spinning & Weaving as a supervisor. The year was 1933 and Ohno soon became well known for his mustache, added to further his image of authority with his direct reports, a large group of women.

Fast forward to 1974, when Ohno was “the man all visitors wanted to meet,” in spite of his pointed efforts to remind Toyota’s suppliers not to build warehouses to store excess production, but instead “to have only the equipment and workers needed to produce what was actually sold.” Such accounts of Ohno’s progress within Toyota and the company’s advancement in the world can be found in an extremely detailed book, authored by Yukiyasu Togo and William Wartman.

Against All Odds: The Story of the Toyota Motor Corporation and the Family That Created It was published in 1993, when Togo was chairman of Toyota Motor Sales, in the USA.   While his account suffers from the bias of a Toyota insider, Wartman is to be commended for guiding a book that delivers a rollercoaster account of Toyota, from Sakichi Toyoda’s birth in 1867 to the release of the first Lexus in 1989.

According to Togo, Toyota’s US sales were steadily, yet slowly increasing in the early 1970s, while at home in Japan a relentless focus on managing costs resulted in Toyota’s ability to consistently deliver profits.

Meanwhile, the US auto industry focused on production volume, rather than production efficiency, and continued to overlook the impact of Ohno’s maturing efforts to focus on efficiency. Ohno was following in the deep footsteps of Sakichi Toyoda, founder of both Toyota Weaving & Spinning and Toyota Motor Corporation, who maintained a relentless pursuit of lower costs, through ever-increasing production efficiency, in both organizations from their opening days.

Ohno entered auto production from the mills in 1943, after both companies were merged by their leading customer, the Japanese military. Upon arrival, he witnessed factories in full disarray, “controlled by inertia rather than reason.”

While Ohno pursued just-in-time production, Shoichiro Toyoda, son of Kiichiro, as well as chairman of Toyoda from 1992-1999, focused on delivering quality cars with competitive prices. Of concern was the time being saved by moving products through development at lightning speed, only to face angry customers in the marketplace, when the best Toyota could offer was immediate repairs.

Guided by strong first impressions of Dr. Deming during his lectures across Japan in 1950, Toyoda led Toyota’s Total Quality Control (TQC) efforts, with a commitment for Toyota to eventually win the Deming Prize.   According to author, Togo, Ohno “became a convert,” when he saw TQC as “fully compatible” with JIT.

Nonetheless, TQC efforts were openly resisted, leading to “a group of nervous quality-control managers surrounding Shoichiro” one day asking if they would be fired if the company did not win the Deming Prize. “If that happens, then I will be fired too,” Toyoda told them. None were fired and Toyota was awarded the Deming Prize in 1965, also against all odds. For those new to Dr. Deming’ theory of management and those with enough practitioners’ tales to fill a book, this account is a very relevant read.  The connection of Deming management to TQC and Toyota’s success is noteworthy.


Collaborating to Improve Government Performance

Guest post by John Hunter.

This webcast shows Phil Landesberg’s presentation, Collaborating to Improve Government Performance, at the 2015 Deming Research Seminar.

I have known Phil for many years having served with him on the board of the Washington DC Deming User’s group. I also worked at the Office of Secretary of Defense Quality Management Office where we brought in the experts he mentioned (Peter Scholtes, Bill Scherkenbach, Heero Hacquebord..) to help the Department of Defense improve.

In the presentation, Phil explored various aspects of the USA government with insight from Deming’s ideas.

Phil also explored discussed the value of force field analysis in change efforts. That tools can help you think about what forces will support the change effort (driving forces) and how to increase this influence after it has been identified. And also how to think about forces that will work against the change effort (restraining effort) and what strategies could be used to reduce the forces restraining the changes.

Related: Transforming the Management System of an OrganizationQuality Comes to City HallEarly History Of Management Improvement Online


Manage Costs, Variation, and Waste – Mind the Choices

Post by Bill Bellows

As noted in my June 26th post, “It Depends…”, when asked in February 1990 about the trend towards reducing the number of levels of management in organizations, Dr. Deming answered, in his usual Socratic fashion: “Why have more levels than you need?”

Now, consider what Socratic questions might have followed these questions:

“Dr. Deming, what do you think about the recent trend toward reducing variation in our processes?”, or

“Dr. Deming, what do you think about the recent trend toward reducing the waste in our operations?”, or

“Dr. Deming, what do you think about the recent trend toward standardizing our operations?”

I would anticipate Dr. Deming approaching each of these questions with an understanding of the nature of organizational dynamics. In each case, he could suggest the need for understanding the nature of the systemic behaviors.  He could suggest the value of having neither more nor less than necessary.  As with the title of his book, his proposal offers a new economics, one in which the focus is on the relationships between the elements of the system and not the elements taken separately.   As a real-life example, Dr. Deming often shared a story of how an employee’s travel costs were reduced by the travel department by requiring same day travel.  But, the need for the employee to awake at 3am to prepare for a 6am flight from Chicago to New York left her too tired to make productive use of her day.   Instead of reducing costs, variation, or even waste, a more systemic approach might be to manage costs, variation and waste and provide the appropriate levels throughout the system. He could also remind us that what appears to be waste (hotel expenses) to one observer may not appear as such to another (the traveler).   As with a whale or an organization, what might appear to be fat or waste to one observer, could be an essential ingredient to the long-term survival of the system.

Likewise, instead of a widespread effort to standardize processes within an organization, one might ask which processes should be standardized and which should be non-standard?  For example, should language and software be standardized across an organization, including its supplier base, as well as sub-tier suppliers?   A coffee shop could have three or more sizes of coffee cups, yet have one lid size that fits each cup.  A hospital could have uniforms for nurses that differ from those for doctors and staff members, thereby making it easier for patients and their families to identify the help they need.   While there’s a place for standardization, there is also a systemic limit to what is economically and operationally viable.

The degree to which the system “works together” can be enhanced with a better understanding of Dr. Deming’s theory, his “System of Profound Knowledge,”   consisting of the four parts below, and their interrelationships;

  1. Appreciation for a system
  2. Knowledge about variation
  3. Theory of knowledge
  4. Psychology

In combining these bodies of knowledge, Deming’s theory offers a holistic appreciation of organizations that includes systems thinking, linked to variation management, linked to a theory of knowledge, further linked to an understanding of people. Twenty-seven years later, I’m reminded every day of my first impressions of Dr. Deming and how his theory for improving our understanding of life continues to transform countless lives.