This webcast shows Bob Browne’s presentation, Profound Knowledge of the Real Thing, at the 2012 Annual Deming Conference. Bob is the former CEO of the Great Plains Coca Cola Bottling Company.
Among other things, this presentation is a good option for those seeking an example that provides historical business results of an organization practicing Deming management methods. Bob provides an overview of inventory (they use Just in Time inventory methods to create efficient processes and systems) and typical financial metrics to examine how their business has done using Deming’s ideas (along with theory of constraints).
If you are an established organization and something new comes along, you are more than likely going to want to use it to do what you did in the past as apposed to use it to disrupt.
The difficulty in changing is often mostly about our psychology (not the technical difficulty of operating under changed systems and processes after making adjustments to adapt to take advantage of new opportunities). Bob quotes:
It ain’t what you don’t know that hurts, it’s what you know that ain’t so.
Reality is in the process, it isn’t in the results.
This is something that is very difficult for many people to understand. Variation, risk and chance within a system mean that individual results are a poor measuring stick. Results matter but within a context of the process. If I double profits by wagering all the cash we can borrow on the roulette wheel that result isn’t a sign that we are doing much better. Using data wisely requires understanding what the data tells you and what it does not tell you.
Writer’s block – the struggle is REAL. People who know me will insist that I’m rarely at a loss for words – so what gives? Thankfully, I had a two-week break to figure out I was in a rut. Stagnant. I’d let my consulting work encroach on my personal development. My personal learning organization was suffering.
Dr. Deming’s 13th Point for Management tells us to institute a vigorous program of education and self-improvement for everyone. There’s no way to put a positive spin on stagnation. Whether you are an organization of one, one thousand (or one million – we know who you are), join me in encouraging ourselves and others to practice essential behaviors that drive a culture of organizational learning.
Not long ago I hired a fairly inexperienced business analyst I’ll call Mark. What Mark lacked in polish he made up for for in initiative. He’s also the poster child for office fly-bys and lots of questions. Twice a day. Every day. “Quick” questions. Distracting? Sometimes. I try to meet his curiosity with my own. Sometimes we figure out he’s asking the wrong question. Sometimes his questions lead to new insights for both of us. I know without a doubt what he’s learned by his own initiative and curiosity is more valuable than any training or orientation program I could have developed. Organizational learning is a two-way street; curiosity helps us navigate existing streets and pave new ones.
In Point 8 of Dr. Deming’s 14 Points for Management, we’re admonished to drive outfear. Fear is the enemy of curiosity. As leaders and managers (and frankly, as human beings), we have a responsibility to support the growth and development of those around us. As a young consultant, I was asked to prepare a briefing for a very senior partner in our firm. I spent days preparing for our initial meeting and was excited for the opportunity to learn from him. His first words to me were, “I have no idea why you’re here or what we’re supposed to be doing.” Not only was I completely demoralized; from that moment, I avoided that guy like the plague. On the flip side, I’m very aware of how my words, tone, and body language can affect others. We – each of us – have the power to encourage organizational learning or squash it.
Ride the wave of true learning moments.
Have you ever been on the verge of a breakthrough and suddenly become unsettled – so much so that you have to just stop whatever it is that’s happening? Jerry Harvey, in his book How Come Every Time I get Stabbed in the Back My Fingerprints are on the Knife? (and Other Meditations on Management), calls engaging in the “prayer of communication” a means to achieve organizational learning. It’s spontaneous – it’s there before we are even aware of it – and can lead to those unsettling breakthrough moments. He elaborates through the story of a young woman who suffers with severe depression. Invited by her friend to a prayer group, she sits in silence for the full hour, and then through her tears, musters the courage to admit that she has considered suicide. Two minutes of silence pass like hours. (The moment of opportunity.) Then the Deacon breaks the silence and with a chipper and optimistic tone says, “Well, since all of us have a lot of things to do and nobody else has anything more to say, let’s all stand, bow our heads, and close the meeting with a prayer.” Harvey wants us to understand that the prayer was in progress up to the moment when the Deacon shut it down, unwilling to ride that wave to a breakthrough. So it is with learning. When the water gets rough, tighten your grip, press on, and be curious for what comes next.
Here’s to growth and new insights in the upcoming year.
The W. Edwards Deming Institute You Tube channel provides a large number of great videos. And the great content is not limited to the most popular videos, there are many wonderful videos that receive fewer views.
A few of the less viewed videos that I highly recommend:
This webcast shows David Langford’s presentation, When Grading Bites the Dust, at the 2012 Annual Deming Conference. A previous post (Change has to Start from the Top) includes a clip from another talk he gave at the 2012 conference and it is a valuable companion to the video included here.
The system does not want to change, too many people have too much invested in the [current] system… If you are going to do what is right for learning, what is right for students, somebody, someplace has to break out of the system.
This is true for education, it is also true for anyone seeking to transform the management system of their organization. Doing so it not easy; there are many forces that will resist change.
David Langford discusses his efforts to transform the learning environment for his students. The journey required him to continually learn himself about how to change his understanding in order to change what he could do to create the right environment to help students learn. That journey is very similar to one that managers must undertake in order to help people succeed.
The basic problem anywhere is quality. What is quality? A product or a service possesses quality if it helps somebody and enjoys a good and sustainable market. W. Edwards Deming
When our daughter, Allison, was about 4 years old, she joined me for a quick ride to the local supermarket to buy two items for dinner: a bag of hard rolls and a lime. Upon entering the store, I asked Allison to help me find the lime, to which she asked “What’s a lime?” “It’s just like a lemon,” I replied, “but green, not yellow.” With these instructions, she spotted the limes, alongside the lemons, and reached for one. She picked it up, examined it, placed it back in the display, and selected another. When I asked why she did this, her reply was very direct and far more than I was expecting of a 4-year old. Quite simply, she said, “They’re not all the same.” Meanwhile, I was reminded of a statement from Dr. Deming, “Variation there will always be, between people, in output, in service, in product.” In a matter of seconds, Allison discovered that limes have variation, although I never investigated her discernment criteria.
On many occasions since this episode, I have asked adults, in a seminar setting, if they sorted through fruit, with the following instructions: Imagine walking into the produce section of a supermarket, where all of the fruit is not bruised or otherwise physically damaged. Would you expect to see anyone sorting through the fruit?
While the answers to the “sorting” question are either “yes, I do,” or “no, I don’t,” more important is the reasoning for sorting. To those who answer “no,” I often ask if they sort between parking spots in a car park, which they would readily admit to doing, generally preferring spots closest to the entrance to the building they will enter. Also, to those who answer “no,” I have asked, if they are wearing a wedding ring, if they sorted when selecting a spouse. To those who do not admit to sorting through fruit, this inquiry always brings agreement, followed by a smile. To those who answer “yes, I do,” I ask for an explanation of why they sort through fruit. Most often, they acknowledge the ability to discern differences between the pieces of fruit, from firmness to size and shape, perhaps even color and ripeness. On occasion, they attribute the sorting process to being driven by “habit,” without appreciation of their discernment criteria.
Shifting to car park spaces, drivers readily discern differences in location, as well as width, length, and shade cover. Yet, when counting the number of parking spaces available to customers or employees, the counting process ignores this variation. In this quantity-based (parking spots are parking spots, limes are limes) situation, these differences are not as important as matching the size of the parking lot with the level of employment or the expected number of customers. Meanwhile, the customers who sort through fruit, as well as the drivers who sort through parking spaces, focus on the use of the fruit and space, respectively. In appreciation of their own discernment criteria, their awareness of the inherent variation can be attributed to a systemic appreciation of how the fruit or space will be used. With acknowledgement of the variation in their choices, their primary interest is quality-based; fitness for use amongst the available options. To paraphrase Dr. Deming, quality is about how well someone is served, from a co-worker to a customer.
While counting, from limes and parking spots to the number of employees or customers, is quantity-based, the differences between the entities being counted is quality-based, with a focus on use. For an aircraft manufacturer, if the parts of an airplane remained in boxes and were never assembled, then the variation in each part, as in the variation in limes and parking spots, would be very hard to discern. Variation appears in how well the parts are eventually integrated into a system and, how well the system performs, day after day. Once again, quality is about use. But questions about the distance to the nearest airport are quantity-based, as the answer, whether in kilometers or miles, 10 or 100, ignores the physical differences between each unit of distance, such as hilly or flat terrain. In short, quantity is about counting. Students are students, doctors are doctors, customers are customers, and suppliers are suppliers. Dr. Deming explained quality with an appreciation of variation and, ultimately, use.
Beginning in the early 1950s, Shoichiro Toyoda, son of Kiichiro Toyoda, the founder of Toyota Motor Corporation, was inspired to discern the difference between quantity and quality, between counting parts and using parts. Yukiyasu Togo, a former employee and co-author of Against All Odds: The Story of the Toyota Motor Corporation and the Family That Created It, provided an explanation of Shoichiro Toyoda’s desire to implement a quality-based system, in parallel with the quantity-based Just-in-Time (JIT) system. According to Togo, Toyota’s JIT system, under the direction of Taiichi Ohno, was extremely successful in saving time in moving products through development at lightning speed, yet only to face disgruntled customers in the marketplace, with long lines of products in need of immediate repair. To Shoichiro Toyoda’s chagrin, the best Toyota’s quantity-based production system could offer was immediate trouble-shooting.
Guided by strong impressions of Dr. Deming during his lectures across Japan in 1950, Shoichiro Toyoda initiated Toyota’s “Total Quality Control” (TQC) efforts, with a commitment for Toyota to eventually win the Deming Prize. As reported by Togo, Ohno eventually “became a convert,” when he saw TQC as “fully compatible” with JIT. Nonetheless, TQC efforts were openly resisted by the JIT community, leading to “a group of nervous quality-control managers surrounding Shoichiro one day…. [asking] if they would be fired if the company lost in their pursuit of the Deming Prize. “If that happens,” Shoichiro told them,” then I will be fired too.”” None were fired and Toyota was awarded the Deming Prize in 1965.
Forty years later, in 2004, Shoichiro Toyoda was honored with the Deming Medal from the American Society for Quality. Upon receiving the medal, he, in turn, honored his mentor with remarks that included:
…Dr. Deming came to Japan following World War II in order to teach industry leaders methods of statistical quality control, as well as to impart the significance of quality control in management and his overall management philosophy. He was an invaluable teacher…, playing an indispensable role in the development and revitalization of post-war Japan.
In a remarkable demonstration of learning to discern, Toyota remains a leader for its ability to finely integrate Quantity Control and Quality Control, and not mistake inquiries of “how many?” with systemic explorations of “how well?”
There is little evidence that we give a hoot about profit. W. Edwards Deming
On July 22, 2014, Apple announced financial results for its fiscal third quarter, reporting a revenue of $37.4 billion and a quarterly net profit of $7.7 billion. From sales of iPhones to iPads to computers, Apple executives offered explanations for these results and predictions for the future. The value of profits as an ingredient for organizations to sustain and develop their operations is undeniable. Thinking beyond the design and development of the next iProduct, profits allow for improvements to current products, not to mention needed technology upgrades, employee development, and dividends for shareholders. But, do organizations solely exist to earn profits or meet financial goals, or, are their profits the result of how well they invest their resources, from innovation to revenue and equipment, and then deliver new and improved products or services? As with Russell Ackoff, who once described a focus on “sufficient profit” as “like a person saying his mission is to breathe sufficiently,” Dr. Deming saw profits as the result of a well-designed and managed organization. In his 1993 book, The New Economics, he posed “Profits must exist, and industry must work as a team in which all participants, large and small, prosper.” Further, “The boundary of a system….may be drawn around a single company, or around an industry, or…the whole country. The bigger be the coverage, the bigger be the possible benefits, but the more difficult to manage. The aim must include plans for the future.”
Moving from profits to pragmatism, let us not lose sight of the need to be practical in our efforts to manage systems of increasing size and complexity. Although definitions vary, a common description of a pragmatist is one who “takes a practical approach to problems and is concerned primarily with the success or failure of his or her actions.” In consideration of this explanation, I was once asked, ”Is it practical to work on things which are good and arrive on time?,” in reference to a question I posed during a presentation, specifically “How much time is spent (every day) discussing parts, tasks, activities, program milestones, etc. which are good and completed on time?” While the answer to this question is routinely “none,” my response to this inquiry was, “Is it practical to wait for a crisis to take action?” In other words, why wait for trouble that can be prevented, if it can be anticipated by using “other eyes”? Consider, for example, being the passenger in a car and asking the driver if the car has gas? That is, are things going well? Ask again in an hour and the answer may remain the same, yet the amount of gas in the tank has declined and will continue to do so until the car runs out of fuel. In asking questions such as “Does the car have gas?,” “Is the part good?,” and “Does this step add value?”, each of which has only two answers, yes or no, we are overlooking how the tasks are organized as a system.
When we shift our thinking from these forms of “yes or no” questions to “How much petrol does the car have and what action should we take now?” and define quality, as Dr. Deming did, we begin to see systems with “other eyes,” comprised of interdependent parts, tasks and elements, and move away from value streams of independent parts, activities, actions, tasks, and elements. In doing so, what is pragmatic in terms of seeing systems (asking “how well” the parts, tasks, and elements work together) will be viewed as impractical for those who continue in the tradition of seeing parts, tasks, and elements as independent (asking if the parts are “good or bad”). Could it be that pragmatism depends on how one sees systems?
He discusses the importance of having a systems understanding while making changes to the management system. The performance of the system is a function of all parts of the system and the interaction of the parts. The performance of a management system is not an addictive process it is a process that depends on the relative strength of each component and how they interact. The transformation process must be carefully managed with an understanding of the organization as system.
Another important concept Louie discusses is understanding variation. One way Louie mentioned of helping someone understand that variation is present in the system.
If you golf the same golf course time after time do you get the same score?
He also discusses that Hallmark Building Supplies has profit sharing for all and doesn’t do annual performance appraisal. They attempt to let the market dictate pay and take pay out of the performance discussions. To manage performance they seek to “coach while the game is going on” (and mentioned the importance of people being receptive to coaching). Cooperation between sales people has increased since they eliminated commissions.
This presentation is a wonderful exploration of applying Deming’s ideas in a small business. I think if you take advantage of the opportunity to watch this you will learn a great deal. And if you re-watch it at different times during the transformation of the management system in your organization you will take away different thoughts that will help with your current thinking.
The first step is transformation of the individual. The individual, transformed, will perceive new meaning to his life, to events, to numbers, to interactions between people. W. Edwards Deming
In January 1970, John Lennon returned to the UK from a holiday in Denmark, inspired by a series of stirring late night conversations, and began to compose a song about the timeless theory of the circle of life, “what comes around, goes around.” Ten days later, Instant Karma! was released and on its way to the top in the US and UK, competing for radio air time with Let it Be, offering Lennon’s sentiments on circular causality through a joyful chorus of “Well we all shine on.”
Twenty years earlier, in the summer of 1950, W. Edwards Deming was in Japan, invited by the Japanese Union of Scientists and Engineers to share his ideas on management with business leaders and wide cross sections of their organizations. In one event, he recalled hosting a group of executives representing as much as 80% of the corporate wealth of Japan. He used the opportunity to introduce his own karmic thoughts on the potential of “interactions between people,” with applicability to any organization, including government, education systems, and healthcare. His circular model, “Production Viewed as a System,” features a feedback loop to link the activities of a production-based organization, from design to manufacturing, with materials from suppliers, to assembly and release to the customer.
Production Viewed as a System
Chart first used by W. Edwards Deming in August 1950 in Japan
Source: The New Economics, Chapter 3, page 58
Change the context to a service industry, education system, or healthcare system, and replace the labels to their respective function to project this circular model onto any organization, with the premise that interdependent activities, otherwise known as teamwork, represent an invaluable, yet often invisible, phenomenon in all organizations. In a radical departure from the conventional linear view of the beginning of any value stream (such as product design), leading to an end point (release to the customer), Dr. Deming included a return loop to provide feedback to the entire design-to-release process, opening imaginative minds to the interdependency of these efforts.
In the spirit of applying the feedback loop in his own interactions with people, Dr. Deming employed this very model in his classroom at New York University, when he used the students’ answers to his questions, to let him know how well he was doing and, thereby, how to improve his lectures. He understood interdependence; their ability to learn depended on his ability to present. In his references to the prevailing style of management, Dr. Deming was mindful of the impact of the linear model in creating behaviors within organizations that could be also characterized as observer-status. Under such a system, players on the sideline of a football match would not appear to be influencing the outcome of the game, in spite of their contributions during practice sessions. In the nature of Instant Karma!, they would never be spectators, even if viewing from home, while recovering from an injury or retired from play. They would always shine on.
As he approached his 80th birthday, Dr. Deming was featured in a television documentary (If Japan Can, Why Can’t We?) in the summer of 1980, with a focus on the contrast between the gloom facing the U.S economy and the remarkable success of the Japanese economy. In reflecting on his advice to US companies for competing with their Japanese counterparts, near the 1:06 mark he proposed “I think that people here expect miracles. American management thinks that they can just copy from Japan, but they don’t know to copy.” Thereafter, he offered that his solutions should not be construed as quick fixes, “It will not happen at once, there is no instant pudding!” (In his book, Out of the Crisis, on page 126, he attributed the term “instant pudding” to James K. Bakken of the Ford Motor Company). As encouragement, he posed that results could be achieved within a few years, sharing examples from Japan. In time, Toyota would become one of the most celebrated examples, when Dr. Deming’s ideas on quality management were integrated into an existing system of quantity management.
Managers in business, school administrators, and teachers may believe that they have to grade, rate, and rank, to manage by numbers and use other traditional methods because these are necessary to do their job. They may think that they must perpetuate these practices because it is the way it has always been done. They may not be able to envision another way. Therefore, to begin a study of Deming’s System of Profound Knowledge requires both a leap of faith that it will have value and curiosity about it. This is a paradox of transformation. The individual starts out on a journey of transformation before even having the map for that journey. Studying the map and integrating it into thinking and acting is the journey.
Another aspect of the paradox is that senior executives and business owners who have the power to transform the management system most likely are in their current positions because of their success applying that system. It may be difficult for some of them to understand that there is any reason that they have to change the system or their methods of managing. After a presentation to senior management of a large company, I was asked why they should believe me, and therefore why believe Deming. They said that the previous week a consultant told them that managing the organization as separate parts, silos, chimneys, as they were now doing, is the right way to manage. In fact, everything he told them supported present practice and therefore contradicted Deming’s ideas. Why should they believe me? That is a legitimate question. Why should they? Why should anyone be willing to entertain new possibilities, be willing to learn?
The answer may be prompted with a question: Do you want to continue to face day-to-day problems that are costly in time and resources, or do you want to face the process of change that will eventually dissolve many of the organization’s problems and your own problems? Management—anyone—may not know they have a choice of whether to continue to face the continual supply of everyday problems or face the challenge of changing thinking to dissolve the source of problems before they occur rather than solve them after they occur. Deming’s way of thinking about a system can help management understand how an organization can create many of its own problems and do a better job of preventing them from occurring. Jim (Mac) McIngvale, the owner of Gallery Furniture in Houston, Texas, accepted the challenge to dissolve the source of his problems and eventually quadrupled his sales volume. He made the change based not on numbers but on a leap of faith that Deming’s teaching would help him to put an end to the wasted time and fatigue produced by the problems he continually was facing. This is discussed in chapter 12.
It is not likely to be productive to tell someone directly that they have to change their assumptions, that things will be better if they think and act differently. We human beings tend to become defensive when told that we have to change. We may think we are being told that something is wrong with us; or we may be very comfortable with the ways things are. Deming never told people that they had to accept his ideas. Deming often said that profound knowledge comes by invitation. He mirrored the insight of Plato, “Knowledge which is acquired under compulsion obtains no hold on the mind,” also expressed as, “The teacher can’t teach if the student is not ready to learn.” A characteristic of a leader is the will and discipline to learn, to take the time to study, practice, and learn from the experience. This learning includes learning about oneself. Leadership requires self-knowledge.
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.
This webcast shows Tom Rudmik’s presentation, Thriving in the World of Massive Change, at the 2012 Annual Deming Conference. Tom is CEO of Master’s Academy and College.
This is an interesting presentation that includes a look at an array of current scientific breakthroughs. The early part is reminiscent to talks I heard from Joel Barker a few decades ago – sharing their look at scientific discoveries, the innovations being brought to market and how we must change how to think and build systems with an understanding of where the world is heading toward.
As Walter Gretzky, Wayne’s father, said: “Go to where the puck is going, not where it has been.”
Like Joel Barker, Tom stresses the importance of making a significant effort to understand the innovation around us and plan for a future using the understanding of where we are heading.*
The existing assembly-line approach to education exists because it’s the only way we knew how to manage large groups of students back in the early 1900s. The world has changed and we need a totally new system of education. No amount of tweaking the industrial age assembly-line system will produce the kind of results that are needed in this 21st century that we live in today.
Most reform attempts, such as “no child left behind,” have focused on treating the symptoms of the system and not the real problem. The problem can only be understood when you have a vision for a brand new system.
For 25 years we have been developing profound learning in thousands of schools and over the years a new model of education has emerged where the vast majority of students can attain academic excellence.
The presentation discusses how to use the vision of the desired-state of the system to drive a transformation to the new system. He doesn’t mention Ackoff’s ideas on idealized design but he seems to be talking about to a transformation based on similar ideas.