The W. Edwards Deming Institute Blog

W. Edward Deming Discussing the Leadership We Need in Our Organizations

This is a very interesting interview with W. Edwards Deming by Bill Scherkenbach (recording in February 1984, during this time Bill Scherkenbach worked at Ford and Deming was consulting with Ford). In this post I continue to explore this powerful video; it is part two of: Bill Scherkenbach’s Interview with Dr. Deming.

Dr. Deming discusses the importance of talking to those doing the work.

They will bring it up that they would like to take pride in their work. Well, what is holding you back? Why can’t you? And they will tell you a lot. And that is the only way you can learn about the problems…

He mentions that walking around can be useful but it isn’t effective. Without the proper focus you only see a glossy picture. Going to where the work is done is important. But as with most management practice it must be done within a proper context and sadly it is often done in a superficial way. A discussed these ideas in my blog post, Management by Walking Around, (don’t miss the comment I added to the post).

The most important figures are unknown and unknowable, that comes from my good friend Dr. Lloyd Nelson…

One, for example, is the multiplying effect of a happy customer that brings business into the company. Another one is the multiplying effect of an unhappy customer that warns his friends and some of his enemies about his experience.

Another one is the multiplying effect that comes from a group that is able to make a contribution to the company as a team. They see their jobs now as not just appearing in the morning, going home at night and receiving a paycheck. They see their jobs as important for helping the company to improve. Their life changes. I see them. They have an interest in the company. That takes teamwork and it takes good management to bring that about.

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The Deming Dimension by Henry Neave

image of the Deming Dimension book cover

The Deming Dimension by Henry Neave provides good historical background and then a well presented explanation of Deming’s ideas on management. It is one of the best books to read to learn about Deming’s ideas.

The book includes a forward by W. Edwards Deming:

The prevailing system of management has smothered the individual, and consequently dampened innovation, applied science, joy in learning, joy in work. It will be necessary to restore dignity and self-esteem to the individual. This can be done, but only by transformation of the style of management now practised.

The transformation must be led by top management. The transformation is not stamping out fires, solving problems, nor cosmetic improvement.

This book by Henry Neave explains why the prevailing system of management has led us into decline. It explains the transformation that must for survival take place under the leadership of top management.

One section of the book explores Deming’s 14 points from a holistic management system approach (which of course is required). As Henry says:

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Improving the System to Reduce Costs Isn’t Equal to Cost Cutting

Real benefits come when managers begin to understand the profound difference between “cost cutting” and “eliminating the causes of costs.”

Brian Joiner in Fourth Generation Management

Cutting costs by fiat via executive orders reduces the capability of the organization. Those costs are often born by customers. In the short term reducing costs in such a manner improves the financial statements. In the long run those cost reductions harm the companies ability to innovate, improve and delight customers.

If instead we create a continual improvement capability and culture in the organization we will make improvements that in turn reduce costs (the Deming chain reaction). Those costs will be cut based on what improvements are made not based on some arbitrary target or mandate. It might be certain costs go up but other costs decrease much more and so the organization as a whole wins.

As W. Edwards Deming said in this interview with Bill Scherkenbach

Minimizing costs in one place can often lead to maximizing costs in another. Only management is responsible, and I mean top management, for looking at the company as a whole, to minimize total cost and not the cost here or there or there… must get departments to work together. That is difficult in the face of the annual rating… because they get rated on their own performance.

Related: Minimize Total CostTyranny of the Prevailing Style of ManagementPeople: Team Members or Costs

2011 ASA Deming Lecture by Roger Hoerl – Need Any Country be Poor?

2011 ASA Deming Lecture by Roger Hoerl, GE Global Research: The World Is Calling; Should We Answer?

Roger starts by discussing some areas of Deming’s work that are not getting the focus they deserve.

I’d like to focus on a few areas of Dr. Deming’s career that perhaps are under appreciated, not talked about as much as some other areas.

One was his concern for the impact of statistics on society. Those of you who have looked at the so called Deming chain reaction have seen that it doesn’t end with money, but it ends with jobs and more jobs – that is impact on society.

I also want to talk about Deming’s emphasis on the big picture, the big problems. For those of you that have read Out of the Crisis, Deming asks in that book: Need any country be poor? And that was a sincere concern of his.

The third under appreciated area is the call for statistical leadership. Deming referred several times to the need to have a senior statistical leader reporting to the CEO. Now he didn’t necessarily clarify exactly what that person was supposed to do but it was very clear in Deming’s mind, and he said it very often, that statisticians needed to view themselves as leaders and function as leaders in society.

I started this blog with a blog post that had a very similar focus on the central importance of providing a better life for everyone in W. Edwards Deming’s vision for the result of adopting the ideas he promoted.

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Better Meetings for Your Organization

Meetings are often frustrating for those spending time sitting through them. The solutions proposed for this issue often seem not very well thought out to me. The various traits (frequency, length, detailed agendas or not etc.) of meetings are useful or harmful depending on the circumstances.

This is similar to Deming’s ideas on management, I don’t believe their is a recipe to follow. There are principles that are universal. But what specific form they take depends greatly on the specific circumstances and systems in place.

If meetings in your organization are frustrating and not effective then taking steps to improve the situation is likely wise. There are principles I believe will help:

Have a written objective

Having a written objective for a meeting forces you to think about it and if you discover there isn’t one then you don’t need to have the meetings. I believe informational meetings are often far too frequent (but it depends on the organization whether they are or not) but I don’t object to a meeting with the purpose of informing (and hopefully listening to feedback) about status. But this can easily be a source of waste, and I would encourage you to be very careful to pay close attention to whether the attendees feel they are valuable.

The objective also lets people know what the purpose of the meeting is. I think most often the attendees don’t understand at all, or understand very little, what the person that calls the meeting expects.

Document decisions and actions to be taken

There is nothing mysterious about documenting decisions. But it is often neglected. The amount of waste created by failing to have a shared understanding of what decisions have been made and what actions people are expected to take is enormous. As I said in Better Meetings:

Document decisions on a flip chart that everyone can see in the meeting and then email everyone the decisions. This is a huge help in my experience. People often just want to get the meeting over with, so everyone just ignores that no decision has actually been made and just hopes the meeting ends. For those things you have decided it is worth meeting on, it is worth making sure everyone understands the decision the same way. How often do you waste time in between meetings and in future meetings as people present alternative versions of what was actually decided?

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Using Outdated Management Practices Can Be Very Costly

Readers of this blog are aware of the problems created by using quotas: Achieved the goal by not the aim (2013)The Futility of a Numerical Goal (2014), Distorting the System, Distorting the Data or Improving the System (2013), Dr. Deming on the problems with targets or goals.

Wells Fargo to pay $150 million-plus over allegations its workers opened fake accounts

City and federal officials have reached a settlement of at least $150 million with Wells Fargo over allegations that the bank’s employees, driven by strict sales quotas, regularly opened new accounts for customers without their knowledge.

image of quote by Dr. Deming "numerical goals set for other people, without a road map to reach the goal, have effects opposite to the effects sought."

As I said in a post on my blog, in 2008, The Defect Black Market:

It is simple to blame employees for taking such action. But the management that setup such a system deserve more blame. This type of manipulation is what is encouraged by managers that think management means setting up such simplistic, senseless systems (Why Extrinsic Motivation Fails). This is one more example of forgetting the proxy nature of data (among other things).

As W. Edwards Deming said decades ago as point 10 in his list of 14 obligations for managers: Eliminate Slogans, Exhortations and Targets.

Maybe Wells Fargo executives should pay more attention to how the field of management has evolved over the last 50 years. The dangers of strict sales targets are well understood by those that study management and human behavior. Sadly our management practices often fail to advance even as those that do seek to understand how to better manage our organizations make great strides in advancing our knowledge.

Related: Another Quota Failure Example (2006)Why ThoughtWorks Eliminated Sales Commissions (2013)The Trouble with Incentives: They Work (2010)Targets Distorting the System (2005)Dangers of Extrinsic Motivation (2006)

Finding Joy In Learning: Applying Deming’s Theory to Schools

Presentation by Michael King and Jane Kovacs at the 2015 Deming in Education conference – Finding Joy In Learning: Applying Deming’s Theory to Schools.

The speakers work for Quality Learning Australasia (QLA). QLA’s website has quite a bit of useful information.

One of the tools they used in the presentation is a Lotus diagram which is used to help organize your thinking and learning.

Michael King:

Improvement and learning are flip sides of the same coin. You won’t get improvement without learning, and learning drives improvement… Theory is important.

This idea echoes what Ian Bradbury said in his 2012 presentation – Deming 101: Theory of Knowledge and the PDSA Improvement and Learning Cycle. To improve we need to have a theory on what will lead to improvement and then test that in practice (using the PDSA cycle). We learn from that experiment and most often should choose to iterate several times as we refine our learning. And then when we learn enough to be confident adopting these methods (and often adopting them more widely) is wise we do so (while continuing to evaluate if it works as expected as we adopt it as a standard practice).

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Using Deming’s Ideas Today to Promote Trust and Meaningful Work

Joshua Macht wrote an article for the Harvard Business Review (published in June) : The Management Thinker We Should Never Have Forgotten. In that article he explores the importance of Dr. Deming’s ideas today.

He quotes from the response W. Edwards Deming sent Peter Senge on his book, and which Senge included in his introduction to the Fifth Discipline:

Our prevailing system of management has destroyed our people. People are born with intrinsic motivation, self-respect, dignity, curiosity to learn, joy in learning. The forces of destruction begin with toddlers — a prize for the best Halloween costume, grades in school, gold stars — and on up through the university. On the job, people, teams, and divisions are ranked, reward for the top, punishment for the bottom. Management by objectives, quotas, incentive pay, business plans, put together separately, division by division, cause further loss, unknown and unknowable.

Joshua focuses on the importance of trust, which I see as part of understanding psychology and leading with a focus on creating systems that value people That Dr. Deming promoted.

The glue that seems to hold Deming’s framework together is the trust between manager and worker.

The trust between manager and worker is the bedrock upon which a healthy managerial relationship will be built. Deming’s thesis is worth recalling now, perhaps more than ever, because it’s precisely this trust that has eroded so precipitously since his passing.

For me trust is too narrow a vision but that may be an issue in my mind more than it is for others. But the value of managing human organization with an understanding of psychology and an aim to provide joy in work with respect for people is indeed core to Deming’s message.

That focus on building systems people can thrive in is why the ideas Deming expressed work so well in all organizations. His focus was on how to continual improve organizations made up of people. What those people did (medical care, software development, retail sales, manufacturing…) was not a limiting factor. The form Deming’s ideas would take in different settings is a bit different but the underlying principles are the same.

Related: The greatest waste in America is failure to use the ability of peopleThe Intellectual Foundation of Modern Improvement (Our post, which includes the Don Berwick presentation Joshua mentions in the article)
Build an Environment Where Intrinsic Motivation Flourishes

Break Down Barriers Between Departments

Some of W. Edwards Deming’s 14 obligations of management have opponents that argue the reverse is wise. Some believe it is good to “motivate” people by making them fearful, for example. Others believe in selecting suppliers for the moment based on whoever gives the cheapest quote today.

But some of the 14 obligations don’t really have opponents arguing against them. I don’t recall anyone advocating for more barriers between departments. Instead the reason so many organizations suffer from the costs of significant barriers between departments is that the overall management system results in behavior that creates barriers between departments.

Addressing these secondary, tertiary… effects is usually more challenging. We normally can’t directly tackle the issue. Just telling people to work together doesn’t do much good if the management system drives them to different behavior. Such support for “teamwork” is merely a slogan without the necessary management commitment. We need to change the management system and the behavior of those in leadership positions in the organization.

From our previous post, Process Behavior Charts are the Secret to Understanding the Organization as a System:

When we create incentives to optimize parts of the system (low-cost supplier, sales incentives, evaluating return on investment for individual business units, etc.) the overall system is sub-optimized. In order to achieve the best overall results individual parts of the system may have to suffer in order to achieve the best overall result.

When we evaluate people and provide bonuses and promotions based on optimizing a portion of the system that creates pressures that work against cooperation across departments. When departments have to compete for budget and staff that can build up barriers between departments. When departments have their budgets to protect and spend that often creates barriers between departments.

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What Topics Would You Like Us to Discuss on Our Blog?

What topics would you like us to explore in future posts on this blog?
What questions would you like us respond to?

One of the goals for this blog is to engage the community of readers in sharing there thoughts on the ideas we discuss. Please share your comments on the blog posts and respond to the questions people share.

Many of the readers of The W. Edwards Deming Institute Blog have been applying Dr. Deming’s ideas in their own organization for decades. We appreciate those who share their thoughts and questions in the comments sections of blog posts.

photo of Dr. Deming in front of a blackboard

W. Edwards Deming, teaching in Japan in 1950