Speech by Dr. Deming to Japanese Business Leaders in 1950
Several speeches are mentioned in the various biographical sketches of Dr. Deming and his impact on Japanese management. In particular a talk he gave at the Mt. Hakone Conference center in 1950 seems to have been important. Attendees included the top industrial managers, representing an estimated 75% of industrial capital base of Japan at that time.
John Dowd was able to get a transcript of Deming’s talk recorded in Japanese from JUSE (the sponsor of the talk and of the Deming Prize). John had it translated into English. A few quotes are excerpted here, see the full transcript of the speech.
Statistical product quality administration is a splendid new tool. It is being applied in every industry, beginning in modern Japan and America as well as England, New Zealand, and various other countries. Whether it be on a large scale or a small scale, it is being researched and executed in an extremely large number of manufacturing plants. Some results of this are:
- Costs go down
- Producers can economize on raw materials
- Production levels increase, and waste decreases
- Product quality becomes more uniform
- Producers and consumers gain the ability to agree on product quality
- Quality is improved, so inspections may be reduced
- Appliances and techniques can be used to a higher degree
You don’t hear the term, Statistical product quality administration, today. The name used today is statistical process control.
The knowledge and brains applied to statistics by the Japanese are an essential national resource; it is important in the same way as water power, forests, and railroads. And that statistical knowledge, much like water power, is not useful at all unless it has an impact on work opportunity and work. With water power, if one were to get rid of turbines and generator machines, no power would emerge.
Similarly it may be recognized that without effective use, all of modern Japanese statistical knowledge would not be helpful to the advance of products, product quality, or product uniformity. You all must look for people who have both statistical knowledge and excellent experience with technical knowledge and employ them in factories. In addition, to aid your technicians you must seek mathematical statisticians as consultants.
However, no matter how excellent your technicians, you who are leaders, must strive for advances in the improvement of product quality and uniformity if your technicians are to be able to make improvements. The first step, therefore, belongs with management. First, your company technicians and your factories must know that you have a fervor for advancing product quality and uniformity and a sense of responsibility for product quality.
Nothing will come of this if you only speak about it. Action is important. If you demonstrate enthusiasm for the improvement of product quality, your product quality administration will certainly advance. Responsibility for product quality means guaranteeing one’s own factory’s products to the utmost degree possible. The greatest guarantee of product quality is not words, but executing product quality administration. When you effect product quality administration, show administrative charts or methods as an indicator, as there is no better way to guarantee product quality to the consumer.
I bolded the comments above. It is obvious from as far back in 1950 Dr. Deming emphasized using the brain power of those close to the work. And, the importance of leadership taking action on quality improvement (talking is not sufficient).
Product quality administration is most useful, and moreover it illustrates the methods by which producers can economically produce the goods that buyers indicate they want.
All of the words in this definition have their respective meanings. “Economic production” means low price production: in other words, elimination of waste; faster production; fewer defects in products, raw materials or machines; the practical use of techniques; improved uniformity in product quality; and the opportunity for producers and purchasers to agree on product quality.
“Most useful” means the design and product quality must suit the purpose of the good; raw materials, mechanical manufacturing techniques, transport, and products must be the best as we consider them from the viewpoint of the marketplace. If you do not conduct market surveys about what quality or what design will be in demand, your products will not succeed in being “most useful.”
Every month you must make roughly the right amount of product, or you cannot achieve economical production. If you are left with 10%, or 25%, of your goods unsold, your profits will disappear. Further, if you cannot respond to a large number of orders, you will not maximize your profit. As a result, in order to achieve economical production, it is necessary to conduct market surveys. Based on market surveys, you will he able to stand on a stable foundation of monthly product sales.
Much of the content is extremely valuable today. It has been over 60 years though since the speech was made and progress on some fronts means some items discussed have been overtaken by events. The principles all remain important. The discussion above of market surveys has been surpassed in importance by just in time production. The principle was to produce at the level the market demanded to allow the business to prosper. Management expertise and technology provide managers today with some better tools to match production to the market.
Projecting the future demand is still important, at times, and so it isn’t that attempting to predict demand is no longer wise. It is just a much smaller focus (than in this speech from 1950). The primary focus is on designing the system to be very flexible in dealing with demand and eliminating excess inventory. It is amazing to me how well the advice in this speech holds up – over 60 years later. The reason is that the principles Dr. Deming focused on are long lived. The techniques to best design systems to manage in accordance with those principles continually improve but the principles remain.
There is also a significant portion of the market surveys that is related to customer focus. The principle was to know your customers. I would say in the intervening 60 years we have moved much more in the direction of more direct knowledge of customer needs, desire and use. Asking customers can be sensible, watching them use the products of services is much more powerful. Knowing what problems your business is solving for customers is extremely important. You need to know their needs and desire intimately and then innovate based on that understanding.
The process of sales is not something that finishes simply with transporting the products to the marketplace, and receiving money. In today’s sales, after selling the product, the businessman must think about whether he has satisfied the customer, and how improvements can be made from then on.
Even today, few companies act on this knowledge. Many would say they do if you ask them but if you just observe you will see they don’t. The systems they have put in place are not those that would be there if you held this belief as important. This is one of the reasons Dr. Deming’s ideas are so valuable today. Many of your competitors still haven’t taken advantage of the improvement to be made by adopting Deming’s ideas. If you adopt them in your organization you will have an advantage over those that have not.
A very simple example of this is in customer support after the sale. So many companies see this as a cost to be reduced. They have outsourced this support and customers despise having to try and get support from this extraneous cost the company seeks to reduce at the expense of customers. But even more important than the customer dis-statisfaction is the lost opportunity to learn by engaging with those attempting to use your products and services. The failure to use customer support as a critically important method to get direct customer feedback is a huge indicator of management failure to understand the ideas Deming promoted for so long.