Applying Deming’s Management Thinking at Patagoniaby John Hunter
Randy Harward spoke at the 2013 Deming Institute annual conference on applying Deming management methods and sustainability and Patagonia.
I was hired to take care of this huge volume of returns coming back from customers, we had so many quality problems. I was managing customer service and all the systems required to handle this huge volume of returns. And I kept raising my hand and saying “why don’t we do something about the problem.”
I visited companies, suppliers and customers all over the world. And I took seminars, and that is when I discovered Dr. Deming and it changed my life. It aligned much of my thinking.
I finally realized what was happening in a Western Mountaineering situation wasn’t… You know at the time at Western Mountaineering I didn’t think what was real management, I thought we were just goofing around. I have actually tried the rest of my life to recreate that situation… it is very very difficult to do what happened there.
We set to work building and documenting every system for design, development, production and sourcing of apparel worldwide. Part of that was teaching a 6 week quality course on tools and Deming’s philosophy to every employee at Patagonia… We taught the red bead experiment as part of that, and I tell you to this day I can’t believe what an impact that exercise has. It really changes world views. 25 years later people still tell me about that game.
What it [QA manual] created was clarity. What we had was photographs, detailed photographs of every stitch and type of construction. We started removing all the debate about what was and wasn’t acceptable.
When it was implemented it was like turning off the facet, seconds [bad product] just disappeared – at least half of them overnight.
Visual management and clear expectation are an important part of success. They integrate with the idea of standardization to make clear what is expected. Standardization doesn’t not stifle improvement, standards are meant to be continually updated. If the system doesn’t have a good process for continual updating the standards and visual job instructions that is a serious failure.
The value of clear photographic evidence of acceptable outcomes reminds me of David Langford’s talk at the annual Deming conference the previous year where he discussed using a photos of a clean room to provide his kids useful guidelines on what being clean meant. A great deal of good management is simply applying good ideas (like making it obvious what is expected using visuals when appropriate). This simple idea is still absent far too often in many organizations.
We did something really on a guess. I changed our warranty to a lifetime warranty and it wasn’t really a warranty it was a lifetime satisfaction guarantee. There is a tiny bit of abuse on that, but it is very very small.
But it had a really interesting effect. It changed the style relationship between Patagonia and it’s customers… I thought it was just a good thing to do for customer service but it ended up being a great thing for warranty returns, they went down dramatically.
We implemented [open book management], it is what we did at Western Mountaineering, and we did it at Patagonia as well. To this day every employee, every month, goes through the books in great detail and understands where the money is coming from and where it is going.
Even with all the text I quoted above, quite a bit of great stuff from the clip isn’t included; watch the webcast for more great stuff.
Related: many organizations are not well designed to provide value to customers and to continually improve the value provided – Effective Communication is Explicit – The consumer is the most important point on the production-line