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.
Sir Thomas More was not the first person, nor the last, to disagree with King Henry VIII. His last serious conflict, refusing to attend the coronation of Anne Boleyn as the Queen of England in 1533, was interpreted as a snub against Anne. From this episode, More’s enemies organized efforts to arrest him on charges of treason, ending two years later with his beheading. A tragic ending for the Member of Parliament and author; who, nineteen years earlier, described the fictional island republic of Utopia. Common explanations suggest this landmass in the Atlantic Ocean represented a perfected society, one ultimately unreachable. 500 years later, visions of Utopia live on in our imaginations. But, what can be said of the enduring concept of perfection?
I have often entered a Do It Yourself shop in search of a specific tool or piece of hardware, not knowing where to find it and sought out assistance from a staff member. With their guidance through the aisles, the interaction inevitably ends with the question, “Is this what you are looking for?” and my reply, “Perfect!” In other words, “exactly what I had in mind.” Such an explanation of perfect differs fundamentally from a definition of perfect as an unreachable endpoint. That is, in terms of a product or a service, there will never be a better one. While I acknowledge my use of “perfect” to respond to questions such as “Is this what you are looking for?,” I have serious doubts about the use of perfect in the context of an ultimate achievement, perhaps characterized by “The Pursuit of Perfection,” a phrase often attributed to Toyota’s Lexus division.
As with Utopia, the concept of perfection as a pinnacle of performance is hardly limited to Toyota. British actor Dudley Moore came to fame in the United States in the 1970s with the film 10, a romantic comedy in which he was paired with American actress Bo Derek, the perfect woman, a “10” on a scale of 1 to 10, if not 0 to 10. What matters is this scale, with a parallel to an Olympic judging system of 1 to 10, ends with 10 as the highest possible achievement in beauty as well as athleticism. What are the implications of a measurement scale that terminates abruptly? What can be said of the continuous pursuit of perfection, if perfection represents an endpoint, such as Bo Derek? While exploring a generation before models Gisele Bündchen and Naomi Campbell graced the covers of Vogue magazine, would it be possible for Dudley Moore’s character to find someone more beautiful than a 10? Can an organization practice continuous improvement and simultaneously believe in perfection in this context? Does CI stop at perfection? On several occasions, I have heard the logic “continuous improvement is a journey” and “perfection is a very distant goal,” well in keeping with Thomas More’s Utopia. A distant goal, agreed, but also a point of stoppage that conflicts with my understanding of continuous, quite often defined as “happening or continuing without break or interruption.”
Might it be possible that seemingly Utopian end points, such as the achievement of zero defects, zero waste, and the elimination of non-value efforts, stem from how individuals and organizations currently think about their efforts, without realizing the conflict between a focus on continuous improvement and the existence of perfection, even if a distant goal? To perceive improvement as continuous requires thinking past stops that offer the illusion of barriers to improvement, much as Sir Roger Bannister raced past a four-minute mile and Chuck Yeager flew a fighter plane beyond the sound barrier. Would continuous improvement be a focus of exploration in Utopia?
“The efforts of the various divisions in a company, each given a job, are not additive. Their efforts are interdependent.”
W. Edwards Deming, The New Economics
In a continuation from a previous blog on what to think when things do not add up…, consider the machinist whose task was machining small holes in a metal housing. He and his upstream and downstream peers were challenged by their manager, in competition with their “teammates,” to reduce the cycle time of each of their tasks. The hole machinist cleverly won the award by saving time by not devoting any additional traditional effort for finely removing the sharp edges around the hole, a process known as deburring. While he was still meeting his requirement of deburring the holes, he saved time by providing a minimal effort, barely complying, yet technically still meeting the company’s deburring requirement. But, the time he saved was nullified by a far greater loss in time when his peers were seriously handicapped by his minimally-deburred holes in their downstream efforts. Negative synergy strikes again!
I have also witnessed best efforts with cost cutting in an office environment, when the card-stock paper in dozens of 3-ring binders used for hardware production planning was replaced with a lighter weight paper. When the thinner, less expensive, pages tore, hole reinforcement circles, 6 per page, were regularly installed on hundreds of pages of planning documents.
In her book, Thinking Systems, Donella Meadows offers a reminder of the previously quoted Sufi expression (“You think because you understand one you must understand two, because one and one makes two. But you must also understand and.”) that the explanation of “and” depends on the nature of the relationship between the items being counted. When they are independent, such as combining apples or cups of water, addition does apply. When they are interdependent, such as combining the two components of aerodynamic drag, pressure drag and friction drag, aerodynamicists know what to think when addition does not work. They begin by realizing that the “total drag” on an object is a non-additive combination of pressure drag and friction drag. Pressure drag can be lowered by reducing the frontal area of an object, as when bicyclists lay their upper bodies close to their bike, instead of sitting upright. Frictional drag can be reduced by making an object smoother, as when surfaces are polished. Such an example is the former use of full-length, polyurethane swim suits in Olympic swimming events.
Beginning in 1905, golfers have benefited from the design of golf balls with reduced total drag. With dimples, they travel farther. How they do it requires the two components of drag to be viewed as interdependent, as a system, for dimples do not result in a smooth surface. Instead, they are known to increase frictional drag. But, the increase in frictional drag is accompanied by a far greater decrease in pressure drag, leading to a net savings in drag. Had they been managed without a sense of a system (as when all departments in an organization focus on ways to lower their own costs – minimal deburring of machined holes, thinner paper for planning documents, and no perforations on stickers – to achieve total savings), one design team would focus on decreasing frictional drag, another on decreasing pressure drag, as if they were separate. As a result, golf balls would be smooth and polished and total drag would not be reduced. Instead, the designers use a “loss leader” strategy, deliberately making one drag component worse to lower the total drag. By increasing frictional drag, the golf balls travel farther.
Supermarkets do the same when they sell some products at a loss, looking to increase total profit when customers buy other products that are sold at a higher profit. Or, during holiday season, providing “free” turkeys for purchases over $75. By decreasing profit in one department, they can increase profit overall. What these situations have in common are examples of The Economics of Teamwork and what to think when addition does not work. They represent the limitless opportunities within organizations to purposefully manage resources, with a focus on exploiting interdependency, not unknowingly falling victim to it.
Guest post by Lori Fry, Principal with Navigator Management Partners, originally featured as a post at https://dignityatworkproject.com/ Follow this link to listen to our first podcast with Lori.
My son, Ben, was written up at work for calling off so he could evacuate Florida ahead of Hurricane Irma’s landfall. You can read about it in The Washington Post. Seriously.
Irma – a category 5 storm almost as large as the entire peninsula. Ben is a college freshman living on his own for the first time. He has a part-time job as a food delivery driver. He works hard, cares about his job, and appreciates being paid. And he cares about his personal safety almost as much as I do.
As the storm approached, I arranged lodging for Ben in Georgia and out of the reach of the worst part of the storm. He was concerned about getting in trouble at work….But who expects food delivery during a hurricane??? At my urging, he called his manager to tell him he was evacuating.
While Ben was away, his manager sent a group text to the delivery drivers stating that while gas was scarce in the area, not being able to find gas was not a reason to call off. There’s brute force – then there’s this. What did his manager expect? Hot and fresh delivery falls apart when the mode of travel is heel-toe express!
When Ben returned to work a few days later, he received a warm “welcome back” write-up and was informed that future time-off requests would be denied.
By all accounts, the situation was infuriating. I wanted to direct my wrath at the manager, but my Deming brain knows the source of the behavior likely comes from something much more powerful – the corporate belief system.
Let’s assume this manager is passionate about helping people get food – that is a powerful vision. As laudable as that might be, his vision might become misguided when put in the context of looming natural disaster. One could argue that the manager’s highest priority be his responsibility to the staff and their safety. At that point, it would be up to each employee to decide whether to evacuate or stay. Naturally some would stay and work, guided by intrinsic motivation; others would listen to their mothers and get out of harm’s way.
So I wondered…why would the manager feel okay about risking the safety of his employees to make a few extra bucks?
I’ll likely never know the answer, but I suspect something in the corporate system drives this behavior – a carrot, such as a bonus plan; or a stick, such as a a penalty for closing early?
Writing up employees under such circumstances demonstrates how beliefs can extend to a ridiculous extreme. Command-and-control tactics strip integrity and dignity out of work – workers are left with drudgery. The manager’s attempt to “punctuate” corporate’s threat with the “no gas is no excuse” line illustrates the the misguided management belief that people can be told what to do – and they will get it done – because they know management expects results no matter what. When the tank is empty and the gas station is closed – brute force won’t make the car’s engine run.
A day or two after Irma left town, The Washington Post ran a story about Ben’s employer, the infamous memo, and the manager’s poor attempt to keep the doors open. It’s difficult to know what the company will learn from this experience. We, however, can use it to deliver a message about how to do things differently.
This webcast shows Bette Moen’s presentation, Fixing Education: A Model That Works, at the 2012 Annual Deming Conference. Bette is the founder and director of Cedar Crest Academy.
Cedar Crest pays close personal attention to each student and adjusts the system to their needs and strengths. The system is adapted to maximize the education system results. How such a concept would be applied in a different system would be different. The level of individualization is not possible with the structure of many schools. But other schools could learn from the ideas and transform themselves to be more focused on providing students what they need instead of trying to figure out how to bend students to the requirements imposed by the school’s rigid structure.
Could your organization improve the performance of the organization by paying more attention to each person and adapting the system to maximize the performance based on the individual’s strengths? I know many organizations I have experience with are much more focused on bending individual’s to fit the rigid organization structure and could benefit from creating systems more able to take advantage of the abilities of their people.
It is wonderful to see the focus placed on creating systems to make learning happen – as described in this presentation. That same focus on creating systems that let kids learn is repeated over and over in the presentations by those applying Deming’s ideas to education. Each presentation shows how important it is to change the thinking from we have a very set system and need to fit students into it to a model of what type of system can we create in order to nurture student learning.
“The efforts of the various divisions in a company, each given a job, are not additive. Their efforts are interdependent.” W. Edwards Deming, The New Economics
In the summer of 2005, I attended a conference which featured Jack Welch, the former CEO of General Electric, as the opening keynote speaker. Welch offered an assessment on the overall savings from continuous improvement projects across GE: “If I added up all the financial savings of the projects at GE it would have added up to the gross national product of the USA.” In other words, the savings from the hundreds, if not thousands, of application projects across GE, when added together, were colossal, and Jack Welch knew it. Yes, they could be added, but the sum appeared to be noticeably inflated. Something was missing in the calculations, perhaps interdependencies and resulting unintended consequences were overlooked. What’s one to do when addition does not work? In keeping with the opening quotation from Dr. Deming, we can turn to Donella Meadows, an environmental scientist for inspiration with her reference to the Sufi statement, “You think because you understand one you must understand two, because one and one makes two. But you must also understand and.”
As a prelude to an explanation of “and”, consider a favorite quotation from Tom Johnson in his book, Profit Beyond Measure, aptly sub-titled, “Extraordinary Results Through Attention to Work and People;” “How the world we perceive works depends on how we think. The world we perceive is a world we bring forth through our thinking.”
Regarding how we perceive the world, the impact of the difference between working together (the total is more than the sum of the parts), working apart (the total is less than the sum of the parts), and working separately (addition applies) can be examined mathematically by rephrasing the Sufi statement as a question; “What does 1 plus 1 equal?” For example, does 1 cup of water plus 1 cup of water equal 2 cups of water? Ditto for 1 apple plus another adding up to 2 apples? Yet, does the same apply to 2 co-workers each saving an hour in their tasks? Combined, would the organization save 2 hours? Or, would 2 workers each saving $100 save their organization $200 overall. Given the reality of systems, such an additive saving is nearly impossible.
The classic issue is whether or not the items being combined are interdependent or independent; that is, separate. In the case of water and apples, when accumulated, they are not dependent on each other. They do not work together, as teammates, to create a third apple nor a third cup of water, nor operate in such a way that water would be lost (other than by evaporation) or part of an apple would be lost. But, in an organization, our actions are always connected to others. We constantly receive from others and deliver to others. By comparison, can you imagine a co-worker who received nothing (data, reports, parts, etc.) from others (other than salary) and delivered nothing to others? That is, the worker was truly an island in the organization, isolated from the others?
When we shift our focus to work and people, we simultaneously shift our thinking from independent cups of water and apples to people and their interdependent tasks. If the two items being considered are people working together, the results can be more than the sum of the parts; more productive than two people working independently. This is termed positive synergy. On the flip side, we could also see negative synergy resulting; 1 + 1 being less than 2.
Opportunities for discovering a lack of additivity apply to both the economics of for-profit and not-for-profit organizations. Year after year, I have been ably served at blood collection centers by highly skilled phlebotomists, as well as many volunteers who contribute their time and passion to these life-saving agencies. One volunteer who stands out is Mary, a senior citizen who provided the refreshments after our donations, always with a warm smile, all the while providing us with a small sticker to add to our personal planners. Mary’s role included adding a date to each sticker to remind us of our next visit. With all the strength she could gather, she cut the 1-inch wide stickers, one at a time, from a large roll. As she tired, she needed both hands to force the handles of the sheers together. Once, I commented on the Herculean effort she expended to cut each sticker from the roll, much more effort to separate the stickers than I recalled from previous visits. Her matter-of-fact reply revealed an appreciation for her system. Quite simply, she offered, “Yes, somewhere someone is saving money by no longer buying a roll of stickers with [easy-to-tear] perforations.” “What do they care about my effort?”, she said, “I’m only a volunteer.”
Mary is not alone in experiencing an unintended (negative synergy) consequence of task-oriented organizations, where processes are divided into apparently separate, independent, tasks, examined for how best to reduce costs for each task, then reassembled into a “new and improved” process. I do not know the thinking behind the decision by the blood donation center to purchase rolls of unperforated stickers. However, I have witnessed other situations where a determined attempt to achieve overall savings by piecing together local savings, resulted in overall losses. These cases serve as a reminder of the ease with which a seductive path of “adding up the savings” can be followed. They also serve as a reminder of the possible outcome of this path by being aware of systems.
Through his seminars, lectures, videos, and books, Dr. Deming shared a vision of systems well-managed. In his last book, The New Economics, he reminded us that “a system is a network of interdependent components that work together to try to accomplish the aim of the system……The greater the interdependence between components, the greater will be the need for communication and cooperation between them.”
We all benefit from standardization every day. We can plug our devices into a wall outlet and power them. We can get a replacement battery and have it work as expected. We can type on the keyboard without thinking because the keys are the same on each keyboard. We can connect to a new wifi network with our phone or laptop. We can buy a replacement pipe for our sink and install it.
With a systems view it is understood that there is a need to consider the entire system when designing solutions. Standardization allows us to create certainty about specific aspects of how items will interact. That certainty (of course variation still has an impact even with standardization so “certainty” may be oversimplifying it a bit) then allows us to be creative and not have to redesign every single part of a system every time we wish to improve some part of that system.
Standardization allows us to creatively improve within the context of the system and with an understanding that certain key factors will conform to those standards.
One of the objections I hear to adopting standardization is that doing so takes away our ability to be creative. This is not the case. Dr. Deming’s quote does a good job of explaining this. Standardization allows us to create systems that are reliable and effective. Within that system there should be a great deal of flexibility to apply creative ideas.