The W. Edwards Deming Institute Blog

Deming Lecture by Dr. Jeff Wu on Quality Improvement from Autos to Nanotechnology

Deming Lecture at the 2012 ASA Joint – Quality Improvement: From Autos and Chips to Nano and Bio” by Jeff Wu, Georgia Institute of Technology.

One of the points Dr. Wu mentioned is Shewhart called common causes, chance causes, and special causes, assignable causes. I must say I have always thought assignable causes seems like a better name to me. It makes it more obvious that using a “what caused this one result” strategy when the result was within the control limits (and thus not an indication of an assignable cause result) isn’t a good idea. But for now special cause is still the commonly used terminology (I wouldn’t be amazed if this reverts to Shewhart’s original term at some point).

Dr. Wu also points out

Deming’s major insight was to recognize that Shewhart’s idea [control charts, chance and assignable causes etc.], originally in manufacturing, can also be applied to enterprises

One of my favorite statistical tools/strategies is Design of Experiments (DoE) (which my father, Bill Hunter, worked with a great deal) and Dr. Wu discusses the value of using this strategy.

If the process is in control but with low process capability, use Design of Experiments to further reduce variation.

I discussed Deming and DoE a bit in a previous post: Statistical Techniques Allow Management to do a Better Job (about a paper Dr. Deming wrote).

DoE can also be used for purposes other than reducing variation but his talk focuses on Taguchi’s ideas on using DoE to reduce variation.

I liked this statement about a failure mode experienced by users:

You scream and kick the machine to no avail.

Does this describe any processes in your organization?

Another quote I liked (when looking at results of a simple DoE effort that reduced error from target by 75%):

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Leadership and the New Science

Leadership and the New Science: Learning about Organizations from an Orderly Universe by Margaret Wheatley does a good job of exploring how to view organizations as a system.

A quote by Meg Wheatley from an interview long after the publication of the book does a good job of capturing the ideas explored in the book:

How do you understand a world in which the only material form is that of relationships, and where there is no sense of an individual that exists independent of its relationships? That was the gift of the quantum worldview. It said there are no independent entities anywhere at the quantum level. It’s all relationships. That was something that made a lot of sense to how we were starting to think about organizations — as webs of relationships.

But the real eye-opener for me was to realize how control and order were two different things, and that you could have order without control. That was a major shift in my own thinking that I certainly discovered through the science.

image of the book cover for Leadership and the New Science

The new science aspect provides the frame of reference of quantum physics and chaos theory. These echo the idea that relationships and systems define outcomes much more than adding together individual contributions. The results we experience are not the outcome of summing together the individual efforts (so ingrained in the thinking behind performance appraisals; assigning specific targets to be achieved to individuals, teams or departments etc.) instead results emerge from a system.

Naturally these ideas resonate very well with Deming’s thoughts and therefore it is one of the books I, and many others interested in Deming’s ideas, took to heart when it was published.

This is not a book of conclusions, cases, or exemplary practices of excellent companies. I no longer believe that organizations can be changed by imposing a model developed elsewhere. Second, there are no recipes or formulas, no checklists or advice that describe “reality.” There is only what we create through our engagement with others and with events. Nothing really transfers; everything is always new and different and unique to each of us.

That quote from the book (page 7, 1st edition) should ring true to those familiar with Deming’s ideas.

Leadership and the New Science provides an excellent view of the value of understanding the importance of interactions, emergence and systems thinking to those interested in leading organizations.

Related: Creativity Inc. – Using Deming’s Ideas at PixarPeople Copy Examples and Wonder Why They Don’t SucceedSystems Thinking: Feedback Loops


Deming Scholars Seminar, November 9, 2016 in Cheyenne, Wyoming

The Wyoming Business Alliance, in partnership with The W. Edwards Deming Institute®, presents the Deming Scholars Seminar on November 9, 2016 in Cheyenne, Wyoming. The seminar is a pre-conference event at the 2016 Governor’s Business Forum.

graphic with photos of the speakers

Presentations include

  • Dr. Joyce Orsini, Fordham University, New York – Learn how to apply Deming principles to have a proud impact on your organization.
  • Dr. Bill Bellows – Reveal assumptions made in how we allocate resources, both individually and collectively.
  • David Langford and Monta Akin, Assistant Superintendent, Leander, Texas – Prioritize issues and opportunities in education and then explore how Deming thinking can create new breakthroughs.
  • Kelly Allan – Practical Deming tools to help remove barriers in the way of opportunities.

Learn more and register for the event online.

Related: First Annual Deming in Education Conference (2015)14th Annual In2:InThinking Network Forum June 10-14 in Los Angeles (2015)Deming Seminar in Hong Kong, 12 to 14 June 201420th Annual International Deming Research Seminar, 3-4 March 2014 in New York City


Dr. Bill Bellows, new Deputy Director of The Deming Institute

I am thrilled to announce an exciting new chapter for The W. Edwards Deming Institute — one which will open tremendous possibilities for our future. We welcome Dr. Bill Bellows to The Deming Institute staff as our new Deputy Director!

photo of Bill Bellows

Bill Bellows

Bill has been a long time member of The Deming Institute’s Board of Trustees; a valuable guiding influence for more than a decade. I have worked closely with Bill on many projects and relied on his advice throughout the years. I could not be more excited to have him join us in this new role, and to have the opportunity to work more closely together to create a stronger Institute for you. As we move to greater engagement and offer new and expanded learning programs, Bill’s experience and expertise will be an energizing force to help us positively impact more lives through The Deming philosophy.

Bill joins us after a 26-year career with Aerojet Rocketdyne’s operations in Canoga Park, California, where he is known for his efforts to provide insights to the advantages of thinking together, learning together, and working together. His inspiration came from W. Edwards Deming, Genichi Taguchi, Russell Ackoff, Edward De Bono and countless thinking partners in the Deming community.

Bill earned his BS, MS, and Ph.D. in Mechanical Engineering from Rensselaer Polytechnic Institute in Troy, NY. Away from work, he serves as a board member of the Volunteers of America – Los Angeles chapter as well as chairman of the Deming Medal Committee for the American Society of Quality. Bill is also an editorial board member, as well as columnist, for the UK’s Lean Management Journal. He lives in Santa Clarita, California with his wife, Monica.

Please join me in welcoming Bill to our small, but mighty, Deming Institute staff!

Sincerely,

Kevin Cahill
Executive Director

Related: Specification-based Management is Not SufficientReflections from Dr. Deming on a Foundation for Leading (presentation at our 2014 conference)Using Deming’s Management Methods to Enhance the Application of Taguchi’s Ideas (Deming podcast)How Did We Do on the Test?


Understanding Data is Often Challenging

Using data to understand the system and validate our theories and successful improvements is an important part managing well. In some cases it is fairly easy to understand and collect data that provides a clear and accurate measure of what we care about. But getting data that helps can also be very challenging.

Creating a management system that aims to use data while focusing on continually improving is a great start. But that requires not just that numbers are used: those numbers must be used properly. There must be an understanding of variation. There must be an understanding of the proxy nature of data. There must be an understanding of the organization as a system.

One of the challenges raised in the webcast that those with a background applying W. Edwards Deming will appreciate is the challenge of collecting accurate data based on the same operational definition. In business, often data is collected without even having operational definitions (“An operational definition is a procedure agreed upon for translation of concept into measurement of some kind.” W. Edward Deming). Without an operational definition there is a greater risk that the data is not accurate (since those collecting it might be using different criteria) and also that the data is not understood properly by those making decision.

Often formal health care studies give more care to collecting data, but even when they do well defining how data should be collected from the real world they run into another challenge – which is that even experts can’t agree which category the situation falls into (for example, how sick a patient is). If patients that are not in similar health conditions are compared to each other the data will (in addition to the various sorts of variation we know impact all processes) also include variation in the results that are due not, for example to the changes made in the process due to the PDSA, but just the variation of the baseline health of the patients in the experiment.

There certainly are challenges in using data in health care that are more complex than many other attempts to use data. But the types of issues with collecting accurate data, collecting accurate data on differing situations (for example comparing data from a PDSA to the current process), and making accurate conclusions about what we can learn from the data (just actually correctly understanding what it says, before we even then try to draw conclusions about what that means or what actions that should lead us to take).

This is an interesting webcast exploring the issues surrounding understanding data on medical errors and what conclusions we can draw from data about the impact of those errors. This is the latest webcast from Healthcare Triage, which is an excellent series for anyone interested in healthcare (not just for those in the field but for anyone interested in understanding human health).

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2016 Deming Prize Winners

Image of the Deming Prize medal (profile of Dr. Deming)

The Union of Japanese Scientists and Engineers (JUSE) has announced the 2016 Deming Prize winners.

There companies were awarded the Deming Prize this year:

Here is a blog post on a 2006 visit to the Toyota Motor Kyushu plant by Mike Wroblewski (read the comments on the post also).

Since 2000 organizations based in India have received the most Deming Prizes; Japan is second, and Thailand is third.

Distribution of winning organizations since 2000 (including prizes for 2016)

  • India – 22
  • Japan – 16
  • Thailand – 12
  • China – 2
  • USA – 2
  • Singapore – 1
  • Taiwan – 1

2016 Deming Prize for Individuals

  • Naotake Okubo, Executive Advisor, Sekisui Chemical

Related: 2015 Deming Prize Winners2013 Deming Prize WinnersDeming Prizes for 2011 go to Companies Based in India, Taiwan and Thailand


Huge Payments to Executives for Good Luck

A recent Harvard Law School Forum on Corporate Governance and Financial Regulation article on the finding that:
90 Cents of Every “Pay-for-Performance” Dollar are Paid for Luck. I agree that mainly we award senior executives huge pay based on luck and the natural result of the organization they are a part of.

It seems there is increasing criticism of lottery sized payout to executives that have done nothing to justify these payments. That criticism of the weak explanations provided for why such huge rewards are deserved is in line with what Deming taught.

At the same time, most of these efforts then try to explain how to fix the problem by better measuring how to evaluate the performance in order to justify the continued enormous payments to many senior executives. This is not supported by what W. Edwards Deming’s shared.

To call it an award of merit when the selection is merely a lottery, however, is to demoralize the whole force

In this quote (page 275 of Out of the Crisis) W. Edwards Deming was addressing the notion of “merit pay” in the context of workers in the system (not executives specifically). But that notion is apt in the case of executives in the USA today, especially as the amount of their awards now are indeed lottery sized.

The idea of a merit rating is alluring. The sound of the words captivates the imagination: pay for what you get; get what you pay for; motivate people to do their best, for their own good.

The effect is exactly the opposite of what the words promise. Everyone propels himself forward, or tries to, for his own good, on his own life preserver. The organization is the loser.

From The Merit System: The Annual Appraisal: Destroyer of People by W. Edwards Deming. As included in The Essential Deming (pp. 27-28).

This puts clearly Dr. Deming’s opinion of the so called “merit pay” practices. We need leaders that are focused on providing good jobs, delighting customers and rewarding investors. We don’t need leaders that are focused on how much they can divert to their own pockets. When you choose leaders that are focused on how much they can divert to their own pockets the entire system loses.

The fix is not to find better ways to measure so the lottery sized pay goes just to the 2 or 3 % of leaders that can make a strong case they are indeed not just being paid for luck or expected results. It would be better to limit the rewards to those few that could show they materially improved the natural result of the organization and not just through the luck in the organization, industry, economy or stock market that lead to widespread good results for everyone. But that is not the correct aim (though honestly if the organization insists on letting executives shippon off huge amounts to their own pockets it would be better if the ability to do so was much more difficult than it is today).

The fix we should seek is to stop thinking trying to pin blame or justify outsized rewards on an individual or a few individuals but to realize the principle of an organization as a system and focus on continual improvement of that organization.

It is my personal belief that the excessive pay of executives reached such a harmful level that Dr. Deming would have added it to his list of 7 deadly diseases long ago if he were still with us. But that is just my opinion (not a position of The W. Edwards Deming Institute). My believe is based on the damage done to the management of our organizations due to the practice of vastly overpaying executives.

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W. Edwards 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