Whether you are the owner of your own small business, a middle manager in a mid-sized company, or the CEO of a multinational, this book aims to show you how to improve your profits and productivity, following the principles of the Deming management method. Dr. W. Edwards Deming, a statistician and management consultant, proposes a thorough reformation of the way managers manage. Change, Dr Deming believes, starts at the top with an informed, quality-conscious management. The book includes advice on how to achieve that level of management expertise in the author's analysis of Dr Deming's 14 points for managers and his deadly diseases of mangagement.
THE DEMING
MANAGEMENT
METHOD
by Mary Walton
FOREWORD BY
W. Edwards Deming
Foreword
by W. Edwards Deming
Why is Western industry on the decline? Why has the balance of trade of the United States of America deteriorated year by year for twenty years? The deficit in export of manufactured goods is worse than the overall figures indicate, as export of agricultural products has been on the increase. We have people; we have natural resources, experience. Why the decline?
The cause of the decline is that management have walked off the job of management, striving instead for dividends and good performance of the price of the company’s stock. A better way to serve stockholders would be to stay in business with constant improvement of quality of product and of service, thus to decrease costs, capture markets, provide jobs, and increase dividends.
In the decade after the War [the Second World War], the rest of the world was devastated. North America was the only source of manufactured products that the rest of the world needed. Almost any system of management will do well in a seller’s market. Success in business in North America was confused with ability to manage.
Management in America (not all) have moved into what I call retroactive management: focus on the end-product—look at reports on sales, inventory, quality in and quality out, the annual appraisal of people; start the statistical control of quality and QC-Circles for operations, unfortunately, detached from management’s responsibility; apply management by the numbers, management by MBO. [Management By Objective], work standards.
The follies of the systems of management that thrived in the expanding market that followed the War are now all too obvious. They must now be blasted out, new construction commenced. Patchwork will not suffice.
Everyone doing his best is not the answer. Everyone is doing his best. It is necessary that people understand the reason for the transformation that is necessary for survival. Moreover, there must be consistency of understanding and of effort. There is no substitute for knowledge.
A conjurer may pull a rabbit out of a hat, but he cannot pull quality out of a hat.
The biggest problem that most any company in the Western world faces is not its competitors, nor the Japanese. The biggest problems are self-inflicted, created right at home by management that are off course in the competitive world of today.
Recognition of the distinction between a stable system and an unstable one is vital for management. The responsibility for improvement of a stable system rests totally on the management. A stable system is one whose performance is predictable. It is reached by removal, one by one, of special causes of trouble, best detected by statistical signal.
Understanding of a stable system discloses devastation of people wrought by the annual appraisal of performance, futility of management by the numbers, management by MBO. A numerical goal that lies beyond the bounds of capability of a system will not be reached except at the expense of some other activity in the company, thus, in the end, raising total cost to the defeat of the company.
Teamwork in a company, except for putting out fires, is impossible under the existing annual appraisal of performance. Everybody, once the fire is conquered, goes back to his own life preserver, not to miss a raise in pay.
It is a pleasure to commend this book by Miss Mary Walton to readers that wish to study her point of view on the theory and examples that guide my work and form the content of my seminars and my book Out of the Crisis (Center for Advanced Engineering Study, Massachusetts Institute of Technology, 1986). The applications, examples, and comments that she provides will be especially appreciated by her readers.
Washington
March 10, 1986
Preface
I first heard of W. Edwards Deming on a trip to Japan several years ago to research a story on workers at Kawasaki Heavy Industries, Inc., which had won contracts to build trolley and subway cars for the Philadelphia mass transit system. It never occurred to me at the time that the American who had taught the Japanese statistical quality control and principles of management after World War II was still living. Indeed, I supposed that he had died shortly after educating the Japanese. Otherwise, he would surely have been famous in this country as well.
I was therefore surprised to learn in 1984 that Dr. Deming was coming to town. He had been retained by the Greater Philadelphia Chamber of Commerce for a four-day seminar in March of that year. I was assigned by my employer, The Philadelphia Inquirer, to write a profile.
Dr. Deming was not only very much alive, but was in rare form when I met him for the first time on January 19, 1984. He was in Philadelphia that morning to give a speech in advance of his March booking, after which his schedule called for an immediate departure for San Diego. I was headed for San Diego as well, to take his seminar there as part of my research. His delightful and protective secretary, Cecelia (“Cele”) Kilian, had turned down my request to travel with him, and my flight left later than his.
After the Philadelphia speech, in which he soundly scolded his audience of executives for their poor management practices, Dr. Deming himself invited me to travel with him to San Diego. I quickly changed my plane reservation and off we went. He traveled with only a large briefcase and an inexpensive tan canvas shoulder bag. I remember watching him in the airport as he made a phone call, then pulled a train schedule from his pocket and nearsightedly consulted the pocket-size date book he lived by, jotting down arrangements for an engagement a year hence.
The Deming profile that appeared on March 11 in the newspaper’s Sunday magazine, Inquirer, drew more response than any piece I’d written in fifteen years of reporting. People wanted to know how to reach Dr. Deming, where to buy his book, how they could attend the seminar. We ran out of copies of the magazine article and then of reprints as well. When later I proposed doing a book on his method, Dr. Deming replied that he would help in any way he could.
Over the next year or so, I visited him on weekends at his Washington home near the Maryland line, treading the flagstone path that led past the big holly tree down to the basement entrance of his office. As he sat at his big blond desk, around the corner from the washer and dryer, he was surrounded by a lifetime of books, journals, curios, and awards. If time permitted after we talked—or rather, after he talked and I listened—there was lunch or dinner with him and sometimes with his wife, Lola, and other guests at his beloved Cosmos Club near Dupont Circle, where popovers and catfish were a specialty. Dr. Deming would order hazelnut ice cream all around, without even asking. Usually he piloted a stately white 1969 Lincoln Continental; its black seats exuded a rich leather smell. Once we took the bus. He was a fan of public transportation. “I ride for twenty-five cents,” he said with satisfaction in one of the few references he ever made to his advanced age. (During the course of researching the magazine article, I had inquired obliquely whether he was worried about who would carry on his work. “I’m all right,” he answered tersely.) I found him in all respects to be a kind and thoughtful individual, if occasionally impatient at his student’s failure to immediately grasp his conclusions.
Dr. Deming was good enough to read and comment on many chapters of this book, particularly on those dealing with the Fourteen Points and the Seven Deadly Diseases, and to make available the unpublished manuscript of his forthcoming book, Out of the Crisis. He also provided journals of his early trips to Japan. We traveled as well to several of his clients, and he supplied introductions to others.
The companies that had turned to Dr. Deming’s method shared a sense not only of urgency and commitment but also of optimism and excitement. Suddenly, there was a new philosophy that promised answers where none had previously existed. Trained to gather and interpret data, their problem-solving teams were like detectives turned loose with a new sheaf of evidence. At last they had the ammunition to eliminate long-standing glitches in their processes, and they went after them with the enthusiasm of crime-stoppers. Show the slightest interest in their work, and out would come sheets of numbers and stories of misinterpreted clues and, finally, success. Probe a little more into the psyche of the employees, and their stories would bring tears to your eyes: what it meant to be taken seriously rather than to be treated with disdain. To be sought out for one’s knowledge and to be asked to contribute to the future of a company. To want to go to work. I heard, too, from executives who had discovered how pleasant it is to share responsibility—and to sleep better at night. How good it is to know their employees respect them. And to know that these feelings of satisfaction come at no cost to profits and productivity. Just the opposite—their companies were doing better than ever before and saw no end to the improvement.
These ventures into the American workplace showed clearly that whether the product is hardware or service, whether the company employs two hundred or two hundred thousand, Americans still care about quality. The country is full of intelligent, courageous people who would change if they only knew how.
In Part Three, Making Deming Work, I sought to report from the factory floor—or the office cubicle, as the case might be. I wanted to talk directly to the people involved in the change and to find out exactly what had taken place. I wanted to deal with specifics rather than generalities. Wherever I went, I found the same kinds of problems and the same human reactions. An executive who thinks his or her company is different from the ones in this book—who says “We don’t have those problems” or “That doesn’t happen here”—doesn’t really know what’s going on, hasn’t really talked to the company employees in an atmosphere free of fear.
By the same token, although evidence presented here of the Deming method’s success is anecdotal in nature, to borrow a term from medical research, it would be a mistake to interpret it as atypical. The Deming method will work anywhere. It is universal.
The question arises, Is America ready? Must we continue the precipitous decline of our value-added economy, living on borrowed time and borrowed money and throwing up protectionist barriers, until we reach the cataclysmic state that more and more experts believe is inevitable? Must it be that only then our businesses and corporations will be prepared to accept a radically different style of management? Or can we act now?
Acknowledgments
Aside from those people whose contributions are evident in the writing, there were several whose keen understanding of the Deming method added significantly to my own. In this regard, I cannot thank the people of GOAL (Growth Opportunity Alliance of Greater Lawrence) enough for their generous help, particularly Director Bob King, for his suggestions, knowledge, and good humor, and statistician Diane Ritter, for holding my hand through histograms and control charts, and for her hospitality as well.
In Philadelphia, Mary Ann Gould was indispensable. So, too, was Brian Joiner, who gave of his time, insights, and considerable expertise during his trips to the city. At the Greater Philadelphia Chamber of Commerce, I am grateful to Rick Ross for his encouragement and to Rosalie DiStasio for keeping me abreast of developments.
Friends helped beyond measure. I thank Peggy Anderson for guidance, Bob Schwabach and Don Drake for general support and expertise with word processors, and Beth Gillin, Jane Marie Glodek, Ellen Karasik, Ron Cole, Bill Eddins, Patsy McGlaughlin, and Jane Barr. For their interest and companionship during the long and vexing newspaper strike when this book was completed, I am grateful to my union colleagues Bill Barry, Kitty Caparella, Rick Tulsky, Lila Roisman, and others on the Newspaper Guild negotiating committee.
I am also grateful to David Boldt, editor of The Philadelphia Inquirer Sunday magazine, both for assigning the story that led to this book and for a happy, long-standing editor/writer relationship. All the people at the magazine, where I work, were a constant source of good cheer. Sally Downey, his assistant and my friend, was wonderful. My gratitude as well to Dr. Deming’s devoted secretary, Cecelia Kilian, who put up with my many calls. Artist Carol Estornell gave both elegance and coherence to the illustrations in this book. Harold Tassell, Jim Naughton and Katherine Hatton gave important advice.
Finally, my love and thanks to my darling daughter, Sarah, for her patience and understanding; to my father, Joseph Vogel, to my stepmother, Lucia Yu, and to my mother, Mary Vogel, who did not fail me.
PART ONE
W. EDWARDS DEMING—THE MAN AND HIS MISSION
Chapter 1
W. Edwards Deming:
A Biographical Note
Born on October 14, 1900, William Edwards Deming is as old as this century. He was sixteen when the United States entered World War I, and forty-one when the Japanese bombed Pearl Harbor. He was in his fiftieth year when Japan, its economy staggering from the effects of war, decided it needed the help of a “foreign expert,” and he was in his eightieth when NBC featured him on a broadcast entitled “If Japan Can . . . Why Can’t We?” and he was, at rather long last, discovered in his homeland.
He grew up on a Wyoming homestead during the period when irrigation was taming the Wild West and transport was by horse and buggy. His work has taken him to the frontiers of technology. Few have lived through so many important eras in history.
The son of a man who was trained in the law and a woman who studied music, he is named for them both: His father was William Albert Deming and his mother, Pluma Irene Edwards. From his father he derived a penchant for scholarship; from his mother, who had studied at Oberlin College’s conservatory of music, a love of composition.
In the early 1900s, William Deming, Sr., moved his family from Sioux City, Iowa, to Cody, Wyoming, where he had a business arrangement with an attorney. He and Pluma had two small sons by that time, William and Robert, who was a year younger. Cody had been named for Buffalo Bill—William Frederick Cody, the colorful nineteenth-century army scout and buffalo hunter and the organizer in 1883 of “Buffalo Bill’s Wild West Show.” The Demings lived in a small house on the grounds of the Irma Hotel, named for Buffalo Bill’s daughter, and Buffalo Bill himself would put in frequent appearances. The two boys were entranced by the long-haired, mustachioed blond showman. Robert Deming remembers visiting an aunt in Los Angeles when Buffalo Bill brought his show to town. The aunt and her two charges elbowed their way to the front of the crowd, and Buffalo Bill recognized the two boys from his home...
