Memorable Quotes by Deming, Part II

Continuing the discussion of often-used quotations from Dr. W. Edwards Deming, we find more comments on the inevitability of change in our work.

• “It is not written anywhere that survival is mandatory.” One only needs to look at the changes over the years of the companies listed on various stock exchanges. In my early years in the computer industry, we talked about IBM and the Seven Dwarfs-Burroughs, Control Data Corporation, General Electric, Honeywell, National Cash Register, Univac, and Xerox Data Systems. None of them capitalized on the change to minicomputers. Digital Equipment, Data General, and Varian became the leaders. However, none of them were a factor in the next generation of microcomputers and Apple, IBM (yes they came back), Dell, and Compaq capitalized on the new opportunity. Apple and IBM made the transition into tablet computers. As Deming said, change is not an option.
  
• “If you want to be ahead, then you have to get ahead.” We all want to get ahead in life or have our company get ahead. We won’t get there unless we do something different. We have to improve, innovate, and dare to make breakthroughs to get ahead.
  
• “Customers expectations are only what you and your competition led them to think.” We all know we have to meet, if not exceed, customers’ expectations, but Deming has a point; what leads customers to develop their expectations. Certainly, specifications to make their systems work are an input. But designs tend to be based on what is available in the industry. They review offerings of you and your customers and design around them or change their purchasing to reflect what they believe is realistically available.
  
• “We can’t make it on satisfied customers, they will switch. We need loyal customers who will wait in line and bring friends. Profit is six to ten times greater with a loyal customer.” Advertising and promotion costs are significantly higher to attract new customers, and communication and testing costs are minimized with existing customers.
  
• “Doesn’t anyone give a hoot about profit anymore?” This comment usually followed a discussion of his chain reaction theory introduced to Japanese leaders in the summer of 1950. It is:
  

o “Improve quality. Costs decrease because of less rework, fewer mistakes, fewer delays, snags: better use of machine time and materials which leads to-
o Productivity improves-
o Capture the market with better quality and lower price-
o Stay in business-
o Provide jobs and more jobs.” This chain reaction became engraved in
Japan as a way of life. “Simple, so simple”, he would often say to emphasize the point.

• Deming’s work provokes people to think, whether it’s in a classroom or on a drive across town. At New York University where he taught for many years, Deming often liked to ask his students which other courses they were taking that would help them have a positive impact on the U.S. balance of trade. “Looking at their faces, you can see them getting mad as they realize their other classes really do not contribute to reducing the balance of trade”, he said.

1. “The Japanese have much to teach Western enterprises, such as eagerness of top management to learn and to treat people as treasures not as assets.” Considering the investment in training, coaching, and understanding strengths of employees, turnover is very costly. Retaining loyal employees is not only the moral thing to do, it is also makes sense economically.
   
2. “Dogs like a pat on the back, and so do people.” Positive reinforcement is useful in encouraging employees. Pride in work and receiving satisfaction from doing work that is valued is key to employee motivation. This doesn’t mean that you never coach employees to improve but do not be overly critical.
   
3. “He who tooteth not his own horn the same doth not get tooteth.” Don’t be arrogant but at the same time have a conviction that what you are doing is right and good. Don’t hide your light under a bushel.
   
4. Closing out his famous four-day seminars where he talked about the futility of people doing their best in processes which were not capable of providing the output expected of them, he would say, “And now I leave you with five words, I have done my best.” He was reinforcing what he often said about workers, they are doing their best and he was too. At this point in his last seminar, 10 days before he passed away at age 94, there was not a dry eye in the house. 
   

New Book

I have been a volunteer for SCORE for nearly ten years.  During that time, I learned that small companies have the same problems as large ones and what I learned in my career is helpful to them.  That led to writing a newspaper column for small businesses and that led to a book.  Basic Business is a collection of over 150 lessons learned over 30 years of management consulting tailored to the small organizations.  It is available through local bookstores or online in hard copy or in electronic format.

Memorable Quotes by Deming, Part I

Basic Business Cents

Dr. W. Edwards Deming was one of the great statisticians employed by Stanford University to teach American industry about methods that allowed them to rapidly ramp up production of war-time goods during World War II. After the war, the Japanese leaders invited Deming to teach them these techniques. They were an island nation, production capacity destroyed by the war, and few natural resources, so they were desperate. He is generally credited with turning their economy around and helping them become a factor in the world economy. He then focused on improving the quality of American industry through his process thinking methods.

Some of his oft-quoted comments are:

·      “Good intentions are not enough. They must be accompanied by profound knowledge. Deming often said, “People are doing their best.” Workers and managers alike intend to do a good job but their processes and knowledge may be limiting their results. Dictionary definitions of profound and knowledge can be interpreted to mean deep understand of perceived truth. It involves knowledge of variation, understanding that no process is perfect, and variation always exists. Quality for international trade must be good enough to command a market.” If the quality of the product or service is not sufficient to entice people to buy it, there is no market.

·      “Better quality is the answer to industrial survival in the western world.” Worldwide communications are so efficient today that people know where they can find the best value, i.e., quality vs. cost. People no longer have to accept poor quality.

·      “How would you know?”  Without data, you don’t know how to make proper decisions. We often expect people to know information that they have no way of finding or analyzing.

·      “When a system is stable, telling workers about mistakes is only tampering.” Using statistical methods, like control charts, to analyze data allows people to take correct action to improve the processes., and avoid incorrect action. If a manager takes action on individual points, the variation will only be increased. Deming called this action “tampering”. If the process is stable and the mean is not acceptable or if the variation is to be decreased, the process must be improved. Simply criticizing or making demands of the employees will just make it worse.

·      “People with targets and jobs dependent upon meeting them will probably meet the targets, even if they have to destroy the enterprise to do it.”  If the targets are arbitrary, people will find a way to achieve them even if it has a detrimental effect elsewhere. It the process is not able to achieve the desired target, the employee will find a way to reach it, no matter at what cost. If the process is capable of doing more than the target, the employee will tend to not go beyond the target.

·      “People hope for instant pudding,” People want immediate results, but improving quality is a long and never-ending journey. Dr. Noriaki Kano of the Science University of Tokyo said, “I wish quality was easy but unfortunately it is a hot and sweaty job.”

·      “Change is upon us.  It is not optional.” We cannot ever rest on our laurels. Changes in market desires, technology, transportation, communication, environment, and world politics contribute to change in the business climate. We must constantly and forever change.

We will conclude with some of Dr. Deming’s famous quotations in the next article.  It is interesting to note how they are standing the test of time.

Eliminating Defects

Basic Business Cents

Customers are assets that must be protected. It is costly, disruptive, and time consuming to find replacements if we have lost them because of defective products or services. A literature search will find books that say it costs five times as much to win back a lost customer as it is to get a new one and another book that says that is a myth. Whatever, most businesses do not want to lose good customers and therefore must identify and correct defects that cause customer dissatisfaction.

This subject is sensitive to me at present because of an experience last month. I was in the middle of a project when my printer failed. This was the third printer from this manufacturer that failed for me in the last nine years. It was only one year old and under warranty for two more years. After considerable time spent troubleshooting on my own and four hours with the manufacturer’s tech support, I was told the faulty parts were not covered by warranty and I would have to call another number to purchase the parts. I got out a competitor’s portable printer that I had not used in 15 years and it worked with only the replacement of a single ink cartridge and allowed me to finish my project. Guess which brand I bought to replace the office printer. This was a product defect compounded by service defects. I may not be an important lost customer to them, but how many others are having similar experiences?

Defects have long-term costs and need to be studied in order to find causes and eliminate or reduce them. Defects are caused by variation in the work processes. This variation can usually be categorized into four areas:

·      Variation in the method employed to produce or servicing the customer.

·      Variation in material employed possibly brought on by different suppliers

·      Variation in machines used, for example, different machines used or tool wear in he same machines

·      Variation in methods of detections or inspection. Yes, sometimes good products are thrown away by faulty inspection processes as well as defects passed.

There is variation in every process but not all cause quality defects in the same degree. They can be grouped into two categories, vital few and trivial many. By studying the causes of variation, the important few that result in defects to the customer can be identified and action taken to eliminate them. Experience and intuition can be helpful in diagnosing the variation causes, but limited. It is better to find the true causes of the variation causing the critical defects by examining the data with the use of statistical tools.

It has become common to provide statistical methods to engineers but it is most effective if all employees, management and entry-level workers alike, are taught the methods to improve their work by analyzing the data statistically. Depending on their positions, the training ranges from 16 to 160 hours in duration.

Defectives are caused by variations. If these variations are reduced, defectives will certainly decrease. This is a simple, strong principle, which holds regardless of types of products or service produced. This will allow us to keep desired customers while adding new ones and enabling the business to grow and prosper.

The Changing Field of Management

Basic Business Cents

Change in management methods are not just inevitable, they are already here. It is moving from traditional management to leadership. Is it passing you by?

Prior to about 1900, in most businesses owners made the decisions and directed employees to follow orders. Then along came Henry Ford who popularized mass production techniques focused on an assembly line. This era was called Traditional Management and was product oriented. In 1950, Japanese invited Dr. W. Edwards Deming to teach them the secret to American production techniques developed during WWII to jump-start their disastrous economy. He taught them process oriented thinking called Process Management.

Some of the elements of Process Management are:

Think and Act from a Systems Perspective-Decisions should be made on the basis of what is best for the total organization. There is always a reaction to every action so care must be made to be sure a decision to improve a narrow area has a positive impact on the total system and not just locally.

Management must share their vision of the future of the organization, its goals and strategy with all employees so they can all work for the common destination.

Challenge the Processes-Effective leadership is always looking for a better way to do things, challenging the status quo. Leaders need to understand the work processes, what is going on, the amount of variation, and why.

Effective leaders investigate waste, rework, and redundancy in work process and constantly work to eliminate it. They simplify these processes and remove complexity. In other words, they innovate present processes and innovate to develop new processes to improve the system.

Continually Seek to Acquire Knowledge-The world is changing so fast that leaders must study and learn continually just to keep up. They need to understand how their people learn. They must understand theory that can be supported or disproved and thereby learn from experience. Without theory of why things happen, experience by itself teaches nothing.

Lead-Leaders model the way because others in the organization are watching them and probably emulating them. Employees watch the leaders feet, not their lips. Leaders need to properly train employees to enable them and then empower them to make decisions.

Provide an Environment for Intrinsic Motivation-Leaders understand what truly motivates their employees. Extrinsic motivators such as money and promises of promotion can be dangerous and cause dissention and short-term decisions. Most people are more strongly driven by a sense of satisfaction of worthwhile accomplishments. Motivating efforts should be win-win to build trust and respect throughout the organization.

Whether we are comfortable with change or not, it is happening.  We cannot stand still; we are either progressing or regressing. Technology developments and the changing desires and needs of customers are changing at a rapid and ever-increasing pace. This means leaders must constantly focus on improvement and innovation of the processes that produce their products and services while engaging the workforce to join in the quest for moving forward.