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The New Economics for Industry, Government, Education - 2nd Edition

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I have recommended this book in my previous review of "Out of the Crisis" to managers who are new to Deming's ideas, being a manual that will be easier and more effective to comprehend and follow. At the final stages of his life, Deming (1900-1993) wrote this epilogue of his career with an honest attitude and sincerity that I, along with many of my colleagues, admire. The frankness of his opinions regarding the (lack of) essentially fundamental leadership traits in today's modern global societies, in all vital areas at all organisational strata, are both valid and brave; the information voiced is made possible only through his previous experiences and status in the field.

If all managerial leaders of this world were to listen, be able to understand and follow Deming's ideas and underlying philosophies, societies will be enhanced beyond recognition in many aspects.

However, if you are a lone crusader in your organisation or even country, then you are in for hell... but do hang on tight, as the world generally hates challenges in any forms and situations... Implementing Deming's philosophies (as with any corporate strategy) involves innovation by the introduction of new ideas into an organisation, which includes rearrangements from jobs and roles to structures and systems; which people generally hate. Even within the book, Deming had already highlighted the various problems to that, and had always emphasised on EDUCATION of the organisation, rather than decreed training to extinguish corporate flames, for he had said:

"Knowledge is theory. We should be thankful if action of management is based on theory. Knowledge has temporal spread. Information is not knowledge. The world is drowning in information but is slow in acquisition of knowledge. There is no substitute for knowledge."

- W. Edwards Deming 12th September 1993

This is my humble tribute to a great man.

This is the last book written by Dr. Deming before his death in 1993 at the age of 93. Dr. Deming is perhaps best known for the work he did in Japan at the end of World War II, and his famous 14 points. In this book Dr. Deming introduces his System of Profound Knowledge, which consists of: An understanding of Systems,A Theory of Knowledge, An understanding of Variation and Psychology Dr. Deming defines a system as: "A series of interdependent components that try to work together to achieve the aim of the system." The system must have an aim, without an aim there is not system. Dr. Deming explains variation as follows: All systems have some variation in them. The secret is to know what kind of variation is occuring and to respond accordingly. Common cause variation is the random variation tha occurs in any system. Special cause variation is a result of something outside the system acting on the system. An example would be that it normally takes you 25 minutes to drive to work, give or take a few minutes, but this morning, because of an accident the commute required 50 minutes. The normal drive time, with variation represents common cause variation, while the accident represents special cause variation. A theory of Knowledge is a way of doing experiments, or defining a mind set. According to Dr. Deming without theory no learning takes place. He give an example of a rooster that has a theory that he causes the sun to rise because he gets up early and crows. One morning he forgets to crow. The sun rises anyway. While the rooster's theory is blown out of the water he has learned that he is not responsible for causing the sun to rise and in the future he can sleep in. Dr. Deming's discussion on psychology has to do with the difference between intrinsic and extrinsic motivation. His basic theory is that people enter the world motivated to learn and do well and that the excessive use of extrinsic motivation kills the intrinsic motivation. In this book Dr. Deming also discusses in some detail his famous Red Beads Experiment which he uses to demonstrate the power of systems and how they victimize the people working in them.

Critique W. Edwards Deming's work at your peril. After all, he probably set whatever standard you're using. This volume - revised by the author before his death in 1993 and partially based on his 1950s work with the Japanese - may strike the contemporary reader as a curious mixture of seminal process thinking and idiosyncratic ruminations on education. Portions read like an artifact of the early 1990s, but in this regard, however, his volume offers a unique perspective on a turning point in American economic history: the shift to the knowledge-based economy. We [...] recommend Deming's volume to any serious student of management thought, and all human resources professionals should familiarize themselves with his work, which set the foundations for many of the transformations now underway in the corporate world.

W. Edwards Deming is the man who tried to tell America how to make industry more effective. Few listened, so he went to postwar Japan and revolutionized their industry instead. When American industrial leaders saw Japan beating them, then they got interested. Almost anything by Deming is a must-read for his commonsense but statistically-based theories for productive, happy work. The New Economics is pretty short but introduces a lot of the points. For the in-depth view, read his Out of The Crisis.

"This book is for people who are living under the tyranny of the prevailing style of management," writes Deming in the preface. Deming has strong convictions, many of which are counter to conventional management thinking.

Deming does not believe in ratings and grades. He says performance is mostly attributable to the system in which that person works. "The forces of destruction that come from the present style of reward ... squeeze out from an individual, over his lifetime, his innate intrinsic motivation.... They build into him fear, self-defense, extrinsic motivation. We have been destroying our people from toddlers on through university and on the job. We must preserve the power of intrinsic motivation, dignity, cooperation, curiosity, joy in learning, that people are born with."

Nor does Deming think highly of goals. "Only the method is important, not the goal."

"It is wrong to suppose that if you can't measure it, you can't manage it - a costly myth."

"The customer is not in the pyramid. A pyramid, as an organization chart, thus destroys the system, if ever one was intended." Instead Deming uses flow diagrams.

"With shared responsibility, no one is responsible. Joint responsibility is totally different from divided responsibility... Learning under a teacher is a joint effort between teacher and pupil."

Deming makes the distinction between common causes of variation, and special causes. He quotes Brian Joiner who said, "One necessary qualification of anyone in management is to stop asking people to explain ups and downs ... that come from random variation."

Deming is a legendary name in quality management, especially in Japan through his consulting work with Japanese industry from 1950 onward. He died at age 93 before the second edition of this book went to press.

The New Economics by W. Edwards Deming, from start to finish, was quite an easy book to read. It never became so overly technical to the point that it makes the reader just want to give up and grab a different book. Great examples were used to help illustrate, as Dr. Deming put it, "the tyranny of the prevailing style of management". His 14 Points of Management are well defined and straight forward. Dr. Deming also gave a brief description of Shewhart control charts, tampering and variation, along with some excellent examples to aid in further understanding their uses and misuses.

Overall, this is an excellent book to read, especially for those who are in a position of management. When I say management, however, I do not refer simply to individuals dealing with employees at the working floors of industry. Dr. Deming's 14 Points of Management can be used in schools, hospitals, business, industry and countless other disciplines, from teachers to CEOs. Upon reading this book, readers will open their eyes to present practices and hopefully, taking this newly found knowledge, apply it and make a better change for the future.

I was assigned this book for a statistical quality control class. When I found out that I was supposed to read an additional book for the class, I was not too excited. I am not one to enjoy having additional reading pushed on me; however, this book proved to be an exception. I can with all honesty say that this book was a pleasure to read.

First a little about the author. Deming is arguably the greatest visionary in the fields of quality control, process improvement, and management revision. In short, he has a lot of great things to say about corporate America.

Unlike a lot of independent works on corporate America, this book does not get lost in the technical and theoretical aspects of problems and solutions. The New Economics uses simple logic and useful reasoning to make points about the current state of things in United States, and what should be done to improve upon them. Even topics such as the use of control charts or the causes of variation are covered in such a straightforward way, that even a person that has never taken a statistics class in their life can understand it. Now, It is important to note that while this book does take a very simplistic approach to topics that are typically hard to grasp, the book is by no means trivial. The book makes many profound points that are truly eye opening. I found myself on more than one occasion slap my head saying, "Wow! That is so ridiculously obvious! I can't believe I have never thought of that before."... and sometimes, "Wow! That is so obvious! I am seriously disappointed no one in corporate America is acting like this!"

Really, the only bad thing I have to say about this book is that Deming tends to be a bit idealistic when it comes to the worker. He believes that if given favorable circumstances, workers will perform well. I can say from personal experience that I have seen workers that have been given every advantage conceivable, and they still show lack of initiative and capability. Deming on the other hand indicates that pretty much any worker is a good, and that if problems occur, blame should fall on upper management. This is really the only point Deming makes that I do not fully agree with.

So, I am not one to sweet-talk something unless I truly stand behind, and I can say, I truly stand behind this book. There are many profound insights in The New Economics that I will carry with me for the rest of my life. All in all, this book is an inspiring read.

I suggest you buy this book... or at the very least see if your library has a copy and read it!

Topics Covered in The New Economics:
General Views on Corporate America
Current Wasteful Behavior
Setting up a System with a Goal
Theory of Profound Knowledge
The Role of Management
Need for a Cooperative System
The Red Beads Experiment
Using Control Charts
The Funnel Experiment
Understanding Variation

Pros:
Very eye opening insight
Defended with sound logic
Simple explanations
Good examples
Only 230 pages; 10 chapters

Cons:
Idealizes Human Nature
I Didn't Read this Book Sooner

After reading the "New Economics" by W. Edwards Deming I was very surprised. Mr. Deming's made the book very easy to read and understand. In my case it was the examples that really put things in perspective. "The Red Bead Experiment" was an example that was very good at explaining exactly what it was that, we needed to take away from the example, the difference between common cause and special cause variation. Management should be solely responsible for the well being of the production line. Personally, Deming's did a really good job in describing typical work situations that I personally am aware of. I enjoyed the way he broke everything down into its simplest form. You do not have to be an industrial engineer to understand the message he is trying to convey. The message he is trying to convey is "Team Work" because it is only when every person in the group agrees with each other that everyone can come together for one common purpose. He was very specific in the situation that he believed everything and everyone could work together. In his eyes the hierarchy had to be done away with. There was no one person that was better than the next. This one belief that I have always believed in. I appreciate his train of thought and think that if it could be applied to the small stream businesses it would be extremely effective. It sounds like Deming's was a man of the people because he described every person's job just as important as the next. It sounded like he believed in the chain of command. I enjoyed this book thoroughly and would recommend it to those trying to get a more in-depth feel to what common cause variation and special cause variation really means.

Wow. After 25 years in the quality business I am still not ready to claim I completely 'understand' Deming. He was of course, a brilliant statistician and business optimization theorist . . . but he was also a physicist. His famous quip, "Water turns to ice . . . same molecules. . . what happened?" I finally realize, was his way of speaking to the state change that occurs in a phase transition, the same phenonmeon that occurs when organizations cross over to quality. Deming was the real Superman.

also read Superperformance

Dr. Demming introduced in this book a new style of management which he basically covered in his simple 14 points of management using the idea of profound knowledge. It was very interesting the way he approached different scenarios with multiple examples that he encountered first hand through his time in industry, stressing the fact that ranking within a system is completely wrong and should be completely removed. Demming pushes group work and cooperation instead of programs such as incentives and commissions due to the fact that they turn into individual profit centers and ultimately lead to the collapse of the system. His ideas were simple to follow throughout the text and is a great book for people in management positions to read and consider.