Out of the Crisis

Dr. Deming best summarizes the purpose of the book: "This book teaches the transformation that is required for survival, a transformation that can only be accomplished by man. A company can not buy its way into quality - it must be led into quality by top management. A theory of management now exists. Never again may anyone say that there is nothing new in management to teach."

He then proceeds with outlining and subsequently detailing his "14 points for management". These fourteen points, he argues, form the basis of the required transformation of the American industry:

"

1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs.

2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.

3. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place.

4. End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust.

5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.

6. Institute training on the job.

7. Institute leadership. The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers.

8. Drive out fear, so that everyone may work effectively for the company.

9. Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service.

10. Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.

11a. Eliminate work standards (quotas) on the factory floor. Substitute leadership.

11b. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.

12a. Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.

12b. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, inter alia, abolishment of the annual or merit rating of management by objective.

13. Institute a vigorous program of education and self-improvement.

14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody's job.

"

While the book may seem dry at points, particularly if being read from cover to cover, it encompasses numerous gems in management. Particularly as it relates to the overall management of and leadership in quality and its importance to re-gain competitive edge.

Below are key excerpts from the book, that I found particularly insightful:

1- "This increase in production led to a new goal. The new goal will create questions and resentment among production workers. Their first thought is that the management is never satisfied. Whatever we do, they ask for more. Here are the fruits of exhortations: 1) Failure to accomplish the goal 2) Increase in variability 3) Increase in proportion defective 4) Increase in costs 5) Demoralization of the work force 6) Disrespect for the management"

2- "The job of management is to replace work standards by knowledgeable and intelligent leadership...Wherever work standards have been thrown out and replaced by leadership, quality and productivity have gone up substantially, and people are happier on the job."

3- "Incidentally, computation of savings from use of a gadget (automation or robotic machinery) ought to take account of total cost, as an economist would define it. In my experience, people are seldom able to come through with figures on total cost."

4- "Quality must be measured by the interaction between three participants: (1) the product itself; (2) the user and how he uses the product, how he installs it, how he takes care of it, what he was led to expect; 3) instructions for use, training of customer and training of repairman, service provided for repairs, availability of parts. The top vertex of the triangle does not by itself determine quality."

5- "There are two types of quality in any system, whether it be banking or manufacturing. The first is quality of design. These are the specific programs and procedures that promise to produce a saleable service or product: in other words, what the customer requires. The second type is quality of production, achievement of results with the quality promised. Quality control works both with the product and with the design of the product. And it is at this point that quality control begins to differ from the traditional system. To find the mistake is not enough. It is necessary to find the cause behind the mistake, and to build a system that minimizes future mistakes."

6- "...Good agreement between independent results of two men would only mean they have a system. It would not mean they are both right. There is no right answer except by methods agreed upon by experts."

7- "Figures on accidents do nothing to reduce the frequency of accidents. The first step in reduction of the frequency of accidents is to determine whether the cause of an accident belongs to the system or to some specific person or set of conditions. Statistical methods provide the only of analysis to serve as a guide to the understanding of accidents and to their reduction."

My employer, a Fortune 100 financial services company, has been overhauling its management strategy. One of the elements that they have been teaching us is the "PDAC Circle" (Plan/Do/Check/Adjust) , which they also call the "Deming Circle". A little googling found this book, which I decided to read to see just where all these techniques they were teaching us came from. He goes into that in depth, and more, with references. It's very helpful to be able to associate the training I get at work with the ideas and case studies that Deming presents.

What I wasn't expecting is that this is a really good read. Deming writes extremely well, he knows his stuff, and he has a vast wealth of experience to draw from. I have a sense that at this point in his life he was a bit angry or frustrated that American industry was still riding the path to ruin even after he had shown in Japan that his methods work.

Deming gets right to the heart of any effort to get things done: "It is not necessary to change. Survival is not mandatory."

"It is not enough to do your best; you must know what to do, and then do your best."

"If you can't describe what you are doing as a process, you don't know what you're doing."

"In 1945, the world was in a shambles. American companies had no competition. So nobody really thought much about quality. Why should they? The world bought everything America produced. It was a prescription for disaster."

Written in 1983, as American industry was failing in the world economy, this is his analysis of the fundamental problems, and their solutions. He has called it the Theory of Profound Knowledge, a title that seems pretentious until you begin to explore it. The proof of his Theory is the incredible recovery of the Japanese economy, led by W. Edwards Deming and his disciples who became giants in Japanese industries, especially automobile manufacturers. The phrase "Made in Japan" went from meaning poor quality to meaning the opposite, as evidenced by Toyota, Honda, Nikon, and a host of other major name brands.
This book takes those lessons and applies them to American products and services as practiced at the time it was written. But the Theory, and the 14 Points that elaborate it, apply to any product or service, including non-profit agencies and government, at any time. Those who follow his principles in practice will be much more likely to succeed than their competitors who do not.
No matter what you do, or where you work, understanding Dr. Deming's principles will help you get it done better.