DEMING MANAGEMENT AT WORK
Six successful companies that use the quality principles
of the world-famous W. Edwards Deming
by Mary Walton, Putnam, 1991
If W. Edwards Deming brought the quality revolution to America it remains to be seen if the revolt will be victorious or if the fight will be pushed back off our shores. These two books offer a collection of up-to-date American case studies in the application of Demingism. In response to Ms. Walton's request for names of American companies that successfully follow his principles, Deming responded that "unfortunately, (he) know(s) of no such company. One finds here and there some glimmers of light."
Dr. Deming was not personally involved with every case presented in these two books. In fact, the dynamics of his involvement offer much insight into him personally and professionally. His apparent attitude toward those companies that have attempted to go it alone is intriguing, particularly those cases where they have consulted the Japanese directly. What emerges over time is an energy level and commitment to principles which often surfaces as abrasiveness. Dr. Deming's lack of patience, and his often open disdain for American management, show up in the form of a strong ego, not unjustified by the accomplishments and frustrations of 45 years.
Andrea Gabor's The Man Who Discovered Quality begins with an exposition into Deming and his ideas. From his home in Washington, D.C. to Japan and through corporate America, Ms. Gabor joined Dr. Deming as he preached his belief in the power of process management and demonstrated his impatience with managers looking for the quick fix. Consistent in his vision was the need to control variation through the application of statistical and problem solving techniques coupled with the need for a senior management led vision to incorporate quality principles into the fabric of corporate life.
Ms. Gabor traces the Ford Motor Company's exposure to Deming's ideas from early trips to Japan in 1978 to their first formal meeting with him in Detroit in February 1981. The executives who attended that meeting were familiar with past American attempts at Statistical Quality Control (SQC), and were confident that Dr. Deming would be able to show them how to successfully apply these techniques against the Japanese. They believed attempts at Ford had failed because of an inadequate application of techniques, as well as excessive pay and work habit differentials between their own companies and their foreign competitors.
They couldn't have been more wrong. Dr. Deming did discuss the role of statistics and problem solving, but "he didn't want to talk about cars or the reject rates on the production line." Instead he wanted to talk about how people and processes were viewed and managed at Ford. Instead of being assured that all would be saved if they simply got workers to work harder, managers were being told that the problem was theirs. If quality was going to happen, it was management which would undergo the more dramatic change and need to cast off the most baggage.
"Deming has developed a philosophy of quality management that is rooted in the power and pervasiveness of variation and how it affects the process, that delicate interaction of people, machines, materials, and environment." All systems are subject to levels of variability that will eventually lead to a degradation of process and product quality. Variations can be categorized generally as random and systemic, the former describing glitches in any process brought about by correctable mistakes, and the latter describing weaknesses in the system itself that make it incapable of delivering the desired quality levels. Dr. Deming hits management in the face with the fact that systemic variations are the most prevalent and can only be corrected through management commitment and leadership. Even random variations, though correctable, require management commitment of the necessary resources - new tools, training, etc. If quality is going to happen, management needs to change. Consistent across all of the case studies in these two books is that newcomers to the Deming arena often aren't expecting this to be the message, and he hits them with it early, hard, and often.
Deming started his work primarily with statistics, and studied the effects of variation on a broad range of processes. Over time, his work has developed into a quality management blueprint, Deming's Fourteen Points, which tie "together disparate process-oriented management ideas into a single, holistic vision of how companies can anticipate and meet the desires of the customer by fostering a better understanding of 'the process' and by enlisting the help of every employee, division, and supplier in the improvement effort."
The Man Who Discovered Quality offers considerable background (100 pages) on Deming and his ideas before setting out on the six major case studies which comprise the majority of the book. Deming Management At Work does the opposite. Ms. Walton's first chapter, What You Need To Know To Read This Book, is an embarrassingly brief (14 pages) introduction to Dr. Deming and his ideas; including his Fourteen Points, the Plan- Do-Check-Act Cycle, and the seven basic charts useful for measurement analysis and problem solving. She then plunges into her own six case studies. What she seems to presume is that the reader already has a copy of her earlier book, The Deming Management Method (Putnam, 1986), which deals with all of these concerns in detail. Readers less familiar with Dr. Deming will prefer Ms. Gabor's book for the breadth of its introductory background. Readers with at least a minimal background in Dr. Deming's ideas will find that Ms. Walton covers the necessary conceptual material as part of her case study expositions. In fact, this adds strength to the presentation of her cases, each containing the necessary material to stand alone. If readers could be presumed to have the necessary background, Ms. Walton's first chapter could simply be omitted. If not, the introductory material deserved more.
In selecting the subjects for her case studies, Ms. Gabor was strongly influenced by the fact that she was traveling with Dr. Deming. Her focus on the personal side of Dr. Deming's interventions led to a strong bias toward cases directly involving Dr. Deming's inner circle. Ms. Walton found that "because most of the companies in the Deming camp at that time were engaged in manufacturing" a book was needed to support the "service industries, whose leaders wondered whether his methods would work in their businesses."
Notwithstanding these differences in background and subject selection, both books offer a set of very valuable case studies. Their approach varies, but their message is the same, Demingism can work with an appropriate commitment to action and the leadership to see it through.
Ms. Gabor's focus is on Dr. Deming and his personal impact on companies like Ford, Xerox, and General Motors, along with the less known Nashua Corporation, a paper and computer products company nestled in the White Mountains of New Hampshire.
Deming's ideas are brought to the forefront by Ms. Walton's cases in which less traditional yet more varied settings are highlighted. From the Tri-Cities Tennessee Quality First program "seeking to hatch a community-based approach to quality that would have universal application" to the United States Navy seeking cost efficiencies in a global system of naval air depots, the service oriented cases clearly illustrate the applicability of Demingism beyond manufacturing.
The case study most reminiscent of the information systems industry is Walton's discussion of the United States Navy. "In the early 1980's, the future didn't look bright for a Deming- style initiative in the Navy." Early feasibility studies pointed to the job mobility of Navy management as a major inhibitor. "On average, the military shore command and the membership of all the fighting forces change posts every two or three years in a giant game of musical chairs." One could easily substitute I.S. management and project teams in this scenario. Deming touts mobility of management as a 'deadly disease' on the path to quality.
"In addition to mobility, there were other military characteristics that the research psychologists viewed as impediments. The Navy (read: Information Systems) drew action- oriented people - folks who tended to jump from the 'Plan' step to the 'Act' step in the Deming cycle, leaving out the interim 'Do' and 'Check' or study stages." Total Quality Management, DoD style, takes time and commitment. "It was understandable that military (read: I.S.) people would have a problem with that. In the heat of battle (read: project), you didn't form a team to study the appropriate moment to fire a torpedo (read: hold a review, design a test case, plan the next phase, etc.). Like I.S., the Navy did see results in many of its early patch-work efforts. "While praising the team(s) for (their) common-sense approach and participative decision making, the researchers noted that members resisted the use of systematic data collection in favor of using their expertise and relying on day-to-day experiences." The reluctance to gather and analyze data consistently meant that Navy personnel could never translate their successes into benefits and terms which could be understood by management. It took a firm commitment from above to overcome these and other impediments and turn the nation's naval air depots into case studies in Demingism.
The only case study common to both books is Florida Power & Light (FP&L). Both books highlight the need for leadership from the top. The oil crises of the 1970's, the impact in Nuclear Regulatory Commission actions following the Three Mile Island accident in Pennsylvania, and increasing consumer hostility brought on by increasing rates and decreasing service levels signaled the need for change. Walton writes that "then chairman of the board Marshall McDonald was the first FPL (Group, FP&L's parent company,) executive to perceive the need for change and to take action. He realized early on that such change had to be of greater magnitude than in the past." Both books highlight the way a single example can drive home a point.
Ms. Gabor recounts how John Hudiberg, the CEO of FP&L who would guide the company on to the Deming Prize, was impacted by a trip to Japan in September 1985. While visiting a Kansai nuclear plant, Hudiberg inquired as to the plant's scram rate, a scram being the automatic shutdown of the plant as a result of any of the thousands of sensors detecting an abnormality. Hudiberg recalls that FP&L was "having seven per year per plant." With a goal of five per plant-year in 1985 being met, Hudiberg thought "big achievement, right?" Well he "asked how many scrams they'd had by that time in September. They said none. (He) thought there was a translation error." There wasn't. He "asked how many they had the year before. They said two. So they had operated eighteen plant-years with only two scrams." That's about 0.1 scram per plant-year. Hudiberg was impressed, and took that message home to Florida.
Walton recounts that Bud Hunter, a senior vice president at FP&L, "was suspicious of McDonald's efforts to foist a Japanese style quality strategy on the company." McDonald had come to FPL from the oil industry so he was "not really a utility man." Hunter went to Japan to see for himself. "On one Kansai visit, Hunter walked through a room where twenty transformers were sitting forlornly in one corner. He had never seen so few stored in one place." He asked what they were for and learned that they were used to replace the transformers that were burned out in lightening storms. Hunter knew that this "Kansai district was roughly the size of Coral Gables" and that a typical storm there "could take out one hundred transformers in one swipe." He "marveled at how they could get by with just twenty transformers in reserve." He went on to learn that the Kansai installers had improved the installation and grounding procedures for transformers so that fewer burned out. Hunter went home a believer in root-cause prevention, and a supporter of Hudiberg's quality efforts.
Through the FP&L case, Ms. Gabor highlights the strong impact personality can have in any discussion of Demingism. She tells us that "Deming's pride often gets the better of him. He refuses to discuss FP&L, apparently interpreting the company's Japanese course as disloyalty, rather than the logical evolution of his teachings." After spending decades building his own inner circle to which he is fiercely loyal, "he occasionally lashes out at any suggestion that the most accomplished Japanese quality practitioners may today be as knowledgeable as he." An October 1988 visit to Japan by Hudiberg coincided with one by Deming. "Despite repeated phone calls to his hotel room, Deming would not meet with the utility executive."
Ms. Gabor concludes her FP&L case with the ominous observation that "although the company won the Deming Prize, the final verdict on FP&L's quality experiment isn't in yet." McDonald, Hudiberg, and Hunter had all retired by the end of 1989. "The true success of the FP&L experiment will become evident only a few years hence" when it can be seen whether or not the change in leadership has caused a change in direction.
Both books abruptly change gears after presenting their case studies. Gabor points out that "with the exception of the company's adherence to a performance appraisal system based on numerical rankings, FP&L probably comes closer than any other U.S. company to fulfilling Deming's Fourteen Points." Walton tells us "even those companies that in other ways subscribed to Deming principles were wont to improve every process other than how they paid and promoted their employees." Both books devote a near-to-last chapter to Deming's admonition to eliminate performance appraisal systems based on numerical rankings. Companies need to recognize that an employee's success under such a system is inherently unfair since job success, or lack of it, can more easily be tied to factors outside of an employee's control. Likewise, performance appraisal mistakenly defines one's boss as the customer, rather than looking to the next step in the process.
No other point raised by Deming is given such explicit attention by either author. In case after case, both authors point out the impact of Deming's Fourteen Points in company after company. But when it comes to the issue of performance appraisal, none of the companies presented puts Deming's words into practice.
Many companies are cited in both books as making progress in this area, but most aren't companies which were presented as case studies. Presumably these companies aren't doing as well against Deming's other points. Of the companies noted which were covered by case studies, Xerox and GM get credit for attempting to approach the employee ratings area. Both have instituted new programs with fewer rating categories than in the past, but neither has gone to the extreme pass-fail approach advocated by Deming.
It's interesting that both authors were forced to present performance appraisal as add-on topics near the close of their books. Apparently none of the success stories presented represented case studies in employee ratings. What this will mean for companies claiming to be followers of Deming in the 1990's is unclear. Employees react seriously to the performance appraisal and salary policies of their employers. In the short run, the case studies presented in these two books highlight the need for clear and visible senior management commitment to the quality improvement process. But in the long-run, the business-as-usual approach that many of these companies have taken to their personnel policies justifies doubt as to the permanent impact these processes might have.
Where Walton can be criticized for opening her book with too little background, Gabor chooses to end her book too superficially. Her closing chapter, Demingism Enters The 1990's, offers little in terms of a concluding tone. She observes that "the underpinnings of quality management are based on both an obsession with the customer and the scientific observation that all things in life are variable and that long- term improvement comes from controlling and reducing the natural variation that plagues all processes." She closes the book expressing her hope and optimism for quality management in the future.
Walton's closing chapter, Lessons Learned, is more pragmatic. She sums up her cases in a five stage process for attempting to follow on the road to quality. The Decision to Adopt (Stage 1) entails recognizing the problem, and Incubation (Stage 2) requires the personal commitment of senior management to get things started. Planning and Promotion (Stage 3) builds a program and ensures the participation of the entire organization. Education (Stage 4) requires that everyone contributing to the process have the necessary tools, and Never-ending Improvement (Stage 5) means that the process has just begun. The journey never ends.
We can learn a great deal from the experiences of those companies that have chosen earlier than others to follow the guidelines established by Deming. Both The Man Who Discovered Quality and Deming Management At Work offer significant contributions to our knowledge, the former strong in illuminating much of the drama of the process, and the latter strong in translating the experiences into actions which can be taken to join the next wave. Given the timing of these two works and the parallel structure of their contents, the lack of overlap in observation and tone is surprising. Reading both will be time well spent.