Kristinesargsyan's Blog

November 12, 2009

“Deming of America” transcript ( shared by Tom Dulz)

Filed under: Stories for OD/ AI Consultants — by kristinesargsyan @ 12:52 pm

The Deming of America

 The following are W. Edwards Deming’s comments transcribed from the PBS

video “The Deming of America” (funded by Arthur Anderson) which was

recorded in 1990.  Much of the video consists of interviews with the

heads of Ford, General Motors, Xerox, Proctor and Gamble, GE Aero

Engines and also people from the Navy and government.  These portions of

the video are not transcribed.  The interviewer is Priscilla Petty (PP).

The introduction describes Deming’s influence in Japan.

 D:  I did not export American practice.  I took to them new knowledge,

philosophy of management, theory of management, which is optimization of

a system whereby everybody gains.  Everybody gains.  The Japanese man,

executive or otherwise, is never too old or too successful to learn.  He

is eager to learn and to listen.  It is not hard for him to change

because he understands the system, that he is part of a system and the

job is to optimize the system.

 D:  It is only management that breaks out of the system that makes

impact.

PP:  Management that breaks out of the system?  Tell me what you mean.

D:  Optimizes the system, for example.  Instead of doing it the way

we’ve always done it, to do what is best for the whole system.

PP:  Could we talk about optimization?

D:  An orchestra is an example that most people can understand, a

system.  Everybody there is supporting all the other players.  140 piece

orchestra, everybody supports the other 139.  He’s not there to play a

solo.  He’s not to play as loud as he can play to attract attention.

He’s there to support the other 139.  The job of the conductor is to

optimize their talents, their abilities.

 D:  Ever hear of a bank that failed?

PP:  Yes.

D:  Do you think it failed because of mistakes, sluggishness at the

teller’s windows?  Mistakes in calculation of interest?  Mistakes in

bank statements?  Don’t be silly.  All that could go off without blemish

and the bank would fail.  Purely a matter of management.  A manager is a

leader.  Should be.  He understands how he, his work, and the work of

his people fit into the system, for optimization of the system.  That’s

the first job of the leader, to try to find, recognize that all people

are different.  Try to fit each one into what he can do best.  Takes joy

in learning, in helping to improve.  He’s coach and counsel, not judge.

You judge people, you shut them up.  They don’t talk.

PP:  What happens in a system when you ask someone to achieve a result

that’s impossible to achieve?

D:  Everybody suffers.  He’ll make it happen, by destruction of the

company or impairment in some way.  He’ll make it happen.  And we all

lose.  Anybody can accomplish anything if we don’t count the cost.

PP:  When you set up a system that makes the individual, that puts the

individual in an impossible situation, then he’s going to do what he has

to do?

D:  If that’s his job, he’ll make it happen, by fudging figures or by

destroying the company.  Can you blame him?  That’s his job.

PP:  So, you’re saying that the component of the system is really

responsible for the larger whole, for the benefit and good of the larger

whole?

D:  That is a good way to put it.  A component, any group, anybody, is

to be judged by his contribution to the system, not for his individual

profit or gain, in sales or anything else.

 D:  We’ve grown up on short term thinking, short term planning.  Profits

now, high dividends, churning money.  Impossible to advance under such

forces.

D:  Well, people, given a choice, be thankful we do have a choice, they

buy the imported product many times in preference.  And our products do

not sell in other parts of the world.  There are exceptions, great

exceptions.  Aircraft industry has 70 percent of world’s business.

 PP:  I asked Dr. Deming why he felt American workers had not been

turning out quality products.

D:  How could they?  All they ask is a chance to do a good job, to take

pride in their job and be proud of the company.  That’s all they ask

for.

PP:  This worker can’t make that product better unless the system is

changed?

D:  He can only make what he’s asked to do, under the difficulties that

he meets, with poor materials, equipment that doesn’t work, all sorts of

problems.

PP:  Workers in this country have been blamed for a number of years,

saying that they are lazy and that they don’t want to work and that they

don’t care and they’re not producing quality and that they are not doing

it right and that’s why our automobile industry went down and that we

have to change our attitudes as people.  Is there any truth in that at

all?

D:  Not a bit.

PP:  Not a bit?

D:  Not a bit.

PP:  Not a bit?

D:  Absolute nonsense.  We’ll get nowhere as long as people think that.

 PP:  Factory workers always have a question when they hear about

Deming.  They want to know, are you against unions?

D:  Against?  Of course not.

PP:  Good, I’m glad to hear you say that.

D:  Unions are a part of the system, a very important component in the

system.

PP:  Now, what’s been the problem then as people have dealt with unions?

D:  Failed to understand the system, that’s the problem.

PP:  So, we have people pitted against each other, union and management,

rather than saying this is the whole system which must be managed?

D:  Optimization of a system should be the basis for negotiation between

management and labor, between buyer and seller, with suppliers of the

company, between countries.  He who goes into negotiations to defend his

rights is already licked.

PP:  What do you mean?

D:  It should be optimization of the system by which you gain more than

any other way.

PP:  So, if I’m going in, I’m thinking only of my own self interest, I’m

a factory worker and I want a higher wage …

D:  You’re a country, You’re anybody.

PP:  Or I’m a country, or I’m anybody and I’m thinking only of myself

and not thinking of the total system and I’m going to lose?

D:  Defend your rights, you lose.

 PP:  How do the people without power, how do they not be taken advantage

of?  Everybody is not of good will.

D:  Purely a matter of understanding.  He who is in power must

understand the system.  And the best solution is for everybody to win.

Everybody to gain.  No losers.

PP:  It’s so foreign to us.  It is not what we’ve been taught.  It’s not

what we’ve done.

D:  Economists have led us down the wrong road.  They’ve taught us

adversarial competition is a solution.  It is not.  Worrying about share

of market, trying to choke your competitor.  Spend your time that way

instead of working on the product, to develop a better product.

PP:  So what do you do instead of compete for share of market?

D:  Expand the market.  Put out better product.

PP:  It’s a different philosophy.  It’s as if we are saying there is a

finite amount versus an infinite amount here.

D:  I think that’s a good way to put it.  People make the supposition

that the market is a finite amount and the successful companies have

taken the other point of view, that the market is expansible.  By paying

attention to the future needs of customers, they expand the market.

PP:  So you don’t worry so much about being an adversary to your

competitor, you worry about what?  Continual improvement of your own

product and getting something better out there and looking to your own

system to enhance it?

D:  That’s right, that’s right.  (?) you and your competitor.  It’s just

a law  of nature.  He who spends his time worrying about his

competition, worrying about his share of market is already licked.  If

you have any stock in that company, you’d better sell it.  Competition

is part of the system and any competitor who improves his product

improves the market, helps his competitors.  And the worse thing that

can happen to you is to have a lousy competitor.

 D:  Customer doesn’t know what he wants.  He makes a choice.  He does

not see his future needs.  Customer’s expectations are only what you and

your competitors have let him to expect.  He is a rapid learner, but he

does not foresee what he might need.  No customer asked for electric

lights.  No customer asked for photography.  No customer asked for

telephones.

 PP:  How has the prevailing style of management crushed innovation?

D:  By ranking people.  It starts with grading in schools, from toddlers

on up, through the university.  Grade, ranking people, making top people

scarce, only so many A’s allowed.  It is not a game.  In playing tennis,

a beauty contest, horse race, play poker, it’s a game.  Somebody wins.

We knew that before we started.  Perfectly all right.  I have nothing

against it.  But management is serious, education is serious.

 PP:  But we are so used to in this country to ranking people, to being

ranked ourselves and those of us who want to achieve always want to make

sure we rank at the top in whatever system we are in.  It’s just counter

to our usual thinking, and even I get a little scared when I think but

what would happen if you weren’t evaluated or ranked?  How does it

work?  If I’m not going to be ranked will I be rewarded for the results

that I produce?

D:  You want reward?

PP:  Yes.

D:  You want reward?  The reward you want is pride and joy in your

work.  That’s what you want.

PP:  Yes, you’re right, that’s the first thing.

D: There’s nothing more to ask for.

PP:  But I also want money sometimes.

D: Pay is not a motivator.

PP:  Sometimes …

D:  No.

PP:  No?

D:  No.  Pay is not a motivator, sure you have to have enough to live

on, and to live right.  Beyond that, pay is not a motivator.  Remember

Norb Keller’s statement which I think is famous.  On the seventh of

November, 1987, Mr. Norb Keller, of General Motors, at a meeting, stated

that if General Motors were to double the pay of everybody commencing

the first of December, nothing would change.  Performance would be

exactly what it is now.  Ranking doesn’t do any good.  Of two people,

one’ll be worse, one’ll want to be better.  I don’t know what we’ll do

about it.  The question is: is one outside the control limit, or does

the difference mean nothing?  And management must know these things.

There is no excuse.  There is an excuse for ignorance but there is a

penalty for ignorance and we all pay it.

PP:  What is an alternative?  What can they do instead?

D:  To help.  To coach and to counsel, to help and optimize.  Don’t

judge.  We need to develop self esteem, dignity, joy and pride in work

so that people may be innovative and contribute their best to the job.

If we destroy them, they are humiliated.  Ranking them destroys them.

 PP:  The question is: are business leaders really taking the

responsibility which is theirs?  Are they educating themselves that they

need this and don’t admit it to themselves?

D:  They don’t know about it.  How could they admit when they don’t know

about it?  But how could they know?  How could they know there was

anything to learn?  How could they know?  How could they have any

suspicion that there is anything to learn?  How could they?

PP:  Well, I think they should know.

D:  How could they?  How could they?

PP:  They ought to know.

D:  How could they?

 D:  How could they?  Themselves … Profound knowledge comes from the

outside, never from the inside, must come from the outside and only by

invitation.

PP:  When you say that knowledge must come from the outside, what do you

mean?  I don’t quite understand it.

D:  You ever find it inside the company?

PP:  Well, sometimes, some parts.

D:  Have you?

PP:  Some parts.

D:  Have you?

PP:  You’re talking about profound knowledge?

D: Yes.

PP:  Or you’re saying that knowledge.

D:  Yes.

PP:  Profound knowledge?

D:  Yes, profound knowledge, knowledge about a system.

PP:  Why is that?  Why can’t it come from inside the company?  What do

you think is going on?

D:  Everybody is doing his best, with the greatest, the best of

intentions, everybody working hard at doing what is wrong, not guided by

a theory of management.  Reactive behavior, managing by results.  Sure

we want good results.  Manage by results, quality goes down, morale goes

down.  Management has not a theory of management.  They work hard, very

hard, under terrible stress that I could not endure.  Best efforts, hard

work, our ruination.

PP:  And you’re talking about CEO’s and presidents and vice presidents

and all other people who are in charge …

D:  Government people, people in education.

PP:  And we’re missing it somehow, we’re missing the real point?

D:  Pretty obvious.  Deming’s Second Theorem: We’re being ruined by best

efforts and hard work, doing what is wrong.

PP:  What are they missing?

D:  Theory of management.

PP:  So, how can we tell them?  How can we tell them they need to listen

to this?  How can we get the message out?

D:  A physician can do nothing for somebody who does not acknowledge he

needs help.  First step, he must ask for it.

 D:  Our education is failing.

PP:  What are we doing that we should be not doing?

D:  We just don’t educate, people, youngsters.  We grade them but don’t

educate them.  Don’t teach them to think.

 D:  Our worse thing is, failure to understand what learning is.  For

example, experience teaches nothing.  The fact is, there is no

experience to record without theory.  Theory enables us to ask

questions, to learn.  Without theory there is no learning.

PP:  That was a really hard one for me.  When I first met you …

D:  Why should that be hard?

PP:  Well, because that’s not what we’re taught.  We’re taught to look

at an example and say, I see, I’ll do that, that’s the right thing to

do. But …

D:  But that’s their downfall.  People copy examples and they wonder

what’s the trouble.  They look at examples and without theory they learn

nothing.  Theory leads you to questions.

PP:  For a while people thought they had the answers about the problem

of quality and they went through all kinds of things such as quality

circles and a number of other methods which they saw working for the

Japanese.  Why do you think those didn’t last?

D:  That’s all window dressing.  That’s not fundamental.  That’s not

getting at change and the transformation that must take place.  Sure we

have to solve problems.  Certainly stamp out the fire.  Stamp out the

fire and get nowhere.  Stamp out the fires puts us back to where we were

in the first place.  Taking action on the basis of results without

theory of knowledge, without theory of variation, without knowledge

about a system.  Anything goes wrong, do something about it,

overreacting, acting without knowledge, the effect is to make things

worse.  With the best of intentions and best efforts, managing by

results is, in effect, exactly the same, as Dr. Tribus put it, while

driving your automobile, keeping your eye on the rear view mirror, what

would happen?  And that’s what management by results is, keeping your

eye on results.

 PP:  I asked Dr. Deming to show me the medal he received from the

Emperor of Japan for his contribution to their economic recovery after

world war two.

PP:  How did you feel when he gave that to you?

D:  Felt unworthy.

PP:  You felt unworthy?

D:  Yes.

PP:  Why?

D:  It was a matter of luck.

 PP:  I asked about another medal from our president.

D:  Oh, the medal from the President of the United States came 28 years

after the medal from the Emperor of Japan.

 PP:  Are you anxious to get back to work?

D:  No, I’m just desperate, that’s all, absolutely frantic.

 D:  Management’s job is optimization of the whole system.  Decide what

constitutes the system, certainly customers, suppliers, employees,

stockholders and the welfare of employees, their education, their chance

to improve skills and education, their chance to have a little time at

home and not work too hard.  Their chance to learn good management so

they can contribute to their clubs and churches and schools.  Our

schools need it sadly.  Optimization would mean teaching everybody so

they may help other people.  Optimization of the whole system, everybody

gains, no losers.

 

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