Four days with Dr. Deming

Cover image of the book Four Days with Deming
William Latzko and David Saunders, “Four Days with Dr. Deming: A Strategy for Modern Methods of Management,” (1995)
Four Days with Dr. Deming is a light read based on the seminars starting over 70 years ago, given to leaders and shareholders of American and Japanese companies. The book covers not only the material from the seminars but also gives an impression of the experience Dr. Deming provided. It’s no surprise that Deming’s message was not readily accepted and promoted since it was mostly a message the majority of management was not willing to hear - that they are doing things backwards. To this day, many of his messages have still not been embraced by management across the world. For example, compare these two titles:

“Why Performance Bonuses and Merit Raises Don’t Work”

“Drop the Annual Merit Review”

The first was from in 2016. The second was something Deming was teaching from 1950-1993.

Photo of Dr. Deming in Japan - 1950
Deming in Tokyo, 1950 by Unknown - Public Domain via WikiMedia Commons
Dr. W. Edwards Deming is responsible for propelling Japan into its postwar economic boom. Beginning in 1950 he was repeatedly invited to lecture to large numbers of Japanese engineers and businessman on his method of management. His teachings were so effective that in 1951 they established the Deming prize for quality. In 1960 he was given the “Second Order Metal of the Sacred Treasure” by the Emperor of Japan, but it was not until 1980 that a Deming award for Quality was established in the United States. The principles behind the Deming management method, although formulated 70 years ago, remain effective in today’s environment.

Deming’s time was before the information age, when manufacturing was the biggest mover in our economy. It was a time when America was on top because of its extensive natural resources, and also because it was one of the only countries untouched by World War II. We as Americans took our success as being due to higher quality or a better industrial base, but the fact was that we were one of the only countries with an intact industrial base. When you are the only provider in the market, quality is not your primary concern.

Postwar Japan, however, was suffering greatly in its attempts to rebuild it’s industrial base. A lack of natural resources and poor quality from its processes required a change in thinking. In 1950 they invited Dr. Deming to Japan to teach them about statistical process control. By widely accepting and adopting Deming’s principles, Japan rapidly became known for quality products that innovated as customer needs changed. In 1980, as Japan’s quality continue to skyrocket, Deming was interviewed by NBC on a program called “If Japan can, why can’t we?”View on YouTube . From that point on, Deming was a highly sought after speaker in the United States. Sadly, only a few companies have really fully adopted his methods.

Doing your best is not good enough

Part of Deming’s views on management reflected the idea that many mangers view their role to simply act. By following this instinct we often times cause worse problems. In his book “Out of the Crisis” Deming explains the concept in more detail:

“Best efforts are essential. Unfortunately, best efforts, people charging this way and that way without guidance of principles, can do a lot of damage. Think of the chaos that would come if everyone did his best, not knowing what to do.”Page 75

Leaders will often follow a gut feeling or first reaction without truly understanding the root causes of the issue. If a factory has a quality issue on one particular line on a floor, a manager may take a direction which puts pressure on individuals to “try harder” - or worse yet - instill a sense of fear in those involved. This may be something that has worked in the past, or it may be the leaders perception based on historical issues with the employees involved. However, if leaders take the time to understand the process and the root causes, they may find that a particular machine on that line is malfunctioning, or a change in suppliers is causing the defects.

What you can do: It is human nature to build constructs in our mind that help us to conceptualize and understand the world around us. Make a habit out of questioning your mental constructs and ensure that we set the right direction. Take the time to gather data, consider alternate viewpoints, and especially as it comes to people, give them the benefit of the doubt. Relationships are much harder to fix than a process.

Drop the Annual Merit Review

Almost all large companies have some form of annual merit review. This typically manifests as once a year a manager and an employee meet to discuss the behavior of the employee over the previous year, and use that view to adjust salary. Traditionally the discussions of these reviews are forgotten, and the following year the cycle begins again. According to Deming this not only has no positive effect on the growth of the employee, but actually has a negative one.

“Appraisals create fear, reduce cooperation between workers and managers, and focus on visible results only. Frequently managers use appraisals as a salary administration tool. They use them to reward and punish. Appraisals are subjective. They commonly do not reflect the actual performance or potential of the appraised person. Appraisals are a lie.”Page 112

The way merit reviews are used in companies simply creates a point of contention once a year between employer and employee. It becomes a negotiation for how large of a raise the employee receives, which is accomplished by arguing back and forth on a numerical value assigned to an arbitrary category. It has nothing to do with growth or creating lasting change in an employee.

What you can do: Unfortunately if you are an employee in a major corporation, you have little choice but to participate in this annual activity. However if you are a leader, you can take some steps over the course of the year, which makes this part of the process painless. For example, you can use a series of one-on-one meetings with your employees over the year to identify places for improvement and continually work on them. At the end of the year the culmination of those discussions becomes the annual review. If you are in a place that you can set the direction for your company, seriously consider abolishing the annual merit review.

The managers job is to drive out fear so that control systems work properly

A modern example of the control system is the Metrics and Key Performance Indicators many companies use to understand their environment. Often metrics are used to judge the performance of actual employees, for example, a defect count or the number of quotes returned. Deming understood that by tying a consequence to a metric you would immediately render the collected data suspect.

“The rumor had it that if the percentage defect in the final audit ever reached 10 percent the manager would ‘sweep the place out’. The inspector believed the rumor. Consequently she never reported more than 22 defects out of her daily sample of 225. She thought she was saving 300 jobs.” Page 171

The consequence of the rumor alone in this case can be disastrous. In this case, the product has a higher rate of defects than management realizes, and this poor quality is being shipped to the customers. Customers may switch to a higher quality product, the expense associated with returns may be much higher than it needs to be, not to mention this may indicate a very fear oriented environment.

In today’s information economy we still see this messing with companies. If you show a team that each time someone reports a bug, then something bad happens to them. Very rapidly your best measure of software quality will become a fictional number. As leaders we can take this information and review how we use metrics in our industries, how it is viewed by our teams, and study our reactions when the number shown to us makes us sad.

What you can do: Re-evaluate the perception of how you utilize metrics. It is enough to think about how we as leaders use them, but more important is how the employees view how we use them, and then take actions to correct those views. By creating metrics that both leader and employee see as useful, you will have good actionable metrics.

Reduce emphasis on short term gains

“Heavy pressure comes from Wall Street for short-term, quarter-by-quarter gains. These gains ignore variation, and each quarter they must go up. So managers rely on creative accounting, mergers, acquisitions, tax schemes, foreign currency swaps, and all sorts of finagling to boost the short-term profit. This disease, unchecked, we’ll ruin our economy”.Page 121. Deming did not take on reforming Wall Street in his book, but this problem has been around since his time.

The implications of this focus can be far-reaching. One of the more common ways to raise a stock price short-term is to reduce your workforce. When you reduce your work force you lose all of the knowledge those people have. You also cause a great drop in efficiency has departments known to rework their processes, rebalance their areas, etc. Perhaps the most dangerous aspect of this is the loss of employee morale. Once employees feel that their jobs are in jeopardy, you will begin to look elsewhere, they will not to be happy

What you can do: Depending on where you are in your corporate structure, there may not be much you can do to address the pressures of the stock market. As a leader in your area, there are things you can do to minimize the impact of this unrealistic expectation. You need to plan for this in a way that impacts your employees the least.

The Red Bead Experiment

One of the more widely known presentations Dr. Deming would give was the red bead experiment. This demonstration was designed to show that management needs to have a profound knowledge of the work process, and that problems coming out of a process should not be addressed at the employee themselves. In short he theorized that if you have an employee follow a strict process, and the inputs to that process are bad, it would not be the fault of the employee if quality became a problem. I’ve also heard this phrase that has garbage in, garbage out.

What you can do: As leaders and managers we need to make sure the root cause of a problem is understood before enacting changes. If for example we have a team of software developers, and that team begins producing software with a higher defect count than before. It is not enough for us to simply yell at the development team to produce higher quality products, when the real problem is the requirements being given to team are incomplete or misleading. Not only do we need to fully understand the root cause of the problem, but it also benefits us to develop our methodologies and processes in a way that allow issues to be dealt with by those doing the work. If the software developers mentioned above have a process that insist they accept the requirements and processing them they will not be able to resolve the problem. If they have a process that allows them to inspect and reject the requirements, these problems can be avoided.

In closing

In our search to find a better ways to work it can be easy to get caught up in enthusiasm around the latest best seller. It is easy to assume that ideas from 1950 would not be relevant in today’s society and that we are just so much smarter these days. By reading some of the old masters, we find that not only are we not much smarter, but we are simply rediscovering what they taught all those years ago.

This book is a fantastic overview to the management system Dr. Deming layed out for businesses around the world, and is highly relevant to us today.

Composed on December 10, 2017

Bill is a voracious learner who believes every process or methodology has something worth stealing. Over three decades of IT experience, and his own Fortune 100 development department, provide the confidence to experiment and push the boundaries of how we think about development, developers, and methodologies. The mantra is to improve even a little every day, but have the five year vision in mind. Learn more about Bill by clicking here.

Four days with Dr. Deming - December 10, 2017 - William B. Chmura