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The value of quality: How one man keeps changing the way we work

W. Edward Demings' methods transformed the ideologies of many global corporations, including Boeing and Ford. King County is using his principles, too.
The Deming Prize is awarded each year in Japan.

The Deming Prize is awarded each year in Japan. Photo: W. Edwards Demings Institute

W. Edwards Deming

W. Edwards Deming Photo: W. Edwards Demings Institute

Fred Jarrett

Fred Jarrett Photo: King County

In Japan, every year top companies compete for the most prestigious award for quality of product and service. Toyota, Nissan and Fuji Film are among the past winners. Perhaps surprisingly, this coveted award is named in honor of an American: W. Edwards Deming. He is a hero in Japan. Out of the ashes of Word War II, Deming taught a broken and impoverished Japan that by pursuing quality they would become an economic powerhouse.

Deming also helped save the American auto industry from collapse by teaching Ford that "Quality is Job #1."

Here at home, Boeing is one of Deming's many U.S. beneficiaries. Deputy King County Executive Fred Jarrett is pioneering the application of Deming’s approach to government by improving quality of service in the face of reduced revenues. Seattle’s Group Health is also in the vanguard and Seattle’s school reformers might polish the apple with some of Deming’s insights.

W. Edwards Deming was a systems thinker; someone who saw both the forest and the trees. His focus was on the system of work within organizations. How do we work? What is the aim of that work? And how can there be continuous improvement through valuing people, enriching collaboration, breaking down siloes and emphasizing long-term quality of product and service? Deming’s approach continues to hold tremendous potential for how Americans can restore prosperity through a renewed vision of work.

Deming’s story is a truly amazing tale. Born in 1900 in Sioux City Iowa, Deming went on to earn his Ph.D. from Yale University to become a distinguished expert in ‘quality control’ and statistical methods. During WWII, Deming was part of a crucial effort to train military factory inspectors in the new quality methods. With these methods vastly reducing waste and defects, America’s armament manufacturing outpaced the estimates of Japan’s military high command by a factor of 8, and was critical to the Allied victory.

Yet after the war, the managers of American industry turned deaf ears on Deming’s new methods. Rosie the Riveter went back to the kitchen and, with her, retreated the new methods. America was triumphant, and the only industrial power to survive the war intact so anything American factories produced found a buyer. American business leadership thought that this success proved the efficacy of their management approach. They were wrong: There was simply no competition.

Deming received a different reception in devastated Japan in the early 1950s. His self-effacing courtesy and genius earned the deep respect of the Japanese. Deming told them that despite their pre-war reputation for shoddy merchandise, Japan would be an industrial giant if they focused on quality through a system of continuous improvement. Quality drives down costs because it reduces waste while capturing market share due to customer satisfaction. Toyota was one of the companies to take Deming’s message very much to heart.

Back in America, Deming was like a Biblical Jeremiah trying to warn his country about a looming rude awakening — and being ignored. Japan, Germany and new industrializing nations began to rebuild after the war using new methods. There was now growing competition. In 1975, American entered into a trade deficit from which it has never recovered. The ‘producer for the world’ had now become a consumer dump for the better quality imports from other nations.

With industrial production shrinking, the great recession of the early 1980s hit with gale force. As America’s industrial base began to unravel, countless workers were thrown out of work. Industry after industry came under assault — some collapsed entirely. In his book "The Reckoning," Pulitzer prize winning writer David Halberstam told a fascinating if disquieting tale of this period through the lens of the auto industry and the cost America paid by Detroit's failure to change its organizational systems of work.

By the 1970s, Detroit had grown arrogant and was no longer run by men gifted in making cars, but by finance and marketing experts. GM was King and producing crappy cars. When the energy crisis hit in the late 1970s, quality, affordable Japanese compact cars filled the void left by Detroit’s gas guzzling leviathans. Companies like Toyota were constantly innovating. Unlike GM that would use marketing and sales to ram products down a consumer’s throat, Toyota used its marketing expertise and consumer relationships to find out how to improve design and meet emerging needs. 

In 1980, NBC aired a prime time special called “If Japan can do it, why can’t we?” The 80-year old Deming was introduced at the tail end of the program. His phone never stopped ringing afterwards. From that time until his death at 93, Deming worked grueling 6-day weeks putting on his famous seminars, teaching at Columbia University and NYU and consulting with American CEOs. Maybe it was possible to become a prophet in one’s own country if you only managed to live long enough!

Ford was in dire straits and its visionary CEO Donald Petersen called on Deming for help. This was fortuitous because Deming realized that organizational transformation was only possible with buy-in at the top. With Deming’s guidance, Petersen instituted a new culture at Ford that fostered deep collaboration at all levels of the company. When Petersen retired from Ford in 1990, he wrote a letter to Deming that said, “You have had a major impact on my life and thinking.”

Ford went on to produce the first top selling, high-quality American car in a generation: the Ford Taurus. Ford did not require a bailout during the recent economic crisis and it remains an American Company. When it had run into troubles shortly before the Great Recession, Ford had recruited Boeing's Alan Mulally, a disciple of Deming's management thinking, who quickly got the  company back on track. Ford had come full-circle, returning from the brink of ruin to once again become a successful global competitor.

When Dow Constantine was elected to King County Executive in 2009, county government faced huge financial challenges due to the onslaught of the Great Recession. Like Petersen at Ford, Constantine wanted to transform his organization and not gut it. He wisely brought Fred Jarrett on board as his deputy executive to implement a new approach to government based on Deming’s principles.

Jarrett had worked at Boeing for over 30 years on improving financial and manufacturing systems before becoming deputy executive. While at Boeing, he had also served in the Legislature and as mayor of Mercer Island. As mayor, Jarrett experimented with Deming’s approach in the public sector. As a result, the city reduced its budget by 20 percent while improving and increasing services. For example, through process improvement, the city’s permitting team slashed the time for approving most re-model permits from 90 days to only three days.

Local governments are increasingly finding themselves without adequate funding to provide, let alone maintain basic services. Rapidly deteriorating infrastructure such as the I-5 Skagit River Bridge and the old South Park Bridge are not isolated warning signals. In this environment, Jarrett advocates a paradigm shift in thinking that focuses on products delivered and measurable policy outcomes achieved. King County's 2015-16 budget will be the first product- or outcome-based budget rather than the typical spending/program-based budget.

King County’s IT Department recently received an award from GovTech for its shift to managing products and services rather than spending. For example, computer work-stations have been standardized so that all components of the work-stations (computers, software, networks, servers, etc.) can be optimized for cost and quality. Standardization on a single, limited set of components reduced variability for support staff, thereby cutting cost and improving the quality of the IT experience.

Acknowledging the impact of Deming on his work, Jarrett comments: “Deming’s influence lives on in any team or organization seeking to continuously improve. Two decades after his passing, his insights remain fresh, relevant and, all too often, astonishing to those new to his work.”

In Deming’s classic book "Out of the Crisis." he outlines a transformation of American organizational structure based on his 14 points and 7 deadly diseases. Deming’s critique of American corporate leadership is more relevant now than ever. He excoriated the focus on short-term profits over long-term aims and success (deadly disease #2). Quality must be built into the processes of work and not checked at the back end (point #3). Eliminate slogans and exhortations because most problems are system generated and lie beyond the power of the workforce to change (point #10). Stop managing by use of visible figures only, many important figures are unknown and unknowable such as the multiplier effect of a dissatisfied customer (deadly disease #5).

There is a deep conviction in Deming’s work in the value of the individual worker, the necessity for pride in work and the profound synergy of collaboration and shared problem solving. Deming emphasized robust training (point #6), the removal of performance ratings (deadly disease #3); and the creation of a culture of collaboration (point #9) by driving out fear (point #8).

Deming is about making the pie larger and better. In essence, it’s really about working smarter. Deming realized the tragedy of amped-up efforts in a poorly designed system. Running faster down the wrong path or climbing higher on the wrong ladder will only make matters worse. Deming said that without a correct understanding of the overall system, “we are being ruined by best efforts.”

America faces enormous challenges. Our organizations, both private and public, are often captive to old mental models and worn-out paradigms of work. But there is also great potential. Deming wrote, “With a storehouse of skills and knowledge [in its people] ... the United States may be today the most underdeveloped nation in the world.”

Deming’s work continues to be a major paradigm shift from the old industrial model pioneered by the American theorist Frederick Taylor in the 19th century. Taylorism, emphasizing management's supervision of workers and enforcement of its judgments, is still embedded in the management of many of American businesses, government agencies and schools and even in the very efforts to reform them. As Konosuke Matsushita, Founder of Matsushita Electronics said, “We will win, and you will lose. You cannot do anything about it because your failure is an internal disease. Your companies are based on Taylor’s principles. Worse, your heads are Taylorized, too.”

Although Deming was embraced in the midst of the storm in the 1980s, he has once again faded out of public awareness. Fortunately, the seeds of his work can still be found around the country and in Washington State.  Perhaps, the Puget Sound region can become the center of a new Deming Renaissance.

Michael Godfried has degrees in architecture and structural engineering from the University of Pennsylvania and the University of Washington. He was co-founder of Save Our Sanctuary, which helped lead the successful grassroots effort to preserve the historic First United Methodist Church in downtown Seattle. He works in an architecture firm specializing in sustainable urban infill housing.


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Comments:

Posted Fri, Jul 5, 9:03 a.m. Inappropriate


1 of 3

Jarrett advocates a paradigm shift in thinking that focuses on products delivered and measurable policy outcomes achieved. King County's 2015-16 budget will be the first product- or outcome-based budget rather than the typical spending/program-based budget.

That is the antithesis of the focus of the political appointees controlling Sound Transit’s board. The legal policies they establish via their monthly resolutions are divorced entirely from any “products delivered” metrics or any “outcomes achieved” benchmarks.

[Deming] excoriated the focus on short-term profits over long-term aims and success (deadly disease #2).

Sound Transit’s actions show it is all about maximizing taxing to benefit the entity and its favored financial beneficiaries. That is its paramount short- and long-term goal. Indeed, the boardmembers never even attempt to quantify in any way “aims and success” benchmarks or goals of the bus and train systems it would build and operate.

The number one goal of the unaccountable political appointees controlling Sound Transit’s board is maximizing regressive tax revenue streams. The most recent tax imposition law Sound Transit's board enacted was on September, 10 2009 -- nearly a year after the 2008 ballot measure was enacted. That new local law contained an irrevocable pledge to confiscate sales tax throughout the district at or near a .9% rate through 2039. This new legislation was known as Resolution 2009-16.

The legal policy created for Sound Transit that day would result in that municipality confiscating about $22 billion of regressive sales tax from this region, merely as security for a $300 million bond.

Maximizing short-term profits was ensured by that board resolution. The ballot measure approved the year before did not require the boardmembers to enact ANY local law imposing ANY local tax. Moreover, absolutely nothing in that 2008 ballot measure even suggested they would pass an ordinance requiring that municipality to confiscate $22 billion of regressive sales tax over the next thirty years merely as security for a $300 million bond. That massive level of taxing was not conditioned on benchmarks tied to “products delivered” metrics or “outcomes achieved”. It certainly wasn’t required by either budgeted spending needs or reasonable anticipated capital and operations costs.

crossrip

Posted Fri, Jul 5, 9:04 a.m. Inappropriate


2 of 3

The disconnects between Deming’s principles and Sound Transit’s management practices could not be more stark.

Quality must be built into the processes of work and not checked at the back end (point #3).

Sound Transit’s board has approved billions of dollars worth of contracts without considering the “quality of the processes” the contractor would employ for the work. The management of Sound Transit depends entirely on plans to verify at the back end whether the work complies with what the contract called for.

Eliminate slogans and exhortations because most problems are system generated and lie beyond the power of the workforce to change (point #10).

“Ride the Wave!”

Stop managing by use of visible figures only, many important figures are unknown and unknowable such as the multiplier effect of a dissatisfied customer (deadly disease #5).

For the most part, Sound Transit’s board and staff lack the ability to “manage” that municipality to achieve a satisfied public. That is because independent third-parties have been contracted to interact with the public in its name. Those entities include Metro and Amtrak employees that operate the trains and buses, prime- and sub-contractors responsible for capital projects, outside lawyers conducting the thousands of private property acquisitions under threat of condemnation, the King County Sheriff’s Office and Securitas that enforce its regulations, the retail sellers and DOL license providers responsible for collecting the taxes, etc. Sound Transit’s board and staff are incapable of “managing” what the public experiences of that municipality’s governmental powers, with the exception of route service.

crossrip

Posted Fri, Jul 5, 9:05 a.m. Inappropriate


3 of 3

Deming emphasized robust training (point #6), the removal of performance ratings (deadly disease #3); and the creation of a culture of collaboration (point #9) by driving out fear (point #8).

The determinations by the three county executives about which individuals they select to control Sound Transit’s governing board do not depend in the slightest on training, or any expectations the individual will perform in a way that benefits the public. Indeed, that hidden and self-referential selection process ensures the appointment of individuals who will foster a “fearless” culture of collaboration to benefit only the entity and its current financial beneficiaries at the expense of the public.

It should be noted that to the extent Fred Jarrett now espouses Deming’s work it is a conversion that happened late in his life. Jarrett found that religion only recently.

Jarrett was head of the Metro Transit Committee from the late 1980’s until Nickels replaced him in 1992. In that position he had been responsible for overseeing the committee that made the recommendations that resulted in the birth of Sound Transit. You newcomers can gather a few salient facts about what went on then from the florid writings of Walt Crowley Metro paid him to produce:

http://your.kingcounty.gov/dnrp/library/1993/mr7326-01/pt7.pdf (see page 126 for the reference to Jarrett).

Unfortunately, back then Jarrett either was ignorant of Deming’s work or he wasn’t able to convince the Metro Transit Committee to incorporate any aspect of it when the recommendation was made in 1992 to proceed with the regional transit authority enabling legislation now codified as Ch. 81.112 RCW.

crossrip

Posted Fri, Jul 5, 10:39 a.m. Inappropriate

Crosscut - You obviously have something against Sound Transit - what set off your rant? It's completely off the point of the article.
I agree their management isn't good and they have a lot to learn friom Deming, but what they are doing, trying to provide good and rapid transit, is absolutly critical to our region.

Bye the way, what's with your comment in you rant p. 2: "Those entities include Metro and Amtrak employees that operate the trains and buses,prime- and sub-contractors responsible for capital projects ..."? Sound Transit has absolutely nothing to do with Amtrak and Metro. And all companies and all governements rely to a large degree on outsourcing... especially using contractors for construction.

Instead of just bitching like a harpie, tell us your suggestions.
How would you propose good rapid transit be created and maintained?

elbegewa

Posted Fri, Jul 5, 11:43 a.m. Inappropriate

My comments relate directly to this piece. Jarrett may be influencing what happens at King County by "channeling" Deming's management principles, but those management precepts haven't come close to penetrating the Sound Transit silo. To the extent Constantine bought off on the kinds of management principles Deming espouses he has not sought to implement them at Sound Transit where he is a legislator with the power and authority to change how that municipality is run.

I agree their management isn't good and they have a lot to learn friom [sic] Deming, but what they are doing, trying to provide good and rapid transit, is absolutly [sic] critical to our region.

You are wrong about that. If you truly believe it, and aren't just piping up with what you know are empty platitudes, then try doing here what Deming would advise. This is something Sound Transit's management never attempts. Try justifying, in light of the regressive tax costs staff indicated the board should impose on the public in connection with ST2, the "products [Sound Transit] should deliver" and what "measurable policy outcomes [need to be] achieved" for people here via those products and services.

What is it about those sharp contrasts you fail to grasp? There's a huge disconnect between what Deming espouses in terms of good management practices and how Sound Transit's unaccountable board is managing that municipality.

Sound Transit has absolutely nothing to do with Amtrak and Metro

Sound Transit contracts out to Amtrak responsibilities various operations services for Sounder trains. Did you know that just one of the contracts Sound Transit has with Amtrak for services now stands at the $100 million mark?

Let’s see what you know about the entities actually providing the Sounder service. Try describing the contracts Sound Transit has with BNSF for rail corridor and facilities use, train operations, track and signal upgrades, and financing security purposes (yes, there’s an outstanding BNSF bond the board authorized). Want to try estimating how much Sound Transit’s contracts with BNSF have cost it? Good luck with that. I'd guess the number at this point is closer to $1 billion than $750 million. What's your number?

All the King County bus operations branded with Sound Transit colors are operated by Metro employees. Sound Transit pays something like $60 million per year to Metro to operate buses in King County and millions more to other county accounts annually for various light rail facilities and operations costs. Again, how could you not know that?

Instead of just bitching like a harpie, tell us your suggestions.
How would you propose good rapid transit be created and maintained?

Oh, I get it -- you are an internet tough-guy, and you like calling people names.

For starters, the right way to finance transit is unlike what goes on up in this neck of the woods. The right way to finance transit capital and operating costs is the way the peers do it: little or no regressive taxing is used, little or no new local long-term bonds are used, existing revenue sources are tapped, and federal grants pay for the bulk of the capital costs of rail. A modest tax on the primary beneficiaries of transit (employers) also should be employed, as opposed to what is done here -- we've got the heaviest sales taxes and car tab taxes for transit in the country. Nobody finances bus and train systems like Sound Transit. The financing plans employed by TriMet and in the Twin Cities are reasonable, appropriate, and effective. They make transit dirt cheap for the people in those metro regions. Are you completely ignorant about how the peers finance transit? Sure seems that way from what you post . . ..

crossrip

Posted Sun, Jul 7, 2:11 p.m. Inappropriate

*Sigh* Looks like Crossrip is off his meds again... : P

orino

Posted Mon, Jul 8, 11:21 a.m. Inappropriate

It takes "meds" for someone to think Sound Transit is managed well, and justified in light of the tax costs? Which ones? Heavy doses of Chlorpromazine and Quaaludes?

I thought all the Sound Transit supporters were clean, albeit easily misled and completely ignorant about how bus and train services providers are structured and financed everywhere else in the US.

crossrip

Posted Mon, Jul 8, 11 a.m. Inappropriate

elbegewa, a large part of what I think crossrip is irritated about is the fact that none of our bureaucratic entities are actually working appropriately. None.

Posted Mon, Jul 8, 11:31 a.m. Inappropriate

a large part of what I think crossrip is irritated about is the fact that none of our bureaucratic entities are actually working appropriately.

Nope. Sound Transit is special. It was designed from the get-go as an efficient tax-harvesting machine to enrich some connected entities. Note how nobody's trying to do what Deming says should be done: nobody's willing even to try justifying, in light of the regressive tax costs staff indicated the board should impose on the public in connection with ST2, the "products [Sound Transit] should deliver" and what "measurable policy outcomes [need to be] achieved" for people here via those products and services.

It isn't just that Sound Transit fails Deming's tests for good management. There isn't anyone now who seriously believes the proposed rail infrastructure would be anywhere close to justified in light of the abusive financing plan that started to be developed in 2009. Even the government heads around here aren't willing to champion it -- that's left to a series of screen names in comment threads who spout inane statements like "The agency is critical for our region's future." Then when you ask what the hell that is supposed to mean, they run away with their tails between their legs.

crossrip

Posted Fri, Jul 5, 10:40 a.m. Inappropriate

oops, meant crossrip

elbegewa

Posted Fri, Jul 5, 1:14 p.m. Inappropriate

Getting back to the example of King County government and the question of whether it is now paying more than lip service to the hallowed Deming scriptural injunctions, my view would be that very little has been accomplished. King County government is essentially a collection of largely autonomous feudal fiefdoms. Each department operates in isolation from the others, unencumbered by a central vision or plan. Each unit jealously defends its prerogatives.

No meaningful systemic change can occur until all the quasi-independent county departments are brought under effective executive control and harnessed to pull together in the same direction. And even if he actually understood the problem and wanted to fix it, I'm skeptical that Dow Constantine has the political muscle to rein in these disparate entrenched forces.

Within King County's land use bureaucracy specifically, the last five years have been utterly bleak. In the 90s a building boom and the newly enacted Growth Management Act combined to produce a vastly complex regulatory regime. Then the bottom fell out of the real estate market while the GMA had impelled the urban areas of the county to either incorporate or annex to existing cities. So King County found itself saddled with a hugely bloated and largely unnecessary administrative structure, both in terms of excessive personnel and regulatory overkill.

The response of the Constantine team to this crisis was driven purely by the budgetary agenda. An outsider was brought in to do the hatchet work. The land use department staff was slashed by about three-quarters and forced to relocate from Renton to Snoqualmie in the middle of the chaos in order to save rent money. Young, engaged workers were laid off while the older, more expensive burn-outs were retained and reassigned to unfamiliar tasks. Morale plummeted. The quality of staff work went from poor to atrocious. Does this sound like Deming's principles at work? I don't think so.

An intelligent response to the challenge would have started with the analytical insight that the land use regulatory and permitting process needed to be greatly simplified -- that the county's response to the GMA and earlier development booms had resulted in a process that was far too complicated and unwieldy, far too costly and time-consuming to administer, and ill-understood and weakly supported by the public at large. As the wags like to say, the crisis also offered an opportunity. It offered a chance to rationalize a system that had been hastily patched together in a disorganized and haphazard fashion. That opportunity was entirely missed. It would be a crime if Dow Constantine and Fred Jarrett were allowed to claim otherwise.

woofer

Posted Sun, Jul 7, 10:46 a.m. Inappropriate

This article is a fine reminder of Deming's great work. Thank you. King County deserves all the criticism it gets but applying Deming's controls to government is going to be difficult. Even if King County were blessed with highly intelligent and motivated staff, which I am not sure it is, measuring the effectiveness of government policies is stupifyingly complex.

kieth

Posted Mon, Jul 8, 11:11 a.m. Inappropriate

You can't possibly be comparing Dow Constantine to Alan Mulally.

When King County can give building permits in less than 2 weeks, I will know that something useful has been accomplished.

When King County staffers answer their phones and provide accurate answers to the public, then I will know that something useful has been accomplished.

Posted Mon, Jul 8, 6:46 p.m. Inappropriate

I see not one reference to transit in this homage to Deming. I have some problems with the implementations in corporations of his methods, but I believe that the conceptual foundations are sound.

Transit policy is an entirely separate issue. Years ago I heard a radio interview with a former Metro executive who advocated further subsidization. His thesis was that the closer one gets to free transit the less reliance there is on private transport.

For the moment let's leave out the social engineering aspect of light rail, bus transport works.

Posted Thu, Aug 22, 9:43 a.m. Inappropriate

Jarrett worships the Japanese economy, which has been in full crash mode for at least 30 years, and has recently brought the world another nuclear disaster that is spreading radiation throughout the Pacific Ocean. He thinks running a government is exactly like running a car factory, and is the force behind the current project to outsource as much work as possible, and cram King County's remaining professional staff into 56 square foot cubicles. Blue collar staff will sit in bullpens, if they are allowed to sit at all given that standing huddles and walking meetings are encouraged, if not required. None of this of course applies to poobahs like Jarret himself, who works in a nice, spacious office attended by a bevy of doting acolytes ready to serve his every need.

Here's a link to the language spoken on Planet Jarrett:

http://www.kaufmanglobal.com/glossary-pages-61.php

Mud Baby

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