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