Okay, here's yet another blog post that I wrote last year but didn't bother to publish. Another item in my garage sale of ideas that I couldn't bear to just throw in the trash... :-)
At Toyota’s headquarters, there is a framed photograph even larger than that of the founder of Toyota, Kiichiro Toyoda. "Who would that be?" you might ask. Who? A man who originally was born and reared on a chicken farm near Sioux City, IA. This man's business philosophies revolutionized Japan. His business and quality processes transformed a country once known for producing cheap junk. In turn, this resulted in a relatively small island nation with almost no natural resources becoming the 2nd (now third) largest economy in the world. To this day, he is revered in Japan. His name is W. Edward Deming.
As the worlds first and foremost quality guru, Deming was largely unknown and unrecognized in his own country, even after he moved back to Washington DC and set up shop as a consultant. In 1980, he was featured prominently in an NBC documentary titled If Japan can... Why can't we? about the increasing industrial competition the United States was facing from Japan. As a result of the broadcast, demand for his services increased dramatically, and Deming continued consulting for industry throughout the world until his death at the age of 93.
But how seriously did we really take Deming's advice in the U.S.? Here are Deming's 7 deadly sins, from which you can judge for yourself:
The answer is obvious: not very seriously. We had our own individual-focused, prima donna management culture, and it was not going to change. Since Deming, many more management consultants have come and gone, but Deming's work still strikes me as the most controversial and daring broadside to the traditional American way of doing business. And yet, we know it works. He proved it. Today we have lots of additional ideas and concepts in continuous improvement, the most common being 6-sigma, Kaizan, TQM, Lean, etc. These are great tools, but they stop short of a higher objective--that of challenging the very fundamental culture of the company. As a result, some companies that use, for instance, 6-sigma, are very successful where others are failing. It's not 6-sigma, it's the culture.
Perhaps companies have largely ignored Deming because some of his recommendations are "too hard" or just "not practical". Take merit pay, for instance. GE had been using merit pay and also firing the bottom 10% of their workforce every year, and they seemed to do very well--at least from the viewpoint of an outsider. Of course, this practice at Enron produced "ruthlessness, selfishness and greed" and ultimately did the company in.
Merit pay doesn't sound controversial, it just makes sense, right? So was Deming crazy? It stands to reason, for instance, that merit pay ought to improve the quality of our educational system. Or not? Here are a some interesting articles that discuss this. Here are some arguments against merit pay of teachers, and here's another similar argument, and another. Deming felt that merit pay discouraged teamwork and collaboration and promoted short-term, me-first thinking. Another article regarding the pitfalls of merit pay cited an insufficient difference between merit pay for high/low performance, and a lack of a clear concept by the employee as to exactly what/when/how he needs to do a task (as an individual) to merit the pay increase. Not to mention, if this is already in his job description and goals, where does merit pay fit in? Merit pay is not a substitute for a manager taking responsibility for coaching and guiding his employee. As Deming would say, it's at least partly the manager's fault if the employee is not performing.
Items 2, 4 and 5 on Deming's list of 7 deadly sins are also especially relevant, and are a problem with many companies who hire "quick turnaround artist" CEO's with business degrees and little technical background. Item (1) is a problem with many companies that hire new CEOs who desire to make a legacy (or at least a quick profit) by buying another company, rather than "sticking to their knitting" and growing organically. Some companies are better than others at reigning in healthcare costs (6) through innovative, proactive, incentivised company programs. And many U.S. companies have finally taken reliability and warranty costs (7) seriously. We've made slow progress on some of these items. On others, we've failed, and the corporate culture of greed--especially among top executives--is at least partly to blame.
At Toyota’s headquarters, there is a framed photograph even larger than that of the founder of Toyota, Kiichiro Toyoda. "Who would that be?" you might ask. Who? A man who originally was born and reared on a chicken farm near Sioux City, IA. This man's business philosophies revolutionized Japan. His business and quality processes transformed a country once known for producing cheap junk. In turn, this resulted in a relatively small island nation with almost no natural resources becoming the 2nd (now third) largest economy in the world. To this day, he is revered in Japan. His name is W. Edward Deming.
As the worlds first and foremost quality guru, Deming was largely unknown and unrecognized in his own country, even after he moved back to Washington DC and set up shop as a consultant. In 1980, he was featured prominently in an NBC documentary titled If Japan can... Why can't we? about the increasing industrial competition the United States was facing from Japan. As a result of the broadcast, demand for his services increased dramatically, and Deming continued consulting for industry throughout the world until his death at the age of 93.
But how seriously did we really take Deming's advice in the U.S.? Here are Deming's 7 deadly sins, from which you can judge for yourself:
The "Seven Deadly Diseases" include:
- Lack of constancy of purpose
- Emphasis on short-term profits
- Evaluation by performance, merit rating, or annual review of performance
- Mobility of management
- Running a company on visible figures alone
- Excessive medical costs
- Excessive costs of warranty, fueled by lawyers who work for contingency fees
The answer is obvious: not very seriously. We had our own individual-focused, prima donna management culture, and it was not going to change. Since Deming, many more management consultants have come and gone, but Deming's work still strikes me as the most controversial and daring broadside to the traditional American way of doing business. And yet, we know it works. He proved it. Today we have lots of additional ideas and concepts in continuous improvement, the most common being 6-sigma, Kaizan, TQM, Lean, etc. These are great tools, but they stop short of a higher objective--that of challenging the very fundamental culture of the company. As a result, some companies that use, for instance, 6-sigma, are very successful where others are failing. It's not 6-sigma, it's the culture.
Perhaps companies have largely ignored Deming because some of his recommendations are "too hard" or just "not practical". Take merit pay, for instance. GE had been using merit pay and also firing the bottom 10% of their workforce every year, and they seemed to do very well--at least from the viewpoint of an outsider. Of course, this practice at Enron produced "ruthlessness, selfishness and greed" and ultimately did the company in.
Merit pay doesn't sound controversial, it just makes sense, right? So was Deming crazy? It stands to reason, for instance, that merit pay ought to improve the quality of our educational system. Or not? Here are a some interesting articles that discuss this. Here are some arguments against merit pay of teachers, and here's another similar argument, and another. Deming felt that merit pay discouraged teamwork and collaboration and promoted short-term, me-first thinking. Another article regarding the pitfalls of merit pay cited an insufficient difference between merit pay for high/low performance, and a lack of a clear concept by the employee as to exactly what/when/how he needs to do a task (as an individual) to merit the pay increase. Not to mention, if this is already in his job description and goals, where does merit pay fit in? Merit pay is not a substitute for a manager taking responsibility for coaching and guiding his employee. As Deming would say, it's at least partly the manager's fault if the employee is not performing.
Items 2, 4 and 5 on Deming's list of 7 deadly sins are also especially relevant, and are a problem with many companies who hire "quick turnaround artist" CEO's with business degrees and little technical background. Item (1) is a problem with many companies that hire new CEOs who desire to make a legacy (or at least a quick profit) by buying another company, rather than "sticking to their knitting" and growing organically. Some companies are better than others at reigning in healthcare costs (6) through innovative, proactive, incentivised company programs. And many U.S. companies have finally taken reliability and warranty costs (7) seriously. We've made slow progress on some of these items. On others, we've failed, and the corporate culture of greed--especially among top executives--is at least partly to blame.
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