Deming and the rise and fall of quality

During the 1980s, when I was reporting on business for the Rochester Democrat and Chronicle, I became fascinated with the ideas of W. Edwards Deming, the father of the Total Quality Management movement. I thought then, and still think, that Deming’s ideas were more potentially revolutionary than most of his followers realized.

W. Edwards Deming

Deming was a statistician. He created statistical techniques by which workers can monitor their own workand coordinate their work without the need for supervision. His techniques were widely adopted by Japanese industry after World War Two, and enjoyed a vogue in the United States when Japanese competition was seen as a threat.

I was excited by Deming’s ideas. I became a cheerleader for Total Quality Management as the expense of my professional journalistic skepticism. I liked the idea of Americans working together as teams to make our industry the best in the world. I liked the idea of businesses drawing on the knowledge and best ideas of all their employees, and not just a handful of managers and consultants; this, to me, was democracy. I interviewed company employees who were enthusiastic about being able to plan their work and make improvements, and not just passively obey.

But this was not to be. In a few years, TQM was wiped off the blackboard, and U.S. business fell into the pattern of downsizing and outsourcing which has continued to this day. Was TQM abandoned because it was threatening to the prerogatives of management? Or did it simply prove too difficult to implement? I’m not privy to the inner decisions of corporate management nor to the information those decisions were based on, so I can’t say.

Whatever the value of Deming’s philosophy as a management technique, it does influence my own thinking. One of Deming’s basic ideas is variation. Among any group of people, or group of things, there will be variations in any characteristic. But according to Deming, you should only be concerned about these variations if they are significant.

From this it follows that rank order is unimportant. The only thing that matters is variation from the mean, or from the desired goal. In any group, there will be a student with the highest test score, a state with the highest incidence of cancer, a salesman with the most commissions, a baseball player with the highest earned run average. Someone has to be first and someone has to be last. What is important is not the rank order, but the variation from the mean or from the desired goal.

It is no disgrace to be the worst of a group of outstanding performers. It is no achievement to be the best of a group of failures. Deming’s idea was a group seldom improved its overall performance by pitting members of the group against each other as competitors. In competition, having your opponent do badly is as good as doing well yourself. The better way, he said, is for the team to work together to improve their overall performance.

Sometimes somebody is outstandingly good or outstandingly bad. When this is the case, it is obvious. There is no need for a rating system. Deming said the outstandingly good performer should be given a new job that fully utilizes his or her abilities, while the outstandingly bad performer should be either reassigned or fired.

Deming had a demonstration called the “red bead” game. He would have his test subject – usually a high-ranking corporate executive – go through an exercise in which the subject reached blindly into a pot containing an equal number of red and white beads, and try to maximize the number of red beads. Of course this was impossible because the subject couldn’t see what he or she was doing. But Deming would go through the usual rigamarole of organizations – praising the ones who drew the largest number of red beards, demanding the ones who drew white beads try harder, threatening to fire the poor performers and so on.

It was a parable for how organizations operate. Bosses demand improvement, but unless you understand and control the process, variation is random and improvement is impossible.

Unfortunately, acceptance of Deming’s ideas was hampered by his personality. He resented the neglect of his ideas by American industry. When he visited Rochester, he was bad-tempered, insulting, arrogant and hard of hearing – not a good combination for someone who wants to communicate ideas.

From this it follows, according to Deming, that employee merit rating systems ought to be abolished. Most variation in individual performance is not statistically significant, and much of it is random. In the rare instances where an individual is outstandingly good or outstandingly bad, it is obvious.

Among the CEOs of companies with a strong presence in Rochester, the great apostle of TQM was David Kearns, although Xerox had its own version which differed somewhat from Deming’s.  Xerox was hard-pressed by Japanese copier companies in the 1980s and Kearns led the company’s rebound. The company’s slogan was “Team Xerox” and I think he really meant it. The company wasn’t really a democracy and workers didn’t really have individual autonomy, but employees were “empowered” to contribute ideas, and many workers I interviewed thought it was a profound change from what went before.

In due course Kearns was succeeded as Xerox CEO by Paul Allaire. Even though the company was earning a good profit, Allaire ordered layoffs in order to generate an even larger profit. Many Xerox employees felt betrayed. They thought they had a pledge of mutual loyalty from Xerox as a corporation, not just David Kearns as an individual.

Allaire said in an interview that it isn’t feasible for a company to promise job security to any employee, even an employee who is doing an excellent job. A company will employ a person only if it has an economic need for that person’s contribution at a particular time. So it is up to employees “to manage their own careers.” I give him credit for being honest about his intentions.

Xerox employees took this to heart. They worked hard and took night classes (and Xerox did spend a lot of money on training.) But their resumes were always up to date. They expected no loyalty to the corporation and gave none. I wondered then, and wonder now, how you can have a company that is totally dedicated to the customer unless you have employees who are dedicated to the company.

The management fad that succeeded TQM was “reengineering,” as expounded by Michael Hammer, co-author of Reengineering the Corporation. While Deming was irascible and difficult, Hammer was charming, witty and accommodating. Hammer said the flaw in the Deming philosophy was that workers will only make incremental improvements in work processes. What is needed, he said, is revolutionary change which requires an outside expert, just as an engineer is needed to redesign a machine. Reengineering, in my opinion, represented a counter-revolution by managers against TQM, which they saw as threatenening their prerogatives.

In the 1990s, the CEO of Caterpillar Inc., which had worked successfully with the United Auto Workers to set up worker-management teams, broke up the teams and provoked a bitter and costly strike. When asked his rationale, he said, “What is it worth to get control of your company back?” So the question of control was more important than economic performance.

P.S. I am indebted to W. Edwards Deming for a great form of insult.  His ultimate expression of contempt for a manager was to sigh and say, “He’s doing his best.”

[P.S. 12/31/10]  Michael O’Hare, on The Reality-Based Community web site, commented on the Deming philosophy as applied to evaluating public school teachers.

Deming – brilliant, tough-minded, and humane –  demonstrated that if you reward individual workers for performance, you are going to be rewarding random variation a lot of the time, with poisonous effects.  Right away, when the top salesman among twenty gets a trip to Hawaii with his wife, the response of the other nineteen is not to emulate him (and how could they, if they don’t see what he does, which is the case for teachers in spades), but to be pissed off and jealous, which is, like, really great for collaborative enterprise.  Next year, regression toward the mean sets in and he is only number five, or ten, so he looks like a slacker, coasting on his laurels. Even his wife starts giving him the fisheye; don’t be surprised if his lunch martini count starts to go up.

It is a universal, desperate, desire of lazy or badly trained managers to find a mechanistic device you can wind up like a clockwork, loose upon the organization, and go play golf. Like testing and firing to get people to do good work.  Please, Lord, show me the way to manage without any actual heavy lifting!  But many desires, no matter how desperately we cleave to them, are not fated to be fulfilled, and this is one.  Teaching, like any complex production process, will get better when teachers watch each other work and talk about what they are doing, why, and how it works; what to watch is usefully indicated by statistical QA methods.  Period.

via The Reality-Based Community.

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