W. Edwards Deming & The Total Quality Management

William Edwards Deming (October 14, 1900 – December 20, 1993) was an American statistician, professor, author, lecturer, and consultant. Deming is widely credited with improving production in the United States during the Cold War, although he is perhaps best known for his work in Japan. There, from 1950 onward he taught top management how to improve design (and thus service), product quality, testing and sales (the last through global markets) through various methods, including the application of statistical methods.

Deming made a significant contribution to Japan’s later reputation for innovative high-quality products and its economic power. He is regarded as having had more impact upon Japanese manufacturing and business than any other individual not of Japanese heritage. Despite being considered something of a hero in Japan, he was only just beginning to win widespread recognition in the U.S. at the time of his death.

Deming received a BSc in electrical engineering from the University of Wyoming at Laramie (1921), an M.S. from the University of Colorado (1925), and a Ph.D. from Yale University (1928). Both graduate degrees were in mathematics and physics. Deming had an internship at Bell Telephone Laboratorie while studying at Yale. He later worked at the U.S. Department of Agriculture and the Census Department. While working under Gen. Douglas MacArthur as a census consultant to the Japanese government, he famously taught statistical process control methods to Japanese business leaders, returning to Japan for many years to consult and to witness economic growth that he had predicted as a result of application of techniques learned from Walter Shewhart at Bell Laboratories.

Deming found great inspiration in the work of Shewhart, the originator of the concepts of statistical control of processes and the related technical tool of the control chart, as Deming began to move toward the application of statistical methods to industrial production and management. Shewhart’s idea of common and special causes of variation led directly to Deming’s theory of management. Deming saw that these ideas could be applied not only to manufacturing processes but also to the processes by which enterprises are led and managed. This key insight made possible his enormous influence on the economics of the industrialized world after 1950.

Deming edited a series of lectures delivered by Shewhart at USDA, Statistical Method from the Viewpoint of Quality Control, into a book published in 1939. One reason he learned so much from Shewhart, Deming remarked in a videotaped interview, was that, while brilliant, Shewhart had an “uncanny ability to make things difficult.” Deming thus spent a great deal of time both copying Shewhart’s ideas and devising ways to present them with his own twist.

Deming developed the sampling techniques that were used for the first time during the 1940 U.S. Census.  During World War II, Deming was a member of the five-man Emergency Technical Committee. He worked with H.F. Dodge, A.G. Ashcroft, Leslie E. Simon, R.E. Wareham, and John Gaillard in the compilation of the American War Standards and taught statistical process control (SPC) techniques to workers engaged in wartime production. Statistical methods were widely applied during World War II, but faded into disuse a few years later in the face of huge overseas demand for American mass-produced products.

Later, he became a professor at New York University while engaged as an independent consultant in Washington, D.C.

Deming was the author of Out of the Crisis (1982–1986) and The New Economics for Industry, Government, Education (1993), which includes his System of Profound Knowledge and the 14 Points for Management (described below). Deming played flute & drums and composed music throughout his life, including sacred choral compositions and an arrangement of The Star Spangled Banner.

In 1993, Deming founded the W. Edwards Deming Institute in Washington, D.C., where the Deming Collection at the U.S. Library of Congress includes an extensive audiotape and videotape archive. The aim of the W. Edwards Deming Institute is to foster understanding of The Deming System of Profound Knowledge to advance commerce, prosperity, and peace.

Work in Japan

In 1947, Deming was involved in early planning for the 1951 Japanese Census. The Allied powers were occupying Japan, and he was asked by the United States Department of the Army to assist with the census. While in Japan, Deming’s expertise in quality control techniques, combined with his involvement in Japanese society, led to his receiving an invitation from the Japanese Union of Scientists and Engineers (JUSE).

JUSE members had studied Shewhart’s techniques, and as part of Japan’s reconstruction efforts, they sought an expert to teach statistical control. During June–August 1950, Deming trained hundreds of engineers, managers, and scholars in statistical process control (SPC) and concepts of quality. He also conducted at least one session for top management.  Deming’s message to Japan’s chief executives: improving quality will reduce expenses while increasing productivity and market share.  Perhaps the best known of these management lectures was delivered at the Mt. Hakone Conference Center in August 1950.

A number of Japanese manufacturers applied his techniques widely and experienced theretofore unheard of levels of quality and productivity. The improved quality combined with the lowered cost created new international demand for Japanese products.

Later work in the U.S.

Ford Motor Company was one of the first American corporations to seek help from Deming. In 1981, Ford’s sales were falling. Between 1979 and 1982, Ford had incurred $3 billion in losses. Ford’s newly appointed Division Quality Manager John A. Manoogian was charged with recruiting Dr. Deming to help jump-start a quality movement at Ford.  Deming questioned the company’s culture and the way its managers operated. To Ford’s surprise, Deming talked not about quality but about management. He told Ford that management actions were responsible for 85% of all problems in developing better cars. In 1986 Ford came out with a profitable line of cars, the Taurus-Sable line. In a letter to Autoweek Magazine, Donald Petersen, then Ford Chairman, said, “We are moving toward building a quality culture at Ford and the many changes that have been taking place here have their roots directly in Dr. Deming’s teachings.  By 1986, Ford had become the most profitable American auto company. For the first time since the 1920s, its earnings had exceeded those of arch rival General Motors (GM). Ford had come to lead the American automobile industry in improvements. Ford’s following years’ earnings confirmed that its success was not a fluke, for its earnings continued to exceed GM and Chrysler’s.

Deming philosophy synopsis

The philosophy of W. Edwards Deming has been summarized as follows:

“Dr. W. Edwards Deming taught that by adopting appropriate principles of management, organizations can increase quality and simultaneously reduce costs (by reducing waste, rework, staff attrition and litigation while increasing customer loyalty). The key is to practice continual improvement and think of manufacturing as a system, not as bits and pieces.”

In the 1970s, Dr. Deming’s philosophy was summarized by some of his Japanese proponents with the following ‘a’-versus-‘b’ comparison:

(a) When people and organizations focus primarily on quality, defined by the following ratio,

quality tends to increase and costs fall over time.

(b) However, when people and organizations focus primarily on costs, costs tend to rise and quality declines over time.

The Deming System of Profound Knowledge

“The prevailing style of management must undergo transformation. A system cannot understand itself. The transformation requires a view from outside. The aim of this chapter is to provide an outside view—a lens—that I call a system of profound knowledge. It provides a map of theory by which to understand the organizations that we work in.

“The first step is transformation of the individual. This transformation is discontinuous. It comes from understanding of the system of profound knowledge. The individual, transformed, will perceive new meaning to his life, to events, to numbers, to interactions between people.

“Once the individual understands the system of profound knowledge, he will apply its principles in every kind of relationship with other people. He will have a basis for judgment of his own decisions and for transformation of the organizations that he belongs to. The individual, once transformed, will:

• Set an example;
• Be a good listener, but will not compromise;
• Continually teach other people; and
• Help people to pull away from their current practices and beliefs and move into the new philosophy without a feeling of guilt about the past.”

Deming advocated that all managers need to have what he called a System of Profound Knowledge, consisting of four parts:

1. Appreciation of a system: understanding the overall processes involving suppliers, producers, and customers (or recipients) of goods and services (explained below);
2. Knowledge of variation: the range and causes of variation in quality, and use of statistical sampling in measurements;
3. Theory of knowledge: the concepts explaining knowledge and the limits of what can be known (see also: epistemology);
4. Knowledge of psychology: concepts of human nature.

Deming explained, “One need not be eminent in any part nor in all four parts in order to understand it and to apply it. The 14 points for management in industry, education, and government follow naturally as application of this outside knowledge, for transformation from the present style of Western management to one of optimization.”

“The various segments of the system of profound knowledge proposed here cannot be separated. They interact with each other. Thus, knowledge of psychology is incomplete without knowledge of variation.

“A manager of people needs to understand that all people are different. This is not ranking people. He needs to understand that the performance of anyone is governed largely by the system that he works in, the responsibility of management. A psychologist that possesses even a crude understanding of variation as will be learned in the experiment with the Red Beads (Ch. 7) could no longer participate in refinement of a plan for ranking people.”

The Appreciation of a system involves understanding how interactions (i.e., feedback) between the elements of a system can result in internal restrictions that force the system to behave as a single organism that automatically seeks a steady state. It is this steady state that determines the output of the system rather than the individual elements. Thus it is the structure of the organization rather than the employees, alone, which holds the key to improving the quality of output.

The Knowledge of variation involves understanding that everything measured consists of both “normal” variation due to the flexibility of the system and of “special causes” that create defects. Quality involves recognizing the difference to eliminate “special causes” while controlling normal variation. Deming taught that making changes in response to “normal” variation would only make the system perform worse. Understanding variation includes the mathematical certainty that variation will normally occur within six standard deviations of the mean.

The System of Profound Knowledge is the basis for application of Deming’s famous 14 Points for Management, described below.

Dr. W. Edwards Deming’s 14 points

In 1993, Dr. Deming published his final book, The New Economics for Industry, Government, Education, which included the System of Profound Knowledge and the 14 Points for Management. It also contained educational concepts involving group-based teaching without grades, as well as management without individual merit or performance reviews.

Deming offered fourteen key principles for management for transforming business effectiveness. The points were first presented in his book Out of the Crisis. (p. 23-24)

1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive and stay in business, and to provide jobs.
2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.
3. Cease dependence on inspection to achieve quality. Eliminate the need for massive inspection by building quality into the product in the first place.
4. End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move towards a single supplier for any one item, on a long-term relationship of loyalty and trust.
5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.
6. Institute training on the job.
7. Institute leadership (see Point 12 and Ch. 8 of “Out of the Crisis”). The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers.
8. Drive out fear, so that everyone may work effectively for the company. (See Ch. 3 of “Out of the Crisis”)
9. Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service.
10. Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.
11. a. Eliminate work standards (quotas) on the factory floor. Substitute leadership.
    b. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.
12. a. Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.
    b. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, inter alia,” abolishment of the annual or merit rating and of management by objective (See Ch. 3 of “Out of the Crisis”).
13. Institute a vigorous program of education and self-improvement.
14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody’s job.

“Massive training is required to instill the courage to break with tradition. Every activity and every job is a part of the process.”

Seven Deadly Diseases

The “Seven Deadly Diseases” include

1. Lack of constancy of purpose
2. Emphasis on short-term profits
3. Evaluation by performance, merit rating, or annual review of performance
4. Mobility of management
5. Running a company on visible figures alone
6. Excessive medical costs
7. Excessive costs of warranty, fueled by lawyers who work for contingency fees

“A Lesser Category of Obstacles” includes

1. Neglecting long-range planning
2. Relying on technology to solve problems
3. Seeking examples to follow rather than developing solutions
4. Excuses, such as “Our problems are different”
5. Obsolescence in school that management skill can be taught in classe
6. Reliance on quality control department rather than management, supervisors, managers of purchasing, and production workers
7. Placing blames on workforces who only responsible for 15% of mistake where the system desired by management is responsible for 85% of the unintended consequences
8. Relying on quality inspection rather than improve product quality

Deming’s advocacy of the Plan-Do-Check-Act cycle, his 14 Points, and Seven Deadly Diseases have had tremendous influence outside of manufacturing and have been applied in other arenas, such as in the relatively new field of sales process engineering.

Quotations and concepts

In his later years, Dr. Deming taught many concepts, which he emphasized by key sayings or quotations that he repeated. A number of these quotes have been recorded.

Some of the concepts might seem to be oxymorons or contradictory to each other; however, the student is given each concept to ponder its meaning in the whole system, over time.

• “There is no substitute for knowledge.” This statement emphasizes the need to know more, about everything in the system. It is considered as a contrast to the old statement, “There is no substitute for hard work” by Thomas Alva Edison (1847–1931). Instead, a small amount of knowledge could save many hours of hard work.

• “The most important things cannot be measured.” The issues that are most important, long term, cannot be measured in advance. However, they might be among the factors that an organization is measuring, just not understood as most important at the time.

• “The most important things are unknown or unknowable.” The factors that have the greatest impact, long term, can be quite surprising. Analogous to an earthquake that disrupts service, other “earth-shattering” events that most affect an organization will be unknown or unknowable, in advance. Other examples of important things would be: a drastic change in technology, or new investment capital.

• “Experience by itself teaches nothing.” This statement emphasizes the need to interpret and apply information against a theory or framework of concepts that is the basis for knowledge about a system. It is considered as a contrast to the old statement, “Experience is the best teacher” (Dr. Deming disagreed with that). To Dr. Deming, knowledge is best taught by a master who explains the overall system through which experience is judged; experience, without understanding the underlying system, is just raw data that can be misinterpreted against a flawed theory of reality. Deming’s view of experience is related to Shewhart’s concept, “Data has no meaning apart from its context”.

• “By what method?… Only the method counts.”  When information is obtained, or data is measured, the method, or process used to gather information, greatly affects the results. For example, the “Hawthorne effect” showed that people just asking frequently for opinions seemed to affect the resulting outcome, since some people felt better just being asked for their opinion. Dr. Deming warned that basing judgments on customer complaints alone ignored the general population of other opinions, which should be judged together, such as in a statistical sample of the whole, not just isolated complaints: survey the entire group about their likes and dislikes. The extreme complaints might not represent the attitudes of the whole group. Similarly, measuring or counting data depends on the instrument or method used.

• “You can expect what you inspect.” Dr. Deming emphasized the importance of measuring and testing to predict typical results. If a phase consists of inputs + process + outputs, all 3 are inspected to some extent. Problems with inputs are a major source of trouble, but the process using those inputs can also have problems. By inspecting the inputs and the process more, the outputs can be better predicted, and inspected less. Rather than use mass inspection of every output product, the output can be statistically sampled in a cause-effect relationship through the process.

• “Special Causes and Common Causes”: Dr. Deming considered anomalies in quality to be variations outside the control limits of a process. Such variations could be attributed to one-time events called “special causes” or to repeated events called “common causes” that hinder quality.

• Acceptable Defects: Rather than waste efforts on zero-defect goals, Dr. Deming stressed the importance of establishing a level of variation, or anomalies, acceptable to the recipient (or customer) in the next phase of a process. Often, some defects are quite acceptable, and efforts to remove all defects would be an excessive waste of time and money.

• The Deming Cycle (or Shewhart Cycle): As a repetitive process to determine the next action, the Deming Cycle describes a simple method to test information before making a major decision. The 4 steps in the Deming Cycle are: Plan-Do-Check-Act (PDCA), also known as Plan-Do-Study-Act or PDSA. Dr. Deming called the cycle the Shewhart Cycle, after Walter A. Shewhart. The cycle can be used in various ways, such as running an experiment: PLAN (design) the experiment; DO the experiment by performing the steps; CHECK the results by testing information; and ACT on the decisions based on those results.

• Semi-Automated, not Fully Automated: Dr. Deming lamented the problem of automation gone awry (“robots painting robots”): instead, he advocated human-assisted semi-automation, which allows people to change the semi-automated or computer-assisted processes, based on new knowledge. Compare to Japanese term ‘jidoka’ (which can be loosely translated as “automation with a human touch”).

• “The problem is at the top; management is the problem.”  Dr. Deming emphasized that the top-level management had to change to produce significant differences, in a long-term, continuous manner. As a consultant, Deming would offer advice to top-level managers, if asked repeatedly, in a continuous manner.

• “What is a system? A system is a network of interdependent components that work together to try to accomplish the aim of the system. A system must have an aim. Without an aim, there is no system. The aim of the system must be clear to everyone in the system. The aim must include plans for the future. The aim is a value judgment. (We are of course talking here about a man-made system.)”

• “A system must be managed. It will not manage itself. Left to themselves in the Western world, components become selfish, competitive. We can not afford the destructive effect of competition.”

• “To successfully respond to the myriad of changes that shake the world, transformation into a new style of management is required. The route to take is what I call profound knowledge—knowledge for leadership of transformation.”

• “The worker is not the problem. The problem is at the top! Management!” Management’s job. It is management’s job to direct the efforts of all components toward the aim of the system. The first step is clarification: everyone in the organization must understand the aim of the system, and how to direct his efforts toward it. Everyone must understand the damage and loss to the whole organization from a team that seeks to become a selfish, independent, profit centre.”

• “They realized that the gains that you get by statistical methods are gains that you get without new machinery, without new people. Anybody can produce quality if he lowers his production rate. That is not what I am talking about. Statistical thinking and statistical methods are to Japanese production workers, foremen, and all the way through the company, a second language. In statistical control, you have a reproducible product hour after hour, day after day. And see how comforting that is to management, they now know what they can produce, they know what their costs are going to be.”

• “I think that people here expect miracles. American management thinks that they can just copy from Japan—but they don’t know what to copy!”

• “What is the variation trying to tell us about a process, about the people in the process?”  Dr. Shewhart created the basis for the control chart and the concept of a state of statistical control by carefully designed experiments. While Dr. Shewhart drew from pure mathematical statistical theories, he understood that data from physical processes never produce a “normal distribution curve” (a Gaussian distribution, also commonly referred to as a “bell curve”). He discovered that observed variation in manufacturing data did not always behave the same way as data in nature (Brownian motion of particles). Dr. Shewhart concluded that while every process displays variation, some processes display controlled variation that is natural to the process, while others display uncontrolled variation that is not present in the process causal system at all times. Dr. Deming renamed these distinctions “common cause” for chance causes and “special cause” for assignable causes. He did this so the focus would be placed on those responsible for doing something about the variation, rather than the source of the variation. It is top management’s responsibility to address “common cause” variation, and therefore it is management’s responsibility to make improvements to the whole system. Because “special cause” variation is assignable, workers, supervisors or middle managers that have direct knowledge of the assignable cause best address this type of specific intervention.

• (Deming on Qualitiy Circles) “That’s all window dressing. That’s not fundamental. That’s not getting at change and the transformation that must take place. Sure we have to solve problems. Certainly stamp out the fire. Stamp out the fire and get nowhere. Stamp out the fires puts us back to where we were in the first place. Taking action on the basis of results without theory of knowledge, without theory of variation, without knowledge about a system. Anything goes wrong, do something about it, overreacting; acting without knowledge, the effect is to make things worse. With the best of intentions and best efforts, managing by results is, in effect, exactly the same, as Dr. Myron Tribus put it, while driving your automobile, keeping your eye on the rear view mirror, what would happen? And that’s what management by results is, keeping your eye on results.”

• “Knowledge is theory. We should be thankful if action of management is based on theory. Knowledge has temporal spread. Information is not knowledge. The world is drowning in information but is slow in acquisition of knowledge. There is no substitute for knowledge.”  This statement emphasizes the need for theory of knowledge (see: epistemology, Shewhart cycle, C.I. Lewis).

• “The most important figures that one needs for management are unknown or unknowable (Lloyd S. Nelson, director of statistical methods for the Nashua corporation), but successful management must nevertheless take account of them.”  Deming realized that many important things that must be managed couldn’t be measured. Both points are important. One, not everything of importance to management can be measured. And two, you must still manage those important things. Spend $20,000 training 10 people in a special skill. What’s the benefit? “You’ll never know,” answered Deming. “You’ll never be able to measure it. Why did you do it? Because you believed it would pay off. Theory.” Dr. Deming is often incorrectly quoted as saying, “You can’t manage what you can’t measure.” In fact, he stated that one of the seven deadly diseases of management is running a company on visible figures alone.

• “By what method?”  When information is obtained, or data is measured, the method, or process used to gather information, affects the results. Dr. Deming warned that basing judgments on customer complaints alone ignored the general population of other opinions, which should be judged together, such as in a statistical sample of the whole (Sampling (statistics)). Changing the method changes the results. Aim and method are essential. An aim without a method is useless. A method without an aim is dangerous. It leads to action without direction and without constancy of purpose. Deming used an illustration of washing a table to teach a lesson about the relationship between purpose and method. If you tell someone to wash a table, but not the reason for washing it, they cannot do the job properly (will the table be used for chopping food or potting plants?). That does not mean just giving the explanation without an operational definition. The information about why the table needs to be washed, and what is to be done with it, makes it possible to do the job intelligently.

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[Source: Wikipedia]