Tripp Babbitt
Published: Thursday, July 17, 2014 - 14:26 Delivering better products or services to customers is the undisputed aim of any organization. They just don’t always act that way. Manufacturing organizations have circled the wagons since the 1950s, when Japanese competitors began capturing market share from the rest of the world.
Looking back at the history of the quality and improvement movement, you can see the wake left through which we’ve traveled. In the book, The Man Who Discovered Quality (Penguin Books, 1992), author Andrea Gabor allows us to go back in time to see the dire straits faced by manufacturing in the United States. The story of Nashua Corp. during the 1980s paints a bleak picture. At that time, Nashua made carbonless paper for U.S. industry. As it began to export internationally, the company discovered that its quality wasn’t good enough to compete with Japanese firms, which had moved in with a better quality product and thereby captured the market. What stupefied William Conway—CEO of Nashua—were the hurdles that the Japanese had to clear just to be competitive. “The Japanese had to purchase the paper in the United States and ship it back to Japan for processing,” says Conway. “Then, for shipments going to Europe, the Samurai paper mills shipped their stock across the Sea of Japan to Vladivostok, where it was loaded on to railcars for the 10,000-mile journey on the Trans-Siberian railroad to Leningrad, from whence it was distributed to Europe. In three or four years, they took 25 percent of the premium market.” As Conway further lamented, “And here we are 150 miles from the trees in Maine, and by the time we’d taken the paper and coated it, we couldn’t be competitive in either cost or quality.” W. Edwards Deming, the subject of Gabor’s book, would talk about how Japan would buy scrap metal in the United States for pennies a pound and sell it back to U.S. companies in the form of other products for multiple dollars a pound. Can anyone say “trade deficit?” This story illustrates how bad things had gotten in the United States. Only the pressure from a strong competitor led Nashua to investigate and adopt statistical quality control (SQC). It’s when you have a poor competitor that you can be lulled to sleep, or you imagine yourself at the top of a bad heap. You would suspect this is what is still happening in the U.S. service industry today. It is important to note that the Japanese became successful in many manufacturing industries—and not just Toyota in the automotive realm. By 1965, Japanese industries led in steel, automobiles, cameras, consumer electronics, motorcycles, optical instruments, pianos, and watches. Deming’s delivery of SQC to the Japanese was a differentiator. Today, you would be hard-pressed to find a manufacturer not using SQC. Today, efficiency reigns supreme in the quality and improvement world. The problem is that effectiveness is what’s needed. You gain efficiency when you focus on process and productivity. Effectiveness comes from management, and here the western world has failed. As Russell Ackoff once said, “We are doing the wrong thing righter,” which is not the same as doing the right thing. Deming told Conway that he (Conway) had to lead the quality effort at Nashua by using SQC himself and demanding it from others. How many CEOs today actually know what a control chart is, or have even seen one, for that matter? Management needs to be squarely in the crosshairs of improvement professionals. The efficiency train has taken us as far as it can. The financially focused, interchangeable management structure needs to find an off-ramp, and customer-focused management needs to find the on-ramp. We need to be sure that the next generation of managers and workers won’t tolerate the legacy thinking that has prevailed since the days of Frederick Taylor and scientific management. The Deming Institute wants to be sure that the principles of Deming are not foreign to these forthcoming leaders. I am discussing topics relevant to current as well as future generations of quality professionals in a series of podcasts produced by the Deming Institute. During the podcasts I interview members of the institute’s advisory board about how Deming’s principles are being used today in industry, government, and education. If you would like more information about how these principles are being applied, be sure to tune in. Tripp Babbitt the managing partner for The 95 Method - Executive Education and Advisors. The 95 Method is about giving organizations a method to use new theories to grow business. Babbitt can be reached at tripp@the95method.com. Reach him on LinkedIn at www.linkedin.com/in/trippbabbitt Tripp also has a podcast and YouTube channel called, The Effective Executive.
Quality Insider Deming’s Principles Today
The goal is to deliver better products and services to customers, isn’t it?
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Tripp Babbitt
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Comments
Ahead of Deming
You should all read My Life and Work by Henry Ford. He had a basic understanding of the need for efficiency, effectiveness and profits long before Shewart and Deming. The Ford Production System was the model for Toyoda.
"As long as you want black"
Not to disparage the work of Frederick Taylor and Henry Ford. Amazing advancements for their day. The issue is if you want different colors or options you have to batch in your production. For this reason you still hear people talk about economies of scale to reduce costs -- and with this thinking and design it is the only option. Let's move on from thinking over 100 years old.
Dr. Deming's work paved the way for Taiichi Ohno to discover a different way to handle the multiple models, colors and options problem. Faster changeover. What took weeks to do (change over), Ohno worked to do it in minutes as he was hand-tied by resource constraints) money. Necessity is the mother of innovation.
Deming's Profound Changes, a book written by Dan Robertson and Ken Delavigne outlines the thinking that has been perpetuated from Taylor into todays thinking (Neo-Taylorism). This holds us back in providing better products and services. Dr. Deming offers a completely different paradigm in thinking.
Getting Back to Basics
I thought the job of making money is the US Mint!
Making a profit is the BY-PRODUCT of providing goods and services. You have the horse before the cart. Before the days of the wiz-guys and financial gurus, companies were run by inventors and scienctists who had a vested interest in the product or service they provided to their customers. Today the customer has been replaced by the coperate board, stock holders and wall street. That's the damn problem. They are only interested in making profits for their stake holders at any costs. You think that's progress? I don't.
Similar to what Deming said about Shewhart, " It may take 50-100 years to fully grasp the wisdom of Deming"
Rich
Inconsistency
I'm sorry not to fully agree with the principles you stated in your article: first, Deming's principles lack today of first hand analysis and after action monitoring; second, organizations' primary goal is to make money, not "to deliver better products and services to customers", this is mere hypocrisy. It's quite crazy that we should keeping look back at Deming's principles, that were established in an economical environment far different from today's: Deming knew nothing of globalization, of joint venturing, of risk management. His only principle was quality betterment but today's markets don't put quality on podium place # one anymore.
Legacy Thinking
I was taught in my MBA class that the purpose of an organization was "to make money." The ends and the means are brought to question in your comment and my MBA program. By delivering better products and services (means) we can aspire to achieve making money (ends).
The problem is that there is an axiom:
No Customer = No Profit
I believe if you don't provide customers with services or products they want, you have no chance of profit or having a going concern. Hypocrisy -- hardly.
I would challenge that Dr. Deming knew something about globalization if just as a witness. He saw the Japanese take market share globally as the rest of the world suffered the consequences. "Joint ventures" -- wasn't called that in his day, but he certainly understood how suppliers and manufacturers could collaborate to capture the market.
Risk management has grown into adding waste and costs with over-engineering with wrong focus. Take Sarbanes-Oxley focused on CEOs has grown into more inspections and audits for the front-line. This completely leaves out the original intent.
Dr. Deming laid out the basics that you must first grasp to run a business. Something that people seem to skip over. His System of Profound Knowledge is timeless. It is large enough to move with the times. Learn the fundamentals and than broaden your knowledge as your knowledge deepens.