After World War II, Americans didn't worry
much about foreign competition. In effect, they
had no competition. Most of the industrial world
lay in ruins. US car makers competed with one
another on the basis of style, not reliability.
The problem for US business was not how to be
competitive, but rather how to produce more.
Management training and business schools
concentrated on the methods needed to produce
more.
The competitive picture had actually
started to change in the 1960s, but Americans were
slow to see the shift. By 1980, it was
much
more obvious. Something had changed.
On
June 24, 1980, a National Broadcasting Co (NBC)
television program was aired with the title If
Japan Can, Why Can't We? The TV program was in
several segments. One featured the use of robotics
and another focused on advanced techniques in
inventory control. But the last section, and the
segment that had the most impact, featured an
American whom few had ever heard of, Dr W Edwards
Deming.
Deming (1900-93) had been a key
contributor to the Japanese economic recovery
after the war, but had lived in relative obscurity
in the US. That was about to change. After the
television program, his phone began to ring
continuously.
Deming is often credited
with teaching the Japanese about statistical
quality control (SQC). Even noted quality expert
Joseph Juran often said that Deming taught the
Japanese SQC. That is mistaken.
It is true
that he taught the techniques of the control chart
during an oft-repeated course over several years
in Japan, but by the time Deming began lecturing,
the use of SQC was already being widely promoted
by the Supreme Allied Command (SCAP, for Supreme
Commander of the Allied Powers) and the Union of
Japanese Scientists and Engineers (JUSE).
Some people even credit Deming with having
taught TQM (total quality management) and Kaizen
(continuous improvement) planning. He did not. Nor
did he teach about just-in-time
inventory-management systems. He did not teach the
Japanese his famous 14 points; in fact, there was
no collection of points when he lectured in Japan,
and it could be argued that the 14 points that
eventually emerged were as much a product of what
he learned from the Japanese as they were from
what he taught them. Here is what happened and
what he did teach.
Deming first visited
Japan in 1947 to assist SCAP in surveys of
housing, agriculture and unemployment. At the same
time, the communications section of SCAP was
teaching Japanese industrialists (particularly in
electronics) the fundamentals of statistical
control of quality. While the techniques taught
were based on those he and others had developed
through the 1920s and 1930s, he was not involved
in that initial teaching. [1]
The managing
director of JUSE at that time was Kenichi
Koyanagi. It was he who asked Deming to speak at a
dinner in Tokyo in July 1950. Prior to his talks
to management, Deming also met for planning
sessions with Ichiro Ishikawa several times.
Ishikawa was a highly influential Japanese
industrialist. He was president of JUSE, but his
real power came from his leadership of the large
industrial coalition. It was Ishikawa who issued
the invitations to 21 top industrial leaders to
listen to Deming. The invitations were not
ignored.
The Japanese knew they were
dependent on international trade to fuel their
recovery. They were already being taught
quality-control tools and techniques and had a
well-educated and practiced workforce, so that is
not what Deming was there to teach.
Ishikawa wanted Deming to give a message
that went beyond the techniques of SQC and
shop-floor tools for improvement. He wanted
industrial leaders to be exposed to a global
strategy for Japanese industry as a whole. By what
method would Japan pull itself out of its crisis?
He asked Deming to lecture on the
responsibilities of management. And Deming did
just that, both at the dinner and at the Mount
Hakone conference center a few weeks later.
Deming's own summary of what he taught them can be
found in a book about him, The World of W
Edwards Deming, written by his assistant
Cecelia Killian, who worked with him for 40 years.
This correspondent also subsequently obtained a
transcript of his talk in Mount Hakone.
He
told the assembled industry heads about the new
economic age that was just beginning and what they
would have to do to survive and flourish in this
new global economic environment. He told them
about the chain reaction that occurs when one
becomes totally focused on quality improvement.
This is a key lesson because with
attention to quality, the company begins a journey
on a "virtuous circle" [2] of simultaneously
improving quality and lowering costs. As quality
improves, there are less rework, scrap and waste
of all kinds. As products become more attuned to
customers' needs, there is less effort spent
producing items people don't want. Costs go down.
Quality improves. Thus paying attention to quality
becomes the primary competitive strategy.
Understanding this is vitally important.
I
remember vividly a videotaped interview of Deming
shot when he was in his late 80s. He says quite
clearly, "It's very simple, really. Pay attention
to quality first. Quality goes up and costs go
down. You will have less waste, less rework, less
scrap. You enter the market with better and better
quality and lower and lower cost. You will capture
the market." In 1950, he was prophetic.
He
proposed that the Japanese use market research. It
was an emerging field in the United States and
almost unheard of in Japan. He told them they
would have to travel to where the customer was to
do this. Deming had gained expertise in sampling
when he worked for the US Bureau of the Census,
and he applied that statistical expertise to
understand customers better.
Think of
General Motors' blunder of trying to sell the
Hummer and Toyota's success with its hybrid car to
understand the importance of this lesson. Quality
must begin with the customer.
Another main
lesson Deming taught was the need for top
management to take personal responsibility for the
quality of the product. It is not enough to teach
the tools (eg statistical quality control - SQC)
of quality improvement, it is also necessary to
create an environment where they can be used. Only
management can do that. Managers must understand
that this is their responsibility and theirs
alone.
Without long-term consistent and
insistent leadership on quality from management,
Japan would not find its way out of the crisis. An
improvement here and there would not be enough to
make significant change.
Deming taught the
Japanese the importance of seeing improvement,
product design, and manufacturing as never-ending
processes. He introduced an early version of what
has become widely known as the "plan, do, study,
act" (PDSA or sometimes PDCA, for "plan, do, check
and act") cycle. He called it the Shewhart cycle
[3] as its origins were derived from Walter
Shewhart's early work at Bell Labs. Again this is
critical.
PDSA is roughly analogous to the
scientific method. In that method, one has a
theory (or hypothesis), and he puts it to the
test; he studies the results and takes action
based on those results. This is the road to
scientific learning. PDSA is the road to
organizational learning. Peter Senge wrote about
the "learning organization" in 1990. Deming taught
the method to become a learning organization in
1950.
Much of modern-day competitiveness
is based on management accelerating the rate at
which improvements are made. The key to this is
effective means of learning. Time spent on the
superstition of "managing by the seat of the
pants" is often waste.
Deming advised them
that a supplier is a partner. Relationships with
suppliers must be based on cooperation and trust.
Adversarial relationships result in waste.
Supplier relationships based on Deming's teachings
change fundamentally and, even better, both
supplier and customer win.
Deming showed
how customers and suppliers are brought into, and
become part of, the production system. Systems
thinking is the key. The
supplier-producer-customer network works together
as a system.
Any country or industry that
follows these basic principles will become
competitive in the global economy and begin to
gain share in the markets in which it does
business. Speculation is not required. As we say
in statistics, "The data are in."
The
methods outlined above that Deming taught are not
difficult to understand, nor are they proprietary.
Anyone can do it. But it is not so easy to do.
Change is required. For that reason, those who do
begin this journey of continual improvement and
competitive gain will tend to gain a consistent
advantage of those who squander the opportunity.
In his 1986 book Out of the Crisis,
Deming asks (rhetorically), "Need any country be
poor?" For any country willing to modify Deming's
fundamental principles to suit its own culture and
population, the answer may well be "No."
Notes 1. To say he was
not involved is not exactly true. He had worked in
the US to help develop the Z1.1 and following
standards on which the courses were based, and he
worked closely with Walter Shewhart (1891-1967) in
the development of the original tools of
statistical quality control. 2. "Virtuous
circle" describes a spiraling instability to
economic equilibrium that has desirable
consequences. There can also be vicious circles.
3. Shewhart was a physicist working at Bell
Labs in the 1920s and 1930s who invented the
statistical control chart. He and Deming
collaborated on what ended up being an important
book, Statistical Method from the Viewpoint of
Quality Control.
John Dowd has been
teaching and consulting in the area of
productivity and quality improvement and strategic
planning and industrial statistics for more than
25 years. He was designated by W E Deming as a
"master" and has worked in more than 25
countries.
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