many of Deming’s ideas are controversial. But the blast radius of these ideas is so large and so impactful that you cannot unsee them once you know what to look for; if you are interested in operational excellence in business, at some point you do have to tackle Deming head-on (View Highlight)
Deming 101
W. Edwards Deming is typically described as an engineer, consultant or a statistician. For many years — right up to his death — his business card read ‘Consultant in Statistical Studies’. While this is not wrong, I think he is better described as a business philosopher. Deming took the ideas about variation that we’ve explored in previous parts of the Data Driven Series and extrapolated from them an entire coherent philosophy of operational excellence (View Highlight)
I joked on Twitter that understanding Deming turns Kochland from a biography of a powerful American conglomerate into a playbook for gathering so much industrial power you eventually control the Republican Party. (No seriously: read all the chapters on lobbying in Kochland, and read Jane Mayer’s extremely biased Dark Money, which describes how Koch hijacked the Republican senate electoral process — and now read all of this through the lens of process control.) (View Highlight)
The key to understanding Deming is to understand variation. Hopefully, at this point in the Data Driven Series, and especially in the wake of Becoming Data Driven, From First Principles, you have a functional understanding of variation. We’ve already looked at some of the first and second order effects of the idea: in particular how it will change the way you think about operational excellence. But that’s just the tip of the iceberg. We’re now going to look at what happens when you take variation as a given, and then chase down all the implications — especially the implications of variation on human psychology. The way we’ll do this is that I’ll first describe the set of Deming’s ideas that should be easy for you to accept. And then we’ll build towards the ideas that are more … challenging. (View Highlight)
Deming organised his philosophy into a system of four pillars late in this life, the so-called ‘System of Profound Knowledge’. These are:
Understanding of Variation — which we’ve spent the bulk of the Data Driven Series exploring together.
Theory of Knowledge — this is epistemology as applied to business. As I’ve explained elsewhere, Deming has long argued that ‘management is prediction’ and ‘there is no such thing as truth in business, only knowledge’. Epistemology is important when applying his ideas — if you do not have a good sense of knowledge, you will attempt to blindly copy instantiations of Deming’s principles from other companies. You would not be able to do trial and error rigorously yourself.
Appreciation of a System — this is systems thinking, which we’ve touched on in passing during the sequence where I introduced the ‘Process Control Worldview’. Systems thinking is in some ways an obvious consequence of Deming’s overall philosophy: you can only improve your business with process control if you know how all the processes you’re observing interlock. Similarly, you can only improve your business if you understand how employee psychology affects system design.
Psychology — I have mostly steered clear of this pillar, and for good reason. ‘Psychology’ describes how humans find meaning in and are motivated to work in complex organisational systems. They compose with the three other pillars in counter-intuitive ways. I believe that this pillar — of all the pillars in his philosophy — is the source of Deming’s most challenging ideas. (View Highlight)
Point One: Create constancy of purpose for improving products and services (View Highlight)
Mary Walton writes, in The Deming Management Method, that establishing constancy of purpose breaks down into four elements: 1) innovation, 2) research and education, 3) continuous improvement of product and service, and 4) maintenance of equipment, furniture and fixtures, along with new aids to production in the office and in the plant. You’ll notice that the first two has to do with future products and services; the latter two with current products and the business operations needed to supply them. (View Highlight)
During World War 2, Deming helped teach Statistical Process Control (SPC) to two thousand men and women under the auspices of the Ordnance Department. Many of these folk in turn became instructors, and gave more classes on SPC to more companies and industries throughout the country. All told, some 31,000 engineers, supervisors, managers and workers went through some form of this course, taking Deming’s methods back to their factories in order to create better weapons and better supplies for the war. In Deming’s Journey to Profound Knowledge, author John Willis argued that this quality advantage was one of the factors that led to the Allied forces winning — and that Japanese production engineers had noticed. (View Highlight)
After WW2, SPC was largely forgotten in the United States. American industry found that it had no special need for continuous improvement — they were, after all, the country with the strongest industrial base in the world. And so American manufacturing became sloppy, even wasteful. They stopped the use of control charts, and reverted back to quality by inspection — discarding defects as a normal part of doing business. In the meantime, post-war Japan began adopting Deming’s methods en masse. Japanese engineers called these methods ‘military quality control standards’ (eventually just ‘QC’) instead of ‘Statistical Process Control’ — because they saw these methods as US military production practices. (View Highlight)
In 1980, CBS aired a documentary on the Japanese economic miracle, finally profiling an American statistician — Deming! — as the source of the Japanese threat. American companies began reaching out to Deming for help. The 14 Points comes from this period; point two is really an exhortation to drop sloppy practices and to adopt the ‘new’ — or rather the forgotten — philosophy of continuous improvement that Deming had taught US factories all those years ago. (View Highlight)
Point Three: Cease dependence on inspection to achieve quality (View Highlight)
The core insight here is that in order to achieve low defects, invert the problem to focus on higher quality instead. That is: focus on what you want to see more of, not what you want to see less of.
Inspection, is, after all, a dumb idea: it is much cheaper to identify and then fix problems early in the production process than to inspect for quality at the end. If you do the latter, you will be very wasteful: you will discard finished products. Better to just increase overall quality at each stage, such that the defect rate goes down permanently. (View Highlight)
Well, one way to think about this is to think of quality as a problem of variation: bad quality is the result of excessive variation during production. Therefore, the best way to improve quality is to bring variation under control within the entire system.
This is, incidentally, why these ideas have mostly been trapped within manufacturing. Deming’s tools are tools to characterise variation, which are typically misunderstood as tools to reduce variation. But as we’ve seen over the course of this series, tools to characterise variation can also be used to detect changes in variation — which means that you can run process improvement in nearly every aspect of business, not just within quality engineering. (View Highlight)
