The Deming Dimension - Management for a Better Future

- 1 - Henry R. Neave, August 25, 2000THE SWISS DEMING INSTITUTE

The Deming Dimension: Management for a Better Future

The Deming Dimension: Management for a Better FutureHenry R. Neave

AuthorProf. Dr. Henry R. Neave is W. EdwardsDeming Professor of Management at theNottingham Business School of The Not-tingham Trent University.

This paper was presented by Henry R. Nea-ve on 2nd March 2000 at his Inaugural Pro-fessorial Lecture at this university.

Professor Neave assisted at all of Dr.Demings celebrated Four-Day-Seminarsheld in Britain and elsewhere in Europefrom 1985 through to Dr. Demingts deathin December 1993. His popular and com-prehensive book, The Deming Dimensi-on [1] was described in 1998 in a publica-tion of the American Society for Quality asThe best overall theoretical yet practicalexplanation of the Deming philosophy. Inaddition to his teaching in the UK, Profes-sor Neave has also lectured in Ireland, Swe-den, Norway, Holland, Spain and Singapo-re.

beginning of his long personal associati-on with Dr Deming by describing the occa-sion of his first experience of assisting at afour-day seminar held in London in 1980.He was to learn early on, that much of whatDr Deming had to say was fundamentallyand radically different to the prevailingconcepts of traditional management. Forthe audience it was an extraordinarylearning experience.

The journey of Demings life begins fromhis birth in the American Mid-West on the14th October 1900 in modest circumstances,to his award of a Doctorate in Mathemati-cal Physics from Yale in 1928. As a studentin 1926 and 1927, he had the good fortuneto take a vacation job at the HawthornePlant of Western Electric. Here he met andworked with Dr. Walter A. Shewhart, thenpioneering his definitive work on the un-derstanding of variation in processes andthe development of the control chart.The profound nature of this work, whichprovides the essential first step towardsthe continual improvement of processes,was not lost on Deming. In this collabora-tion with Shewhart can be found the ori-gins of system thinking, operational defi-nitions and the famous improvement cy-cle, Plan-Do-Study-Act. Shewhart brou-ght a new dimension to quality, far widerthan even current interpretation of theword, and Deming was there.

In the 1930s and 40s Dr. Deming becameprominent as a statistician working for theU.S. Department of Agriculture and theNational Bureau of the Census.

The 1950s and 60s are characterised byProf. Neave as The Theory of a Systemand Cooperation, to sum up the emphasisthat Dr. Deming placed on his teaching tothe management of manufacturing organi-sations in post W.W.II Japan. From its rootsin his association with Shewhart, Deminghad tied the pursuit of quality inexorablyto a new system of management. Now,system thinking and cooperation were theprerequisites for a system of managementthat shifted the focus from the individual

to the system and the continual improve-ment of the system. Prof. Neave examinesthe component parts of system thinking indetail.

The 1970s were a depressing time for Dr.Deming. Despite the self-evident post warsuccess of Japanese industry, he witnes-sed his own county drifting into crisis. Heknew he had something to offer, he wantedto help but no one would listen. Finally,the search for answers to the crisis by themedia bore fruit and in 1980 Dr Deming wasdiscovered and appeared on the NBCtelevision programme, If Japan Can, WhyCant We? 30 years after the start of theJapanese miracle, America and the Westbegan to listen.

Dr. Deming embarked on a continual pro-gramme of teaching in the USA. and theWest. It was a gruelling undertaking foranyone, let alone a man in his 80s but de-spite failing health he pursued his goal forthe remaining 13 years of his life. By thesecond half of the 1980s his approach hadbeen broadened and deepened and he be-gan talking about A New Climate inwhich the gain of all components of a sy-stem was stressed and innovation was gi-ven as important a role as continual impro-vement. And, not forgetting people, hestressed the part of managements job thatis to give people back pride in their work.

In his 90s, Dr Deming consolidated thewhole of his philosophy of managementinto one extraordinary phrase - A Systemof Profound Knowledge. Appreciation fora System, Theory of Variation, Theory ofKnowledge and Psychology were the in-terlinking and interdependent componentsof the total system. A priceless, timelesslegacy of wisdom which Prof. Neave invi-tes us to study further if we are to make abetter future, materially, socially and men-tally, in an increasingly complex world.

Dr Deming died at his home in Washing-ton DC. on the 20th December 1993.

On the occasion of his inaugural professorial lecture Prof. Neave takes the opportunity to look back at thelifetimes work of Dr W. Edwards Deming. He traces the development of Dr Demings unique and profoundunderstanding of the process of management from its origins in the 1920s through to the 1990s and thepinnacle of his work, A System of Profound Knowledge. Prof. Neave argues that in a world growing evermore complex, the need for learning of this rich legacy of wisdom becomes increasingly appropriate if all itscitizens are to share in a better future.

Summary:Author: Noel C. Spare

In this short lecture, Prof. Neave providesbut a glimpse of the lifetime of Dr W. Ed-wards Deming. He sets the scene at the

- 2 -Henry R. Neave, August 25, 2000 THE SWISS DEMING INSTITUTE


IntroductionIntroductionIntroductionIntroductionIntroductionIt was an unexpected honour to become aProfessor at the Nottingham Trent Univer-sity. But mine is an almost-unique honour:this particular title, named after WilliamEdwards Deming (born 14 October 1900,died 19 December 1993). I know of onlyone other person who bears this title, Bar-bara Lawton of the University of Coloradoat Denver, and she is someone who workedvery closely with Dr Deming for manyyears. She wrote to congratulate me on myappointment, so I believe she has no ob-jection to sharing her title with me!However, the fact that this is the title of myChair seemed to me to choose the subjectof my inaugural lecture automatically. Itjust had to be an introduction to DrDemings life and work - which is ambitiousfor just a short talk, but I shall try.Let us begin with the quotation which mostof you will have seen in the publicity forthis talk:

Dr W Edwards Deming has a lot to ans-wer for. He has been responsible forturning the writers life upside down.These two sentences were written by aNottingham Trent University student inSeptember 1998. They were the openingwords of the project which he wrote afterattending my introductory course on DrDemings work. And in his second para-graph he spoke of many nights of frustra-ted reading related to Dr Deming and hiswork. So, be warned: this could be damag-ing to your health!

To help you understand where I am co-ming from, and why, let me give you a ...

Brief AutobiographyIn the late 1960s I became the first full-timeStatistics lecturer in the Mathematics De-partment just up the road at the Universityof Nottingham. Before long there was animpressive and thriving Statistics Groupthere, headed in the 1980s by ProfessorAdrian Smith, well-known to some of youin the audience, and I stayed full-time withthe Group for nearly 20 years. But, withoutdoubt, the most important thing which hap-pened to me during all that long time wasin 1980 when I found myself (much morethrough great good luck than virtue) car-rying out some consultancy work for theBritish subsidiaries of the first Americancompany to start taking Dr Demings workat all seriously. As a result of that connec-

tion, about five years later (quite out of theblue) I suddenly received a letter telling methat Dr Deming was coming to London forthe first time that summer to present whatin America had already become his veryfamous four-day seminar for management(whose title was Quality, Productivity, andCompetitive Position). The letter invitedme to become one of his two main assi-stants at that seminar. (The other assistantwas an American who had served in thiscapacity several times already: Bill Scher-kenbach, who at that time was Director ofStatistical Methods in the Ford Motor Com-pany - recommended to them by Dr De-ming.) I accepted the invitation, albeit alittle nervously. And so began the uniqueprivilege - and responsibility - of workingwith Dr Deming on all of his visits to Bri-tain and elsewhere in Europe for the remai-ning nine years of his life.

Two years later I reduced my involvementat Nottingham University to a fairly smallpart-time contract, to give me time to helplaunch the British Deming Association(BDA). The BDA was set up not as a con-sultancy but as a non-profit educationalorganisation having the stated aims ofspreading awareness of Dr Demings work,helping to deepen understanding of thatwork, and generally to help in whateverways it could (within the non-profit con-text) both organisations and individualswho became interested.

Five years later (1992), the time came whenI no longer wanted to continue with eventhe small amount of Mathematical Stati-stics with which I was still engaged, andso I moved on to full-time leave of absencefrom academic life. And that continued until1996, which is when Professor Tony Ben-dell invited me to join the Quality Unit hereat Nottingham Trent as a part-time Princi-pal Lecturer.

Why Four Days?I mentioned Dr Demings four-day mana-gement seminar. That might sound a so-mewhat luxurious amount of time. At least,that is what I thought when I first heard ofit. But Dr Deming had the right idea abouta lot of things - including the length of timeneeded to give a good introductory pre-sentation on his work! And, when I firstenjoyed the experience of a four-day semi-nar in London in June 1985, I soon realisedwhy he had insisted on that length of event.

You see, back then, very few of the delega-tes had any idea of what was coming. It

wasnt that they were new to ideas andapproaches and schemes for achievingquality (whatever that might mean). No,quality was already all the rage. You mayknow of people like Tom Peters, Philip Cros-by and Joseph Juran: they were alreadymaking quite a name for themselves backthen. You may know something aboutJapanese-sounding things like Kaizen, qua-lity circles, and TQM and TQC - they werearound, too. And there was of course theGreat British invention: BS5750 - which, ifyou are very young, I should explain, iswhat later became ISO9000. (I should ha-sten to add that you do not need to knowanything about any of what I have justmentioned to follow the rest of this talk: infact, come to think of it, they might be moreof a hindrance than a help.)And now, in 1985, Deming was coming toLondon. So, in many companies, the Qua-lity Manager was sent off on his travelsagain, this time to find out what Demingwas all about.

No wonder therefore that, when Dr W Ed-wards Deming (now of course in his mid-80s) slowly hobbled out onto the stage ofthe Connaught Rooms, in Queen Street inLondon, those delegates were, to put itmildly, unprepared! I think I have neverseen so many open mouths and expressi-ons of utter incredulity, and heard so manysharp intakes of breath and mutterings ofdisbelief - total astonishment - as there wereon the opening day of that four-day semi-nar. For when they heard what Dr Deminghad to say, he wasnt just contradictingmost of what they had always experiencedso far in their working lives as regards ideasabout management, and quality, and pro-ductivity, and people, and work, relation-ships with suppliers, performance apprai-sals, targets, inspection, standards, lowest-tender contracts, and lots more besides-he was even contradicting much of whatwas coming from those other quality ex-perts and techniques and approaches thatI have just mentioned - and at that time thedelegates were only just beginning to learnabout them! And Deming was saying thatthey were wrong.

So it was small wonder that, at that time, itwas not unusual for some fraction of theaudience - say 10% - to go home after justthe first day. That rather upset me, and soI raised the matter with Dr Deming. Was heupset? Was he annoyed? Did he regard itperhaps as an insult? After all, this 85-year-old had flown all the way over fromhis home in Washington DC just to pre-sent this seminar. Not a bit of it: there was



no blame, no anger. A touch of sadness,yes. He just said to me, very gently, with alittle shake of his head: Henry, theyre notready yet.

Then we came to Day 2. And, for the 90%or so that were left, things began to chan-ge. Some things were beginning to sink in:the great good sense of what Deming wassaying - hugely different though it was -was beginning to register. And now therebegan to be positive vibrations around theroom, rather than the negative or at bestneutral ones of the first day. And then, bythe third day, the delegates were really be-ginning to get into it. And on the Friday,they realised they were nearing the end ofan extraordinarily important learning expe-rience.

I saw that pattern acted out several times.Why am I telling you all this? It is an im-portant part of setting the scene. It is alsoa warning for you not to expect too muchfrom me just now. If Dr Deming neededfour days to introduce his managementphilosophy (even with his very special ta-lent of being able to pack a mountain ofmeaning into just a very few words), itwould be impertinent of me to think I cando much in one short talk. I am very fortu-nate in that most of the seminars on DrDemings work that I have been asked topresent in recent years, including here inthe Quality Unit at Nottingham Trent, havebeen for between two and five days, notjust an hour or so.I could think of no better way to structurethe presentation from now on than to sim-ply relate the story chronologically, fromhis lifes beginning to its end, and then totake a brief look into the future. For thoseof you who are completely new to this, Iwill give advance warning that the onlyslightly tough thinking will be in the 1920sand 1950s - and it wont last very long!

So first, for the record ...

The Early 1900s: TheStory BeginsAs I said, William Edwards Deming wasborn with the century, in 1900. His familywas not well off, and moved several timesas his father tried to find satisfactory em-ployment. They finished up in Wyoming,and Deming received his Bachelors degreefrom the University of Wyoming in 1921,majoring in Electrical Engineering. He thenwent to teach Physics in Colorado, wherehe obtained his Masters degree. His doc-torate came from Yale in 1928, in Mathema-

tical Physics.

The 1920s: NewStatistics inManufacturingJust like many students these days, MrDeming (as of course he still was at thetime) had to work his way through col-lege: He had to find holiday jobs to raisemoney to finance his studies. And that ledto a most incredibly fortunate coincidence,without which the industrial history of theworld during our lifetime might have beenvery different.

For, in 1925 and 1926, Mr Deming took sum-mer vacation jobs at the Western ElectricCompany in Chicago. What was so fortu-nate about that? Well, it was in the We-stern Electric Company at this very timethat Dr Walter A Shewhart was developinghis theory of what we nowadays refer to insuch terms as the statistical control of pro-cesses, along with the associated tool ofthe control chart, and the understandingof the two fundamentally-different typesof variation in processes, variation due towhat Deming later called common and spe-cial causes. Deming just happened to bethere, at the Western Electric Company, justat the right time.

Understanding variation. Why is thatimportant? Well, let us consider when youbuy a product, or a service, or you are en-gaged in a service operation, or a manufac-turing process, or an administrative pro-cess, etc.. Does it always work smoothly,the same way, take the same amount of time- so that you can either do, or experience, aperfect job? That would be very rare. Ordoes it work fine one day, but have nastysurprises for you the next? Thats variati-on, or variability. Variation is nasty: itmakes things difficult, unpredictable,untrustworthy: bad quality. Good quality isvery much related to reliability, trustworthi-ness, no nasty surprises. In a big way, badquality means too much variation, goodquality means little variation.

And Shewharts breakthrough in under-standing variation (for it was nothing less)proved to be the foundation-stone of WEdwards Demings lifetimes work. Shew-hart became not only Demings teacher buthis mentor, somebody he found he couldtrust and respect, and therefore learn fromwith confidence. For the rest of his life (along while!), Deming repeatedly attributedthe source of much of his most importantlearning as being Walter Shewhart.

And not just for these statistical aspectsof the Deming philosophy, but much elsebesides, including (a) systems thinking, (b)operational definitions (i.e. defining unam-biguously how something is to be measu-red or assessed, and really getting to gripswith if and why it should be done that way),(c) the famous improvement cycle: Plan-Do-Study-Act (which many call the De-ming Cycle but to which he always refer-red as the Shewhart Cycle - as proof, hereit is in his own handwriting, Figure 1) andmuch more.

But let me quote Deming directly from hisdedication in the 1980 reprint of Shewhartsfamous 1931 book: Economic Control ofQuality of Manufactured Product [2]. Herefers to Shewhart there as the father ofmodern quality control, and Deming prai-sed certain chapters of that book as beinga masterpiece on the meaning of quality.He continued:

To Shewhart, quality control meant eve-ry activity and every technique that cancontribute to better living ... His book em-phasises the need for continual search forbetter knowledge about materials, howthey behave in manufacture, and how theproduct behaves in use. Economic manu-facture requires achievement of statisti-cal control in the process and statisticalcontrol of measurements. It requires im-provement of the process in every otherfeasible way.Even today, I think you will agree that mostpeoples interpretation of the word quali-ty is still hopelessly narrow and limitedcompared with Shewharts understanding

Figure 1 The Shewhart Cycle forContinual Improvement in Demings ownHandwriting



in his great book of nearly 70 years ago.

Now, we need to know something of thecircumstances in which Shewharts greatdiscoveries took place, for only then canwe properly understand the prime purposeof those discoveries. The sad, and costly,fact is that - despite the amount of timewhich has elapsed - the true purpose andhence the potential of Shewharts work isstill greatly undervalued.

The Western Electric Company at that timewere heavily involved in the developmentof telephone technology and related equip-ment. They were investing massively toincrease their knowledge and ability. Forsome considerable time their improvementefforts had paid handsome dividends. Butgradually that improvement activity beganto run out of steam: it was achieving lessand less. They were still working as hard,if not harder than before, spending muchmoney, time, effort - every kind of resource- on trying to make things better.

I will quote you a fragment of the speechwhich Dr Deming made at the launch of theFrench Deming Association in 1989 [3]. Itshould be no surprise that he was talkingabout reducing variation:

... the harder they tried to achieve consi-stency and uniformity, the worse were theeffects. The more they tried to shrink va-riation, the larger it got. They were natu-rally also interested in cutting costs. Whenany kind of error, mistake, or accident oc-curred, they went to work on it to try tocorrect it. It was a noble aim. There wasonly one little trouble - their worthy ef-forts did not work. Things got worse. ... As he explained it just a little later in thesame speech:

... they were failing to understand thedifference between common causes andspecial causes, and that mixing them upmakes things worse. ... Sure we dont likemistakes, complaints from customers, ac-cidentsbut if we weigh in at them wit-hout understanding, then we make thingsworse.

Not just fail to make them better, but makethem worse.

These ideas about the two types of variati-on may be new to you, so Ill give it to youin just three sentences! Ill talk in terms ofvariation in a process - which could for ex-ample be some administrative process,manufacturing process, service operation- basically, anything which happens over aperiod of time, so that we may have a chan-

ce to improve it.

What Dr Deming called common-causevariation is the routine variation to be ex-pected because of what the process is andthe circumstances in which it exists and isoperating. Special-cause variation isanything noticeable over and above thatroutine variation. (Some people find it use-ful to think in terms of the analogies of com-mon-cause variation as noise and special-cause variation as signals.) And, surely,very different actions are called for depen-ding on whether something is routine (i.e.there all the time) or exceptional (perhapsjust one-off). Thats it. Not exactly rocketscience! But still so little understood over70 years later.

And so, Shewhart created the tool called acontrol chart whose purpose was to pro-vide guidance for improvement. What kindof actions, and what kind of interpretati-ons of data, will help you improve? Butthere is a lot of bad teaching around onthis. To a lot of people who know whatcontrol charts are and perhaps use them,this emphasis on their use for improvementis still very new. Most people who use thecontrol chart at all use it for what I callmonitoring purposes, as a sort of early-warning device. If all the data lie withintwo horizontal lines which are called thecontrol limits (and are computed by sim-ple formulas from data from the process),and continue to stay there, all is regardedas being well, and people may relax andthink of other things. But if the process,say, starts to wander in some way, the con-trol chart signals the onset of trouble, sothat corrective action may be taken beforethe trouble becomes too serious. This ishow most people use control charts. Now,I am not saying that it is wrong to use thecontrol chart in that way. Of course not. Itworks very well in that early-warning role.Im simply saying that if that is all you areusing the control chart for, you are missingout on the main purpose for which Shew-hart created it, which was to provide gui-dance for the type of things to do whichwill lead to improvement, to making thingsbetter - not to just keep things as they are,which is all that the monitoring use of thecontrol chart provides - and all that it isintended to provide. To merely maintainthings as they are, or to improve: thats thedifference.

And that is a major difference in purpose.Demings lifes work was all about provi-ding guidance for how to improve, to makethings better, and to stop doing thingswhich cause harm and make things worse.

Shewharts discovery of the two types ofvariation and his creation and intended useof the control chart were the first greatsteps on that long journey toward the De-ming management philosophy (or theory,or approach - whatever you wish to call it).

The 1930s to the 1940s:New Statistics in Non-ManufacturingSo, it did all start in the 1920s with somenew statistical thinking and methods in aspecifically manufacturing context. Re-grettably, more than 70 years later, somepeople still seem to think that that was allthat Demings work was about, and all thatit is relevant to. Nothing could be furtherfrom the truth. For one thing, Deming wasnever employed in a manufacturing envi-ronment, except for his holiday jobs atWestern Electric. For his first permanentemployment he joined the United StatesDepartment of Agriculture (which, I sup-pose, is manufacturing, but of a rather dif-ferent kind). His appointment there was asa Mathematical Physicist (for that was thesubject in which he was mainly qualified).Twelve years later, in 1939, he was appoin-ted Head Mathematician and Adviser inSampling at the National Bureau of theCensus - again, hardly manufacturing! Hiswork there, particularly with the 1940 Ame-rican census, turned out to be supremelysuccessful, and it was in that connectionthat he first attracted some internationalattention. In fact his first visit to Japan,soon after the Second World War, was pri-marily to work with those who would beinvolved with the first Japanese post-warcensus.

The 1950s to the 1960s:The Theory of a System,and CooperationRemember that description of this era: youwill see in a moment where it comes from.

A second visit to Japan, again to work withthe census people, was planned for Sum-mer 1950. By this time, Dr Demings nameand reputation had become known to Ken-ichi Koyanagi, Managing Director of JUSE,the Japanese Union of Scientists and En-gineers, an organisation set up soon afterthe war ended, having the aim to help Ja-panese industry get on its feet again. Koya-nagi issued an all-important invitation forDr Deming to also teach concepts and me-thods for the achievement of quality in in-



dustry. During that visit his teaching notonly reached hundreds of engineers, plantmanagers, research workers, and so on: italso reached top management. A particu-larly famous meeting was held in July 1950with the 21 top industrialists of Japan pre-sent, a meeting later described as the occa-sion at which Dr Deming had in that oneroom 80% of the industrial capital of Japanright in front of him. Deming regarded thatas the breakthrough: that those top peoplecame to listen and learn from him.

Japan has, of course, been going throughsome difficulties in recent years. And the-re are some who point to those difficultiesand say: There you are. I told you so.This Japan stuff, or this quality stuff, orthis Deming stuff. Doesnt work, does it?I think there are two brief facts worth poin-ting out. First, Demings teaching in Japanwas almost entirely to manufacturing in-dustry (in addition to the Census), not tothe financial sector nor to government.Second, his main teaching to the Japanesewas in 1950 - 1952. To point, nearly 50 yearslater, to problems which (as I understandit) have primarily been caused by parts ofthe Japanese picture on which Deming hadlittle or no influence even that long whileago, and claim that consequently Demingdoesnt work does seem to me to be atrifle unreasonable.

Let me quote from another NottinghamTrent University student:

Looked at in todays light, with the col-lapse of Japan and the other Tiger econo-mies, is this message still relevant? Withworld recession staring us in the face, it isprobably more relevant than ever.

The reason for Japans recession is to befound in Doctors Orders when Demingsays:

Financial wizards ... what have they beendoing? ... letting the company go to ruina-tion, thats what - permitting expenditureon the wrong thing at the wrong time.

(Doctors Orders was an ITV programmeabout Deming, first screened in 1988.)Investment mistakes on a grand scalecombined with a large amount of fraudand government mismanagement has crea-ted this crisis.

Can you really blame Deming for them?

However, the Japanese have come backfrom worse.So yes, Japans industrialists, includingthose at the top, listened and learned some

good sense from Dr Deming. And it wasntjust his reputation, and the fact that he wasan eminent scholar (which I think has al-ways earned rather more respect in Japanthan in some Western countries). Anotherreason they did so was well-expressed byKoyanagi [4] as follows:

Most of the Japanese were in aservile spirit as the vanquished, andamong Allied personnel there were not afew with an air of importance [which Iimagine was something of an understate-ment]. In striking contrast, Dr Demingshowed his warm cordiality to every Ja-panese whom he met. ... His high persona-lity deeply impressed all those who lear-ned from him and became acquainted withhim. ... The sincerity and enthusiasm withwhich he did his best for us still lives andwill live forever in the memory of all con-cerned.

Deming treated the Japanese with warmthand respect and humanity. In a short pieceof film from post-war Japan shown inDoctors Orders, Dr Deming provided thefollowing voice-over, showing genuinesympathy and understanding:

Japanese top management, and anybo-dy in Japan, could understand that Ja-pan was in a crisis. They could not conti-nue to receive food from the American armyfor ever. They needed new equipment, hav-ing no resources. Industry was on theground. Twisted steel where there hadbeen a factory: was now a rice-field. Theywere in a crisis. They knew that.

So what did he teach them, to help themout of that crisis? Was it just statistics (assome claim)? I do not think so. First let me

show you this entry from his diary [5], da-ted 10 July 1950:

The lectures are being held at the JapanMedical Association in Ochanomizu. ...Over 600 men had applied, and the limitwas finally overstrained to 230. Profes-sor Masuyama and assistants will teachthe statistical control of quality in the af-ternoon. I shall teach during the forenoonthe theory of a system, and cooperation.There you are: that is where the title of thissection comes from: his own diary. De-ming was content, on this occasion andothers, to leave the teaching of statisticsto assistants, while he concentrated on thereally important matters.

What did he mean by the theory of a sy-stem, and cooperation? Here is an abbre-viated version of his own seven-point sum-mary of his teaching in Japan during thatsummer:

A summary of Teachingsto Top Management andto Engineers in Japan1. The Organisation has to be Viewed as aSystem.This first point was the famous flow dia-gram, his simple but profound picture ofan organisation viewed as a system. Heregarded this as the most important dia-gram he ever drew in his life (Figure 2). Icall it the Page 4 diagram, because that iswhere it appears in his 1986 book: Out ofthe Crisis [6]. Out of the Crisis is a big,fat book! The fact that this appears soearly indicates how fundamental he consi-

Figure 2 The Organisation Viewed as a System. Deming considered this to be themost important diagram he ever drew in his life

Suppliers ofMaterials and

Equipment

Receipt andTest of

Materials Production Assembly Inspection

Tests ofProcesses,Machines,

Methods, Costs

Distribution

Consumers

ConsumerResearch

Design andRedesign

A

B

C

D



dered it to be: right up front.

It is also well worth quoting from his finalbook: The New Economics for Industry,Government, Education [7]. A section tit-led with the question: What ignited Ja-pan? reads as follows:

The flow diagram was the spark that in1950 and onward turned Japan around.It displayed to top management and to en-gineers a system of production. The Japa-nese had knowledge, great knowledge,but it was in bits and pieces, uncoordina-ted. This flow diagram directed theirknowledge and efforts into a system of pro-duction, geared to the market - namely,prediction of needs of customers. Thewhole world knows about the results.

This simple flow diagram was on the black-board at every conference with top mana-gement in 1950 and onward. It was onthe blackboard in the teaching of engi-neers.

Action began to take place when top ma-nagement and engineers saw how to usetheir knowledge.

What is so special about the flow diagram?Two main things, I think. Firstly, it is an all-important horizontal view of how the workneeds to get done - what actually happens,and what needs to happen - in an organisa-tion, rather than the familiar vertical view,which is just the power structure, theconventional organisation chart (Figure3):And it is a very neat perspective that thisvertical structure is so often obstructiveto the horizontal flow. But it is that whichis all-important regarding what theorganisation actually does. And second-ly, whereas the doing is represented by thearrows going from left to right in the flowdiagram, the organisation should be conti-nually improving - because of the learningand feedback represented by the arrowsalong the top going from right to left. Andthe vertical structure can be pretty effecti-ve at getting in the way of that as well!

So that is the big one. But now, the other

six of the seven points.

2. Quality is determined by the manage-ment. Outgoing quality can not be betterthan the intentions of the management.

I so often heard him say, simply, Qualityis made in the Boardroom.

3. The consumer is most important. Whatwill help him in the future? Strive forlong-term relationships with your custo-mers.

What will help the consumer in the future -not just now? ... Strive for long-term relati-onships. The consumer was at the rightside of the Page 4 diagram (Figure 2). Atthe left is the supplier - who should be yourpartner, working together, long-term, intrust and cooperation. Why? Not just tobe nice. Supplier and customer will bothbe better off - thats why:

4. Your supplier is your partner. Makehim your partner. Work together on con-tinual improvement of quality. Develop along-term relationship with a supplier ina spirit of mutual trust and cooperation.Supplier and customer will both win.5. Supreme quality initiates a chain reac-tion of positive effects just as inferior qua-lity produces a chain of adverse effects.

There is a second famous diagram datingfrom 1950: the chain reaction (Figure 4).Improve quality (in the big sense in whichDeming meant it) leads to improve pro-ductivity leads to expand. Note jobsand more jobs: he loathed unemployment- he saw it as such a waste of humanity andhuman potential:]6. Need for trust and cooperation betweencompanies.

7. Development of trust and respect.

I think you can see some common themesrunning through that list! And its hardlyjust statistics! And its hardly just for ma-nufacturing companies!

(The uncut version of Dr Demings sum-mary of his teachings in Japan can be foundin Chapter 3 of The World of W EdwardsDeming [8].)It is not surprising that there should havebeen such a development of emphasis inDemings teaching. When you get into it,an inevitable consequence of Shewhartsunderstanding of those two types of va-riation is that the great majority of problems(or, thinking positively, of opportunities forimprovement) lie in the common causes -the system, as Deming called it. When so-

mething goes wrong, the fault rarely lies inindividuals. Looking round for a scape-goat, someone to blame, is the last thingthat management should do. The faultwholly or primarily lies in the system: theenvironment, the circumstances, the wor-king conditions, the values, the companyculture within which individuals live, work,try to succeed, try to survive - yet so oftenit is that very culture which repeatedly andconsistently obstructs their aims and desi-res.

So Demings thinking, as a natural conse-quence of Shewharts thinking, leads to avast change of emphasis from what is stillcommonplace in so much of modern mana-

Figure 3 Conventional OrganisationChart as a Contrast to Demings SystemView

Figure 4 Deming Chain Reaction:The second most effective diagram forthe astonishing success of JapaneseProducts on the World Market.

Improve quali ty

Costs decreasebecause of less

rework, fewermistakes, fewerdelays, snags,better use of

machine-t ime andmaterials

Productivityimproves

Capture the marketwith better qualityand lower price

Stay in business

Provide jobs andmore jobs



gement - and indeed, even more sadly, ofmodern government. It is still common-place, often increasingly so (and you knowit), to be focused on blame or praise, pu-nishment or reward, judgment - of the indi-vidual. Deming had already, half a centuryago, come to realise that that focus is mis-placed.

You see, to repeat, he had concluded thatthe vast majority of performance, beha-viour, results - whatever - comes from thesystem within which people live and workrather than from the individuals themsel-ves. And, if that is true, then of coursewhat can be achieved by such focus onjudgment of the individual is trivial com-pared with what can be achieved by focu-sing instead on improvement of the systemwithin which the individual works and li-ves. This in large part explains why De-ming was so critical of managing and jud-ging - with reward and punishment invol-ved - related to the achievement (or other-wise) of numerical targets and quotas andobjectives and numerical goals. And ofperformance-related pay and ranking andrating and league-tabling. Its a long list:you could add more.

Now, there is no time to get into those con-tentious issues here: and in fact it wouldbe irrelevant to try. Why? Because itwould be putting the cart before the horse(which is either unproductive or dange-rous, depending on whether you are onthe level or on a slope). The fundamentalquestion, from which all those issues Ivejust mentioned and many others then fol-low, is: could it be true that most beha-viour and performance come from the sy-stem, not the individual? I will tell you thatfor a long while I did not believe it. We arejust not brought up to believe that, to thinkthat way.

And then I got thinking like this. I inviteyou to try it too. Think slowly, and thinkcarefully.

Just imagine, you personally, how yourperformance, behaviour (what you do andhow you do it) would change according towhether

! you are living in a time of peace or atime of war;

! you live in one of the industrialisednations, or you live in a third-worldunder-developed country;

! you are extremely rich, or you are po-verty-stricken;

! your work is greatly fulfilling and ex-

citing, or it is dull and demoralising;

! you had lousy schooling, or you hada brilliant education;

! you had great parents, or you suffe-red abuse of various kinds throug-hout your childhood;

! you trust your colleagues at work, oryou distrust them;

! you trust your spouse or other part-ner, or you distrust him/her;

! all around you are back-biters andpoints-scorers, or they are support-ers and helpers;

! you are in an environment of con-flict, competition, winners and losers;or of genuine mutual cooperation sothat everybody gains.

Of course your behaviour would change -a lot - depending on these different cir-cumstances. But you are still the same per-son. It is changes in the system aroundyou, and the effects of those changes onyou, that change your behaviour and per-formance.

It is time to move on. But to where?

The 1970s: ?The 1970s: ?The 1970s: ?The 1970s: ?The 1970s: ?A question mark. Because we have rela-tively little knowledge of what was happe-ning with Deming during this decade.

He was still working very hard, lecturingregularly at the New York universities, stillpublishing research papers, visiting Japanfor the annual Deming Prize ceremonies(though I do not know how regularly). Andthat is in spite of the fact that effectivelythe Japanese had stopped learninganything significant from him years earlier.And there was no sign that the rest of theworld, including his home country of Ame-rica, had any interest in what he could dofor them either. Even in his secretarys bio-graphy of him, a section listing hisInternational Activities has many entriesin the 1950s, fewer in the 1960s, and thenonly two for the 1970s: that he lectured inArgentina in 1971 and, interestingly, thathe was a consultant to the China Producti-vity Center in Taiwan in 1970 and 1971. Andthen: nothing.

Let me tell you what I believe. I believe(and this would hardly be surprising in thecircumstances) that he suffered some de-pression. Two particular personal incidentssupport that thought. First, when I wasone of a group of about 30 people having a

Study Weekend with him in 1988, we gothim talking about his life. And he said a lotabout the 1950s and, to an extent, the 1960s.But when we asked him about what hadhappened in the 1970s, after a long pausehe just muttered: Oh, nothing much. Hejust didnt want to talk any more. The otherincident was when I was studying some ofthe music he had composed. I found mu-sic composed in the mid-1970s which I canonly describe as deeply and distressinglyunhappy. I believe he felt that the greatlearning with which he could help the We-stern world, if only we would listen, woulddie with him. He had reached that kind ofage.

Thankfully, as we know, that was not thecase.

The 1980s (first half):The West AwakensThrough Japanese contacts, an AmericanChief Executive did at last discover Demingin 1979, and began to listen and learn. Thiswas William E Conway of the Nashua Cor-poration. Demings involvement with Nas-hua began in just sufficient time to becomeknown to the NBC television producer, Cla-re Crawford-Mason, who at that time hadbegun to prepare a documentary which wasfirst screened in June 1980, a programmewith the title: If Japan Can, Why Cant We?.That was the breakthrough. As Demingssecretary later wrote [9]:American industrialists who watched theprogramme not only grasped more fullythe enormity of the problems that theywere facing, but they also realised thatanswers were available. Perhaps moreimportantly, W Edwards Deming was in-troduced to the audience as the man witheffective answers. It was an introductionthat would change his life irrevocably(and, she might have added, the lives ofcountless others).Here is a transcript of several short extractsfrom If Japan Can, Why Cant We?:Lloyd Dobyns (narrator): We have saidseveral times that much of what the Japa-nese are doing we taught them to do. Andthe man who did most of the teaching is WEdwards Deming, statistical analyst, forwhom Japans highest industrial award forquality and productivity is named. But inhis own country he is not widely recog-nised. That may be changing. Dr Demingis working with Nashua Corporation, oneof the Fortune 500, a company with saleslast year of more than $600,000,000. De-



ming was hired in late 1979 by NashuasChief Executive, William E Conway.

Bill Conway: And of course our majorsupplier of copier machines was a Japane-se company. And so we saw the advan-tages of how many things the Japanesecompanies were doing. And we heardabout Dr Deming. And so we got off andgot under way with our quality programwith Dr Deming.

Dr Deming: They realised that the gainsthat you get by statistical methods are gainsthat you get without new machinery, wit-hout new people. Anybody can producequality if he lowers his production rate.That is not what I am talking about.Stati-stical thinking and statistical methods areto Japanese production workers, foremen,and all the way through the company, asecond language. In statistical control youhave a reproducible product hour after hour,day after day. And see how comfortingthat is to management: they now know whatthey can produce, they know what theircosts are going to be.

Bill Conway: Many of these programmeson statistics have died in American com-panies because they didnt get the topmanagement support. Now, why top ma-nagement does not believe that this is theway the Japanese have improved their in-dustry over the last 30 years I dont know.

Dr Deming: I think that people here expectmiracles. American management thinks thatthey can just copy from Japan - but theydont know what to copy!

Lloyd Dobyns: But one part of Demingsprogram is not likely to please them. Heinsists that management causes 85% of allthe problems.

Dr Deming: I ask people in managementwhat proportion of this problem arises fromyour production worker. And the answeris always: All of it! Thats absolutely wrong.Theres nobody that comes out of a Schoolof Business that knows what managementis, or what its deficiencies are. Theres no-one coming out of a School of Businessthat ever heard of the answers that Imgiving your questions - or probably eventhought of the questions.

Now, compared with what I have shownyou concerning Demings teaching in Ja-pan 30 years earlier, you may have noticeda strangely narrow emphasis in those ex-tracts: he was mainly back to just talkingabout statistical methods in a manufac-turing context again - just where things hadbeen 55 years earlier! Several years later,

when I had begun to appreciate the muchgreater breadth and depth of his teaching,I asked him why he had reverted to such anarrow focus in that TV programme. I re-member his answer well. He said: Becau-se, Henry, I thought that, at the time, thatwas all that people would be able to take.He had judged that his American audiencewould not be able to stomach what he hadbeen teaching the Japanese 30 years ear-lier: he had to take things more carefullywith them. Some new statistics in manu-facturing: yes, perhaps Westerners couldcope with that. He was deliberately usingthat narrow focus as a thin end of thewedge, hoping that, having made thatstart, the breadth and depth could grow.

But, however hard he tried to contain hims-elf, his frustration with American manage-ment would often come to the boil. It wasnow more than 30 years since the Japane-se miracle had begun, and the Americanswere still so wrong and still so slow to learn.His final words on EncyclopaediaBritannicas video: Managements FiveDeadly Diseases (released in 1984) were:With a storehouse of unemployed people- some willing to work, a lot of them wil-ling to work, with skills, knowledge, wil-lingness to work; and people in manage-ment unable to work through the meritsystem, annual rating of performance, notable to deliver what theyre capable ofdelivering. When you think of all the un-der-use, abuse, and misuse of the peopleof this country, this may be the worlds mostunderdeveloped nation. Number One - wedid it again! Were Number One - forunderdevelopment. Our people not used,mismanaged, misused, and abused, andunder-used by management that worshipssacred cows: a style of management thatwas never right, but made good fortunefor this country between 1950 and 1968because the rest of the world, so much ofit, was devastated. You couldnt go wrong,no matter what you did. Those days areover, and theyve been over a long time.Its about time for American managementto wake up!

The 1980s (second half):A New ClimateBy the late 1980s, Demings teaching hadindeed greatly broadened and deepened.A New Climate was the phrase whichrepeatedly came to my mind. He was nowstrongly emphasising Cooperation: Win-Win, as he coined the phrase (just as inJapan 35 years earlier) - not cooperation

for some sacrificial, magnanimous, altrui-stic purpose but simply so that all concer-ned could gain, and be better off in all re-spects than if they carried on in the oldmode of conflict and destructive competi-tion.

And, in a world which is changing ever-faster, he spoke increasingly of the neednot just for improvement but for innovati-on - in process, in product, in service. Howright. And so he would study the kind ofmanagement climate in which innovationcould flourish. Rather obviously, it wouldnot be the familiar climate of managementby fear, conformance, right first time,punishment if anything goes wrong. Mostinnovation does go wrong, but if manage-ment cannot accept wrong innovation, theywont get right innovation either.

And for a third strong feature of the NewClimate, here are Dr Demings openingwords in Central ITVs Doctors Orders.Before hed been speaking for even 30 se-conds, Deming had come up with what was,to many people, a somewhat unexpectedview of the job of management:Just think what this country could be -think what North America could be - ifhalf the people, even make it 25%, couldtake pride in their work, could take joy intheir work. Things would be a whole lotdifferent from what they are now. Why notgive that satisfaction to everybody? Thatsthe job of management!A new climate indeed!

Dr Deming was, of course, now gettingquite old - and ill. Indeed he was de-veloping a collection of medical conditi-ons which would have killed off most peop-le much earlier than they did him.

But he knew he was dying. And consci-ously or unconsciously he knew he musttry to develop something which would helpthose who live after him to understand andcontinue to develop his lifes work. It wastoward the end of 1989 that we first heardthis extraordinary phrase:

1990 to 1993: A Systemof Profound KnowledgeExtraordinary, yes - but accurate. This washis attempt, sometimes only with the wis-dom of hindsight, to summarise the guts,the core, the essence of his whole lifeswork. His work is to do with knowledge,understanding, learning - no kidding! Andit is profound, it is deep - its not superfici-al. And its implications are profound. And



it is a system - in an exactly analogous wayto how he wanted us to consider organi-sations as systems: i.e. containing many,many components, but with its strengthlying in the understanding of how all tho-se components fit together, how they in-terlink, how they are interdependent, howthey integrate. With my own wisdom ofhindsight, I know that one has not begunto comprehend the Deming philosophy ofmanagement until that integrated nature ofhis work becomes predominant in the waythat one thinks of it and understands it.

I like very much the following representati-on of Demings System of Profound Know-ledge, constructed by one of my manygreat American friends, Peter Scholtes (Fi-gure 5):The System of Profound Knowledge iscomprised of the four major parts: Appre-ciation of a System (as I have been descri-bing it); Theory of Variation (right back towhere it all started with Shewharts break-through so long ago); Theory of Know-ledge (how do we know things, how do welearn things, how do we improve thatlearning and knowledge?); and Psycholo-gy (the understanding of people and theway that they interact with all that sur-rounds them). This is a very human philo-sophy. And what is so good about Petersrepresentation is that it illustrates so wellthat not only are the four parts so importantin their own right: again the strength ofthis system is the way that those parts in-terlink, inter-relate, and inter-depend. Thisis a rich legacy.

W Edwards Deming died on 19 December1993, at his home in Washington where hehad lived since 1946, and just ten days af-ter completing his final four-day seminar inCalifornia. I would estimate that at least a

quarter of a million people attended hiscelebrated four-day seminars between 1980and 1993. As we know, the economic out-look in America has improved in recentyears - a lot. How much of that has beendue to those quarter of a million people?How would I know?

I do know that there was a lot of excitementin quality management circles when BillClinton and Al Gore took office. As justone example, the major feature in the De-cember 1993 issue of Quality Progress (themonthly magazine of the American Socie-ty for Quality) was How the Federal Go-vernment Is Reinventing Itself, subtitledVice President Gores National Perfor-mance Review report might just be the qua-lity book of the year.

Poignantly enough, as I just said, Decem-ber 1993 was also the month when Dr De-ming departed this life. I wonder if, in tho-se final days, he may have recalled what hehad said just ten years previously, in aninterview reported in The Washington Post,January 1984:

Question: Youve been very successful inattracting people to these seminars. Isntthat encouraging to you?

Dr Deming: I dont know why it should be.I want to see what theyre going to do. Itwill take years.

Right again! And so, finally, what of ...

1994 and onward: TheFutureAs the world grows ever more complex, andoften more cruel, and as technology incre-asingly provides opportunities to do grea-ter good but, if misused, can also do grea-ter harm, do we not increasingly need thehelp of the Deming philosophy - its valu-es, its principles, its logic, its practicalguidance? If you feel interested by whatyou have learned in this short summary, Iinvite you to examine and study further DrDemings unique work, and then see if youagree with me. Take a little time over it.(Misquoting the TV commercial:) its worthit!

Dr Demings work is, I believe, hugely im-portant, literally priceless, literally timeless.It is a real source of help and hope for ma-king a better future, materially, socially, andmentally. That was the purpose of DrDemings lifes work. What better purposecould there be?

I shall end by transcribing a couple of mi-

nutes dialogue from another video, thistime made around the time of Dr Demings90th birthday: The Deming of America. Inthis video, Dr Deming can be seen as I knewhim to be, rather different from what is seenon most other video material. At heart hewas a modest and humble man, with a greatwarmth for humanity, both individually andcollectively. And, to his death, he was re-gretful that he could not have done morein his blessedly long life, particularly forhis fellow-countrymen in America and therest of the Western world. During the fol-lowing extract the interviewer, Priscilla Pet-ty, asked him to show her the Second Or-der Medal of the Sacred Treasure, awar-ded him in Japan in 1960. It was a rarehonour. But, despite all that he had ac-complished for Japan, and had begun toaccomplish for the West in the latter years,he suggested that, after all, maybe it hadjust been a matter of luck. Finally, lookout for what he said when she asked himwhat he thought of a medal awarded himby the American President in 1988.

Priscilla Petty: I asked Dr Deming to showme the medal he received from the Emperorof Japan for his contribution to their eco-nomic recovery after World War 2.

Narrator: In 1960, the Prime Minister ofJapan, acting on behalf of Emperor Hirohi-to, awarded Dr Deming Japans SecondOrder Medal of the Sacred Treasure. Thecitation on the medal attributes Japans in-dustrial rebirth and its worldwide successto W Edwards Deming. No honour amongbusinessmen and industrialists in Japan ismore coveted.

Priscilla Petty: How did you feel when hegave that to you?

Dr Deming: Oh, totally unworthy.

Priscilla Petty: You felt unworthy?

Dr Deming: Yes.

Priscilla Petty: Why?

Dr Deming: Oh, it was a matter of luck.

Narrator: Quite obviously, a grateful Ja-panese people dont share Dr Demingshumble view that it was only a matter ofluck. Each year, since 1951, the Japanesehave awarded a medal named in DrDemings honour to those companieswhich have attained the highest level ofquality. His presence at an award cerem-ony like this one to the Kajima Corporationis considered the ultimate honour.

And its a strange paradox that this Ameri-can, who is a national hero in Japan, until

Figure 5 Schematic Visualisation ofThe System of Profound Knowledge,the Legacy of W. Edwards Deming to theWorld

Unders tand ingof Systems

Understanding aTheory of

Knowledge

Unders tand ingVariat ion

Unders tand ingPsychology andHuman Behav io r



recent years was virtually unknown in theUnited States - a prophet without honourin his own country.

Priscilla Petty: I asked about another me-dal from our President.

Dr Deming: Well, the medal from the Presi-dent of the United States came 28 yearsafter the medal from the Emperor of Japan.28 years later - that is all he had to sayabout it. Yes, it was very late in life that theWestern world began to appreciate thegenius of this man. But, as the saying hasit: Better late - than never.

References

Books and booklets

[1] NEAVE, Henry R, The Deming Di-mension, SPC Press, Inc., 1990,Knoxville, Tennessee, USA

[2] SHEWHART, Walter A, EconomicControl of Quality of ManufacturedProduct. van Nostrand (1931); Ame-rican Society for Quality Control(1980); CEEPress Books, Washing-ton DC (1986).

[3] DEMING, W Edwards, ed NEAVE,Henry R, Profound Knowledge. Bri-tish Deming Association Booklet A6(1990). Page 3.

[4] KOYANAGI, Ken-ichi, The DemingPrize. The Union of Japanese Scien-tists and Engineers, Tokyo (1955, rev.1960). Page 8.

[5] KILIAN, Cecelia S, The World of WEdwards Deming. SPC Press,Knoxville, Tennessee (2nd edn, 1992).Page 6.

[6] DEMING, W Edwards, Out of theCrisis. Massachusetts Institute ofTechnology, Center for AdvancedEngineering Study (1986).

[7] DEMING, W Edwards, The NewEconomics for Industry, Education,Government. Massachusetts Insti-tute of Technology, Center for Ad-vanced Engineering Study (2nd edn,1994). Page 57.

[8] KILIAN, Cecelia S (op. cit., 1992). Pa-ges 2427.

[9] KILIAN, Cecelia S (op. cit., 1992).Page 18.

Videos

Doctors Orders. Central ITV, Birmingham(1988).If Japan Can, Why Cant We? Films Inc.,Chicago (1980).Managements Five Deadly Diseases. En-cyclopaedia Britannica (1984).The Deming of America. Petty ConsultingProductions (1991).

Address of the AuthorProf. Dr. Henry R. Neave

THE SWISS DEMING INSTITUTEPostfach 71, CH-8126 ZumikonTelefon 0041 1 918 11 19Telefax 0041 1 918 11 70E-Mail [email protected] www.deming.ch

Documents

The Deming Dimension - Management for a Better Future