William Edwards Deming on Business Transformation

W. Edwards Deming
W. Edwards Deming
Most everyone in business has at one time heard of William Edwards Deming. He is most widely known for his role in Japan's reconstruction after Word War II and as the “father of Total Quality Management” (TQM). If you recall, TQM is designed to reduce errors produced during the manufacturing or service process, increase customer satisfaction, streamline supply chain management, aim for modernization of equipment and ensure workers have the highest level of training. TQM is frequently associated with systems required to support various business process improvement initiatives.

During his life, Deming wrote extensively about management theory, quality, continuous improvement and business transformation. Some of his BT principles fly in the face of traditional management theory. Among the most well-known are his 14 points for management in industry, education and government. Deming said his 14 points apply anywhere. The size of the organization doesn’t matter, nor does the industry. They apply equally to a department, division or entire organization. But rather than write about them and lose something in the translation, let’s hear it from the quality master himself. The following is an excerpt listing the 14 points from Chapter 2 of “Out of the Crisis” by W. Edwards Deming:[1]

  1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to 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 inspection on a mass basis 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 toward 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. 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.
  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.
    1. Eliminate work standards (quotas) on the factory floor. Substitute leadership.
    2. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.
  11. 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.
  12. 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.
  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.

Some of Deming’s 14 points are sure to raise eyebrows, for example, the statements he makes in 10b, “Eliminate management by objective. Eliminate management by numbers, numerical goals” or in point 12, “abolishment of the annual or merit rating and of management by objective.” In another one of his works he goes on to describe the seven deadly diseases of Western Management. Number three on Deming’s deadly disease list is “Evaluation of performance, merit rating or annual review.” Regardless of whether you agree with Deming or not, he is a visionary with an incredibly successful track record. His management points are as relevant today as when he published them in 1989; and with the benefit of time, they are proven to be correct.

If you are thinking about following Deming’s advice and are wondering about what you should do in place of performance evaluations, you are not alone. Once, when Dr. Deming was lecturing[2] on the topic of eliminating performance appraisals, someone in the audience asked, “If we eliminate performance appraisals, as you suggest, what do we do instead?” Dr. Deming's reply: “Whatever Peter Scholtes says.” To learn more about the alternatives to performance appraisals, read Chapter 9 - Performance without Appraisal in the “The Leader's Handbook: Making Things Happen, Getting Things Done” by Peter Scholtes.

[1] Source: http://deming.org/index.cfm?content=66; Accessed May 4, 2010.
[2] Source: “The Leader’s Handbook”, page 296

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