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Curious Cat: Deming on Management

Deming Chain Reaction

Out of the Crisis, page 3:

  • Improve Quality --->
  • Costs decrease because of less rework, fewer mistakes, fewer delays, snags, better use of machine-time and materials --->
  • Productivity Improves --->
  • Capture the market with better quality and lower price --->
  • Stay in Business --->
  • Provide jobs and more jobs

And in fact two factors lead to creating more jobs. First the lower costs gained by eliminating waste and errors allows prices to be lowered which will increase sales. Second by improving the product or service (by improving the processes inside the company) at the very least defects decline and reliability goes up.

But in almost every case the product or service will improve. By improving quality (using quality improvement principles like voice of the customer, value streams, constancy of purpose) the company will learn better what the customer values and take steps to make the product or service better meet and exceed customer expectations.

The reason constancy of purpose helps in this particular area might not be obvious. Essentially by focusing on what value you provide (instead of narrowly focusing on the exact product or service produced today) the company assures that the focus is on providing value to to the customer - not on reduce costs... Obviously reducing waste and thus costs is desirable. The primary concern though is providing the customer what they want. For example, it did not matter how many costs Kodak reduced on manufacturing and developing film for cameras. Most customers found digital camera a more effective (cheaper and of better utility) at meeting their needs. If your company sees you business as manufacturing film instead of providing a way for people to capture visual moments from their life you are doomed when a new way of meeting the need customers filled with your product of service comes into being.

Another point that can confuse people is that jobs seem to be declining in manufacturing for example. While Deming's ideas (filtered through lean manufacturing, quality, six sigma, etc.) are more widely adopted. It is true that productivity continues to improve rapidly. And that means more can be produced with fewer people. That factor makes it more difficult to see the chain reaction than it was 50 years ago. But taking into account the underlying increase in productivity (due to a number of factors - improved technology, improvement management...) the chain reaction of improving quality leading to better and cheaper products and services and growing sales and more jobs is still true. you have to take into account certain market factors so perhaps improving quality by 5% a year is the minimum required to keep from losing pace with the market and it might be that even improving by 8% a year gains a few more sales but not enough to lead to more jobs. Therefore the chain is still in place but the competition is higher (and effectively the links in the chain have resistance that must be overcome. Of course if you do not even meet the level necessary to overcome the resistance you will rapidly go in the reverse direction - losing customers, cutting jobs, losing more customers, cutting more jobs...

Related:

Dr. W. Edwards Deming's management ideas have greatly influenced modern management practice. Many quotes and thoughts are attributed to W. Edwards Deming's system of management. Sometimes these represent his ideas accurately, and sometimes they do not. Here I attempt to clearly indicate what he actual said and include some of my thoughts on what he meant.

Deming's Bio | Online Deming Resources | Deming Related Articles, reports, handbooks, etc.

Deming on Management