“Back to the Future”

Yesterday I woke up to find I had made it to 60 years old.  In my case 60 years young.

As I reflected on my 40 plus years of working in various career fields, I came to realize that for most of these years a common theme had been present and the focus on this theme have brought me to this point in my life and career.  That theme is “continuous improvement”

Continuous Improvement is attributed to Dr. W. Edwards Deming, the statistician who introduced his 14 points of management in Japan after World War II.  Deming’s philosophies contributed to the Japanese Industries recovery after the war and the eventually challenging the premiere status over the US in the 60s and 70s.

I was fortunate enough to work for the US Government as Continuous Improvement was being adapted, and at John Deere when Deming’s theories were being put into practice.

At John Deere the story was very interesting.  I was privileged to be part of a meeting that introduced these methodologies to the salaried workforce. In this meeting we were told that John Deere had found that a Japanese competitor could build and deliver a crawler (small bulldozer) to downtown Dubuque, Iowa for $5,000 less than John Deere could build their version of a similar crawler at its Dubuque plant. They hired a research firm to find out how this was possible.  The answer surprised the executives at John Deere.  They expected that it was done with cheaper labor, and other labor costs; but they found that the Japanese were paying similar labor costs.

In fact most of the overhead costs were the same.  So how were the Japanese able to reduce cost so significantly?  They were using the Deming methods to create quality products that required less rework and correction, as the product was being produced, and they were using Just-In-Time (JIT) Inventory.  This method of delivering parts to the assembly line at the moment they were needed was very foreign to US industry and contributed to huge stock piles of major parts like engines, tires, transmissions,etc. that required warehouses to house them and manpower to take care of and handle them.

Over the years the label for continuous improvement has changed; Quality Circles, Total Quality Management, Continuous Improvement Management, and Business Process Management.  All of these methodologies trace their histories back to Deming’s Continuous Improvement philosophy.

Therefore, it is still a valuable exercise to look at Deming’s methodology.  Here is what Deming referred to as the Seven Deadly Diseases:

Seven Deadly Diseases from Wikipedia®

1. Lack of constancy of purpose
2. Emphasis on short-term profits
3. Evaluation by performance, merit rating, or annual review of performance
4. Mobility of management
5. Running a company on visible figures alone
6. Excessive medical costs
7. Excessive costs of warranty, fueled by lawyers who work for contingency fees

"A Lesser Category of Obstacles" includes

1. Neglecting long-range planning
2. Relying on technology to solve problems
3. Seeking examples to follow rather than developing solutions
4. Excuses, such as "our problems are different"
5. Obsolescence in school that management skill can be taught in classes
6. Reliance on quality control departments rather than management, supervisors, managers of purchasing, and production workers
7. Placing blame on workforces who are only responsible for 15% of mistakes where the system desired by management is responsible for 85% of the unintended consequences
8. Relying on quality inspection rather than improving product quality

Worldwide emphases on short-term profits and greed have done more to destroy the progress of Deming’s methodologies than any other factor.  Management has paid too much attention to stockholder interests and too little on the real parameters of success thinking that their parameters lead to lower profits, when just the opposite is true.

Think about the profits and dividends that would have resulted if Toyota did not have to pay fines and recall costs for its lapse in quality, when quality had been the driving force behind their success.  The paid a huge price for changing to a profit-oriented business.

The financial industry also has paid this price when it changed to focus to short term profits.  The Crisis of 2008 is the result of the lack of long-range planning and the management knows best philosophy.

So in my opinion, it is back to basics.  Deming’s 14 Points are still the foundation that Continuous Improvement is built on.