This post is a continuation of my second guest post for Adelaide Universities MBA Blog. If you haven’t read my summary of the Demming Management Method, start here first.
Demming’s Fourteen Point Management Method
Demming’s 14 Point Management Method was first published in 1982. A statistician by trade his ability with numbers enabled him to challenge many traditional management practices, resulting in his fourteen point plan:
1. Create Consistency of Purpose for the Improvement of Product and Service
Demming and others, such as (Stephen R Covey) believe that one of the difficulties facing humankind is that we are too easily focused on the problems of today, at the expense of those of tomorrow.
“It is easy to stay bound up in the tangled knots of the problems of today, becoming ever more and more efficient in them” – Demming
He argues that this focus is at the expense of the future viability of the organisation. To counter this he recommended that organisations adopt a very clear ‘consistency of purpose’ to help organisations apply appropriate time and effort ensuring and expanding on their future. The consistency of purpose should be a plan with methods for which the organisation intends to stay relevant in a changing marketplace. The plan should include consideration for supporting and encouraging innovation (not just something new to sell!), resourcing for research and education, a framework for continuous improvement of product and service, and appropriate capital expenditures to maintain and improve production across the organisation.
2. Adopt the New Philosophy
By this Demming means that organisations should adopt quality as the new religion, and that all decisions by management should be made with the long-term quality of product or service in mind.
“Reliable service reduces costs. Delays and mistakes raise costs” – Demming
Often when managers try to increase productivity they focus only on the most obvious of metrics – numerical output. They often pay little attention to increases of re-work, or reduction in quality, seeing only the improvements in the headline numbers. Making matters worse is that customers rarely inform businesses of their dissatisfaction, and are inclined to just quietly take their business elsewhere. It is too easy for standards to decay when they should be improving. Demming states that the only solution to this problem is the company-wide belief and pursuit of quality.
3. Cease Dependence on Mass Inspection
“Inspection with the aim of finding the bad ones and throwing them out is too late, ineffective, costly” – Demming
He said that companies should spend less time looking for, and then throwing out defects as a way to achieve quality and more time building good quality into the process to start with.
“Quality comes not from inspection but from improvement in the process” – Demming
Demming also argued against establishing production criteria, or “meeting specifications”, believing such techniques permitted poor quality that was just inside the specifications, and also inhibited companies from focusing on what mattered more- the pursuit of ever decreasing product variation.
4. End the Practice of Awarding Business on Price Tag Alone
Demming stated that there were several problems with awarding business by price tag alone:
- It usually leads to a proliferation of suppliers, damaging efforts of quality
- Encourages buyers to jump from vendor to vendor
- Results in a reliance on specifications, a barrier to continuous improvement
He notes that a price tag is “unambiguous and therefore appealing”, whereas determining the quality of the vendor is far more difficult. A good test for quality is searching for the application of his fourteen points by the supplier’s management, in particular the continual pursuit of process improvement. Demming believed that true quality can only come from long term, mutually beneficial relationships where both parties have institutionalised quality as the new religion.
5. Improve Constantly and Forever the System of Production and Service
“Everyone and every department in the company must subscribe to constant improvement” -Demming
It’s too easy to treat improvement as a one time, or periodical event. Improvement needs to be built into the very fabric of how each individual and team operates and this requires significant management effort.
“Meeting specifications does not result in constant improvement. It ensures status quo.” – Demming
Demming believed that too many companies focused and rewarded putting out fires, whilst ignoring the more important goal of system improvement.
6. Institute Training and Retraining
Demming believed that companies too often relied on training taking the form of Chinese Whispers. One employee trains the next based on what they know, and then that employee trains the next and so on. Without documented training and procedures, it is inevitable that at some point, an employee will be trained in some right ways, and in some wrong ways. It results in employees, in the same roles, all doing things differently, resulting in uneven quality and efficiency. Worse, these differences mean that improvements made by any one employee, such as a small adjustment to process for greater quality or efficiency, is less likely to spread to the others in their team. Another problem with this approach is that the employee never really knows, with any certainty, if they are doing their job right. Poor performers will find it hard to improve and be as efficient as their peers. Too often poor performance is blamed on the individual, and not on the quality of the training and re-training they have received.
7. Institute Leadership
“Leadership is the job of management. It is the responsibility of management to discover the barriers that prevent workers from taking pride in what they do” – Demming
Demming states that too often managers emphasise numbers over quality, don’t listen to employee’s suggestions, accept rework without fixing what caused it, and endorse in-adequate tools and poor training. One of the causes of this problem is the lack of leadership training coupled with limited understanding of their subordinates’ job.
Demming also states that an underperforming employee can be the result of a poor fit for the job. In such case, it is the manager’s responsibility to find more suited role for that person.
8. Drive out Fear
“People are afraid to point out problems for fear they will start an argument, or worse, be blamed for the problems. Moreover, so seldom is anything done to correct problems that there is no incentive to expose them. And more often than not there is no mechanism for problem-solving. Suggesting new ideas is too risky. People are afraid of losing their raises or promotions, or worse, their jobs. They fear punitive assignments or other forms of discrimination and harassment. They are afraid that superiors will feel threatened and retaliate in some fashion if they are too assertive or ask too many questions. They fear for the future of their company and the security of their jobs. They are afraid to admit they made a mistake, so the mistake is never rectified. In the perception of most employees, preserving the status quo is the only safe course.” – Demming
For better quality and productivity management must take significant efforts to mitigate these factors. Employees should feel secure, and not just secure in the regular use of the term. Employees should not be afraid to express ideas, ask difficult questions, or report a problem, or to “call attention to conditions that interfere with quality”.
[Demming's language on this point is very strong, and whilst I agree, I can't help but wonder if this was influenced by his extensive work in Japan]
9. Break Down Barriers Between Staff Areas
This point largely deals with the effect departmental silos have on the whole company’s effectiveness and on the gap between management and staff. An organisation should look for ways to remove any barriers between staff, for the betterment of the whole.
He states that a company, working as one, with a stable process, is then able to implement efficiency improvement such as “just-in-time” manufacturing, where supplies and inventory arrive only as they are needed which removes the need to stockpile and enables a more efficient supply chain.
10. Eliminate Slogans, Exhortations, and Targets for the Workforce
One of Demming’s pet hates was slogans in the workforce – things like “Do it right first time”, and “Zero defects” and Steve Job’s “Real Engineers Ship”.
Demming stated that slogans should be eliminated because they do nothing but “generate frustration and resentment” in the workforce.
“Implicit in such sloganeering is the supposition that employees could, if they tried do better. They are offended, not inspired by this suggestion” – Demming
He believed that because employee’s ability to do and be better is constantly being thwarted by their environment and the complexity of the workplace system therefore a well-meaning slogan only creates frustration and resentment.
Demming also believed that numerical goals should be in the same category:
“You can beat horses; they run faster for a while. Goals are like hay somebody ties in front of the horses snout. The horse is smart enough to discover no matter whether he canters or gallops, trots or walks or stands still, he can’t catch up with the hay. Might as well stand still.” – Demming
Point 10 is probably the most contentious of this 14 point plan. He believed that employee performance was more a product of management than on the individual’s characteristics; extrinsic motivators such as slogans and numerical goals would only work in the short term.
11. Eliminate Numerical Quotas
Demming believed that any measurement of an acceptable amount of day’s work by quotas or similar should be abolished because it causes “loss, chaos, dissatisfaction and turnover”. He also takes aim at piecework (pay for the number of items that are made) and incentive payments because this focus on numerical output encourages people to turn out numbers rather than quality. Such a focus also encourages people to ‘game the system’ such as saving output for a rainy day or hiding their true potential for fear it will become the new goalpost.
To find speed he recommends studying the work, defining the regular limits (80/20 style), and then referring the complexity (the 20%) to a specialist.
12. Remove Barriers to Pride of Workmanship
For a worker to have intrinsic motivation and commit to the pursuit of quality, managers need to look for and eliminate any barriers to pride of workmanship.
“The workers know exactly what these barriers are: an emphasis on numbers, not quality; turning out the product quickly rather than properly; a deaf ear to their suggestions; too much time spent on rework; poor tools; problems with incoming materials” – Demming
Demming states that the best place to find out this is from the workers themselves, but also describes situations where they do not feel empowered to talk so freely. If a manager has never done the job they supervise then listening to staff and identifying the barriers can be difficult.
13. Institute a Vigorous Program of Education and Retraining
Showing people how to do their job is one thing, but to respond to an ever changing future staff need more than that. Demming believed that companies should look to their staff as resources to be developed for a future need.
“How do you help people improve? What do you mean by improve? If you ask me, I would say that I find a general fear of education. People are afraid to take a course. It might not be the right one. My advice is take it. Find the right one later. And how do you know it is the wrong one? Study, learn, improve.” -Demming
Demming believed that companies will be rewarded for help their employees improve, even when their interests didn’t necessarily line up with an obvious need:
“You never know what could be used, what could be needed. He that thinks he has to be practical is not going to be here very long. Who knows what is practical?” – Demming
14. Take Action to Accomplish Transformation
The final point in the plan deals with how to go about achieving the transformation required to implement the other thirteen points. He states that management will need to act as a team with the assistance of a statistical consultant. Every employee in the company will need to “acquire a precise idea of how to improve quality continually”, but this must be lead and fostered by management.
To assist Demming recommends the use of the ‘Shewhart Cycle’, or the ‘PDCA Cycle’ – Plan, Do, Check, Act. 1) Plan what you are going to do; study a process and plan what change might improve it, 2) Test the change, or do it on small scale in production, then 3) Check the data; observe the effects; did it work? Finally 4) What did we learn? Does anything need retesting? Act on the learnings.
This is quite similar to Eric Ries ‘Build, Measure, Learn’ cycle, a foundation of his ‘Lean Startup’ movement.
Demming states that implementing his plan will be difficult and will require significant buy in by all managers. Consistency and adherence to the iterative Shewhart Cycle needs to be institutionalised. Above all, to make such a radical change, management will need to be courageous, as many of the points raised will be in direct contrast to the way they have managed in the past.
So that’s Demming’s 14 Point Management Plan, published in 1982. As Demming is most famous for his ‘total quality’ focus, this summary focuses primarily on this. He was also a strong supporter in company wide focus on innovation, in a way that would be at home in any publication or manual from Silicon Valley.
Many of the factors that inhibit quality also inhibit innovation – it would be easy to adopt his management method for a ‘total innovation’ focus.
In future posts, I will focus on specific parts of his fourteen point plan.
[All quotes referenced from Walton, M (1986), The Demming management method, Perigee, New York, pp 55-95]
Thoughts? Comments? Hit me up below!