Primarily known for his work in Japan in the aftermath of the Second World War, W. Edwards Deming was a driving force behind the innovation and quality push behind the post-war Japanese economy. Deming trained many engineers, managers, and scholars concepts of quality through statistical process control (SPC). A number of Japanese manufacturers applied his techniques and experienced previously unattainable levels of quality and productivity. Deming taught that organizations could increase quality and while simultaneously reducing costs. The key behind this mindset is to practice continual improvement by thinking of manufacturing as a system, not as bits and pieces.
Deming was an advocate of managers having new ways of thinking, which he called a system of profound knowledge. This system included an appreciation of systems, knowledge of variation, a theory of knowledge, and knowledge of psychology. By having good knowledge of the processes, understanding statistical variation, explaining knowledge, and understanding human nature, managers would be able to redefine the processes and bring about a heightened era of productivity and quality for any organization. Deming listed “deadly diseases” that far too often restrict or limit an organization’s goal for improved quality and productivity.
1. Lack of Constancy of Purpose
Organizations need to not simply focus on the current product or service, but keep planning for the future. Organizations that lack a focus or do not plan accordingly may find initial success with a service or product, but as the market demands and the environment change, these organizations will be a step behind the competition.
2. Emphasis on Short-Term Profits
Lack of long ranging planning by the organizational management will lead to either under-performance or irrelevance. Larger corporations need to not only focus on shareholder investments, but need to keep long-term plans in motion. Modifying organizational goals for short-term profits may make shareholders happy, but immediate prosperity may be at the expense of long-term viability. Spending money and resources for long-term projects and R&D may take away from earnings presently, but will allow the organization to position itself for more diversity and heightened innovation when long-term planning is made a priority. Not pursuing a good business opportunity because the initial setup costs are perceived as too high is a typical mistake many organizations will make because they are too focused on short-term profits.
3. Evaluation by Performance, Merit Rating, or Annual Review of Performance
Deming argued that evaluations actually rob workers of their sense of pride and workmanship. Furthermore, Deming argued that workers must work within the system, and that performance should be attributed to that system. Rewarding workers for meeting a quota may be counter-productive because they will reward based on performance, not the system. One immediate problem is that workers may simply work to these results and not focus on all parts of the process. Workers may produce a product, and if rewarded for maximum quantities produced, will the workers simply focus on producing as many as possible without regard to quality. On the other hand, if workers are rewarded for fewest numbers of defects, will they be very productive? For Deming, these appraisals were faulty because they did not focus on the entire work environment.
4. Mobility of Management
Reducing the job turnover rate of management will benefit the organization. Deming argued that whenever management experienced turnover, or job hopping, leadership is lost, which makes constancy of purpose very difficult to attain due to a lack of long-term planning as a result of mixed and ever-changing messages and direction.
5. Running a Company on Visible Figures Alone
Organizations need to calculate costs with all available statistical information, but Deming argued that some costs and figures are not known and cannot be calculated. In spite of not understanding these figures, they should as much as possible be factored into planning and decisions. Customer loyalty as a result of continuous quality improvement is a figure that is unknowable. However effective managers would be able to realize that there would be a benefit in this respect if a product quality continues to improve, and this unknowable figure should be included into decisions.
6. Excessive Medical Costs
In Deming’s time, as with present day businesses, employee health care costs are very significant. Organizations should do as much as possible to reduce these expenses by making work conditions as safe as possible, and to focus on employee well-being in general can reduce costs. Fostering an environment that makes employees happy and challenged will generally lead to better mental and physical health. If fewer employees are taking sick days, productivity can be maintained at higher levels. On site programs to encourage healthier life styles are easy and inexpensive ways to allow for healthier employees, which will result in cost savings across the organization.
7. Excessive Costs of Liability
Perhaps a common complaint from many people, in all seriousness Deming argued that there are simply too many lawyers. Of all the deadly diseases argued by Deming, this is essentially not in the control of any single organization and changes would most likely need to be performed by the government.
Although Deming worked and planed his theories for the manufacturing sector, which many of these ideas were adopted in Japan, and later by organizations in the United States, many of his ideas can easily be adapted to the service industry. As the very nature of business in the United States continues to move away from the manufacturing to the service sector, Deming’s ideas are still relevant and important today.