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"Out of the crisis" (1980) by Edward Deming
The aim of this book is the transformation of the style of American management. Transformation of American style of management is not a job of reconstruction, nor is it revision. It requires a whole new structure, from foundation upward. Mutation might be the word, except that mutation implied unordered spontaneity. Transformation must take place with directed effort. The aim of this book is to supply the direction. Need for transformation of governmental relations with industry is also necessary, as will be obvious.
Failure of management to plan for the future and to foresee problems has brought about waste of manpower, of materials, and of machine-time, all of which raise the manufacturer's cost and price and the purchaser must pay. The consumer is not always willing to subsidize this waste. The inevitable result is loss of market. Loss of market begets unemployment. Performance of management should measured by potential to stay in business, to protect investment, to ensure future dividends and jobs through improvement of product and service for the future, not by the quarterly dividend.
It is no longer socially acceptable to dump employees on the head of unemployed. Loss of market, and resulting unemployment, are not foreordained. They are not inevitable. They are man-made.
The basic cause of sickness in American industry and resulting unemployment is failure of top management to manage. He that sells not can buy not.
The causes usually cited for failure of a company are costs of start-up, overruns on costs, depreciation of excess in inventory, competition-anything but the actual cause, pure and simple bad management.
What must management do ? Management obviously have a new job. Where can management learn about the transformation that is necessary ?
The fact is that management can not learn by experience alone what they must do to improve quality and productivity and the competitive position of the company.
Everyone doing his best is not the answer. It is first necessary that people know what to do. Drastic changes are required. The first step in the transformation is to learn how to change: that is, to understand and use the 14 points in Ch. 2, and to cure themselves of the diseases in Ch. 3.
Long-term commitment to new learning and new philosophy is required of any management that seeks transformations. The timid and the faint-hearted, and people that expect quick results, are doomed to disappointment.
Solving problems, big problems and little problems, will not halt the decline of the American industry, nor will expansion in use of computers, gadgets, and robotic machinery. Benefits from massive expansion of new machinery also constitute a vain hope. Massive immediate expansion in the teaching of statistical methods to production workers is not the answer either, nor wholesale flashes of quality control circles (QC-circles). All theses activities make their contribution, but they only prolong the life of the patient; they can not halt the decline. Only transformation of the American style of management, and of governmental relations with industry, can halt the decline and give American industry a chance to lead the world again.
The job of management is inseparable from the welfare of the company. Mobility, here a while and gone, from the management of one company to the management of another, is something that American industry can no longer afford. Management must declare a policy for the future, to stay in business and to provide jobs for their people, and more jobs. Management must understand design of product and of service, procurement of materials, problems of production, process control, and barriers on the job that rob the hourly worker of his birthright, the right to pride in workmanship.
There are conferences almost any day in this country on the subject of productivity, mostly concerned with gadgets and measures of productivity. As William E. Conway said, measurements of productivity are like accident statistics. They tell you that there is a problem, but they don't do anything about accidents. This book is an attempt to improve productivity, not just to measure it.
The book makes no distinction between manufacturing and service industries. The service industries include government services, among which are education and the mail. All industries, manufacturing and services, are subject to the same principles of management.
Anyone in management requires, for transformation, some rudimentary knowledge about science - in particular, something about the nature of variation and about operational definitions. Numerous examples throughout the book illustrate how failure to appreciate the two kind of variation, special causes of variation and common causes, and to understand operational definitions brings loss and demoralization.
The reader will sense the fact that not only is the style of American management unfitted for this economic age, but many government regulations and the Justice Department's Antitrust Division are out of step, propelling American industry along the path of decline, contrary to the well-being of the American people. For example, unfriendly takeover and leveraged buyout are a cancer in the American system. Fear of take-over, along with emphasis on the quarterly dividend, defeats constancy of purpose. Without constancy of purpose to stay in business by providing product and services that have a market, there will be further downturn and more unemployment. What is the Securities And Exchange Commission doing about takeover ?
When we size up the job ahead, it is obvious that a long thorny road lies ahead-decades.
Dependence on protection by tariffs and laws to "buy American" only encourages incompetence.
It would be incorrect to leave the reader with the impression that no action is taking place. The fact is that management throughout a number of companies are at work on the 14 points and on the diseases that afflict American industry. Substantial results are already recorded. Some schools of business are offering courses in the transformation of the American style of management, based on notes for seminars conducted during the past few years.
Failure of management to plan for the future and to foresee problems has brought about waste of manpower, of materials, and of machine-time, all of which raise the manufacturer's cost and price and the purchaser must pay. The inevitable result is loss of market. Loss of market begets unemployment. Performance of management should measured by potential to stay in business, to protect investment, to ensure future dividends and jobs through improvement of product and service for the future, not by the quarterly dividend.
The basic cause of sickness in American industry and resulting unemployment is failure of top management to manage. The causes usually cited for failure of a company are costs of start-up, overruns on costs, depreciation of excess in inventory, competition-anything but the actual cause, pure and simple bad management.
The fact is that management can not learn by experience alone what they must do to improve quality and productivity and the competitive position of the company. Everyone doing his best is not the answer. It is first necessary that people know what to do. Long-term commitment to new learning and new philosophy is required of any management that seeks transformations. The timid and the faint-hearted, and people that expect quick results, are doomed to disappointment.
Solving problems, big problems and little problems, will not halt the decline of the American industry, nor will expansion in use of computers, gadgets, and robotic machinery. Massive immediate expansion in the teaching of statistical methods to production workers is not the answer either, nor wholesale flashes of quality control circles (QC-circles). All theses activities make their contribution, but they only prolong the life of the patient; they can not halt the decline.
The job of management is inseparable from the welfare of the company. Mobility, here a while and gone, from the management of one company to the management of another, is something that American industry can no longer afford. Management must understand design of product and of service, procurement of materials, problems of production, process control, and barriers on the job that rob the hourly worker of his birthright, the right to pride in workmanship.
There are conferences almost any day in this country on the subject of productivity, mostly concerned with gadgets and measures of productivity. As William E. Conway said, measurements of productivity are like accident statistics. They tell you that there is a problem, but they don't do anything about accidents.
Unfriendly takeover and leveraged buyout are a cancer in the American system. Fear of take-over, along with emphasis on the quarterly dividend, defeats constancy of purpose. Without constancy of purpose to stay in business by providing product and services that have a market, there will be further downturn and more unemployment.
Dependence on protection by tariffs and laws to "buy American" only encourages incompetence.
L'échec du management à anticiper les problèmes entraîne un gaspillage de main d'oeuvre, de matières premières et de temps-machine, lesquels augmentent le coût total de production, et donc le prix que paie le consommateur. Le résultat, inévitable, est la perte de parts de marché. La perte de parts de marchés entraîne des licenciements. La performance du management devrait être mesurée par sa capacité à maintenir l'entreprise au niveau du marché, à protéger les investissements, et dans le même temps la création de dividendes et la création d'emploi dans l'avenir, et non pas seulement par la création de dividendes pour le trimestre en cours.
La mauvaise santé des entreprises américaines, et le chômage qui en résulte, est dû à l'incapacité des cadres supérieurs à manager. Lorsqu'une entreprises fait faillite, les causes généralement invoquées sont les coûts de démarrage, des dépassements de coût, la dépréciation du stock de marchandises en surplus, la concurrence - n'importe quoi, sauf la cause réel: un pur et simple mauvais management.
En réalité, le management ne peut pas apprendre par l'expérience seule ce qu'il doit faire pour améliorer la qualité, la productivité et la compétitivité de l'entreprise. Que chacun fasse de son mieux n'est pas la bonne réponse. Il faut d'abord que les gens sachent quoi faire. Si le management cherche à se transformer, il doit s'engager sur le long terme à acquérir de nouvelles connaissances et une nouvelle culture. Les timides et les peureux, ainsi que ceux qui espèrent des résultats rapides, n'obtiendront aucun résultat.
La résolution de problèmes, de grande ou de petite envergure, n'arrêtera pas le déclin de l'industrie américaine, ni l'utilisation de l'informatique ou la robotisation. Un investissement massif et immédiat dans la formation des ouvriers de production aux méthodes statistiques n'est pas non plus la bonne réponse, ni d'ailleurs l'organisation à grande échelle d’événements ponctuels d'amélioration de la qualité (cercles de qualité). Toutes ces actions apportent un contribution, mais elles ne font que prolonger la vie du patient; elles sont incapables d'arrêter son déclin.
Le métier du management est inséparable du bien de l'entreprise. La mobilité des membres de la direction générale, à savoir occuper un poste aujourd'hui dans une entreprise, et partir le lendemain dans une autre, est un chose que l'industrie américaine ne peut plus s'offrir. Le management doit comprendre la conception des produits et des services, l'approvisionnement, les problèmes de production, le contrôle des processus, ainsi que l'ensemble des dispositions qui privent l'employé de son droit le plus élémentaire: celui de pouvoir être fier de son travail.
Il y a tous presque tous les jours, dans ce pays, des conférences sur la productivité, qui n'évoquent la plupart du temps que des dispositifs de mesure de la productivité et autres gadgets. Comme le disait William E. Conway, les indicateurs de productivité sont comme les statistiques d'accidents de la route. Ils vous indiquent qu'il y a un problème, mais ils n'expliquent en rien les accidents.
Les rachats non désirés d'entreprises et les prises de contrôles par emprunt (LBO) sont le cancer du système américain. La peur d'être racheté, ainsi que l'attention disproportionnée aux résultats trimestriels, empêchent l'engagement à long terme. Sans engagement à long terme de rester sur le marché en fournissant des produits et des services répondant à un besoin, la baisse des ventes et la hausse du chômage continueront.
La dépendance à la protection de l'économie par l'état sous la forme de lois et de taxes douanières ne font qu'encourager l'incompétence.
(..) A few weeks later, to my surprise, a letter arrived at my home. When I opened it, I found a short paragraph written by Dr. Deming. Reading the first sentence, I stopped to catch my breath. Somehow he has said in a sentence what I had struggled to put into four hundred pages. It is amazing, I thought, how clear and direct you can be when you reach the end of your years (Deming was then almost 90). As I took in the totality of what he had written, I slowly started to realize he had unveiled a deeper layer of connections, and a bigger task, than I had previously understood:
"Our prevailing system of management has destroyed our people. People are born with intrinsic motivation, self-respect, dignity, curiosity to learn, joy in learning. The forces of destruction begin with toddlers - a prize for the best Halloween costume, grades in school, gold stars - and on up trough the university. On the job, people, teams, and divisions are ranked, reward for the top, punishment for the bottom. Management by Objectives, quotas, incentive pay, business plans, put together separately, division by division, cause further loss, unknown and unknowable."
As I subsequently learned, Deming has almost completely stopped using the terminology of "Total Quality Management" "TQM" or "TQ" because he believed it had become a superficial label for tools and techniques. The real work, which he simply called "transformation of the prevailing system of management", lay beyond the aims of managers seeking only short-term performance improvements. This transformation, he believed, required "profound knowledge" largely untapped in contemporary institutions. Only one element of this profound knowledge, "theory of variation" (statistical theory and method) was associated with the common understanding of TQM. The other three elements, to my amazement, mapped almost directly onto the five disciplines: "understanding a system", "theory of knowledge" (the importance of mental models) and "psychology", especially "intrinsic motivation" (the importance of personal vision and genuine aspiration). (..) After Dr. Deming passed away in 1993, I spent many years thinking and talking with colleagues about what constituted this prevailing system of management as Deming understood it, eventually settling on eight basic elements.
Management by measurement:
- focusing on short-term metrics
- devaluing intangibles
- getting ahead by pleasing the boss
- management by fear
- management set targets
- people are held accountable for meeting management targets (regardless of whether they are possible within existing system and processes)
- technical problem solving is emphasized
- diverging (systemic) problem are discounted
- diversity is a problem to be solved
- conflict is suppressed in favour of superficial agreement
- to manage is to control
- the "holy trinity of management" is planning, organizing, controlling
- competition between people is essential to achieve desired performance
- without competition among people there is no innovation
- fragmentation
- local innovation do not spread