Deming’s Point 10 of 14 – Eliminate slogans and exhortations

Deming’s full statement is as follows:

Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.

Ben Hamper’s Rivethead

This point reminds me of Howie Makem, the quality cat lampooned by Ben Hamper in Rivethead in 1986, about the same time Deming’s Out of the Crisis was published. At the time, Ben Hamper was a riveter at GM’s Truck plant in Flint, MI, who could describe his shop floor experience with the wit of a Tom Wolfe. Rivethead was originally a column in Michael Moore’s Flint Voice, later edited into a book.

According to Hamper, the management of the plant had decided that what it needed to improve quality was a mascot for workers to rally around, and organized a naming contest, of which “Howie Makem” was the winning entry. The mascot then materialized as a man in a cat suit with a large Q embroidered on a red cape walking the floor and exhorting operators to improve quality amid jeers, catcalls and the occasional bolt throw. Howie Makem is one of the few artifacts of which no picture can be found on Google, which is why I had to draw it from Hamper’s description.

Spending time and money on slogans, mascots, banners and monogrammed shirts or mugs is predicated on the assumptions (1) that quality and productivity problems are primarily due to lack of motivation in shop floor operators and (2) that it can be changed by the same kind of marketing campaign that works for selling detergents. Deming’s and Hamper’s point is that it is counterproductive and that these assumptions are false.

The key points that I see about appropriate public relations and communications around Lean are as follows:

Do it first, play it back later

Improvement does need marketing and promotion inside the company, to customers, and to suppliers, but not at the start of the effort, and not in this form.

The beginning of an improvement program like Lean transformation is when it is most likely to fail. At that time, the organization, from management to line workers, has everything to learn about its technical and managerial content, as well as the art of implementing it. It is then that they will make the most mistakes and therefore least need publicity. The first pilot projects only need to be known and understood by those who are directly involved, and should not be announced upfront with a marching band at an all-hands meeting. You are much better off trumpeting results once the projects are successes that can inspire others. And even then, it is not done with slogans but by testimonials of participants, demonstrating the improvements directly on the floor or in video recordings.

With outsiders as well, you do it first and play it back later. You don’t announce what you are going to do, but, once it is done, you make it a field trip destination for local schoolchildren as well as other industrial tourists.

Car companies and public relations on manufacturing

Toyota plants have visitor centers with posters on the products and cartoons explaining the production system to children and have a whole staff of professional tour guides taking groups on a set path through the plant, wearing headsets to hear the explanations. These tours are part of public relations and not given by retirees, as is the case at many other companies.

Porsches-Leipzig-plant

Porsche Leipzig

Porsche in Leipzig charges customers €1,000 extra to spend a day at the plant to pick up their Panameras or Cayennes, during which they get a tour of the shop floor featuring their version of Lean, a lunch at top of the visitor center, and an hour with a driving pro on the test track to learn how best to drive their new car in various conditions.A striking feature of this plant site, is that it is dominated by the round, inverted diamond shape of the visitor center, on the top left of the photogaph, between the test track on the left and the production shops on the right.

g.-volkswagen-transparent-assembly-plant-in-dresden

VW transparent assembly plant in Dresden

This is part of a new marketing trend in Germany, where, rather than hide plants away, you locate the cleanest, most automated and most spectacular processes where your customers, or even the public at large, can see them. In this spirit, Volkswagen has located a plant downtown Dresden, with glass walls for passersby to see the final assembly of cars.

Motorcycle homecoming at Honda in Marysville in 2005

Motorcycle homecoming, Honda Marysville, 2005

Honda pioneered a different form of promotion of its manufacturing system to end users with its homecomings at the Honda motorcycle plant in Marysville, OH, where, once a year, they hosted bikers who see the production lines and meet the operators who built their bikes. The same approach was later emulated by the now defunct Saturn division of GM.

Companies in other industries rarely go this far, particularly when their products do not excite the public’s imagination. Bart Simpson’s class goes on a field trip to a box factory, which does not generate much enthusiasm.

Promotion of Lean efforts by component suppliers

If you make components to sell to OEMs rather than to consumers, the promotion of your Lean programs takes a different form, with customers sending teams of auditors to assess whether you are “Lean enough” to do business with, and they may send you supplier support engineers to help you implement Lean to their satisfaction. This means that you must present your plant in a way that allows the auditors to check all the marks needed to give you the right score, even if it means setting up a Potemkin village with tools that you don’t think are essential to your business.

Working with your customers’ supplier support organization — or supporting your own suppliers — is a different process, requiring a deeper level of involvement, and it is not a matter of public relations for either side, and should not be treated as one. The customer provides free consulting to help the supplier increase productivity and improve quality. In exchange, the supplier reduces prices by a fixed ratio every year, calculated so that the improvements are to economic benefit of both sides. The customer pays less, while the supplier makes more profits. It is a win-win, but not an easy system to set up and operate. It involves top management, engineering on both sides, purchasing on the customer side, and customer service on the supplier side, and it is not run by Public Relations.

Deming’s Point 9 of 14 – Break down barriers between departments

(Featured image from the  Bureaucracy game, by Douglas Adams)

Deming’s complete statement of Point 9 is as follows:

“Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems in production and in use that may be encountered with the product or service.”

Within a large organization, it is common for departments to work at cross purposes. Each department is a functional silo, working towards goals that may be inconsistent with the interests of the whole. Deming gives many examples of disasters that occur as a consequence, and exhorts his readers to break down the barriers to keep them from happening. As with his other points, he makes no recommendation on how to accomplish this.

Let us examine several approaches that have been tried, and the issues that organizations encountered when they did:

Eliminating silos in the organization

This is not a problem for small companies. As long as the entire management team fits within a small conference room, there are few opportunities to erect barriers. In a large company where it is a problem, the most obvious solution is to organize by what is variously called business teams, business processes, value streams, or focused factories.

You dissolve the functional departments and organize multifunction teams that bring all the required talent to bear on the core activities. In a manufacturing company, for example, all the resources needed to make a family of products from start to finish — including engineers, maintenance and quality technicians, schedulers, etc. — report to one “value stream manager,” and there cannot be barriers between silos because there are no silos.

It’s like the Mission Impossible TV series, with the disguise specialist and the explosives expert working together towards a common goal, as opposed to being in separate facilities and exchanging service requests in triplicate. This is a popular picture in the US and the approach is often used in a variety of contexts, such as emergency response, as in Apollo 13, or product development, for Data General’s MV-8000 computer in 1980 in Tracy Kidder’s The Soul of a New Machine, or the 1996 Taurus at Ford in Mary Walton’s Car.

The movie Apollo 13 shows a seemingly too-good-to-be-true team that is thrown together to find a way to fit the square connector of the command module air scrubber to the round hole used on the lunar module, using nothing but the odds and ends available to the astronauts on the crippled spacecraft. But the story is true, and we have a picture of the actual device the astronauts built.

This was the philosophy of Business Process Reengineering (BPR). Each business was to be broken down into processes turning some input into an externally visible output. Manufacturing, in BPR, did not qualify as a process. Instead, it was subsumed into the order-fulfillment process.

Making functional departments work

But it is not a panacea. The development of the 1996 Taurus took 30 months, and it was a major improvement over previous products at Ford, but still not down to the 24 months used at Toyota for the Rav4, and Toyota uses a traditional structure with functional departments communicating through memos.

In addition, according to Mary Walton, Ford’s integrated, collocated team made design decisions that made manufacturing more difficult. She explains in particular that the sculptured shape of the side panels made them more difficult to stamp, and this happened even though manufacturing was represented in the team. As a work of art, the 1996 Taurus was stunning. As a commercial product, however, it was lackluster, losing the previous versions’ bestseller status in the US market to the more “boring” Honda Accord and Toyota Camry in 1997.

The reality is that organization structure does not determine outcomes. The caliber of the individuals, their motivations for the roles they are playing, and their interaction protocols are at least as important. In their July, 1998 Harvard Business Review article , D.K.Sobek, J. Liker, and A.C. Ward listed the following practices as key to Toyota’s performance in product development:

  1. Written communication with single-sheet A3 reports in standard formats.
  2. Engineering supervision by practicing, hands-on engineers.
  3. A chief engineer (shusa, or 主査) for each project who is an experienced designer with a proven ability to integrate different technologies into a product. The shusa has a team of 5 to 15 members coordinating the work of hundreds who remain in functional departments.
  4. Engineers who develop their skills through on-the-job training, mentoring, and rotation within their functional department, with senior managers rotating between departments.
  5. High-level project plans with a small number of milestones, giving each department flexibility on detailed tasks.
  6. Checklists of design standards embodying the lessons learned in previous projects.

Obstacles to organization by process or value stream

The Toyota example is about product development. But what about other activities like operations? When you attempt to organize everything by business process, or by value stream, in most cases you encounter some functional departments that you technically cannot or should not break up.

Most machine shops have a central heat treatment facility. Induction hardening can, for some work, distribute heat treatment among different production lines and break down the “heat treat silo,” but a given shop may make products to which it is not applicable, its customers may not approve the process, or it may not have the skills or resources to implement it. Electroplating and painting commonly are similar challenges. As a result, the plant ends up with a few common services organized as functional departments along with lines that take a family of products through a sequence of operations.

Among support functions, the picture is also mixed. Production scheduling at the detailed level, for example, works better when the schedulers work directly for the manager of a production line than in a central department, because local scheduling is a simpler problem and the relevant specifics of machine behaviors are more accessible. On the other hand, breaking down a maintenance department and making the technicians report to production managers may not enhance their responsiveness when, for example, the group assigned to a line is short of the critical mass needed to have at least one technician standing by for the next emergency.

Other departments remain organized centrally because of the information they have access to, like Human Resources, Accounting, or Technical Data Management; others, because of external entities they deal with, like Shipping and Receiving.

Skills maintenance, continuing education and career planning

When breaking down a functional department and reassigning its members to teams organized around processes, we also need to consider how it affects the people to whom we do it. Professionals like medical doctors or lawyers work for clients who have little or no knowledge of their specialties, but it is then up to them to decide how much of their revenue to spend or maintaining their skills. They choose which magazines tp subscribe to and which conferences to attend, without asking anybody’s permission.

An engineer reporting to a production manager also works for one “client” who does not have the same expertise, but as an employee. If this engineer wants to attend a conference, the first step is to get approval for the time and money it will consume, from a manager with no knowledge of whether it is a good idea.

In the long term, what career does this engineer have to look forward to? The manager needs the engineer’s skills here and now but is ill equipped to provide guidance, compared to an engineering manager whose background and experience are in the same field.

For this reason, some companies have adopted matrix organizations, in which specialists report “solid-line” to a process owner who needs their skills in operations or on projects, and “dotted-line” to a functional manager for skills maintenance and career development. In a diagram, as follows, this structure looks simple and attractive:In reality, of course, it is a more complex form of organization than a simple hierarchy, and conducive to all sorts of tensions regarding authority and responsibility.

Project transitions

Project work — like product development, new product introduction, or new plant setup — differs from operations in that it ends when a goal is reached, which may be a working prototype, a target takt time in production for the new product, or for the new plant. At that point, the teams are disbanded and their members move on.

This is a particularly sensitive transition to manage when you collocate a multifunction project team in one big room, because its members bond both with the project and with each other, and receive the ending like a psychological blow on the scale of the loss of a family member. This is another reason why they need to retain a connection with their functional peers.

Conclusions

Breaking down barriers between departments for the greater good of the organization as a whole is a worthy goal, that high-level managers have been pursuing since, at least, the Roman empire. There is no simple recipe. The approaches followed by successful organizations have been subtle, nuanced, and fitted to their purposes.

Deming’s Point 8 of 14 – Drive out fear

(Photo by Lewis Wickes Hine, New York Public Library)

Deming’s complete statement of Point 8 is as follows:

“Drive out fear.”

This is a prescription that Doug Hiatt, a quality assurance manager at Boeing, found bewildering. First, he couldn’t see how fear could be “driven out,” and, second, where dangers are real, he didn’t feel that fear was something to be avoided. Deming is not arguing, however, that external threats, like competitors, should be hidden from employees to make them feel secure. In the 1980s, I worked for a software company whose managers were invariably friendly and courteous to subordinates, and where management communication was mostly “happy talk” that made especially the younger employees feel comfortable. Then, overnight, one third of them were laid off. Their sense of security was false.

Deming is advocating giving employees a genuine sense of security, which is both difficult to create and easy to shatter. Nothing can create such as sense quickly, but we can think of all sorts of human resource policies that can have this effect if carried out consistently over many years. Deming does not give us any pointer, but, in the US in 2012, few companies even try, particularly in environments like Silicon Valley.

Deming feels that fear always leads to “impaired performance and padded figures.” While the fictional Darth Vader can scare a crew into building a fully operational death star faster, the record in the real world is mixed. There, the ultimate manager by fear was probably Joseph Stalin, as shown in his January, 1940 telegram to a plant manager telling him that, unless results were produced within a tight deadline, his management team would be shot. The performance of Soviet industry supports both of Deming’s assertions.

MachiavelliBut even in the US, managers like Jack Welch, who introduced Rank-and-Yank  at GE, clearly feel that there is nothing wrong with making employees fear losing their jobs. Others like to quote Machiavelli’s “It is better to be feared than loved, if you cannot be both.” But Machiavelli’s world in 15th century Italy was more like the Game of Thrones than a contemporary manufacturing company. His prince is concerned exclusively with stabilizing his power, fending off rivals, and conquering more territory. Machiavelli’s advice is of limited value in areas like product development, marketing, manufacturing, or customer relationship management.

Intel’s Andy Grove was so famous for saying “Only the paranoid survive” that he wrote a book by this title, but the book is about business strategy, not about the way you treat employees. I had an extended project with Intel when Grove was its CEO; the Intel employees I worked with spoke of him with awe and respect, but never with fear. They trusted his steady hand steering the company and were not worried about being treated unfairly. Outside Intel, the company was perceived as secretive and aggressive, bordering on ruthless.

Does fear always impair performance? Stage fright can paralyze public speakers, stage actors or singers, but its complete absence is a sign of indifference to the audience that it doesn’t miss. The best performers are those who feel stage fright but are galvanized by it. Conversely, does the absence of fear always enhance performance? Academic tenure is the ultimate in job security. But do professors perform better once they are tenured than when they are on a tenure track pursuing it? Non-academics may be too quick to assume that they don’t. There is no valid general answer to that question. Some do and some don’t.

Deming sees a “widespread resistance to knowledge.” From the details he gives, what he means for individual contributors is that they are afraid new methods or new technology will make their hard-earned skills obsolete and threaten their positions; for managers, it is the worry that the investment in acquiring knowledge will never be recouped. These are two separate concerns.

The first fear is readily observed in organizations that hire people based on the immediate need for skills, as opposed to recruiting them for a career. If you know you are employed because you are the only one to know how to run a milling machine of a particular model, or navigate the user interface of a legacy information system, then you are naturally less than enthusiastic about the introduction of a way of working that requires you to train others to do your current job, or of new machines or systems that do not need your current skills. If company behavior over decades has built a foundation for this fear, you will not drive it out easily. It will require the establishment of new human resource policies, their communication to the work force, and their sustained practice over a long-enough period to build credibility with the work force

In operations, the managers’ primary responsibility is the output to customers, and employees do learn in the process of producing it, particularly if they rotate between stations. But even this form of knowledge acquisition is not free. It takes management attention to organize and monitor, each job an operator rotates into requires a learning period during which performance degrades, and there is always the risk that your most knowledgeable employees will leave. Other forms of knowledge acquisition include participation in improvement projects and experiments, technology watch, and formal training, in house and at public venues. All are investments in money and time, with  uncertain outcomes. Let us look at each in more detail:

  1. Improvement projects. They should always have the dual purpose of improving performance in their target area and learning by the work force. Participation in successful improvement projects develops both technical and managerial skills, in a way that pays for itself through the performance enhancements.
  2. Experiments. While experimentation is a normal part of product development, most managers do not make room for it in operations. A Lean Manufacturing plant, on the other hand,  sets aside space for it and encourage engineers or technicians to experiment with concepts, tools, machines, or systems that are  not  immediately applied in production. This is how they learn to be savvy buyers of technology, customize off-the-shelf equipment, or build from scratch machines that are not commercially available. You cannot write a discounted cash flow analysis to justify such an engineering sandbox, but you can see its impact in the proliferation of clever devices that enhance production performance on the shop floor.
  3. Technology watch. This is keeping up with new developments in one’s current specialty, by reading the trade press, attending conferences, visiting trade shows, and going on plant tours. These are activities that a manager may find difficult to justify, on the grounds that they are not anything a customer would be willing to pay for. Yet, not doing them is a sure path to technical obsolescence.
  4. Training. We discussed training issues in the review of Deming’s Point 6.

How do you “drive out” the fear of making the wrong decisions in this area?  This is particularly challenging when you break down functional silos and distribute technical specialists among the processes they serve, whose management owners rarely appreciate the need for them to stay current. If you are an extrusion engineer working for the production manager in a shop that makes extruded rubber parts for cars, you may be dedicated to making the lines perform well, but you will be isolated from professional peers. That is why some organizations either retain the functional silo structure while trying to make it work better using tools like A3 reports for better communication, or they adopt a matrix organization, in which the specialists maintain a “dotted line” reporting relationship to a technical manager whose job is to manage the maintenance and development of their skills.  A common strategy for IT in manufacturing companies is to outsource the technical work to a system integrator who is responsible for the technical skills of the contractors he sends.

Deming also describes as a loss from fear the inability to serve the best interest of the company because of rules or production quotas. It conjures up the image of Captain Queeg telling his officers how every rule in the book is there for a reason and has to be followed to the letter. Deming gives the example of a supervisor afraid to stop a machine for needed repairs because he might not fulfill his production quota. Of course, the machine breaks down and he can’t fulfill his quota anyway. But it is a dilemma. On the one hand, you want employees to use their judgement and break rules that are counterproductive. But, on the other hand, you don’t want them to think that shop operating standards and production plans are only guidelines. Finding the right balance is not easy between blind obedience to imperfect rules and absolute control by each individual of what to do and how much to produce. Here are a few pointers on how to do it:

  1. The rules have to be few in number and clearly stated. The following signs show the rules governing the use of a public park in Paris and a swimming pool in Palo Alto, CA. Every visitor to the Luxembourg gardens is expected to know nine articles of small print; the Palo Alto swimmers, seven bullet points.

  2. The purpose of the rules must be communicated, whether it  is regulatory compliance, safety, quality, etc. If no one can explain the purpose a rule serves, then it is a candidate for elimination.
  3. A process must exist to modify or cancel rules that are obsolete, ineffective, or counterproductive. The Accidental Office Lady is a memoir of Laura Kriska’s years at Honda in Japan. As a young American college grad, one rule she found particularly objectionable was the discriminatory requirement for women to wear a uniform at work. She recounts how she used Honda’s NH Circle system to organize a group of co-workers and make a case for the elimination of uniforms as an improvement in office work, and got it approved by Honda management.

How do you recognize the presence of fear in an organization? Deming lists 14 different types of statements that he has heard from employees and considers to be expressions of fear. Following is a summary of his list:

  1. The company may go out of business.
  2. Supportive superior may leave.
  3. Putting forth an idea may be perceived as treason.
  4. May not have a raise at next review.
  5. Long-term benefit may require short-term performance drop on daily report.
  6. May not be able to answer boss’s question.
  7. Credit for contribution may go to someone else.
  8. Admitting a mistake may have adverse consequences.
  9. Boss believes in fear; management is punitive.
  10. System will not allow expansion of abilities.
  11. Company procedures are not understood; employees don’t dare ask questions.
  12. Management is mistrusted, and perceived to have a hidden agenda.
  13. Inability to fulfill production quota (Operator or Plant Manager).
  14. No time to take a careful look at the work (Engineer)

To journalists: if you write about Lean, check your facts!

An otherwise informative newspaper story about a company’s Lean approach in a local newspaper contains the following paragraph:

“The heart of lean is kaizen, a Japanese term. ‘Kai’ means to take apart, and ‘zen’ a striving toward perfection. Kaizen is a process in which a team of employees is brought together to focus on a problem that needs solving or a process that needs improving. Improvement is continual, and that’s the striving for perfection. Edward Deming, a statistician from the U.S., brought the idea to Japan after WW II when he struggled to get American manufacturers to listen to his ideas. Lean and kaizen principles were widely adopted by Japanese manufacturers and helped Japan rebuild after the war.”

This is a remarkable paragraph. Other than saying that Kaizen is Japanese, every statement in it is inaccurate. Let us review them one by one:

  1. “The heart of lean is kaizen,..” Well, not really. It’s only part of it. You can’t implement Lean with just Kaizen, and you can practice Kaizen without being Lean.
  2. “‘Kai’ means to take apart,…” Not in my copy of Nelson’s Japanese dictionary! ‘Kai’ means change, renew, mend, not “take apart.”
  3. “…and ‘zen’ a striving toward perfection.” In the same dictionary, Zen means good, goodness, right, virtue, not “striving” for anything, let alone “perfection.”
  4. “Kaizen is a process in which a team of employees is brought together to focus on a problem…” What about Kaizens done by individuals through a suggestion system?
  5. “Edward Deming, a statistician from the U.S., brought the idea to Japan after WW II…” It’s W. Edwards Deming, and what he brought to Japan was not Kaizen but statistical quality control.
  6. “Lean and kaizen principles were widely adopted by Japanese manufacturers and helped Japan rebuild after the war.” Assumes Lean and Kaizen existed before Japan’s post-war reconstruction.

The rest of the article is actually interesting, informative, and credible about the specifics of the case. It didn’t need a paragraph of background. If, as a journalist, you write about a case of Lean implementation, don’t write such a paragraph without checking  the facts.

Deming’s Point 7 of 14 – Institute Leadership

Deming’s complete statement of Point 7 is as follows:

“Institute leadership. The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers”

There are the following three parts to this statement:

  1. Institute leadership.
  2. The aim of supervision should be to help people and machines and gadgets to do a better job.
  3. Supervision of management is in need of overhaul, as well as supervision of production workers.

Part 1: Institute leadership

What does Deming mean by leadership, and how to you institute it? From Plato and Sun Tsu to Peter Drucker, many have written about leadership as a quality a person may possess, without ever precisely defining what it is. You see its effect in others’ willingness to follow, but no one has ever written a credible spec of what makes a leader. There is in particular no agreement on whether this quality is innate to a few individuals or can be nurtured in many. In The Practice of Management (pp. 158-160), for example, Drucker argues that leadership is innate, and that the best management can do in an organization is create conditions for the natural leaders in its ranks to emerge.

When Deming argues that the job of management is not supervision but leadership, he appears to be using leadership in the sense of this rare quality that escapes a precise definition. At the opening of Chapter 8, however, he writes:

“The aim of leadership should be to improve the performance of man and machine, to improve quality, to increase output, and simultaneously to bring pride of workmanship to people.”

In this context, he is referring to a role rather than a quality, and “management” could be substituted for “leadership” without changing the meaning. When you say “Xi is the new leader of China,” it describes Mr. Xi’s formal role, not his qualities.

Part 2: Supervision should help people, machines and gadgets do a better job.

In this light, Parts 2 of Deming’s Point 7 can be interpreted primarily as a recommendation on the role of first-line management in a factory. The name for this position has changed multiple times, from the 19th century Gang Boss, through the less brutal sounding 20th century Foreman, to the gender-neutral Supervisor, and now to the vague and fuzzy Group Coordinator or Area Coordinator. These repeated name changes for the same position suggest that it is an uncomfortable one, between the management hammer and the shop floor anvil. Top management and engineering titles have a longer shelf life.

Deming’s explanations  focused on what is wrong with supervising people whose work you don’t know, treating every problem as a special case, and managing by numbers. If being able to do the work of the people you manage is a requirement, then production supervisors will be exclusively drawn from the ranks of operators,  and this position will not be given to college grads on their first jobs. My experience, however, is that first-line supervision in production works best when the supervisory team includes members of both types, combining the book smarts of the college-educated rookies with the shop smarts of veteran operators. There may be tensions between the two but, if well managed, they can achieve together results that neither group could without the other.

Treating every problem as a special case is an easy trap to fall into, and it is what most managers do. Each problem they see is a line-item on their to-do list, they find a countermeasure, check it off and move on. The special cause is that we received a defective part last week, or the operator was new, or the cutting tool broke. But leaders should not be satisfied with such answers and dig deeper to consider whether the problem is a symptom of a problem with the process itself. In the Soviet Union, all problems had to be blamed on human error. Someone had to be made a scapegoat and punished. The idea that there might have been something wrong with the system was not allowed to be contemplated. Deming’s point here is that leaders must do exactly that.

In Deming’s view, it is because they don’t understand the work that supervisors fall back on managing by numbers. Even if you have no clue about the work of an operator, you can still count parts and, if your management only cares about the numbers, you end up doing nothing else. Deming’s perspective on managing by numbers in explained in Deming versus Drucker.

Underlying this discussion, but not said by Deming in son many words, is an underestimation of first-line management. In my experience, when backed by their superiors, production supervisors are the most powerful agents of change on the factory floor. Because they are part of management, support groups like Maintenance or Quality listen to them. They can work directly with operators as no one else in management can, and they are processes owners.

This combination of factors makes them uniquely effective as improvement project leaders. Deming  puts in their job description, which is necessary but not sufficient. Their area of responsibility must be small enough for them to have time to work on improvement. In the late Toyota-run NUMMI plant, a group leader in assembly had an average of 17 operators. Many other companies boast about having a “lean” management structure with one supervisor for 100 employees, who is too busy to do anything but minding daily numbers. Meanwhile, improvement is the purview of a specialized engineering department that has neither the resources needed to undertake all the necessary projects nor the rapport with the shop floor that is needed to make changes take root.

What does Deming mean by gadgets? We can assume that, when Deming says machines, he implicitly includes fixtures, jigs, and tooling under that term. Gadget is not a technical term, and Deming does not define it, but, except in Point 7, every use of it in his book is clearly derogatory:

“Lag in American productivity has been attributed in editorials and in letters in the newspapers to failure to install new machinery, gadgets, and the latest types of automation such as robots. Such suggestions make interesting reading and still more interesting writing for people that do not understand problems of
production.” p. 13

Among Obstacles, on p. 127: “The supposition that solving problems, automation, gadgets, and new machinery will transform industry. No one should sneer at savings of $800,000 per year, or even $1000 per year. A group of workers took pride in changes that saved $500 a year. Every net contribution to efficiency is important, however small.”

Gadgets and servomechanisms that by mechanical or electronic circuits guarantee zero defects will destroy the advantage of a beautiful narrow distribution of dimensions.” p. 141

In other words, whatever gadgets are, they are up to no good, so why would supervision worry about making them do a better job? Why not just get rid of them? One reason is that first-line managers usually do not choose the resources they have to work with, whether human or technical. They don’t choose to buy a particular gadget; their task is to use it as best they can.

Part 3: Supervision of management is in need of overhaul

This is clearly about the higher levels of management, but Deming’s elaboration on Point 7 says nothing on this matter. In higher-level positions, it is often impossible to find candidates with personal experience of the work of all their subordinates.  To take an extreme example, former presidents of the US are unanimous in saying that nothing could prepare you for that job.

We know that someone is a good leader by the readiness, willingness and enthusiasm of others to follow. Anyone can observe the behaviors of leaders and try to emulate them, but rarely to the same effect. Deming does not offer a theory or even a definition of what he means by leadership, but we know that he didn’t see much of it in American managers.

Deming’s Point 6 of 14 – Institute Training on the Job

Note: The teacher in this picture is Mustapha Kemal Atatürk, founder and president of the Turkish Republic, in 1928. Until then, Turkish had been written in the Arabic script. Atatürk crisscrossed the country to personally introduce the Latin alphabet to notables in every town. At the end of his presentation, they had to choose a last name and write it on the blackboard in the new script. It may not have been on-the-job training, but it certainly is an illustration of training and of committed leadership. And it worked: 84 years later, Turkish is still written in the Latin alphabet.

Deming’s full, terse statement of his 6th Point is as follows:

“Institute training on the job”

“Institute” is stronger language that just “implement.” It is not just about making something happen, but  turning it into an institution. In the language of the 1980s, “on-the-job training” was synonymous with “sink or swim”:  as a rookie engineer, you were given projects, and it was up to you to figure out how to carry them out. Given that you had had your fill of classes in college, you didn’t mind. Production line operators received some mandatory orientations on things like safety gears, but relied on colleagues to figure out how to do their work. So, what was Deming talking about?

Deming’s elaboration on Point 6 actually drops the “on-the-job” and is entitled just “Institute training.” In it, explains that it is about “the foundations of training for the management and for new employees,” as opposed to continuing education. Regarding management, he points out that Japanese managers “start their careers with a long internship (4 to 12 years) on the factory floor and in other duties in the company,” implying both that it is systematic in Japan, and not done anywhere else. I once worked with a Purchasing manager in a major Japanese company who had five spent years in Design Engineering (See  Point 4), and this was part of a number of rotations preparing him for senior management positions. However, it was not systematic, in that not all professional employees went through this process.

This practice is also predicated on long-term, committed employer-employee relationships. It trains managers who know in depth how the company works and have personal ties to many of its departments, but are not necessarily at the top level of expertise in any of their specialties, and it does more to enhance their value to the company than their marketability outside of it. Similar practices are also found outside of Japan, in companies like Boeing, GM, or Unilever, for young employees identified as having “executive potential” (See Alternatives to Rank-and-Yank in Evaluating People). In Italy, I had the opportunity to work with a production supervisor in a frozen foods plant who was a young German engineer in such a program. The parameters and the management of these programs matter. They may degenerate, for example, if the time spent in each position is too short and if participants are rewarded for not making waves.

Here again, Deming is at odds with Drucker. The rotation of managers to be seasoned in the specifics of the company’s business before being promoted is contrary to Drucker’s concept of a professional manager who can run any business, and more in line with the practices of the military. When, at the end of The Practice of Management, Drucker discusses the preparation of tomorrow’s managers, which he sees as a combination of a “liberal education for use,” centered on classics and on a “basic understanding of science and scientific method,” supplemented by continuing education in advanced techniques of management. In his view, managers need to respect technical workmanship in the activity of the company, but they don’t need to possess this workmanship themselves, and their generic management skills are transferable across industries. At Apple, Steve Jobs would probably have agreed with Deming; John Sculley, with Drucker.

Deming says little on how shop floor operators should actually be trained, and  makes no reference to Training-Within-Industry (TWI), a program we would have expected him to be familiar with as a development that was contemporary to his own work in World War II, but a  Google search for “Deming +TWI” does not match any document. He bemoans companies’ failure to use people’s abilities but does not explain how training, on the job or otherwise, can remedy this.

Deming also says that training should be focused on the customer’s needs, which, influenced by TQM, we may interpret as meaning the next process.   When Deming writes “customer,” however, he does not mean it metaphorically but literally. He is actually thinking of the real customer, the one who pays and has the option to buy elsewhere. In other words, training must relate the work done at any workstation to the experience of the end user of the finished product. The farther upstream from final assembly, the more remote the connection and the more challenging it is to communicate, but the more understanding an operator has of the effect of the work, the stronger the motivation to do it well.

Even in the best companies today, much of the initial training of operators is done off-line rather than on the job. The basic employee orientation on company procedures or personal protection equipment is, of course, done offline, but so is a major part of the work itself. Machinists learn the basics of CNC turning with tabletop lathes that carve wax cylinders before moving on to actual machines, and assembly teams learn the basics of the Kanban system through simulation games.

Deming’s Point 5 of 14 – Improve Constantly and Forever the System of Production and Service

Deming’s complete statement of Point 5 is as follows:

“Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.”

At first sight, this point sounds exactly like the first one, which is about constantly improving products and services. What is the difference? Point 1 was about output; Point 5, about internal processes and systems. It says that improvement is an activity that must always be part of the life of any business organization. On this, Deming is on the same wavelength as Imai in Kaizen, which was published almost at the same time as Out of the Crisis.

“Constantly and forever” means that improvement in a plant starts on its opening day and ends only if it closes. Point 5 assumes that improvement is always possible, and should always be pursued. Imai had quoted a Japanese executive saying that he had found a US plant unchanged on his second visit after 30 years. Looking for examples of what this visitor might have seen, I found the following two pictures of coke ovens at the Ford River Rouge plant:

Figure 1. Identical operation 30 years apart

By contrast, a factory that practices improvement looks slightly different if you revisit it after six months and is unrecognizable after two years.

But the idea that you need to constantly improve a factory contradicts the conventional wisdom that it produces diminishing returns. One area of human endeavor where we might expect such diminishing returns is the 100m race, with athletes training ever harder to nibble ever smaller improvements in their times. It is what common sense tells us, but not what the data tells us. Figure 2 plots the world records in 100m racing from 1900 to 2010.

Figure 2. World records in 100m racing from 1900 to 2010

The linear trend is for the record to drop by an average 0.01 sec/year for 110 years, with no sign of a slowdown in improvement. Still, in manufacturing quality, you could claim that there are diminishing returns when the same amount of effort takes you for 30% to 3% defective, then from 3% to 0.3%, and then from 0.3% to 15ppm. In a competitive environment, however, the consequences of making or not making these improvements do not diminish. If you don’t make them, somebody else will and use them to take markets away from you.

In the 50s and 60s, some American appliance makers were not only failing to improve quality but were deliberately degrading it. Even though I had read reports of this, I still thought it so egregious that I didn’t believe it, until, in the 1980s, I met an engineer who had been personally involved. He had been part of a “reliability” department charged with redesigning products to fail as soon as possible after the warranty expired. This was a version of planned obsolescence that opened the door to competitors. Planned obsolescence still exists, but it is now about making customers want to buy a new product because it has new and better features, not because the old one broke down.

Deming does not mention the training value of improvement work. Improving the production system may become ever more challenging, but the work force that has taken it this far has learned lessons and grown skills that enable it to take on the next challenge. The problems may be harder, but the problem-solvers are stronger.

In his comments, Deming does not limit the size of the improvement actions. His recommendation isn’t just about what we now call continuous improvement or Kaizen. It is not just about small changes made to work methods by those who do the work. It can also be large-scale, radical changes. On the other hand, the only target of improvement he seems to have in mind is quality. As he describes it, if quality improve, so does productivity, because you eliminate the friction in the process caused by defects. Bringing processes under statistical control is front and center.

Lean Manufacturing goes much further. First, you cannot have flow lines with processes that are not under statistical control, and, if you have such processes, not much else matters besides bringing them under control. But there are many plants, in mature industries, where it is no longer an issue,  and machines, right out of the box, can hold tighter tolerances than required. In this case, Deming’s logic is turned on its head, and it is quality improvement that becomes a by-product of work on productivity.

For example, when you convert a batch production line to a one-piece-flow cell, the immediate effect is that you may see is that double productivity while reducing cycle time and WIP by 90%. Then, as you start operating the cell, you notice that it produces three times fewer defectives per shift than the old line did, essentially because, instead of burying defects in WIP, you detect them immediately. A part coming out of an operation is immediately loaded into the next one, which brings to light any defect it may have. This is a scenario that I have observed many times, but it is not part of Deming’s world view.

Today, you would never hear a manager openly oppose Deming on this. It has become part of the standard talking points but, if you listen closely, you hear different messages that contradict it, such as: “We’ve optimized production, and our big opportunity is now in the supply chain.” If you want to follow Deming’s advice, you should ban the word “optimal” from your vocabulary, because, by definition, if anything you do it optimized, you can no longer improve it. The completion of one improvement action sets the stage for the next one, forever; optimization, on the other hand, leads to a full stop. When you see the shop floor after hearing such a statement, you see plenty of opportunities that have been left on the table and are not being pursued.

There are still very few companies that genuinely pursue improvement “constantly and forever” at all levels of the organization, through all means available, including  individual suggestions, circle activities, Kaizen events, and large-scale innovation projects. We usually consider them showcases of Lean.

Deming’s Point 4 of 14 – End the practice of awarding business on the basis of a price tag…

(Picture from TYWKIWDBI)

The complete wording of Deming’s Point 4 is as follows:

“End the practice of awarding business on the basis of a price tag. Instead, minimize total cost. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust.”

Today, you will encounter no one involved with supply chain management who would argue against the idea of basing purchasing decisions on the total cost of having the item on hand when needed for production and developing collaborative relationships with suppliers. The idea of single-sourcing every item, on the other hand, makes many managers nervous, but, without such a committed relationship, you cannot have information exchange at the depth required for collaboration to pay off.

As of 2012, however, very few companies have followed through on this recommendation. What we have seen instead in the past 20 years instead is “We’ll skip Lean and go straight to China,” based exclusively on temporarily cheap labor, without due consideration to local infrastructure, quality and productivity issues, and logistics. Companies that are “reshoring” after being burned at this now have an opportunity to implement this most specific and least controversial of Deming’s 14 points.

It breaks down into the following specific recommendations on what is now called supply chain management:

  1. End the practice of awarding business on the basis of a price tag.
  2. Minimize total cost.
  3. Move toward a single supplier for any one item.
  4. Develop long-term relationships of loyalty and trust with suppliers.

Stop awarding business on the basis of a price tag

In this area,  companies don’t behave like individuals. Whether you buy food, clothing, household appliances, or the services of a plumber, you don’t systematically choose the lowest price. Like the astronaut on the launch pad, you do not want every part in the rocket to have been made by the lowest bidder. Even if you are hunting for bargains, you also consider quality, delivery, and the availability of support. You willingly pay more for appliances that are reputed for working well, lasting long, operating quietly, match the design of your house, and have spare parts and service readily available.

In principle, a company’s purchasing agents should think the same way. When they don’t, it is because they are evaluated on the prices they are able to negotiate and because they are not familiar with the actual use of the materials or equipment they buy. If you hired a third party to do your shopping, with instructions to find the lowest prices, you are unlikely to be happy with the results or even to same money over time.

Because they don’t use what they buy, purchasers rely on specs to decide whether a supplier’s product meets the company’s needs. As Deming points out, however, conformance to specs is never synonymous with fitness for use, no matter how carefully the specs are written. Specs only work as a one-way filter; if a product is out of spec, you know you can’t use it, but, if it is within specs, it does not guarantee that you can. Juran distinguished between true and substitute characteristics. The true characteristics are what you are really after, like the taste of a cake. Unfortunately, you cannot verify it without eating the cake, so you use substitute characteristics that you can measure, like the cake’s diameter or the sugar content of the ingredients. If they are out of specs, you know there is something wrong with the cake, but they can all be within spec and the cake still taste awful.

Relying on specs in purchasing is therefore taking necessary conditions and treating them as sufficient. But how do you avoid doing this? Deming does not say. I recommend the following:

  1. Avoid perverse incentives. Use metrics for purchasing that do not overemphasize the price.
  2. Implement Lean supply chain management. It is a broader subject than just buying based on price, but it provides a context for a more balanced approach to evaluating suppliers.
  3. Rotate professionals in and out of Purchasing. This means treating purchasing as a skill employees should have rather than a career. If you have people in Purchasing who have previously worked in Production or Engineering, they will have a better understanding of the issues.
  4. Give end users a voice in Purchasing. Purchasing should not have the authority to switch suppliers without the approval of those who consume the materials or use the equipment.

Minimize total cost

For manufacturing, it means considering everything it takes to have good materials within arm’s reach of the production operator for as long as the line is running on this product, as opposed to the price on a purchase order. For equipment, it means looking at the total cost of ownership (TCO), also a term that was introduced after Out of the Crisis came out.

The only issue Deming raises is that of quality, but it is not the only one, particularly when you consider switching from a  supplier located 10 miles from your plant to one that is 6,000 miles and 10 time zones away in an unfamiliar country. You have to consider transportation, longer lead times, communications and travel.

Furthermore, discussing cost and quality in the same breath leads naturally to thinking about what the literature calls “cost of quality.” The literature on quality defines this cost as the sum of the direct costs of failure, appraisal and repair, and omits the impact of quality on sales, as being too “controversial” and difficult to measure. This “cost of quality,” however, is the tip of the iceberg; it grossly underestimates the business consequences of quality problems, as shown, for example by the Firestone tread separation issue in 2000 or Toyota sticky accelerator pedals in 2010. A car maker’s reputation for quality is its crown jewels, and the answer on how much effort it should put into nurturing is is whatever it takes.

While transportation costs are relatively easy to calculate, the cost of expanding lead times from days to weeks or months is, in some cases, much larger than the cost of having inventory in transit. For example, toys sold in the US during each Christmas season are made in China the previous summer, but you cannot tell bestsellers from duds until late in the fall, by which time there is nothing you can do to adjust the supply.

To follow Deming’s recommendation here, you consider not the unit price of the item but all the outflows of funds generated by the decision to buy it for a given supplier for as long as you intend to do it, knowing that this may vary from a few months for fashion-related items to several decades for airplane parts. The question is not the price of one unit but, for example, what it takes to make, say, 1,000 usable units available on your production line every day for the next four years. And you have to write at least a best-case, worst-case, and most likely scenarios of how it may unfold in terms of volumes, quality and delivery performance, and  technical support of the supplier. Each scenario results in cash flow schedules that can be compared.

Such an analysis cannot be done without making assumptions about product life, demand, and supplier capabilities. It is more complex than picking the lowest bidder, but the stakes are high.

Move toward a single supplier for any one item

What happens when your single supplier fails? It happened to Toyota with the Aishin Seiki fire of February, 1997. The plant was Toyota’s single source of proportioning valves for Toyota in Japan. Toyota’s factories shut down within four hours of the fire, the supplier network was mobilized, production was restarted within a week, and was back to full volume in 6 weeks.  In the Japanese press, the fire was initially viewed as a failure of Toyota’s system; by the time it ended, it was a vindication of it.

If you buy thousands of items, even with a single source for each, you will have hundreds of suppliers. If you have a policy of having at least two sources for each item, you will have even more suppliers and more complicated relationships to manage. Deming emphasizes the impact on quality, but it touches in fact every aspect of supplier relations. Juggling multiple suppliers for each item is playing the field; having a single source, a monogamous relationship.

If, for each item, you have a single source for whom you are a major customer, your plan for dealing with emergencies like the Aisin Seiki fire is to rely of the strength of your supplier network to come up with an appropriate response. The Wall Street Journal article about the Aisin Seiki fire in May, 1997 described the response of Toyota suppliers as the manufacturing equivalent of an  Amish barn raising.

Sudden surges in demand are not an issue in car manufacturing, but they are in other industries, like semiconductor production equipment. If you are a machine shop making components for this industry, you may see demand doubling overnight simply because  one semiconductor company placed a big order for machines in a new wafer fab. You know that sudden changes in the economy may cause this order to be cancelled, and you cannot count of other orders filling up you slack capacity once this order is filled. In this case, rather than investing in additional equipment that is unlikely to be permanently needed, suppliers have been known to make second-sourcing agreements with competitors to provide surge capacity. One consequence of such arrangements is that the parts arriving at the customer plant may come from different suppliers. From the customer’s perspective, however, it is still a single-sourcing arrangement,  because the primary supplier remains responsible for quality and delivery.

Develop long-term relationships with suppliers

A six-year contract representing 30% of your sales to be a customer’s sole supplier of a component sets the stage for a different working relationship than a one-year contract representing 10% of your sales, in which you are one of a stable of suppliers among which the customer splits the demand. Exclusive, long-term relationships are clearly a required foundation for the collaboration that the entire literature on supply chain management agrees should take place between suppliers and customers, but generally doesn’t.

“Arms around” is better for both sides than “arm’s length” and adversarial. So why is it so rare, and what can we do to make it more common? The abundant literature on supply chain management fails to see what I think is the elephant in the room: unlike a plant, a supply chain is ruled by the interaction of multiple, independent economic agents. This is discussed in Chapter 19 of Lean Logistics (pp. 341-352). The summary is as follows:

In the lean supply chain, the traditionally adversarial, arm’s length relationship between supplier and customer makes way for a collaborative approach, centered on long-term single-sourcing agreements, and extensive exchanges of business information and technical know-how. This approach increases the total payoff of the relationship, but transitioning to it is difficult because it requires behavior changes on both sides.
Sustaining it over time also requires management to consistently forgo the short-term windfalls that can be reaped through a unilateral return to the adversarial approach. That supplier and customer should collaborate to increase the total payoff does not prevent each one from negotiating aggressively with the other on sharing this payoff.

Once you acknowledge that a collaborative relationship takes a long time to build and are easily destroyed by either side, you can manage it accordingly and give it the attention it requires.

Deming’s Point 3 of 14 – Cease dependence on inspection to achieve quality…

Deming’s 3rd point is the first to mention quality, and it is specific, even if its implementation is sometimes a tall order. Its complete statement is as follows:

“Cease dependence on inspection to achieve quality. Eliminate the need for massive inspection by building quality into the product in the first place.”

The idea that quality should be built into the design of the products and into the processes to manufacture them has come to be generally accepted in the past 30 years, and implemented in many industries. You never hear anyone arguing against it. At the same time, final inspection and test has never completely disappeared, even in the car industry. Engines, for example, are all tested before moving on to assembly, even at the best manufacturers, and body paint is visually inspected by people.

In the details he gives about this point, Deming acknowledges that there are exceptions where no one knows how to build quality into the process. In particular, he mentions integrated circuits. It is still true in 2012, and the economic importance of this “exception” has grown in the past 30 years. There are also other, older technology products for which there is no alternative to sorting the output. Lead shot, for example, is produced by pouring molten lead into a sieve, collecting the solidified drops, sorting the ones that are sufficiently round based on their ability to roll down chutes, and recycling the others.

Oddly, Deming includes “calculations and other paperwork” in a bank among the activities for which mistakes are “inevitable but intolerable.” Today, an individual using on-line bill-pay to settle a utility bill expects that the exact amounts will be properly debited and credited without human intervention. If, on the other hand, you are occasionally transferring $300K from Russia to the US, you can expect humans to validate the transaction.

At least in Out of the Crisis, Deming does not distinguish between inspection and testing. Inspection is a manual process, subject to human error and to dilution of responsibility when a product is subject to multiple inspections, which is why he describes it as ineffective as a filter for defectives. At the end of their process, however,  integrated circuits are not inspected by humans but tested on automatic test equipment that, if properly calibrated, provides consistent results. The relevance of these results depends on the human process of programming the test equipment; the productivity of test operations, on the sequencing of the tests.

Because inspection and test is perceived as  “non-value added,” it has a bad odor in the Lean community, and is ignored in its literature. Today, however, it is something we have to do, and we might as well do it well. Deming discusses it in Chapter 15 of Out of the Crisis;  I, in Chapter 16 of Lean Assembly .

Deming’s point 2 of 14: Adopt the new philosophy…

This is the most cryptic of all of Deming’s points:

“Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.”

This could have been said, with different meanings, at any time in the past 200 years. It could be said today, about a “new philosophy” that would not be the one Deming was referring to 30 years ago.  What was new in 1982 or even 1986 may be long in the tooth in 2012. Also,  is there such a thing as “Western management” as a common approach spanning the Americas and Western Europe? In the elaboration on this point, Deming asserts “We are in a new economic age, created by Japan.”

Deming’s 2nd point could be rephrased as “study and adopt Japanese management,” but it still would not be specific. It certainly made sense for car companies to learn the Toyota Production System, as they eventually more or less did, but Japan is 130 million people and more than 1 millions companies, engaging in all sorts of behaviors, not all of which are worthy of emulation. In addition, explicit references to another nation are counterproductive when you are trying to implement anything, as they instantly elicit the response that “it won’t work here.”

To make his point, Deming dives from the stratosphere of philosophy to the nitty-gritty of train schedules. Japanese trains, today as well as 30 years ago, run fast, frequently, and on time, which certainly enhances your traveling experience. As a train engineer told me in 1977,  “It’s a very interesting country, from a railroad point of view.” When I returned from Japan 18 months later, I brought him a copy of the latest schedule, which was sold at newsstands and looked like a small phone book. 34 years later, I crisscrossed Japan  for a week with tight connections and never missed one. It is radically different from using high-speed trains in Germany (ICE) or France (TGV). The Japanese high-speed trains, the Shinkansen, are no longer the fastest in the world, but what is most remarkable about them is that, if you stand close to the Tokyo-Osaka line, you see trains of 16 carriages roll by at 150 tp 200 mph every few minutes, as shown in Figure 1. By contrast,  TGVs from Paris to Lyon run about once an hour, and often late.

Figure 1. Schedule of Shinkansen departures from Tokyo to Osaka and beyond

And punctuality in public transportation in Japan is not limited to the Shinkansen: if you stand on a country road, with a schedule that calls for a bus to come by at 4:36PM, you see it coming round the bend at 4:35PM.

One good reason to point this out to American managers in the 1980s was that such a quality of service could not be explained by hard work, low wages, or protectionism. It required advanced technology and management, engagement of the work force, and attention to details. Furthermore, from 1964 to 1981, the Shinkansen was the only train of its kind in the world.

While the Shinkansen and its operations are a wonder to behold, it also has characteristics that have made it impossible to sell outside of Japan. It uses a wide gauge and cannot run at reduced speeds on regular tracks like the French TGV or the German ICE, as a result of which the Shinkansen network requires many more specially built bridges and tunnels.

Figure 2. Shinkansen tracks versus regular Japanese tracks

In fact, the only stretch on which traffic is intense enough to run profitably is the original Tokyo-Osaka line, and some lines are known to have been built because a powerful politician wanted his district served. Japan is a place where you find the Shinkansen and many other engineering marvels, but it is not immune to major errors in business planning and has its share of bridges to nowhere. It is not an ideal society, as Deming must have known, but a real, flawed one, comprised of 130 million fallible human beings.

In the US, fear of Japanese competition peaked in the late 1980s, and ebbed in the 1990s when the country entered a long recession that it has yet to overcome. In 2012, the focus of attention is China, not Japan. Not everything about Japan is worth following, and it was a mistake to believe so, but it is also a mistake to go back to ignoring it. In manufacturing, the most advanced concepts in both technology and management are still  found in the best Japanese factories, and the Japanese literature on the subject has no equivalent anywhere else.

But none of this tells us what the “new philosophy” is. By riding trains and visiting factories, you can observe practices, but not their underlying principles.  And you need these principles to develop corresponding practices in other contexts. There isn’t a single such philosophy for the whole of Japan. Instead, each successful organization has its own, which may or may not be explicitly stated, and if stated for internal use, is not necessarily shared with the world. In Out of the Crisis, the 14 points are the closest there is to the statement of a philosophy. Therefore this points essentially says that they the others should be adopted.