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Transformation of Western style of management faces seven deadly diseases and sixteen obstacles to success
Transformation of Western style of management faces seven deadly diseases and sixteen obstacles to success
'Out of the Crisis,' Chapter 3, Diseases and Obstacles
Mike Sondalini
Mike Sondalini
PWW EAM System Consultant
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June 15, 2022
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Top 3 EAM System Design and Use Insights from the Chapter in ‘Out of the Crisis’ by W. Edwards Deming
Abstract:
Changing Western style of Management and adopting the 14 Points from Chapter 2 to transform and rebuild an organisation for high quality and productivity will face the deadly diseases and obstacles. Deming identified seven deadly diseases and sixteen obstacles to organizational change inherent in Western management systems. They apply to all radical institutional change, including improving maintenance and EAM systems and processes to be more effective and efficient.
Keywords: organizational change, organizational transformation, management transformation, quality improvement, productivity improvement,
Top 3 EAM system insights this article helps you to appreciate:
· Organizations are stable, living systems, and like all ‘life’ they will fight against a threat. The secret is to give their management and their people a safe way to change.
· Improving a company’s quality and productivity requires senior management to build quality and productivity improvement into an operation’s way of working.
· The 7 diseases and 16 obstacles to organizational transformation also apply to EAM system improvement.
An organization, an enterprise, a corporation, or a company are living systems. They are intelligent, alive entities that will protect themselves against perceived risk. Once formed, their operational system and enterprise asset management system, will prevent change for the better unless perfecting themselves is a part of their design and functioning. If organizations contain Western management’s deadly diseases and obstacles to transformation that W. Edwards Deming described in Out of the Crisis, Chapter 3, they will “require a total reconstruction of Western management.”
Unfortunately, Deming did not provide a ‘vehicle’ or method to use to transform organisations. In the case of improving an Enterprise Asset Management (EAM) system you can use the Plant Wellness Way EAM asset life cycle management methodology (see the www.plant-wellness-way.com website).
The comments and thoughts in the following lists are my summation and interpretation of the diseases and obstacles. Any errors and misunderstandings are mine alone.
The 7 Deadly Diseases that Kill Management and Organizational Transformation
Deming lists seven deadly diseases, but only elaborates five in detail.
1. The crippling disease: lack of consistency of purpose
Western management’s focus on short-term results instead of on providing customer-satisfying quality product and service prevents an organization building for lasting long-term success. Deming wrote, “It is better to protect investment by working continually toward improvement of processes and of product and service that will bring the customer back again.”
2. Emphasis on short-term profits
The need to generate quarterly profits and dividends drives Western management decision making to the detriment of choosing options that would bring a far more profitable future in five- or six-years’ time. Taking long-term choices requires courageous leadership vision and commitment.
3. Evaluation of performance, merit rating, or annual review
Explore the statistical evidence of organizational performance and you will find the true creator and driver of business results is the management system and processes in use. It is nonsensical to rate individuals and have annual performance reviews because it was the system, and not the personal efforts of the people in the system, that caused the results.
4. Mobility of management
Changing an organization’s focus to the improvement of quality and productivity for long-term survival and success requires its senior management to lead and resource the change for as long as it takes to embed the required mindset, processes, and behaviours. The leaders need to stay to manage and support the change from the start until fully entrenched.
5. Running a company on visible figures alone (counting the money)
Management reports showing historical financial results are hindsight-looking instruments. They tell of events in the past, now unchangeable. Deming advises, “This type of rating is management downstream, managing the outcome, too late, so much easier than to provide leadership on improvement.”
6. Excessive medical cost
Provision of occupational health and safety insurance is a cost to business added to product and service pricing and borne by the consumer.
7. Excessive costs of liability, swelled by lawyers that work on contingency fees
The 16 Obstacles that Obstruct Management and Organizational Transformation
1. Hope of instant pudding
[[ I like this; one of my favorite;
like magical thinking and take it on faith ]]
This obstacle is the wish that quality and productivity transformation “is accomplished suddenly by affirmation of faith” or “without effort and sufficient education to do the job.”
2. The supposition that solving problems, automation, gadgets, and new machinery will transform industry
It is the holistic operation of the total system that delivers the results an organisation gets. Changing the physical assets in a Western-style business system that uses bad management principles and poor practices, will not improve the results. It is not the physical assets that are the true causes of the organization’s problems.
3. Search for examples
A common obstacle is requiring evidence of sure success in organizations like your own before starting the quality and productivity transformation. As Deming says, “Improvement of quality is a method. Transferable to different problems and circumstances. It does not consist of a cookbook procedure on file ready for specific application to this or that kind of product.”
4. “Our problems are different”
Deming agrees that organizations are different, “but the principles that will help to improve quality of product and of service are universal in nature.”
5. Obsolescence in schools (of business)
Students taught Western management methods in MBA courses and business classes learn to cause and sustain the failings of the system. What they ought to be doing is getting practical experience of the processes they manage and learning the right ways to transform company systems to continually get ever greater successes.
6. Poor teaching of statistical methods in industry
Deming says it best, “Awakening to the need for quality, with no idea what quality means or how to achieve it. Mass assemblies for crash courses in statistical methods, employing hacks for teachers, being unable to discriminate between competence and ignorance. The result is that hundreds of people are learning what is wrong.”
7. Use of Military Standard 105D and other tables of acceptance
Any acceptance testing that requires taking a lot from the production run and then do an acceptance test on a sample amount from the lot will “guarantee that some customers will get defective product.”
8. “Our quality control department takes care of all our problems of quality.”
In organizations with quality control departments, they usually become collectors and filers of charts while quality remains poor. Quality is a senior management responsibility, as it directly impacts customers and thus corporate survival and success. That responsibility cannot pass to others since only senior management can make the system changes needed to improve quality.
9. “Our troubles lie entirely in the work force.”
About this obstacle Deming writes, “The supposition is prevalent the world over that there would be no problems in production or in service if only our production workers would do their job in the way that they were taught. Pleasant dreams. The workers are handicapped by the system, and the system belongs to management.”
10. False starts
It is mistaken thinking that providing training courses in statistical methods to enough people will bring the desired change. As is introducing QC-Circles into production. Or training in root cause analysis of problems. These are false starts making it look as if beneficial change is underway. Yet, the underlying management philosophies and system remain the same and will thus corrupt the efforts to improve quality and productivity.
11. “We installed quality control.”
Quality and productivity improvement is not a thing that comes out of a box that you assemble and use. Deming writes, “Improvement of quality and productivity, to be successful in any company, must be a learning process, year by year, top management leading the whole company.”
12. The unmanned computer
One must fully understand the information contained in a computer output and not trust its content because it came from a computer. Without sure evidence of its correctness, it is a gross mistake to accept that the output of a computer is the proper statistical data analysis to apply, and it is a trustworthy result on which to make quality and productivity decisions.
13. The supposition that it is only necessary to meet specifications
A specification is a description of a requirement that produces an intended performance. But so many factors and events occur in engineering, manufacturing, and delivery of a product or service, that Deming wrote, “Specifications cannot tell the whole story. The supplier must know what the material (or service) is to be used for.” It is vital to collaborate with the supplier, so they learn and understand what the specification does not tell them.
14. The fallacy of zero defects
This is the presumption that once a product’s quality parameters are inside their specification limits an item is good for use in service. Deming points out, “There is something obviously wrong when a measured characteristic barely inside a specification is declared to be conforming; outside it is declared to be nonconforming.” The Taguchi loss function, as in the image below, is a better description of the situation—minimum loss at the quality target value and increasing loss the further from the target in either direction.
Taguchi cost function showing loss to society of poor quality product and service, and excessive quality
[[ there is a graphic here ]]
https://media.licdn.com/dms/image/D4D12AQGJ88w2_pQqJw/article-inline_image-shrink_1500_2232/0/1655339493771?e=1717632000&v=beta&t=7OYwdnUcZ5V8rtGTquSQ577GDey4Tl4rF-CG7JY4xEs
[[ there is two images, one at the top of the article, before the article starts, and then there is one here, they look so alike, pls figure it out for yourself if you care; that's my warning; ...]]
15. Inadequate testing of prototypes
A prototype is a one-off assembly containing parts made close enough to the required quality characteristics. It may work well in trials and tests. But when mass manufactured, the natural variation in the parts production processes can result in the finished assembly not working properly. Considering distributions of parts’ size is necessary in product design.
16. “Anyone that comes to try to help us must understand all about our business.”
A company cannot improve itself without using new knowledge correctly applied. The knowledge may exist within the organization but not used, or it exists outside. It is not necessary that the outside help knows all about the business. They only need to cooperate with persons in the organization who can transfer the new learnings into valid solutions.
The seven diseases and sixteen obstacles to organizational management transformation exist in most Western management style operations. Recognising that a stable system, like a company or corporation, will fight against change to preserve itself, the Plant Wellness Way EAM methodology for improving enterprise asset management systems takes a different tact to doing change management. As shown in the image below, it establishes a separate EAM system, call it a prototype, and gets is working brilliantly. Everyone sees it deliver successful change for their organization and fear evaporates. Then the rest of the old EAM system is transformed to the new PWWEAM system.
Plant Wellness Way EAM system implementation begins as a trial program building a PWWEAM system prototype
[[ there is a graphic here ]]
https://media.licdn.com/dms/image/D4D12AQHVk2xzujEbig/article-inline_image-shrink_1500_2232/0/1655339617766?e=1717632000&v=beta&t=MDKnmvWTDXGlXBw53eZIBgy2r6QxLbUVZexbSypdHi8
Mike Sondalini
PWWEAM System-of-Reliability
16 June 2022
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Book Synopsis: Out of the Crisis
Published by Patrick on March 4, 2015
Statistician Dr. W. Edwards Deming presents the information in his book Out of the Crisis as a tool to be used in order to help with the transformation of the Western/American management style. As he describes it, Japan’s awakening to statistical principles, attention to quality, systems, and better management helped to turn their economy around after WWII by making products of increasingly higher quality and for cheaper prices. This rise by Japan caused trouble for Western and U.S. industry, and in order to halt the decline and change the trend, Deming’s book provides the foundation for an awakening and action to address the crisis. Deming is a firm believer in the effect that management and men have on business and processes, and this book provides thorough explanation in order to help one measure the performance of management as well as provide insight on how things may have been done wrongly. The meat of this book offers Deming’s 14 Points for Management that aim to transform American industry, an outline of diseases and obstacles that stand in the way of such a transformation, comments about quality, and details about common and special causes.
Deming’s 14 Points for Management require adoption and action as a signal from management that they intend to remain in business and want to protect both jobs and investors. These points are lessons for top management, and are widely applicable to many different organizations of varying sizes and industries. The 14 Points for the Transformation of Management are enumerated below:
1. Create a constancy of purpose for the improvement of services and products. This first point aims to help management think both long and short term; planning for the future in addition to worrying about problems of today. In order for this to be done, innovation, research, education, and design improvement must be invested in, and top management should work to publish a resolution stating their commitment the purpose and that no jobs will be lost for contributions to productivity and quality.
2. Adopt the new philosophy. On all levels, a renewed commitment requires that previously accepted levels of mistakes, defects, poor training, uncommitted management, etc. not be accepted.
3. Cease the dependence on mass inspection. Deming says that inspection with the intention to improve quality, is an attempt that is too late. This point asserts that quality comes from improvement of production processes and not from inspection.
4. The practice of awarding business based on the price tag alone should be ended. This point illustrates that without adequate quality measurements, business given to the lowest bidder is buying low quality for high cost.
5. Constantly and forever improve the system of service and production, beginning with the design stage, and continuing with improvement downstream.
6. Institute training in order for management to understand the company, the problems that affect production workers’ production, and the effective use of the abilities of people.
7. The adoption and installing of leadership, where management must work on improvement sources.
8. Drive out fear, because best performances won’t occur from employees unless they feel secure.
9. Break down barriers between staff areas so that problems can be better addressed.
10. Eliminate slogans and targets for workers. Eliminate programs promoting zero defects and that target new productivity levels. Such slogans serve only to encourage relationships that are adversarial and counterproductive, due to the fact that productivity and quality levels belong to the system, not to the individual workers. Eliminate management by objective and instead institute leadership.
11. Point 11a is to eliminate numerical quotas placed on the work force, and point 11b is to do the same for those in management. Deming states that quotas work to prevent quality and productivity improvements.
12. Remove the barriers that work to rob people of their pride of workmanship; most to treat people like commodities.
13. Encourage self-improvement and education for everyone, and the last is to take action to accomplish the intended transformation. The Shewhart cycle is offered as a helpful tool for managers to follow at every step of the fourteen points for improvement, which will also help to find special causes indicated by statistical signs.
14. The transformation is a job that belongs to all workers in the organization. The last point is to put everyone to work in order to accomplish the transformation.
For an updated list of Deming’s 14 points, visit:
[ page no longer exist]
https://www.deming.org/theman/theories/fourteenpoints
The 14 Points offered by Deming provide for a theory of management to address the declining state of Western industries, and functions as a tool to help with the reconstruction of Western Management. Deming provides what he calls the deadly diseases that most Western companies are afflicted with. These deadly diseases include the lacking of a constancy of purpose with the intent to plan service and product that will maintain a market, provide jobs, and keep a company in business, which correlates with point one of the fourteen points. In addition, they include an emphasis on short-term thinking and short-term profits, merit ratings, reviews, and evaluations, job hopping, management by the use of only visible figures, and excessive medical costs. The last enumerated disease is the excessive costs of liability that come from numbers inflated by lawyers who work on contingency fees.
Deming describes quality as a concept that has many faces, with each agent of a product, service, or company having a different definition. He describes the measurement of quality as being the interaction between three different participants; the product itself, the user and how they use, install, and maintain the product, and their expectations as developed by advertising of the product. In order for a company to remain competitive and provide good quality, they must maintain communication with both their users and potential users. Consumer research and sampling can be done with specific procedures, and are important for redesign, and improvement of products for customers. In product design, Deming suggests four steps that deal with designing, making, selling, and testing, then repeating the steps in order to form a helix of improving quality at lower costs.
ControlChart
Example Run Chart/Control Chart
Common and special causes of improvement are key to the understanding of variation, which is important for quantifying improvement and understanding processes as a manager. Run charts are important tools for visually representing a process and plot results for specific events of a process, and shows their relation to other points, and the median. Statistical control is important in order for any analytical conclusions to be drawn from the information and occurs when a process is stable and has no indication that a special cause of variation exists. Common causes are those that are natural to the process, and special causes are those that occur due to a change or error with the stable system. Confusion between common and special causes leads to increased variability, higher costs, and frustration to everyone involved. Given the principle of variation, if 50% of people in a process perform above average, 50% will perform below average, and this is why it is wrong for management to work to punish those whose performance slips – they may still be operating within the stable range of variation. In Deming’s experience, typically 94% of causes belong to the system, and only 6% constitute special causes, meaning that most of the responsibility for variation lays on the shoulders of management. As Deming states in chapter 11, Out of the Crisis is not a book intended to deliver techniques for improvement, but one that is aimed at helping people to better understand the concepts so that they can apply them with increased learning in their specific field or industry.
This book, Out of the Crisis, aims to help those who work in inefficient and poorly ran systems to see what problems and errors they may be falling victim to. Deming’s 14 Points aim to provide a new way for managers to think about their roles and the ways in which their companies function, and such thinking and attention given to the information posed in the 14 Points can help managers to take more in-depth steps to address problems. Deming states that his plan may take a while, 5 years or more, but reframing Western management is necessary if companies are to compete with the cost and quality of more efficient systems like Japan. This book was published in the 1980’s, but with the competitive nature of international business, its principles are still sound for laying the foundation for effective management and leadership.
This article is an adapted sample from a synopsis paper on Out of the Crisis, written for Advanced Topics in Project Management (COM5451) at Florida State University during the Spring of 2015.
Reference:Deming, W. E. (1991). Out of the Crisis. Cambridge: Massachusetts Institute of Technology.
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William Edwards Deming (October 14, 1900 – December 20, 1993)
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Out of the Crisis Book Summary
Buy Out of the Crisis on Amazon.
Out of the Crisis is a classic of the quality movement that the Toyota Production System was borne out of. Deming was really one of the founders of that movement and one of the first people to somewhat intuitively grasp the complexity of modern businesses and what that required from management to adapt.
Though this book (written in 1982) is clearly directed at physical manufacturing businesses, it’s pretty easy to see how they apply to pretty much any business.
A simple but profoundly true example:
Defects are not free. Somebody makes them, and gets paid for making them.
Low quality means high cost because consumer expectations don’t change, they want the same quality. If you mess it up, then you pay for rework. What was expensive about our onboarding process is how much rework had to be done.
This seems obvious in manufacturing, but consider this example from a retail business:
I ordered from a bookstore one case of twenty-four count inch ring notebooks. Instead, twelve came.
On complaint, the bookstore sent the other twelve. I inspected every notebook and found one where the rings were stationary in the open position, useless to me. Twenty-four notebooks qualified me for a discount. The store charged me the full price, with the explanation, when I mentioned this, that the girl that took the order was new.
This is an all too common experience that I bet everyone has had. The business owner and or employees give the gold ole “we were trying our best and it’s not our fault.” However, the customer doesn’t care. They overpaid for poor service.
But the fact remains that the correction of the error in the bill, and replacement of the defective notebook, must have wiped out the profit on the sale and left the customer with a resolution to try some other stationer on future orders.
This is a good example because it seems like such a little thing, the kind of thing that would go unnoticed by most people. But, these issues tend to be systematic in my experience. The business that has the issue is likely to have many other similar ones. As the saying goes, there is never just one cockroach in the kitchen.
To restore quality, Deming lays out his 14 points that companies must follow. One of my favorites is 5:
Improve constantly and forever the system of production and service
…
Putting out fires is not an improvement of the process. Neither is discovery and removal of a special cause detected by a point out of control. This only puts the process back to where it should have been in the first place
This was known in the Toyota Production System as kaizen, continuous improvement. It is an essential operating principle, every time something goes wrong you need to identify it and do a root cause analysis until everyone in the business understands that this will be how things always work.
Another personal favorite, point 9:
Break down barriers between staff areas … Servicemen learn from customers a great deal about their products. There may unfortunately be in some companies no routine procedure for use of this information. In one instance, the service department, in response to frantic calls from customers, had routinely cut off a tube that conveys abrasive material to a downward outlet, and reversed the auger beyond the outlet.
The problem was that the auger jammed the material into the end of the tube. The manufacturing department kept right on making the auger as always before, while the service department, on a call from a customer, routinely made the correction. The management were unaware of the lack of teamwork between manufacturing and service, and of the loss.
This is, in a sense, a continuation of the same point. It is essential as a company scales that they have processes and a culture for any time something goes wrong that it gets communicated to someone that can solve the root cause. Putting out fires gets you zero points, a well-operating company requires that you must be a fire prevention specialist.
Deming, and the quality movement more generally, was in some way a reaction to the authoritarian high modernism of Taylorism which tried to reduce all business down into spreadsheets.
The notion of quality, the things that cannot be measured, is an essential counterpoint.
The most important figures that one needs for management are unknown or unknowable … but successful management must nevertheless take account of them.
Examples:
1. The multiplying effect on sales that comes from a happy customer, and the opposite effect from an unhappy customer. …
2. The boost in quality and productivity all along the line that comes from success in improvement of quality at any station upstream
The first five chapters of this are excellent and broadly applicable to all businesses. I found the later parts of the book didn’t age quite so well and were more directed at more traditional businesses.
Last Updated on May 25, 2022 by Taylor Pearson
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