The book of Dr. Henry Neave, apprentice, close friend and colleagues of Dr. Deming, is generally considered the best interpretation of Deming's teachings on new management. A fundamentally different, humanistic view of management, developed by Dr. Deming in the second half of the last century, harmoniously combines the goals of business owners, managers and other employees. The slogan of the new management "Everyone wins" is reflected in the famous 14 points and the theory of deep knowledge. Dr. Deming's methods and approaches are universal. They apply to both banks and big business and for small businesses and organizations; successfully work in industry, service sector, healthcare, education, insurance, trade, public administration etc. The book is addressed to managers and entrepreneurs, as well as teachers and students of economic specialties. 3rd edition.
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by the LitRes company.
Draw the background
Introduction
This book begins with a short chapter that talks about the need for change almost entirely in Deming's words. His outstanding book, published in 1986, is called "Out of the Crisis". What crisis? Are we in a crisis? He obviously thinks so, and in Chapter 1 he tells us why.
Before we begin our introduction to Dr. Deming's management philosophy, we learn something about this man's life in Chapter 2. This is not just "for the sake of order", but because it is really interesting! Deming's philosophy is vast, and the more we study it, the more profound it seems. This philosophy has evolved continuously for more than sixty years, and even a little sketch of the history of its development will help us to see it more clearly.
In Chapter 3, we will attempt to solve a very difficult task: to summarize the foundations of Deming's philosophy - the fourteen points of the program for management, "diseases" and sixteen obstacles to change. Naturally, this chapter cannot be compared with the second and third chapters of "Out of the Crisis", where Deming provides an introduction to these issues. Its purpose is to serve as a temporary replacement, a kind of bridge for those who have not yet read Deming's books, and for those already familiar with it, this chapter will be useful for reference.
We conclude Part 1 with an introduction to what might be called statistical thinking. The basis of such thinking (as, indeed, of the whole philosophy of Deming) is the pioneering work of Dr. Walter Shewhart in the 1920s. on the nature of variation. An essential feature of this thinking, as we shall see in this book, is the recognition of the fact that the lack of understanding of the nature of variation often leads, despite the best intentions, not only not to improvement, but to a deterioration in the state of affairs. The chapter also includes a discussion clarifying the difference between the common (and, I would say, incorrect) use of control charts and how and for what purpose Shewhart, the inventor of this statistical tool, used them.
Deming's point of view on recent history industry
What is your opinion about the industrial history of the 20th century, especially its second half? And what are the grounds for such an opinion?
Here is the point of view of W. Edwards Deming. All of the words in this chapter are in fact his own and are taken from his seminar talks as well as from his notes. The style of the chapter imitates Deming's oral presentation to an audience in his homeland of America. However, much of what has been said can be applied to Britain and other Western countries.
North America has contributed a lot to the field of modern knowledge and its application. In the 20s. The United States contributed to the methods of interchangeability and mass production that spread throughout the world, which made it possible to put into the hands of millions of people in various countries products of production that they would not otherwise have. The power of the United States grew.
After World War II, which caused significant devastation, the United States remained the only state in the world that could produce goods to the fullest extent of its capabilities. The rest of the industrial world lay in ruins, it was our client and active consumer. The world needed a lot of our goods, and there were queues of people willing to give us their gold and get what we could produce. Gold flowed like a river into Fort Knox (the location of the US gold reserves. - Note. scientific ed.). But where is it, this gold, now? He is no longer there.
Everyone expected that the good times would continue and nothing could darken them. And why would they end? When the market expands, doing business and being an optimist is not difficult at all. A lot of people are still living in the 50s. They think that since they have something for breakfast and lunch, then everything is going well. But contrary to our expectations, looking back, we find that we have been in economic decline for decades.
What happened? It's hard to believe that anything could happen. The changes were gradual, imperceptible. And if it is not difficult to establish the date of an earthquake, then it is much more difficult to determine the beginning of the decline. We can detect decline only by looking back. So, the cat does not realize that twilight has descended on the earth. For a cat's eye, evening twilight is as good as a clear afternoon. But in complete darkness, the cat is as helpless as any of us. Likewise, the duck does not understand that it is raining. How, one wonders, did she know about it?
Our country (America. - Note. auth.) was on the rise until about 1958. But then the world began to change. Around 1968, Japanese goods began to enter our market. The price was reasonable, and the quality was good - in contrast to those low-quality crafts that came from Japan before the war and immediately after it - cheap things, worth, by the way, the asking price for them. Buyers' preference for a range of imported goods gradually became a threat to North American industry.
Has America fallen asleep? Is she still dozing? The markets are now global. People have a choice.
Let's think about North America as it is now. What does the US trade balance look like? The answer is clear: not only are things not going well, they are going very badly (see Figure 1).
Our deficit in trade in both goods and services is increasing every year. Agricultural products have always brought money into the country; wheat, cotton, soybeans and maybe a number of other products still bring them. A few years ago we had a positive trade balance in the trade of agricultural products, but now the situation has changed. In 1986, imports of agricultural products exceeded exports, and if we take into account the illegal import of narcotic substances of plant origin into the country, then our deficit in agricultural products is significantly higher than the published official data suggests.
Moreover, the problem is not limited to agricultural products or industrial goods. Some services also make their own (negative) contribution to the trade balance (see “Out of the Crisis”). For example, the United States pays four times more to carry passengers than any other country in the world.
What we can do? We can try to introduce trade restrictions. Which country has the most trade restrictions? This dubious honor belongs to the United States. A few years ago, France was number one in terms of restrictions, while the United States was only number two. Now we are number one. Some of the restrictions imposed by the United States are very subtle. For example, only two thousand books of the same title in English can be imported into the country. Although no one can say that books are prohibited from being imported, but from a practical point of view, this is so.
Who is our best buyer in the global market? Answer: Ontario, Canada. Recently, I studied the question of who in the United States earns the most from exports. General Motors was in first place, Ford was in second, and the aircraft industry was in third. It was not entirely clear why this was so. Continuing my search, I found that the exports included assemblies, parts for assembly, many of which are then sent to Ontario. They later return to the US, but are still considered exports.
Our problem is quality. Can't we provide high quality? Of course we can. And some American goods are excellent: paper clips, for example, are quite good. We are grateful for them. Unfortunately, many other, quite good American products are in little demand abroad.
Some industries are doing better now than they used to. There are more cars than ever in the United States and many more people are flying. What does this data mean - decline or advancement? When answering this question, we must take into account that in 1958 we had an intercity railway connection. Therefore, we had a choice: plane, train or car? Now we have very few railway lines left. Therefore, we must either fly by plane or drive a car.
One of our best money-making exports is military products. We could greatly expand this source of income if it were not for moral considerations. Another source of currency is scrap metal. We can't use it so we sell it. The raw material in this microphone costs maybe 15 cents. We sell it for that price and then buy it as a finished product at the seller's price, paying something like $2,000. A similar situation is observed with paper and cardboard waste paper. Timber products also bring us currency. It is an important renewable resource. The share of American aircraft in the world market is about 70%, and this brings us a huge amount of dollars. As I understand it, various equipment for construction work also constitutes a significant export item.
American movies (service) bring us currency. Banking, insurance and other types of services are also significant in terms of income, but not to the extent that they used to be. In this sense, British banks have always been the best. But at present, eight of the largest banks in the world are Japanese, the ninth is French, and only the tenth is American. The next American bank is already in 36th place. American banks are distinguished only by losses from unsuccessfully issued loans. In Washington, 23% of all real estate is owned by the Japanese. The same figure for Los Angeles is 44%. There was a time when I woke up in Los Angeles, looked out the window and thought I was in Tokyo. One participant in my seminar in London called this situation a sale of family silver.
Our country has been downright blessed with natural resources, but most of them are non-renewable. What will we eat when they run out? We send somewhere for dollars iron ore (enriched), aluminum, nickel, copper, coal - all these are non-renewable products. Scrap metal is also non-renewable.
Have we thrived on everything ready? We squandered our natural resources and, as we shall see, corrupted our people. And we need all of them.
What is the definition of colonies? The colony exports raw material and buys expensive manufactured goods and services. Have we become a colony?
“Which country today can be considered the least developed? Despite the treasures of the skills and knowledge of millions of unemployed; on the underused, unused or misused skills and knowledge of working people at all levels of production and in all industries, the United States today can be considered the most underdeveloped country in the world.
What to do? I am sure that we must start all over again and repent, not of sins, but of stupidity. What we've been doing hour after hour is wrong. We did everything we could to destroy profits, and we did that for three decades. And if someone is concerned about this, then we can say with confidence that this someone does not know very much about how and what to do. Opportunities to successfully improve our position in the future with existing system there is simply no management.
William Edwards Deming was born on October 14, 1900. Therefore, it is not surprising that the story about him is rather long. However, in order to understand Deming's teachings, it is important to know about some stages of his life. The impatient reader may feel that he is drowning in an endless stream of advice and demands contained in Deming's teachings. And frankly, I would not be surprised if some of the new followers of Deming began to consider some parts of his teachings as reasonable, others as very unusual, and still others as downright funny.
However, too hasty and superficial familiarization with Deming's work without proper preparation is like studying the tip of an iceberg. Therefore, we must realize the following: what we are now reading is the result of more than sixty years of active reflection, research and practice of Deming - this bright personality, looking far ahead, drawing on the work of countless specialists in industry, education, statistics, physics, psychology etc., which he constantly studies, sifts and perceives extremely selectively. Deming advises to focus not on the output (resultant) characteristics of processes, but on their inputs, just as we must first study the origins and basic building blocks from which Deming's philosophy was formed in its current form. In addition, since Deming himself does not accept a style of thinking focused only on the end result, it may be useful for many people to learn about something from the outstanding track record of this nearly century-old "statistical research consultant."
Let's, bypassing the very origins, turn to the history of about fifteen years ago. At the time, Deming's name was not widely known, at least not in our (western) part of the world. But most of those who heard of Deming perceived him more as a scientist, a consultant in the field of statistics, than as a specialist with a strong say in the field of management. Even in those circles of the statistician community where he was well known, this notoriety of his (as he recently wrote to me himself) was not at all the result of his "excursions into new worlds." And if the statistician community was rather slow to accept the promise, importance, and potential of Deming's work, then the industrial community (of course, this applies to Western industry) was undoubtedly even less receptive to them.
One of the first American industrialists to hear Deming's name in 1974 was William E. Conway, then president of Nashua Corporation and later CEO (and was somewhat intrigued by the circumstances under which this happened). Nashua Corporation, one of the 500 largest companies in the United States, is located in Nashua, New Hampshire. Its main activities include the production of computer magnetic disks, copiers, equipment for processing photographic materials and various paper products.
In the early 70s. Nashua Corporation was part of a consortium that included five American companies, a German chemical firm, and the Japanese manufacturing firm Ricoh. The consortium was developing a new copier system that could potentially claim leadership in the world market. Work began in 1969, and the market launch of the system was scheduled for 1974. Since the system was to be manufactured in Japan, most of the major technical meetings were held in Tokyo.
Upon returning from one of his trips, the director of research and development of Nashua Corporation told Conway a very unusual story. American guests, previously treated with traditional Japanese courtesy, were practically ignored this time. Two meetings were held, but at exceptionally unusual hours, not accepted in business practice. Naturally, Conway, hearing about this, wanted to know what was the matter. Here are his own words about what the director of the department told him:
“Everyone here is crazy. They collect data for every occasion, draw it on these little cards, and then spin around, setting up everything and everything.
Conway asked, "Who's doing all this?" The answer was:
“Everyone is busy with it. The president, the VP of sales, the manager, the chemists in the R&D department, the workers, the foremen, the accountants—everyone is doing it, Bill, they're all doing it!”
But why are they "doing it"? In 1969, Ricoh began a five-year program in an attempt to win prestigious award for businesses, known as the "Deming Award". And the Nashua Corporation delegation was somewhat unlucky: it arrived in Tokyo just before Ricoh's nomination date for the coveted award.
In the prices that the Japanese could offer, Conway saw a significant difference. Of course, it was not unusual for the Japanese to underprice their prices compared to Western companies. But what turned out to be a novelty: instead of the cheap junk Japanese goods familiar and remembered by many since childhood, the Japanese now offered not only goods at a low price, but also excellent quality, uniformity and reliability. How could this happen?
After Conway heard about the Deming Prize in 1974, he took notice of the name and began to notice more and more references to it during his subsequent visits to Japan. He felt the respect and even admiration that the Japanese had for Dr. Deming. Conway discovered that the Deming Prize ceremonies were televised at the best of times and that the Japanese companies that won the Prize proudly erected huge bronze replicas of it at their front doors.
Despite all this, Conway did not take any concrete action for nearly five years. Then, in early 1979, one of Conway's colleagues at the Nashua Corporation recalled that in the 1950s. his former supervisor referred to Deming as a statistical consultant. Conway instructed him to find out if Deming was still alive, and if so, to find out where he was now. On Tuesday, March 6, 1979, Conway telephoned Deming's home in Washington and asked him to visit the company. Deming arrived the same week on Friday.
The seventy-eight-year-old Deming had a lot to tell Conway about the work he had done in America, especially before and during World War II. That in the boom years that followed after the war, most Americans turned a deaf ear to his calls. That as a result of their "deafness" he decided to speak to the leaders of Japanese industry. And finally, about what has happened in Japan since that time.
Conway, largely against the advice of his senior colleagues, invited Deming to consult Nashua Corporation. But Deming refused! As a minimum proof of his interest, Deming said, he needed Conway to make a special commitment. The commitment was that Conway, as CEO, should be the leader of the process and the agent for the changes Deming demanded, since these responsibilities cannot be delegated to anyone. In previous years, Deming had suffered many disappointments while working with American managers and was determined not to repeat the mistakes of the past. Conway agreed. Thus, for Deming, a renaissance began in the West.
As Conway progressed in learning and understanding Deming's philosophy, instilling it in his company; as he observed (despite Deming's plea not to expect too much in a short time) the exciting and beneficial changes that would soon take place, he became increasingly convinced of the importance of disseminating Deming's writings nationally as widely as possible.
Conway himself did much to popularize the teachings of Deming, and at every opportunity he spoke to fellow directors and managers throughout the country. One such opportunity presented itself on October 11, 1980, during an open discussion on performance issues at a board meeting of the National Manufacturers Association in Phoenix, Arizona. Here are excerpts from Conway's speech, describing his enthusiasm and belief in what Deming did and what he could do:
“Through the teachings of Edwards Deming, our company has come to realize that increased productivity can be achieved every day through a greater focus on quality at all stages of our operations. For thirty years, Dr. Deming has worked with Japanese industry; he is credited as one of the major contributors to its giant strides in quality and performance. There is a direct relationship between these two values: productivity increases with quality. Deming's approach - the father of the third wave in industrial revolution– is based on statistical quality control and creates new ways of business management. Japanese manufacturers, using statistical quality control, victoriously passed around the world in the second half of the twentieth century, just as American industrialists conquered the world in the first half of it, using the principles of mass production.
It is worth noting that before meeting Deming, Conway knew almost nothing about the subject of statistics. He admitted to having a vague memory of something about the bell curve from some college course. Conway continues:
“For a number of years, the Japanese have been using statistics and control charts to measure, evaluate and improve their performance. They use statistical information—facts, graphs, maps—to drive a process of continuous improvement that they have found to result in higher productivity and lower cost while maintaining quality that meets market demands. This is the kind of competition that we are dealing with today. It represents a level of quality and productivity that threatens us. And don't try to dismiss the success of the Japanese by thinking that it is rooted in a unique cultural heritage or a low wages and therefore impossible in America. The success of the Japanese is based on statistical quality control, which was introduced to them by an American.».
It would be a mistake on my part to give the impression that all of Conway's actions were correct. I think he still failed to grasp some of the deeper principles that Deming told him about, and as a result he often made mistakes. But who would not have made them in his place? The important thing is that Conway really understood the significance and great promise of Deming's work, and also that he tried to talk to this man.
Conway did his best to get his senior managers to study Deming's ideas. However, the initial realization of their importance was achieved on a much larger scale on June 24, 1980, after the NBC television documentary If Japan Can, Why Can't We("If Japan can do it, why can't we?") The film's director, Clara Crawford-Mason, had great difficulty finding the right material. What happened next is well described in Mary Walton's The Deming Method in Management. The Deming Management Method):
“Crawford-Mason contacted Deming and he invited her to speak. He told her about his work in Japan and showed her yellowed clippings of stories written by the Japanese. Crawford-Mason didn't know what to think. Deming was very nice, maybe eccentric, and in some ways even reminded her of her father. But what he said was too surprising if it were true. “He kept talking about how no one wanted to listen to him.” Their first conversation led to the creation of five interview programs lasting 25 hours. The more they talked, the more impressed Deming's words made Crawford-Mason and the more suspicious she became. It was just incredible! “Here is the man who found the answer! He lives five miles from the White House - but no one wants to talk to him." Crawford-Mason contacted a senior economics figure in the Carter administration and asked if he knew Dr. William Edwards Deming. He didn't know."
By this point, Deming could have told Crawford-Mason about his collaboration with Nashua. She visited the company, and this visit was the final frame in her television newsreel about Deming and Conway. Many of those whose work is now based on Deming's work first heard about him in this television program. Mary Walton continues:
“The next day, June 25, 1980, in the basement where Deming's office was located, the phone rang incessantly. “We were literally bombarded with calls,” recalls Deming's secretary, Cecilia Kilyen. It was a nightmare. Many of the callers were in despair. They absolutely wanted to see Deming tomorrow (or better, yesterday), otherwise their company would collapse!
Now that the course of our narrative has reached relatively recent times, it is no longer possible, and hardly worth it, to describe literally everything that happened. After all, the reader, most likely, knows much more about recent events than about distant ones. But for the full picture, we still give short review some moments since the first meeting between Conway and Deming in March 1979.
Later that year, with support from Conway, Deming began his now famous four-day management seminars. Initially, his audience numbered no more than one or two dozen listeners. Two years later, the audience exceeded a hundred people. To this day, Deming holds his seminars about two dozen times a year, often in front of fairly large audiences. Mrs. Kilayen told me about one such workshop, which was attended by over a thousand people. Since then, Deming prefers that the number of listeners does not exceed five hundred.
Through his seminars, Deming meets with several thousand American managers a year, and it is difficult to estimate the number of those who have familiarized themselves with his experience during this decade, especially when you consider seminars held directly at firms. Moreover, unlike in the early 1980s, Deming's seminars now attract many senior managers. For example, in 1987 one of the seminars was attended by 52 managers of the highest rank from one company!
Of America's largest corporations, Ford Motors is best known for its adherence to the Deming philosophy. Thus, Don Peterson, who recently stepped down as president of the board of directors of Ford Motors Company, became famous for the famous phrase "I am proud to be called a student of Deming." In addition to Ford Motors, Mary Walton's book includes descriptions of experiences from Honeywell, AT&T, Campbell Soups, Malden Mills (a yarn manufacturer in Massachusetts), Jangbridge, Inc. printed circuit boards) and MEC ( electronic equipment). Other companies soon interested in Deming's approach included Kimberly Clark, Procter & Gamble, Velcro, and the Florida Power and Light Company. Public services also took part in this activity, and many of the works now known were carried out in the city of Madison and in the government of the state of Wisconsin.
Numerous groups of Deming followers—organizations founded to spread and improve understanding of his teachings, as well as to assist interested organizations in putting ideas into practice—have sprung up across America. In early 1980, the MANS Association in Holland and the W. E. Deming Institute in New Zealand were founded with the same aims. In November 1987, with the help of many of my friends, I initiated the founding of the British Deming Association (BDA). And two years later, Jean-Marie Gogh made us incredibly happy by founding the French Deming Association in early 1989.
During the 1980s, Deming received numerous awards, honorary degrees, and medals, including the National Medal of Technology from President Reagan in 1987. Nomination for this award recognized Deming's hard work in introducing statistical methodology, his contributions to the theory of sampling methods, speeches in support for a common management philosophy, which led to an increase in product quality with a subsequent improvement in the quality of goods available to consumers, as well as an increase in the efficiency of corporations.
End of introductory segment.
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The following excerpt from the book Organization as a system. Edwards Deming's Principles for Building a Sustainable Business (Henry Neave, 1990) provided by our book partner -
Preface to the Russian edition Preface by W. Edwards Deming Author's preface Introductory remarks
PART 1. Draw the background
Introduction
Chapter 1 Deming's View of Recent Industrial History
Chapter 2. Brief biography
Chapter 3. Deming's 14 Points for Management. Diseases and barriers to change
Chapter 4. Variation (variability) and process control
PART 2. The Basics (something about the basics)
Introduction
Chapter 5
Chapter 6
Chapter 7 Operational Definitions
Chapter 8. Processes and Systems
Chapter 9
Chapter 10
Chapter 11. Is meeting the requirements of specifications a sufficient condition for quality? Taguchi loss function
Chapter 12
PART 3. New climate
Introduction
Chapter 13
Chapter 14
Chapter 15
PART 4. Fundamentals of knowledge
Introduction
Chapter 16
Chapter 17
Chapter 18
Preface to the Russian edition
Russia is undergoing profound and radical socio-economic changes. These changes are often perceived by the inhabitants of Russia as a national disaster. The barriers that for more than three-quarters of a century isolated the country's economy from the turbulent whirlwinds of the world market collapsed almost overnight. The main force of the country's economy, huge but clumsy industrial dinosaurs with atrophied mechanisms of adaptation, were forced to enter into an unequal battle with the "sharks of imperialism" hardened in competitive struggle.
Despite correctly conveying the tragedy of the situation, this view leaves aside the fact that the biggest predators have not yet fully manifested themselves on the Russian economic proscenium. In fact, as happened more than once in epochs of turbulent historical changes, it was not the strongest and most successful warriors who were the first to infiltrate the weakened regions, but their significantly less successful neighbors, who were forced out of the fertile plains into cold and not yet very attractive spaces.
A new great redivision is taking place on the world stage. It is based on fundamental changes in the conditions and factors in the formation of economic power. The scientific and technological revolution, about the necessity of which philosophers and political economists told us decades ago, has actually happened. The industrial society, with its industrial and social sphere built on the principles of mass production, is being replaced by a new society. In this new society, the main source of power and wealth is the ability to produce new useful ideas, knowledge, and technologies. In this society, only those industries succeed that are able to use this knowledge and technology with unprecedented speed to satisfy the spoiled consumer.
Global means of transportation and communication have compressed the world, brought countries and peoples closer together - the concepts of national borders, national sovereignty, national security are losing their former meaning. Countries, regions, cities compete with each other to attract and retain investors, world-class businessmen-manufacturers and traders, the best inventors and social innovators on their territory.
The creative potential of the individual, his ability to innovate and continuous learning in various fields, and not the ownership of land and capital, is increasingly becoming a source of personal prosperity and human well-being. The ongoing changes in the economic basis of society cannot but be reflected in radical changes in the social life of society in all its aspects, in interpersonal, family, labor and other relations. Radical changes are taking place in the political sphere. The ideology of industrial society, with its desire for unification, with the dictatorship of the majority, is replaced by the ideology of consensus, a balance of interests and opinions of all social groups and minorities.
In a certain sense, Russia was the country that most fully embodied in its economic and social structure principles of the industrial age. Unlike other countries, the principles of monopolization and unification, mass production, the maximum use of economies of scale, functional specialization and division of labor to ensure efficiency, the use of control as the main tool for achieving quality standards dominated not only in the field of production itself, but also in the field of agricultural production. , in education, health care, science, the formation of a life support environment, housing, the political sphere.
For those who think about the ways of reviving Russia, it is fundamentally important to understand that the fundamental reason for the defeat of Soviet society is the collapse of the hopelessly outdated mode of production and the socio-political organization of industrial-type society. Accordingly, the country's way out of the crisis cannot be based on reproducing the structures, systems, ideologies and policies of prosperous countries as quickly as possible. These countries themselves are changing exceptionally fast. They are in constant change, they are reinventing, redesigning their business and social systems in an attempt to adapt to the new economic age. Social and industrial systems in various sectors and aspects, even in countries as far advanced in this direction as Japan and the United States, are characterized by a high degree of heterogeneity in adapting to new requirements. The new often manifests itself in paradoxical forms. Trying to copy successful examples without understanding the essence and logic of what is happening, what will we copy first of all? Obviously, what we understand the most!
As ambitious as it may sound, we can only rebuild domestic business and social systems, corporations, firms, regions, cities, and countries for effective competition in a globalized economy if we initially set ourselves the task of not just approaching the leaders today, but the task of getting ahead of them. To go the same way that they went before us, trying to copy what they can do much better than us, this means dooming yourself to failure. There is only one way for success - to learn from the experience of those who have taken this path before us. To surpass them in understanding the logic, patterns of success factors in the new economic era and more consistently, more persistently be able to use them.
The book offered to the attention of readers is intended for those who are interested in understanding this logic and patterns. This book is about the theory and method of the great American - Dr. Deming, one of the "prophets" and builders of the new economic era, the man who is most often associated with the "Japanese economic miracle". More importantly, however, he eventually became a prophet in his own country as well. It seems that thanks to a deep study of his methods, other eminent researchers and consultants, the experience of applying these methods in Japan, many American corporations, the American economy as a whole, seem to have managed to reverse the negative trends in the growth rate of economic efficiency. It was in the United States of America that Deming's ideas were first widely tested for the restructuring of management methods in the social sphere, education, health care, local and state government.
It seems very symptomatic that the first full-scale edition of this book is being carried out in Togliatti on the initiative and with the financial support of the municipal government, the city public fund "Development through Quality". Tolyatti became, apparently, the first Russian city in which the ideas of management based on quality began to be mastered in the municipal government. The scientific conference on management methods based on quality, held by the municipal authorities and the Volga Automobile Plant, is becoming a forum of all-Russian significance, where a wide range of business people, managers, scientific and technical elite, political and public figures got the opportunity to get acquainted with the methods and world experience in applying ideas of quality in production and social and administrative sphere.
The preparation of this book for publication would not have been possible without the enthusiasm of scientists and specialists from the Russian Deming Association, whose efforts have translated and carefully edited the English original.
The Russian Deming Association and the city of Togliatti, the Foundation "Development through Quality" (Togliatti) express their sincere gratitude to the author of the book, Dr. Henry Neave, as well as to the head of the American publishing house SPS Press, Ms. Fran Viller, for permission to make this publication on a non-commercial basis . All income from this publication will go to the Development through Quality Foundation of the city of Togliatti and will be used to support projects aimed at promoting and mastering quality-based management methods in the city, region and Russia.
Head of Administration of the Avtozavodsky District of Tolyatti A.I. Polukhin Executive Vice-President of the Russian Deming Association, Head of the Center for New Management Technologies (MGIETTU), Moscow Yu.T. Rubanik
Henry Neave
Organization as a system. Principles of Building a Sustainable Business by Edwards Deming
Translation Y. Rubanik (ch. 1–18), J. Adler and W. Shper (ch. 19–32)
Scientific editors Yu. Adler, Yu. Rubanik, V. Shper
Editor M. Burdina
Commissioning Editor S. Turco
Technical editor N. Lisitsyna
Corrector I. Golubeva
Computer layout A. Abramov
Cover artist E. Syrokvashina
© Henry R. Neave, 1990. Printed in English in the USA by SPC Press, Knoxville, Tennessee. All Rights Reserved
© Rubanik Yu.T., translation, ch. 1–18
© Translation, ch. 19-32. Moscow Reinsurance Company LLC, 2005
© Design. ALPINA PUBLISHER LLC, 2014
All rights reserved. No part of the electronic version of this book may be reproduced in any form or by any means, including posting on the Internet and corporate networks, for private and public use, without the written permission of the copyright owner.
* * *Preface to the Russian edition
This book is addressed mainly to the CEOs of companies. In a very interesting and accessible form, it outlines the basics of the management philosophy of the great American - Dr. William Edwards Deming, who is also called the father of the Japanese economic miracle. It was from Deming's lecture to representatives Japanese business in 1950, an unprecedented ascent of the country, previously backward and in ruins after the defeat in World War II, began to rise to the heights of a new business system.
Deming's own books are difficult to read - he expressed his thoughts in a difficult way, and so far his works have not been very lucky with the translation into Russian. Henry Neave - a talented popularizer - actually made Deming's teachings truly accessible to the general reader.
Henry Neave's book is a challenge to the first person. The reader will discover a world of management that is fundamentally new for Russia, so unusual for us, for our mentality, that many will have a desire to simply put the book aside. Do not do that. Get over yourself. Read to the end. If you do this, then you still have a chance to build a company that can be globally competitive. By putting the book down, you deprive yourself of this chance.
Today we can say with good reason that almost all prosperous corporations and firms, to one degree or another, use elements of the Japanese management model, which is based on Deming's management philosophy. There are examples of following the principles of alternative management in Russia as well.
You have to make many discoveries. Perhaps for the first time you will learn and think about the role of the work system you have created, about the quality of products, services or work performed in your company. You will be introduced to Deming's simple 98/2 formula. It means that 98% of the problems in the organization, defects in products, works or services do not depend on people, but on the system and are determined by its inherent shortcomings. People, in turn, do what is prescribed by this system. Most likely for the first time, you realize that the main question is not “who is to blame and what to do?”, But “what is to blame and who to do?”, and stop looking for the guilty, start improving the system. Deming's 98/2 formula inevitably leads to the fundamental conclusion that punishing people is not only pointless, but also detrimental to the company. It makes no sense, because in this way the manager, at best, will be able to eliminate only 2% of the causes of defects that are somehow related to the personality of the employee, and the main clusters of problems will remain untouched. The disastrous punishment for the company lies in the fact that because of fear, information is distorted and hidden, people are afraid to take the initiative and take responsibility.
The rejection of the idea of punishment leads to a rapid change in the atmosphere in the company and to a fundamentally different level of relations. This decision completely changes the content of the activities of managers at all levels. It requires managers to master decidedly different methods and ways of working. From bosses, overseers, mentors, they should become leaders, mentors, coaches. And this is a new challenge to the first person.
You will learn that system improvement means constantly measuring the implementation parameters of various processes that are of interest to consumers and the company itself, analyzing the collected implementation statistics, developing improvement programs and implementing them.
After reading the book, you will understand that processes, including business processes, live according to their own special laws. They must not be tampered with arbitrarily, even for the purpose of improvement. Much attention is paid to the disclosure of such concepts as "controllability of the process", "special causes of defects".
Here, the famous fourteen principles of Deming are revealed in sufficient detail, which reflect the essence of his doctrine of management. Probably, readers will brush them aside at first, saying that this is another arbitrary set of slogans, and life has already taught us not to trust slogans. Be patient now, think about the meaning of each of Deming's fourteen points, and you will see what depth of thought, what innovation in management approaches are hidden in them.
Traditional management breeds rigid organizational structure. Any enterprise, any organization is clearly divided into functional units, each of which has its own tasks, functions, and special areas of work that are different from others.
Deming's philosophy leads to an understanding of hierarchy only as a tool for building a company's horizontal organization and a mechanism for maintaining the normal functioning of a new organizational structure. The manager's mission here is to help build horizontal relationships in the system based on processes, to erase the barriers between departments as much as possible, to eliminate all the obstacles that the hierarchy introduces, to give authority to those people who can quite professionally perform them.
The hierarchy in the management system based on the teachings of Deming builds a flexible structure that adapts itself to the needs of the client and changing business conditions, organizes and supports the process device, including leadership in processes, creates an environment for improvement (powers, status, motivation, time, training ). In other words, it serves to simplify and improve processes, and does not complicate them.
Deming's philosophy changes the meaning of the organization as a whole, changes the content of each employee's activity: just as customers expect new and better goods or services from the organization, so the company expects innovations from people and continuous improvement of their activities.
The status of each employee changes. He really becomes a collaborator, that is, a person who, together with others, does a common thing.
The book emphasizes the importance of teamwork. After all, each business process has its own team, which is called upon to jointly solve the problem of its continuous improvement. In teamwork, a synergy effect arises that multiplies the intellectual potential of people, leading to surprisingly powerful solutions that could never have appeared outside of a joint brainstorming session.
The implementation of the Deming management model in practice makes the company open to information flows, provides a common information space when all employees know everything. There is no reason for rumors and gossip in the company.
Another amazing discovery will be a completely new look at the plan. Deming viewed the plan as an evil. If an organization has a properly built budget system that motivates employees to work as efficiently as possible, then plans as directives are not only unnecessary, but also dangerous, since they can provoke a decrease in the quality of goods produced, services provided and work performed.
Deming also has a new approach to building relationships with suppliers. As a basic principle, he suggests partnership for life. This approach is not only possible, it has no alternative in the long run. Indeed, in any company there are a lot of suppliers, and they critically affect the quality of the process. Then the question arises: “What is the point for us to improve the process from the inside, when there is chaos at the entrance?” Where suppliers and their services are critical, the first thing to do is to build the right systems for selecting suppliers and relationships with them.
The Moscow Reinsurance Company has been following the path paved by Deming for five years now. This is not easy, because often you have to move on virgin lands, since Deming formulated only general principles and approaches, and their implementation requires an individual approach in each firm. But it is precisely following the Deming management philosophy that allows us to maintain high rates of development, compete with the world's leading reinsurance companies, and achieve the seemingly impossible.
Translation Y. Rubanik (ch. 1–18), J. Adler and W. Shper (ch. 19–32)
Scientific editors
Editor M. Burdina
Commissioning Editor S. Turco
Technical editor N. Lisitsyna
Corrector I. Golubeva
Computer layout A. Abramov
Cover artist E. Syrokvashina
© Henry R. Neave, 1990. Printed in English in the USA by SPC Press, Knoxville, Tennessee. All Rights Reserved
© Rubanik Yu.T., translation, ch. 1–18
© Translation, ch. 19-32. Moscow Reinsurance Company LLC, 2005
© Design. ALPINA PUBLISHER LLC, 2014
All rights reserved. No part of the electronic version of this book may be reproduced in any form or by any means, including posting on the Internet and corporate networks, for private and public use, without the written permission of the copyright owner.
* * *
Preface to the Russian edition
This book is addressed mainly to the CEOs of companies. In a very interesting and accessible form, it outlines the basics of the management philosophy of the great American - Dr. William Edwards Deming, who is also called the father of the Japanese economic miracle. It was with Deming's lecture to representatives of Japanese business in 1950 that the unprecedented ascent of the country, previously backward and in ruins after the defeat in World War II, to the heights of a new business organization system began.
Deming's own books are difficult to read - he expressed his thoughts in a difficult way, and so far his works have not been very lucky with the translation into Russian. Henry Neave - a talented popularizer - actually made Deming's teachings truly accessible to the general reader.
Henry Neave's book is a challenge to the first person. The reader will discover a world of management that is fundamentally new for Russia, so unusual for us, for our mentality, that many will have a desire to simply put the book aside. Do not do that. Get over yourself. Read to the end. If you do this, then you still have a chance to build a company that can be globally competitive. By putting the book down, you deprive yourself of this chance.
Today we can say with good reason that almost all prosperous corporations and firms, to one degree or another, use elements of the Japanese management model, which is based on Deming's management philosophy. There are examples of following the principles of alternative management in Russia as well.
You have to make many discoveries. Perhaps for the first time you will learn and think about the role of the work system you have created, about the quality of products, services or work performed in your company. You will be introduced to Deming's simple 98/2 formula. It means that 98% of the problems in the organization, defects in products, works or services do not depend on people, but on the system and are determined by its inherent shortcomings. People, in turn, do what is prescribed by this system. Most likely for the first time, you realize that the main question is not “who is to blame and what to do?”, But “what is to blame and who to do?”, and stop looking for the guilty, start improving the system. Deming's 98/2 formula inevitably leads to the fundamental conclusion that punishing people is not only pointless, but also detrimental to the company. It makes no sense, because in this way the manager, at best, will be able to eliminate only 2% of the causes of defects that are somehow related to the personality of the employee, and the main clusters of problems will remain untouched. The disastrous punishment for the company lies in the fact that because of fear, information is distorted and hidden, people are afraid to take the initiative and take responsibility.
The rejection of the idea of punishment leads to a rapid change in the atmosphere in the company and to a fundamentally different level of relations. This decision completely changes the content of the activities of managers at all levels. It requires managers to master decidedly different methods and ways of working. From bosses, overseers, mentors, they should become leaders, mentors, coaches. And this is a new challenge to the first person.
You will learn that system improvement means constantly measuring the implementation parameters of various processes that are of interest to consumers and the company itself, analyzing the collected implementation statistics, developing improvement programs and implementing them.
After reading the book, you will understand that processes, including business processes, live according to their own special laws. They must not be tampered with arbitrarily, even for the purpose of improvement. Much attention is paid to the disclosure of such concepts as "controllability of the process", "special causes of defects".
Here, the famous fourteen principles of Deming are revealed in sufficient detail, which reflect the essence of his doctrine of management. Probably, readers will brush them aside at first, saying that this is another arbitrary set of slogans, and life has already taught us not to trust slogans. Be patient now, think about the meaning of each of Deming's fourteen points, and you will see what depth of thought, what innovation in management approaches are hidden in them.
Traditional management generates a rigid organizational structure. Any enterprise, any organization is clearly divided into functional units, each of which has its own tasks, functions, and special areas of work that are different from others.
Deming's philosophy leads to an understanding of hierarchy only as a tool for building a company's horizontal organization and a mechanism for maintaining the normal functioning of a new organizational structure. The manager's mission here is to help build horizontal relationships in the system based on processes, to erase the barriers between departments as much as possible, to eliminate all the obstacles that the hierarchy introduces, to give authority to those people who can quite professionally perform them.
The hierarchy in the management system based on the teachings of Deming builds a flexible structure that adapts itself to the needs of the client and changing business conditions, organizes and supports the process device, including leadership in processes, creates an environment for improvement (powers, status, motivation, time, training ). In other words, it serves to simplify and improve processes, and does not complicate them.
Deming's philosophy changes the meaning of the organization as a whole, changes the content of each employee's activity: just as customers expect new and better goods or services from the organization, so the company expects innovations from people and continuous improvement of their activities.
The status of each employee changes. He really becomes a collaborator, that is, a person who, together with others, does a common thing.
The book emphasizes the importance of teamwork. After all, each business process has its own team, which is called upon to jointly solve the problem of its continuous improvement. In teamwork, a synergy effect arises that multiplies the intellectual potential of people, leading to surprisingly powerful solutions that could never have appeared outside of a joint brainstorming session.
The implementation of the Deming management model in practice makes the company open to information flows, provides a common information space when all employees know everything. There is no reason for rumors and gossip in the company.
Another amazing discovery will be a completely new look at the plan. Deming viewed the plan as an evil. If an organization has a properly built budget system that motivates employees to work as efficiently as possible, then plans as directives are not only unnecessary, but also dangerous, since they can provoke a decrease in the quality of goods produced, services provided and work performed.
Deming also has a new approach to building relationships with suppliers. As a basic principle, he suggests partnership for life. This approach is not only possible, it has no alternative in the long run. Indeed, in any company there are a lot of suppliers, and they critically affect the quality of the process. Then the question arises: “What is the point for us to improve the process from the inside, when there is chaos at the entrance?” Where suppliers and their services are critical, the first thing to do is to build the right systems for selecting suppliers and relationships with them.
The Moscow Reinsurance Company has been following the path paved by Deming for five years now. This is not easy, because often you have to move on the virgin lands, since Deming formulated only general principles and approaches, and their implementation requires an individual approach in each company. But it is precisely following the Deming management philosophy that allows us to maintain high rates of development, compete with the world's leading reinsurance companies, and achieve the seemingly impossible.
I am sure that after reading this book, you will not be disappointed and will not regret the wasted time. Even if you do not dare to take the path of a radical transformation of your company, you will still enrich yourself with the knowledge of a completely new approach to management. And such knowledge is valuable in itself.
President of the Moscow Reinsurance CompanyG. N. Fidelman
Where are Henry Neave and Edwards Deming taking us?
Foreword by science editors
... And many who heard with amazement said: “Where did this come from? What kind of wisdom was given to Him, and how are such miracles performed by His hands?
Gospel of Mark, chapter 6, verse 2
"There are no prophets in their own country!" If this saying did not exist before Deming, it would have to be invented especially for him. The fate of this person corresponds very precisely to her. Judge for yourself. The second is over World War. Edwards Deming, then a well-known American statistician, ends up in Japan. During the war, he trained American quality specialists in the effective application of mathematical methods in quality control. This hard work was carried out in wartime conditions and, undoubtedly, was useful, but did not lead to the expected results, i.e., to a sharp increase in the quality of supplies for military orders. Well, not all wartime projects were very successful.
At this time, Deming, along with his older friend and teacher Walter Shewhart, was developing the theory that was destined to form the basis of the Japanese model of quality systems. In recent years, the term “statistical thinking” has been increasingly used to describe this theory. Actually, it was Shewhart who was invited to Japan by the head of the American occupation administration, General MacArthur. But it so happened that just at that time Shewhart fell ill. Then he asked his friend Deming to go instead of him. What came of it, we now know.
Arriving in Japan in 1950, Deming had the opportunity to hold a seminar at which, thanks to the efforts of Professor Kaoru Ishikawa, who later became a great Japanese guru in the field of quality, and also, to no lesser extent, his father, the first persons - the owners and managers of the lion's share Japanese enterprises, for the most part still in ruins. It turned out to be a very important circumstance that Deming's audience this time were the first persons. He told them that if they put statistical methods into practice, they would very soon be able to enter world markets with great success. The Japanese listened to him ... and really entered the world markets. It is curious that the Japanese thought that Deming was expounding to them practical achievements and the American experience. And this experience was not at all. He didn't turn out the way he wanted. This is how useful it is sometimes inaccurately translated from of English language into Japanese! Incidentally, the English text of a lecture delivered by Deming in 1950 in Japan appeared relatively recently on Deming's Internet network. It turned out that this material was not preserved in the Deming archive, but enthusiasts managed to reconstruct the English text written down by one of those present at this seminar. After it appeared in free access on the Internet, V. L. Shper and Yu. P. Adler translated it now from English into Russian and published it in the journal Quality Management Methods (2000, No. 10). The reader, if he is curious, can evaluate the content of Deming's lectures for himself.
Of course, don't oversimplify. It is by no means only Deming who is "guilty" of the Japanese economic miracle. But there is no doubt that he played his part in this. However, having become the “father of the Japanese miracle,” Deming remained the most ordinary professor at New York University in his homeland. None of the industry leaders listened to him or heard him. Quality control was, of course, carried out by the quality control department. Top management had their own, much more important tasks. Thus, for almost thirty years Deming was not noticed in America! What a vivid example of arrogance and complacency.
But by the end of the 70s - the beginning of the 80s, Japan's success in world markets became obvious to everyone. And then an American television journalist made a film about Deming, which was called "If the Japanese can, then why can't we?". On the day the film was shown, Deming became famous in America. He was already almost 80 years old. Now we know that he still had about fourteen years to live. And during this time, Deming did a feat and performed a miracle. He tirelessly traveled around the country and the world, conducting his famous seminars.
Then Deming had numerous followers and students, including among the top executives of large companies such as Ford. One of Deming's most consistent students and assistants was the English statistician Henry Neave, who continues the work of his mentor now, conducting seminars similar to those that Deming had previously taught. Then Neve often assisted his teacher. The book you now hold in your hands was written during Deming's lifetime and approved by him. This is an attempt to comprehend the teachings of Deming "in hot pursuit", and, in our opinion, one of the most successful attempts.
There is also a story connected with the translation of this book into Russian.
In Russia, it was published earlier in two volumes, one of which came out first in 1994, then in 1998, and the second in 2003. When preparing the first Russian edition, it was divided into two volumes for reasons of convenience. But during the preparation of the first volume, it turned out that there was simply no money for the second. Alas, such were the realities of the early 1990s. last century in our country. It took several years for the first issue to be republished, this time in Togliatti. However, even here the "gunpowder" was not enough. Thanks to sponsors, whose preface you can read, the book has become available in Russian in its entirety. But it so happened that the first and second volumes were translated by different people and published by different publishers. All this, of course, could not but affect the quality of the Russian edition, not to mention the obvious inconvenience for readers. In addition, over the past time, organizations have appeared in Russia and are gaining strength, for which mastering the management of a new generation is becoming an urgent task. That is why it was decided to republish the book by Henry Neave, this time in an authentic form with the original. This allows us to say a few words on the essence of the teachings of E. Deming.
As S. Yesenin said, "great is seen at a distance." It takes time to appreciate the true value of what people have done, to weed out the temporary and to reveal the ideas and knowledge that form the basis of the intellectual and spiritual foundation of mankind.
For most people, Dr. Deming's ideas are associated with the "quality revolution", the central theme of which was the consideration of the consumer as an indispensable part of any organizational system, which determines the meaning of the existence of this system. When this concept was first set against the "money-making machine" view of business, it was seen as highly radical and ideologically charged. But years have passed and modern leaders it became clear the requirement not just to satisfy, but to get ahead of the needs of the consumer, to please him as a natural condition for the long-term survival of organizations. At first glance, it may seem that business has already assimilated the ideas of quality management. Indeed, its modern interpretations in the form of TQM (total quality management) or international standards The ISO 9000 series, version 2000, has become quite a respectable commercial product in the consulting and educational services. However, life shows how right Dr. Deming was, arguing that the “quality revolution” is only a prologue to a period of profound changes in the philosophy and methods of management, generated by objective trends in socio-economic development, the emergence of a “new economic era”.
At the center of the changes is the problem of humanizing the economic life of society, the perception of business as an activity implemented by people and for people. Business management in this case is seen as a process of system optimization aimed at ensuring the interests of social groups and individual people that make a positive contribution to its effective functioning. “Everyone benefits from optimization!” - this is how Dr. Deming defined the essence of the "new management" program.
Approach to this program goal is possible on the basis of the synergy effect, the multiple qualitative strengthening of the capabilities of society and its constituent organizations due to the harmonious interaction of all social groups. And this is very different from the approaches of numerous "guardians for the people's interests", whose thoughts are not aimed at general prosperity, but at the idea of taking away and sharing "justly". The higher the level of cooperation, the more effectively society and organizations use the natural and material resources at their disposal, the intellectual and spiritual potential of the human person.
The emergence of such cooperation implies a deeper level of knowledge used by people in organizing systems and coordinating their actions. Fundamental laws cannot be circumvented: more than effective management can only be achieved by increasing the content depth of theories, models used to analyze the situation and make decisions. In a dynamically changing environment, in conditions of an uncertain future, an effective organization cannot be built on the basis of copying known decisions, procedures and rules inherited from the glorious but bygone past. “There is no substitute for knowledge” - continuous adaptation, continuous improvement require reaching a new, deeper level of understanding the nature of the organization. True, in-depth knowledge is required in order to consciously “weave” a strong and at the same time flexible organizational fabric in which technical, material and social, human, dimensions are harmoniously intertwined.
But how do you capture the complexity of an organization without falling into simplification? How to single out those components that are important and necessary for management from the huge amount of knowledge accumulated by mankind modern organization? How to combine these elements into a whole, to see the connections between the patterns identified in the framework of the natural, exact sciences and the sciences of man and society? Deming devoted the last years of his life to solving this problem, creating the famous system of deep knowledge. He was in a hurry. He did not have time to publish books or articles in which this system would be presented in any complete way. The system of deep knowledge was developed and expounded by Deming in the course of his seminars.
As has happened more than once in history, the orally stated intention of an outstanding person is conveyed and concretized by his students. Henry Neave, as we have already noted, was and remains one of Deming's most devoted and consistent students. His book, according to experts, is undoubtedly one of the best interpretations of Deming's teachings. It consists of five parts. In the first four parts, the leading theoretical concepts are considered, which then formed the foundations of the theory of in-depth knowledge: the foundations of the process approach and the systemic vision of the organization, elements of the theory of variability, the foundations of the organizational learning process, and the principles of creating a collaborative environment. In the fifth part, these elements are integrated into single system. It is possible that Russia needed the last few years precisely in order for business organizations to grow up in it, for which mastering the management of a new generation is becoming an urgent task. There are indirect indications that such organizations have indeed already arisen and their number is growing. Is it fast enough? However, Deming said that "survival is a voluntary matter."
Readers of this book will voluntarily have to overcome several difficulties. In our rather dynamic and productive time, there was a refinement, and sometimes a rethinking of various things. So, for example, in the first editions we translated the term profound knowledge as "deep knowledge". Now we think that this does not make sense enough, and we settled on the “deep knowledge” option.
Another problem is related to the fact that G. Niva's book is inextricably linked with the famous book by E. Deming "Out of the Crisis: A New Paradigm for Managing People, Systems and Processes" ( Out of the Crisis) . This book was translated into Russian (Tver: Alba, 1994), but, unfortunately, this translation turned out to be, to put it mildly, inadequate.
In such a difficult environment, reading the book by G. Neave "The Space of Dr. Deming" can turn into a difficult research problem. Is it worth spending so much time and effort on this business? In our opinion, it's worth it. Because G. Neave, following E. Deming, calls us to new world where there are no familiar guidelines, where new laws are in force and where we will work to get joy from the labor process itself and from communication with colleagues. In this world, we will not be evaluated and ranked, but will be given the opportunity to reveal all our talents and abilities. "Stop, stop! you say. “We don’t need those tales that are told to the gullible. This has never been the case and never will be. We read these utopian socialists with their cities of the sun and other nonsense!”
Well, maybe it wasn't, but it will be, it will definitely be. And we will do it with our own hands. Together. Because otherwise we have no hope for the future. And Henry Neave's book is the shortest way to it. It is with such aspirations that we present it to our readers.
Yu. Adler, Yu. Rubanik, V. Shper
A new translation of E. Deming's book "Out of the Crisis: A New Paradigm for Managing People, Systems and Processes" was published in 2007 by Alpina Business Books.
Preface to the Russian edition
This book is addressed mainly to the CEOs of companies. In a very interesting and accessible form, it outlines the basics of the management philosophy of the great American - Dr. William Edwards Deming, who is also called the father of the Japanese economic miracle. It was with Deming's lecture to representatives of Japanese business in 1950 that the unprecedented ascent of the country, previously backward and in ruins after the defeat in World War II, to the heights of a new business organization system began.
Deming's own books are difficult to read - he expressed his thoughts in a difficult way, and so far his works have not been very lucky with the translation into Russian. Henry Neave - a talented popularizer - actually made Deming's teachings truly accessible to the general reader.
Henry Neave's book is a challenge to the first person. The reader will discover a world of management that is fundamentally new for Russia, so unusual for us, for our mentality, that many will have a desire to simply put the book aside. Do not do that. Get over yourself. Read to the end. If you do this, then you still have a chance to build a company that can be globally competitive. By putting the book down, you deprive yourself of this chance.
Today we can say with good reason that almost all prosperous corporations and firms, to one degree or another, use elements of the Japanese management model, which is based on Deming's management philosophy. There are examples of following the principles of alternative management in Russia as well.
You have to make many discoveries. Perhaps for the first time you will learn and think about the role of the work system you have created, about the quality of products, services or work performed in your company. You will be introduced to Deming's simple 98/2 formula. It means that 98% of the problems in the organization, defects in products, works or services do not depend on people, but on the system and are determined by its inherent shortcomings. People, in turn, do what is prescribed by this system. Most likely for the first time, you realize that the main question is not “who is to blame and what to do?”, But “what is to blame and who to do?”, and stop looking for the guilty, start improving the system. Deming's 98/2 formula inevitably leads to the fundamental conclusion that punishing people is not only pointless, but also detrimental to the company. It makes no sense, because in this way the manager, at best, will be able to eliminate only 2% of the causes of defects that are somehow related to the personality of the employee, and the main clusters of problems will remain untouched. The disastrous punishment for the company lies in the fact that because of fear, information is distorted and hidden, people are afraid to take the initiative and take responsibility.
The rejection of the idea of punishment leads to a rapid change in the atmosphere in the company and to a fundamentally different level of relations. This decision completely changes the content of the activities of managers at all levels. It requires managers to master decidedly different methods and ways of working. From bosses, overseers, mentors, they should become leaders, mentors, coaches. And this is a new challenge to the first person.
You will learn that system improvement means constantly measuring the implementation parameters of various processes that are of interest to consumers and the company itself, analyzing the collected implementation statistics, developing improvement programs and implementing them.
After reading the book, you will understand that processes, including business processes, live according to their own special laws. They must not be tampered with arbitrarily, even for the purpose of improvement. Much attention is paid to the disclosure of such concepts as "controllability of the process", "special causes of defects".
Here, the famous fourteen principles of Deming are revealed in sufficient detail, which reflect the essence of his doctrine of management. Probably, readers will brush them aside at first, saying that this is another arbitrary set of slogans, and life has already taught us not to trust slogans. Be patient now, think about the meaning of each of Deming's fourteen points, and you will see what depth of thought, what innovation in management approaches are hidden in them.
Traditional management generates a rigid organizational structure. Any enterprise, any organization is clearly divided into functional units, each of which has its own tasks, functions, and special areas of work that are different from others.
Deming's philosophy leads to an understanding of hierarchy only as a tool for building a company's horizontal organization and a mechanism for maintaining the normal functioning of a new organizational structure. The manager's mission here is to help build horizontal relationships in the system based on processes, to erase the barriers between departments as much as possible, to eliminate all the obstacles that the hierarchy introduces, to give authority to those people who can quite professionally perform them.
The hierarchy in the management system based on the teachings of Deming builds a flexible structure that adapts itself to the needs of the client and changing business conditions, organizes and supports the process device, including leadership in processes, creates an environment for improvement (powers, status, motivation, time, training ). In other words, it serves to simplify and improve processes, and does not complicate them.
Deming's philosophy changes the meaning of the organization as a whole, changes the content of each employee's activity: just as customers expect new and better goods or services from the organization, so the company expects innovations from people and continuous improvement of their activities.
The status of each employee changes. He really becomes a collaborator, that is, a person who, together with others, does a common thing.
The book emphasizes the importance of teamwork. After all, each business process has its own team, which is called upon to jointly solve the problem of its continuous improvement. In teamwork, a synergy effect arises that multiplies the intellectual potential of people, leading to surprisingly powerful solutions that could never have appeared outside of a joint brainstorming session.
The implementation of the Deming management model in practice makes the company open to information flows, provides a common information space when all employees know everything. There is no reason for rumors and gossip in the company.
Another amazing discovery will be a completely new look at the plan. Deming viewed the plan as an evil. If an organization has a properly built budget system that motivates employees to work as efficiently as possible, then plans as directives are not only unnecessary, but also dangerous, since they can provoke a decrease in the quality of goods produced, services provided and work performed.