## W. Edwards Deming

(1900-1993)

Apply statistics to manufacturing.

Only after Japanese manufacturing skill became apparent to the rest of the world (in the 1980s) did Deming gain fame in his home country.

In 1982, Deming’s book Quality, Productivity, and Competitive Position was published by the MIT Center for Advanced Engineering, and was renamed Out of the Crisis in 1986. In it, he offers a theory of management based on his famous 14 Points for Management. Management’s failure to plan for the future brings about loss of market, which brings about loss of jobs. Management must be judged not only by the quarterly dividend, but also by innovative plans to stay in business, protect investment, ensure future dividends, and provide more jobs through improved products and services. “Long-term commitment to new learning and new philosophy is required of any management that seeks transformation. The timid and the fainthearted, and the people that expect quick results, are doomed to disappointment.”

In 1990, Marshall Industries (NYSE:MI, 1984–1999) CEO Robert Rodin trained with the then 90-year-old Deming and his colleague Nida Backaitis. Marshall Industries’ dramatic transformation and growth from $400 million to$1.8 billion in sales was chronicled in Deming’s last book The New Economics, a Harvard Case Study, and Rodin’s book, Free, Perfect and Now.

In 1993, Deming published his final book, The New Economics for Industry, Government, Education, which included the System of Profound Knowledge and the 14 Points for Management. It also contained educational concepts involving group-based teaching without grades, as well as management without individual merit or performance reviews.

The philosophy of W. Edwards Deming has been summarized as follows:

Dr. W. Edwards Deming taught that by adopting appropriate principles of management, organizations can increase quality and simultaneously reduce costs (by reducing waste, rework, staff attrition and litigation while increasing customer loyalty). The key is to practice continual improvement and think of manufacturing as a system, not as bits and pieces.”[27]

In the 1970s, Deming’s philosophy was summarized by some of his Japanese proponents[citation needed] with the following “a”-versus-“b” comparison:

(a) When people and organizations focus primarily on quality, defined by the following ratio,
{\displaystyle {\text{Quality}}={\frac {\text{Results of work efforts}}{\text{Total costs}}}}
quality tends to increase and costs fall over time.
(b) However, when people and organizations focus primarily on costs, costs tend to rise and quality declines over time.

### The Deming System of Profound Knowledge

“The prevailing style of management must undergo transformation. A system cannot understand itself. The transformation requires a view from outside. The aim of this chapter is to provide an outside view—a lens—that I call a system of profound knowledge. It provides a map of theory by which to understand the organizations that we work in.

“The first step is transformation of the individual. This transformation is discontinuous. It comes from understanding of the system of profound knowledge. The individual, transformed, will perceive new meaning to his life, to events, to numbers, to interactions between people.

“Once the individual understands the system of profound knowledge, he will apply its principles in every kind of relationship with other people. He will have a basis for judgment of his own decisions and for transformation of the organizations that he belongs to. ”

Deming advocated that all managers need to have what he called a System of Profound Knowledge, consisting of four parts:

1. Appreciation of a system: understanding the overall processes involving suppliers, producers, and customers (or recipients) of goods and services (explained below);
2. Knowledge of variation: the range and causes of variation in quality, and use of statistical sampling in measurements;
3. Theory of knowledge: the concepts explaining knowledge and the limits of what can be known.
4. Knowledge of psychology: concepts of human nature.

He explained, “One need not be eminent in any part nor in all four parts in order to understand it and to apply it. The 14 points for management in industry, education, and government follow naturally as application of this outside knowledge, for transformation from the present style of Western management to one of optimization.”

“The various segments of the system of profound knowledge proposed here cannot be separated. They interact with each other. Thus, knowledge of psychology is incomplete without knowledge of variation.

“A manager of people needs to understand that all people are different. This is not ranking people. He needs to understand that the performance of anyone is governed largely by the system that he works in, the responsibility of management. A psychologist that possesses even a crude understanding of variation as will be learned in the experiment with the Red Beads (Ch. 7) could no longer participate in refinement of a plan for ranking people.”[28]

The Appreciation of a system involves understanding how interactions (i.e., feedback) between the elements of a system can result in internal restrictions that force the system to behave as a single organism that automatically seeks a steady state. It is this steady state that determines the output of the system rather than the individual elements. Thus it is the structure of the organization rather than the employees, alone, which holds the key to improving the quality of output.

The Knowledge of variation involves understanding that everything measured consists of both “normal” variation due to the flexibility of the system and of “special causes” that create defects. Quality involves recognizing the difference to eliminate “special causes” while controlling normal variation. Deming taught that making changes in response to “normal” variation would only make the system perform worse. Understanding variation includes the mathematical certainty that variation will normally occur within six standard deviations of the mean.

The System of Profound Knowledge is the basis for application of Deming’s famous 14 Points for Management, described below.

### Key principles

Deming offered 14 key principles to managers for transforming business effectiveness. The points were first presented in his book Out of the Crisis. (p. 23–24)[29] Although Deming does not use the term in his book, it is credited with launching the Total Quality Management movement.[30]

1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive, to stay in business and to provide jobs.
2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.
3. Cease dependence on inspection to achieve quality. Eliminate the need for massive inspection by building quality into the product in the first place.
4. End the practice of awarding business on the basis of a price tag. Instead, minimize total cost. Move towards a single supplier for any one item, on a long-term relationship of loyalty and trust.
5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.
6. Institute training on the job.
7. Institute leadership (see Point 12 and Ch. 8 of Out of the Crisis). The aim of supervision should be to help people and machines and gadgets do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers.
8. Drive out fear, so that everyone may work effectively for the company. (See Ch. 3 of Out of the Crisis)
9. Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and usage that may be encountered with the product or service.
10. Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.
1. Eliminate work standards (quotas) on the factory floor. Substitute with leadership.
2. Eliminate management by objective. Eliminate management by numbers and numerical goals. Instead substitute with leadership.
11. Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.
12. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, inter alia, abolishment of the annual or merit rating and of management by objectives (See Ch. 3 of Out of the Crisis).
13. Institute a vigorous program of education and self-improvement.
14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody’s job.

“Massive training is required to instill the courage to break with tradition. Every activity and every job is a part of the process.”[31]

#### PDCA myth

It is a common myth to credit Plan-Do-Check-Act (PDCA) to Deming. Deming referred to the PDCA cycle as a “corruption.”[32] Deming worked from the Shewhart cycle and over time eventually developed the Plan-Do-Study-Act (PDSA) cycle, which has the idea of deductive and inductive learning built into the learning and improvement cycle. Deming finally published the PDSA cycle in 1993, in The New Economics on p. 132. Deming has added to the myth that he taught the Japanese the PDSA cycle with this quote on p. 247, “The PDSA Cycle originated in my teaching in Japan in 1950. It appeared in the booklet Elementary Principles of the Statistical Control of Quality (JUSE, 1950: out of print).”

1. Lack of constancy of purpose
2. Emphasis on short-term profits
3. Evaluation by performance, merit rating, or annual review of performance
4. Mobility of management
5. Running a company on visible figures alone
6. Excessive medical costs
7. Excessive costs of warranty, fueled by lawyers who work for contingency fees

“A Lesser Category of Obstacles” includes:

1. Neglecting long-range planning
2. Relying on technology to solve problems
3. Seeking examples to follow rather than developing solutions
4. Excuses, such as “our problems are different”
5. The mistaken belief that management skills can be taught in classes[33]
6. Reliance on quality control departments rather than management, supervisors, managers of purchasing, and production workers
7. Placing blame on workforces who are only responsible for 15% of mistakes where the system designed by management is responsible for 85% of the unintended consequences
8. Relying on quality inspection rather than improving product quality

Deming’s advocacy of the Plan-Do-Study-Act cycle, his 14 Points and Seven Deadly Diseases have had tremendous influence outside manufacturing and have been applied in other arenas, such as in the relatively new field of sales process engineering.[34]

## 15 Famous quotes by William Edwards Deming

1. “Profit in business comes from repeat customers, customers that boast about your project or service, and that bring friends with them.”
2. “It is not enough to do your best; you must know what to do, and then do your best.”
3. “It is not necessary to change. Survival is not mandatory.”
4. “If you can’t describe what you are doing as a process, you don’t know what you’re doing.”
5. “Quality is everyone’s responsibility.”
6. “Innovation comes from the producer – not from the customer.”
7. “If you do not know how to ask the right question, you discover nothing.”
8. “You should not ask questions without knowledge.”
9. “Learning is not compulsory… neither is survival.”
10. “The result of long-term relationships is better and better quality, and lower and lower costs.”
11. “Rational behaviour requires theory. Reactive behaviour requires only reflex action.”
12. “We are here to make another world.”
13. “Lack of knowledge… that is the problem.”
14. “All anyone asks for is a chance to work with pride.”
15. “Whenever there is fear, you will get wrong figures.”

## Publications and books by William Edwards Deming et al.

• 2000, 1993. The New EconomicsMIT Press.
• 2000, 1986. Out of the Crisis. MIT Press.
• 2000. On errors in surveys. Bobbs-Merrill Company.
• 1992. Profound knowledge. British Deming Association.
• 1990. Sample Designs in Business Research. John Wiley and Sons Inc.
• 1985, 1964, 1943. Statistical Adjustment of Data. John Wiley and Sons.
• 1985, 1966. Some theory of sampling. Dover Publications Inc.
• 1982. Quality, productivity, and competitive position. Massachusetts Institute of Technology, Center for Advanced Engineering Study.
• 1981. On the management of statistical techniques for quality and productivity. W. Edwards Deming.
• 1969. A further account of the idiots savants, experts with the calendar. American Journal of Psychiatry, 126(3), 412-415.
• 1967. What happened in Japan?. Society of Quality Control Engineers.
• 1963. Facsimiles of two papers by Bayes. Hafner Publishing Company.
• 1950 / 1966. Some Theory of Sampling. Dover Publications.
• 1950 / 1952. Elementary Principles of the Statistical Control of Quality. Nippon Kagaku Gijutsu Renmei, Tokyo.
• 1948. A brief statement on the uses of sampling in censuses of population, agriculture, public health, and commerce. United Nations.
• 1943. Statistical adjustment of data.
• 1943. On the efficiency of deep stratification in block sampling. Journal of the American Statistical Association, 38(221), 93-100.
• 1939. Statistical method from the viewpoint of quality control. Courier Corporation.
• 1938. Least Squares. The Graduate School, Department of Agriculture, Washington.

## Carl F. Braun

The accounting limitation

5 Ws: to tell who was going to do what, where, when, and why

https://intelligentfanatics.com/forums/topic/the-story-of-carl-braun-cf-braun-company/

The culture permeated from the top down. Carl Braun was obsessed with maximizing the potential of every person in his company. He wrote several books which were mandatory reading for managers and employees. You can still find some of these books in circulation and they have quite a cult following. Management and Leadership is thought to be one of the best management and leadership books ever written: