W. Edwards Deming: Biography, Management Theories, and Application in Small Businesses

Biography

W. Edwards Deming (1900-1993) was an American statistician, professor, and management consultant best known for his work in quality management. He received a BS in electrical engineering from the University of Wyoming, an MS from the University of Colorado, and a PhD from Yale University. After working for the U.S. Department of Agriculture and the Census Bureau, he became a professor of statistics at New York University.

During World War II, Deming taught statistical process control (SPC) techniques to American engineers and executives. After the war, he was invited to Japan to help rebuild their industries, where he taught SPC and quality management to Japanese engineers and executives. His teachings played a significant role in Japan’s economic rise and the high quality of their products.

In the 1980s, Deming’s management theories gained popularity in the United States after he was featured in the NBC documentary “If Japan Can… Why Can’t We?” He became a sought-after consultant and helped numerous companies improve their quality and productivity.

Management Theories

Deming’s management philosophy is based on the concept of continuous improvement and the belief that quality is the responsibility of management. His key theories include:

1. The System of Profound Knowledge: This theory consists of four parts: appreciation for a system, knowledge of variation, theory of knowledge, and psychology. Deming believed that managers must understand these areas to lead effectively and drive continuous improvement.

2. The 14 Points for Management: These points outline the principles that managers should follow to improve quality and productivity, such as instituting leadership, driving out fear, and breaking down barriers between departments.

3. The Plan-Do-Study-Act (PDSA) Cycle: This iterative four-step approach to problem-solving and continuous improvement involves planning a change, implementing it, studying the results, and acting on the lessons learned.

4. The Seven Deadly Diseases: Deming identified seven common management practices that can harm an organization, such as lack of constancy of purpose, emphasis on short-term profits, and annual performance reviews.

Applying Deming’s Theories in a Small Business

A consultant working with a small business can apply Deming’s theories in the following ways:

1. Assess the current management practices and identify areas for improvement based on Deming’s 14 Points and Seven Deadly Diseases.

2. Help the business owner and managers understand the System of Profound Knowledge and how it applies to their organization.

3. Implement the PDSA cycle to solve problems and drive continuous improvement. This can involve training employees on problem-solving techniques and encouraging a culture of experimentation and learning.

4. Develop a quality management system that emphasizes prevention, rather than inspection, and empowers employees to take ownership of quality.

5. Foster a culture of collaboration and break down barriers between departments to improve communication and teamwork.

6. Encourage leadership at all levels and provide training and support to help managers become effective leaders.

 

The System of Profound Knowledge

W. Edwards Deming’s System of Profound Knowledge is a holistic approach to management that consists of four interrelated parts. Deming believed that managers must have a deep understanding of these four areas to lead effectively and drive continuous improvement.

1. Appreciation for a System

• A system is a network of interdependent components that work together to achieve a common goal.
• Managers must understand how their organization functions as a system and how the various parts (e.g., departments, processes, people) interact and influence each other.
• Optimizing individual components may not lead to the best overall results; instead, managers should focus on optimizing the entire system.
• Collaboration and communication across the organization are essential for system optimization.

2. Knowledge of Variation

• Variation is present in all systems and processes, and understanding the types and causes of variation is crucial for effective management.
• Common causes of variation are inherent in the system and can be addressed by changing the system itself.
• Special causes of variation are unique, non-random events that can be identified and eliminated.
• Managers must use data and statistical tools (e.g., control charts) to distinguish between common and special causes of variation and take appropriate actions.

3. Theory of Knowledge

• This part focuses on the nature of knowledge and how it is acquired, interpreted, and applied in decision-making.
• Deming emphasized the importance of using data and evidence to inform decisions, rather than relying solely on opinions or assumptions.
• The PDSA (Plan-Do-Study-Act) cycle is a key tool for learning and continuous improvement, as it allows managers to test theories, gather data, and refine their understanding of the system.
• Managers should foster a culture of learning and encourage employees to continuously expand their knowledge and skills.

4. Psychology

• Understanding human behavior, motivation, and interactions is essential for effective leadership and change management.
• Managers must create an environment that fosters trust, collaboration, and intrinsic motivation.
• Deming believed in the importance of driving out fear and creating a culture where employees feel safe to take risks, share ideas, and report problems.
• Leaders should focus on developing and empowering employees, recognizing that their knowledge, skills, and well-being are critical to the organization’s success.

The System of Profound Knowledge emphasizes the interconnectedness of these four areas. Managers must consider all aspects simultaneously and understand how they influence each other to make effective decisions and drive continuous improvement.

By deeply understanding and applying the System of Profound Knowledge, managers can create a more holistic, data-driven, and human-centered approach to leadership and organizational improvement. This, in turn, can lead to higher quality, productivity, and customer satisfaction, as well as a more engaged and motivated workforce.

The 14 Points for Management

W. Edwards Deming’s 14 Points for Management are a set of principles designed to help organizations improve quality, productivity, and competitiveness. These points form the foundation of his management philosophy and are applicable to any organization, regardless of size or industry.

1. Create constancy of purpose toward improvement of product and service: Organizations should have a long-term vision and focus on continuous improvement, rather than short-term thinking and quick fixes.

2. Adopt the new philosophy: Embrace change and adopt a quality-focused mindset throughout the organization, from top management to frontline employees.

3. Cease dependence on inspection to achieve quality: Focus on building quality into products and processes, rather than relying on inspection to catch defects after they occur.

4. End the practice of awarding business on the basis of price tag alone: Develop long-term relationships with suppliers based on quality, rather than making decisions solely based on cost.

5. Improve constantly and forever the system of production and service: Continuously identify and eliminate waste, inefficiencies, and sources of variation in all processes.

6. Institute training on the job: Provide employees with the necessary skills and knowledge to perform their jobs effectively and contribute to continuous improvement efforts.

7. Institute leadership: Managers should be coaches and mentors, focusing on helping employees improve and remove obstacles, rather than simply supervising and assigning blame.

8. Drive out fear: Create a culture of trust and openness, where employees feel safe to ask questions, report problems, and suggest improvements without fear of reprisal.

9. Break down barriers between departments: Encourage collaboration and communication across functional areas to optimize the entire system and achieve common goals.

10. Eliminate slogans, exhortations, and targets for the workforce: Avoid empty phrases and unrealistic targets that do not address the underlying causes of problems or provide employees with the means to improve.

11. Eliminate numerical quotas for the workforce and numerical goals for management: Focus on understanding and improving processes, rather than setting arbitrary targets that may encourage short-term thinking and suboptimal behavior.

12. Remove barriers that rob people of pride of workmanship: Provide employees with the tools, training, and support they need to do their best work and take pride in their contributions.

13. Institute a vigorous program of education and self-improvement: Encourage continuous learning and personal development for all employees, recognizing that an organization’s success depends on the knowledge and skills of its people.

14. Put everybody in the company to work to accomplish the transformation: Engage all employees in the continuous improvement process and make it clear that quality and excellence are everyone’s responsibility.

By implementing these 14 points, organizations can create a culture of continuous improvement, employee engagement, and customer focus, leading to higher quality, productivity, and long-term success.

The Plan-Do-Study-Act (PDSA) Cycle

The Plan-Do-Study-Act (PDSA) Cycle, also known as the Shewhart Cycle or the Deming Wheel, is an iterative four-step approach to problem-solving and continuous improvement. It is a key component of W. Edwards Deming’s management philosophy and is widely used in various industries to test and implement changes on a small scale before applying them more broadly. The four steps of the PDSA Cycle are as follows:

1. Plan

• Identify a problem or opportunity for improvement.
• Gather data and analyze the current situation to understand the root causes of the problem.
• Develop a hypothesis about what changes might lead to improvement.
• Plan a small-scale test or experiment to assess the potential impact of the proposed changes.
• Establish clear objectives and metrics to measure the success of the test.

2. Do

• Implement the planned test or experiment on a small scale.
• Collect data and document observations during the test.
• Record any unexpected findings or deviations from the plan.

3. Study

• Analyze the data collected during the “Do” step.
• Compare the results to the objectives and metrics established in the “Plan” step.
• Determine whether the hypothesis was confirmed or refuted.
• Identify any lessons learned and insights gained from the test.

4. Act

• If the test was successful, consider implementing the changes on a larger scale.
• If the test did not yield the desired results, use the lessons learned to modify the hypothesis or develop a new approach.
• Document the findings and share them with relevant stakeholders.
• Plan the next cycle of improvement, building on the knowledge gained from the previous cycle.

The PDSA Cycle emphasizes the importance of iterative, small-scale testing and data-driven decision-making. By breaking down larger problems into smaller, more manageable tests, organizations can reduce the risk of implementing ineffective or harmful changes. The cycle also promotes a culture of continuous learning and improvement, as each iteration builds upon the lessons learned from the previous one.

Key benefits of using the PDSA Cycle include:

• Fostering a systematic and data-driven approach to problem-solving and improvement.
• Encouraging experimentation and innovation while minimizing risk.
• Promoting collaboration and cross-functional teamwork.
• Facilitating continuous learning and knowledge sharing within the organization.
• Enabling organizations to adapt quickly to changing circumstances and customer needs.

By consistently applying the PDSA Cycle, organizations can drive ongoing improvements in quality, efficiency, and customer satisfaction, ultimately leading to better business results and a sustainable competitive advantage.

The Seven Deadly Diseases

W. Edwards Deming identified seven common management practices that can harm an organization’s performance and hinder its ability to improve quality and productivity. He referred to these practices as the “Seven Deadly Diseases” because of their detrimental impact on long-term organizational success. The Seven Deadly Diseases are:

1. Lack of constancy of purpose

• Organizations often focus on short-term thinking and quick fixes rather than establishing a long-term vision and commitment to continuous improvement.
• Without a clear, consistent purpose, employees may lack direction and motivation, leading to suboptimal performance and decision-making.

2. Emphasis on short-term profits

• An overemphasis on quarterly earnings and financial metrics can lead to cost-cutting measures that undermine quality, innovation, and employee morale.
• Short-term thinking may discourage investments in research and development, training, and other initiatives that are essential for long-term success.

3. Annual performance reviews

• Traditional performance appraisal systems often foster individual competition and blame rather than collaboration and continuous improvement.
• Annual reviews may not provide timely, meaningful feedback and can discourage open communication and risk-taking.

4. Mobility of management

• High turnover among managers can disrupt organizational continuity and hinder the development of long-term relationships and trust.
• Frequent changes in leadership may lead to shifting priorities and a lack of accountability for long-term results.

5. Managing by visible figures alone

• Relying solely on quantitative metrics and financial data can lead to a narrow focus on short-term results and a neglect of important qualitative factors such as customer satisfaction, employee engagement, and process quality.
• Managers should use a balanced set of measures and seek to understand the underlying drivers of performance.

6. Excessive medical costs

• High healthcare costs can burden organizations and employees, diverting resources away from investments in quality, innovation, and human capital.
• Promoting employee wellness and prevention can help reduce medical costs and improve overall organizational performance.

7. Excessive costs of warranty, fueled by lawyers who work on contingency fees

• Organizations that rely on inspection and rework to catch defects may incur high warranty costs and legal liabilities.
• Focusing on building quality into products and processes from the outset can reduce the need for costly remediation and litigation.

To overcome these “diseases,” Deming advocated for a fundamental shift in management thinking and practices. He emphasized the importance of adopting a systems perspective, fostering a culture of continuous improvement, and engaging all employees in the pursuit of quality and customer satisfaction.

By addressing these Seven Deadly Diseases and embracing Deming’s management philosophy, organizations can create a foundation for long-term success and resilience in the face of changing market conditions and customer demands.

Curing the Seven Deadly Diseases: Deming’s Recommendations

To address the Seven Deadly Diseases, W. Edwards Deming proposed a set of management practices and principles that organizations should adopt. These recommendations are closely aligned with his 14 Points for Management and aim to create a culture of continuous improvement, employee engagement, and customer focus.

1. Establish constancy of purpose

• Develop a long-term vision and strategy focused on continuous improvement and customer satisfaction.
• Communicate the vision clearly to all employees and stakeholders.
• Make decisions and allocate resources in alignment with the long-term vision.

2. Focus on long-term value creation

• Emphasize the importance of quality, innovation, and customer loyalty over short-term financial gains.
• Invest in research and development, employee training, and process improvement initiatives.
• Foster a culture that values experimentation, learning, and risk-taking.

3. Implement a more effective performance management system

• Replace annual performance reviews with frequent, meaningful feedback and coaching.
• Encourage collaboration and teamwork rather than individual competition.
• Use data and analytics to identify opportunities for improvement and support fact-based decision-making.

4. Develop leadership continuity and accountability

• Cultivate leadership talent from within the organization to ensure continuity and institutional knowledge.
• Hold leaders accountable for long-term results and the development of their teams.
• Encourage leaders to adopt a coaching and mentoring mindset.

5. Use a balanced set of performance measures

• Supplement financial metrics with non-financial measures such as customer satisfaction, employee engagement, and process quality.
• Use data to understand the underlying drivers of performance and identify areas for improvement.
• Regularly review and adjust performance measures to ensure alignment with organizational goals.

6. Promote employee wellness and prevention

• Invest in programs and initiatives that support employee health and well-being.
• Encourage healthy lifestyles and provide resources for stress management and mental health support.
• Foster a work environment that values work-life balance and employee welfare.

7. Build quality into products and processes

• Adopt a “quality at the source” mindset, focusing on prevention rather than inspection and rework.
• Engage all employees in continuous improvement efforts and provide them with the necessary tools and training.
• Collaborate with suppliers and partners to ensure high-quality inputs and streamline processes.

In addition to these specific recommendations, Deming emphasized the importance of adopting a systems perspective and understanding the interconnectedness of various organizational components. By viewing the organization as a complex system and recognizing the impact of management practices on employee behavior and performance, leaders can make more informed decisions and drive sustainable improvement.

Implementing these recommendations requires a significant shift in management thinking and a long-term commitment to change. However, organizations that successfully adopt Deming’s principles and cure the Seven Deadly Diseases can unlock the full potential of their employees, achieve higher levels of quality and customer satisfaction, and build a foundation for lasting success.