Deming & Views on Management Crisis

W. E. Deming & Japanese Manufacturing “Out of the Crisis” **Draft 08-15**
In the early 1950’s, W. Edwards Deming, Walter Shewhart, (from Bell labs) and other American technical teams, were asked by General Douglas McArthur, to come to Japan to help rebuild that shattered economy. McArthur had a plan to get Japan back to an economically stable system as soonas possible, and he saw manufacturing as a key component. (This wasn’t altruism, since if there were no jobs, then the populace might resort to violence, making the occupation by American troops more difficult). These technical teams, and Deming in particular, provided the ideas and techniques that motivated the Japanese to begin their manufacturing renaissance. Toyota and other Japanesemanufacturers listened, learned, and acted. They instituted the practices recommended by Deming, infused with their own cultural traditions. The book The Elegant Solution: Toyota’s Formula for Mastering Innovation, gives a 2007 update of the Japanese triumph in manufacturing. Their success is in very large measure due to the mind-set that Deming and the American teams put into place way back in the ‘50’s.(My own take is that an important component of this mind shift is that the American teams emphasized measuring absolutely everything, since only by comparative measurements can improvement take place. The other Deming ideas are crucial, but I think measurement underlies most of them). The result of this Japanese dedication to modern manufacturing and management practices is now painfully evidentto us here in the U.S., with Toyota Motor Company’s revenues exceeding the combined revenues of GM, Ford, DaimlerChrysler, and Volkswagon. Note that all of the Japanese success was achieved in spite of having no oil, iron, wood, and practically no other industrial resources. The Japanese success is a triumph of people oriented systems, process, and product. The lack of natural resources motivatedthe Japanese to place exceptional value on educated, trained, competent people, thus offsetting their lack of resources. Here is another crucial lesson for us here in the U.S., favored as we have been by abundant natural resources. Deming’s tried to spread his ideas of manufacturing and business renewal in America but found no audience. America and its leaders of that time (1950’s and 1960’s) wereoblivious of any need for change since we had the only viable economy in the world and our goods dominated the globe. Those were the good times, until about 1968 or so when Toyota started importing their superior quality cars. Acutely aware of the limitation of American Leadership, Deming published a book on the diseases of American management in 1986 called “Out of the Crisis”, This bookdescribed his vision of how America could still compete with Japanese organizations. Published in 1986, his prescriptions are still resisted by the managements I have observed, and, beyond my individual experience, is the realization by almost everyone that we are in deep deep trouble as a nation. We have lost industry after industry to foreign competition, our economy is on the decline, and our statusas a leader of innovation is seriously compromised. The auto industry is simply a more obvious loss, among many others. The consequences of our failure in management are abundantly clear today as I revise these notes in August of 2008. Even the most cursory look at American production shows a loss of millions of manufacturing jobs, 100’s of billions in trade deficits, a trillion dollars owed toforeign governments, and a general malaise about our future prospects. (Not to even mention the current debacle of the financial industry or the Iraq war). Here are Deming’s prescriptions for getting out of our current Crisis.

C:acbooksAHPLeanSigmaOpResearchDemingAndToyota.fm 8/16/08

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Deming & Views on Management Crisis Deming’s 14 Points Required to Climb Out of the Crisis…