competitive strategy, quality improvement, statistical methods, evaluation research, philosophy of science, critical thinking
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Quality, Productivity and Competitive Position

This post was written by John on July 4, 2008
Posted Under: Deming,General Management,Statistical Thinking
pf button both Quality, Productivity and Competitive Position

June marked the 25th anniversary of the publication of Dr. W. E. Deming’s first management book, “On Quality, Productivity and Competitive Position”. Deming lived both in Washington D. C. and New York where he kept an apartment on Hudson St. in the Village. He was a professor at NYU’s Graduate School of Business Administration from 1946 until his death in 1993. He also taught for years at Columbia. While returning to his apartment one evening in 1968 he was mugged and stabbed and was rushed to St. Vincent’s Hospital where he spent several days; a true New Yorker, indeed.

Deming was born in 1900 in Iowa and spent the bulk of his early childhood in Polk City and then at around age 7 moved to Cody, Wyoming and later Powell, Wyoming. Life was harsh and he lived, as did many, in a tarpaper shack. He would joke in his seminars that he would wager he was the only person in the room that was born in the reign of Queen Victoria.For those unfamiliar with Deming (which seems to include much of corporate America) he is perhaps best known for his trips to Japan after the end of World War II.

He had traveled to Japan in 1947 originally to help occupation forces to conduct sampling research for a census.His visit was not unnoticed by the fledgling Union of Japanese Scientists and Engineers (JUSE) and he was invited to return to Japan at a later date to conduct a series of classes on the statistical quality control techniques that had proved so beneficial to the United States in the production of high quality materials for defense manufacturers.He did return in 1950 and conduct those classes. They were primarily in the area of what, at that time, was called Statistical Quality Control.

But Deming also taught another course. The essence of this teaching is captured in the speech he gave to many of the top managers of Japanese post-war management at Mt. Hakone in 1950.At that meeting Deming outlined a competitive strategy that has come to be known as the “Deming Chain Reaction”. Basically it is simple in concept, but difficult in execution.It had always been thought that better quality could only be achieved at higher cost. That is, there is a theoretical point at which further attempts to improve quality would inflate price so much that the object being manufactured is no longer marketable because of its cost.

As it turns out, that is only true if attempts to improve quality are focused on inspection. When one focuses attention on quality through process improvement and the elimination of waste, quality improves and costs go down at the same time.There is no better example of this strategy at work than Toyota Motors. But there are many, many other examples as well. We, in America, are all too familiar with the phenomenon of products invented and developed here that are manufactured elsewhere. The result has been a huge deindustrialization of America. Industrial America today is half the size it was 30 years ago.

The effect of this deindustrialization on the economy has been devastating.Deming predicted Japan’s success in the 50s when no one else was paying attention to them economically at all. He foresaw the de-industrialization of America and entitled his next book, “Out of the Crisis”. Both books contain the basics of his ideas about how to be competitive. Perhaps for America he was too far ahead of his time.In keeping with his upbringing Deming worked right up until his death in 1993. He maintained his active consultancy and taught his famous “4-Day” seminar until a few weeks before the end. He was tough.I had the good fortune to know him personally and he was a wonderfully kind and gracious man as well. I can still clearly hear his words, “There is no substitute for knowledge.” The knowledge is there in the pages of his book. It needs only to be extracted and acted on.

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