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At the recent Annual W. Edwards Deming Institute Annual conference (this year held in Madison, Wisconsin) Peter Scholtes gave an excellent speech on the 6 Leadership Competencies from his book: The Leader’s Handbook. Those competencies are:
As those familiar with Dr. Deming will immediately note those are very closely tied to Deming’s 4 areas of management. I am a friend (and manage Peter’s website so I am biased) but as I have said before anyone interested in management should read his book (the competencies are discussed in chapter 2).
The photo shows George Box, John Hunter and Peter Scholtes (from right to left) at the MAQIN reception the night before the conference. Two previous mayors of Madison introduced Peter’s talk: Paul Soglin and Joe Sensenbrenner.
Related: ASQ Deming Medal to Peter Scholtes - Using Books to Ignite Improvement - Management Improvement Leaders - Performance Without Appraisal
So incentive schemes to get people “motivated” seem to backfire often. Why can’t we figure out how to incentivize the behavior we desire and have it not backfire on us? What is the righter way to dangle incentives in front of our employees to get them to do what we want? Well aiming at that is a bad strategy. Using extrinsic motivation less badly is possible but the correct answer is just don’t do it.
The problems of individual incentives seem to far outweigh any potential benefit. Dr. Deming was against this strategy decades ago, and I agree. Peter Scholtes and Alfie Kohn (among others) do a good job of explaining why it is a bad idea. Douglas McGregor’s Human Side of Enterprise is a good place to start. Managers need to eliminate de-motivators of employees not try to find better carrot dangling schemes to somehow make the carrot dangling incentive produce the desired behavior.
I have written about this area previously: Problems with Bonuses, The Defect Black Market, Why Extrinsic Motivation Fails and Losses Covered Up to Protect Bonuses.
Bob Sutton has a good blog and wrote an interesting post recently: Washington Mutual and Perverse Incentives
I would say don’t try to create righter individual incentives. While it is possible to make it less bad, spend your time on more productive management activities. That is my answer.
Related: Reward and Incentive Programs are Ineffective — Even Harmful by Peter Scholtes - Theory X (motivation by carrot and stick) - We eliminated commissions, incentives… - Individual Bonuses Are Bad Management - Another Quota Failure Example - Righter Performance Appraisal
Get Rid of the Performance Review! by Samuel Culbert
As I have said numerous times, I agree with Deming that management by performance appraisals doesn’t work. Most people seem to realize they are fake, cause harm, and do little if any good. But they continue to act as though it is impossible to stop activities that cause harm and provide no significant benefit.
Related: Righter Performance Appraisal - Performance without Appraisal - Deming and Performance Appraisal - Problems Caused by Performance Appraisal
How Business Pays for its View of Human Nature by Fred Kiel makes some good points. I think he is a bit off in why the points are good, but…
I believe people are self interested and somewhat rational. However, self interest, is complex. People want to be liked, people want to be part of something good, people want to feel they are appreciated, people like having money to buy what they want… Some people like to feel better than others, some are insecure…
Thinking that people are guided by self interest and somewhat rational decision making is helpful, I believe. But that understanding complex, too often people seek over-simplified models to base their decisions upon (I now have 92 posts in the psychology category of this blog). And fearful, ill-informed, un-trained (in ways that build the capacity to make rational decisions) workers pursuing their self interest is often much more harmful than workers that are more secure, trusting, knowledgeable, committed workers pursuing their self interest. If you design your organization with what Dr. Deming called an understanding of psychology then you can make these traits work for the organization instead of against the organization.
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Armand V. Feigenbaum received the 2007 National Medal of and Technology and Innovation for his leadership in the development of the economic relationship of quality costs, productivity improvement, and profitability, and for his pioneering application of economics, general systems theory and technology, statistical methods, and management principles that define The Total Quality Management approach for achieving performance excellence and global competitiveness.
In 1987, Dr. W. Edwards Deming received the medal for his forceful promotion of statistical methodology, for his contributions to sampling theory and for his advocacy to corporations and nations of a general management philosophy that has resulted in improved product quality with consequent betterment of products available to users as well as more efficient corporate performance.
In 1992, Joseph M. Juran received the medal for his lifetime work of providing the key principles and methods by which enterprises manage the quality of their products and processes, enhancing their ability to compete in the global marketplace.
Related: 2007 National Medals of Science and Technology - 2007 Baldrige National Quality Award - 2007 William G. Hunter Award - 2005 and 2006 National Science and Technology Medals - ASQ Deming Medal to Peter Scholtes
Tata Steel, India, has been awarded the 2008 Deming Prize. They were the only organization to receive the prize this year.
Mr. B. Muthuraman, Managing Director, Tata Steel, while expressing satisfaction over this accomplishment said, “No other activity made us think so deeply about our business and relationships than the process of applying for the Deming Prize. Total Quality Management (TQM) is a fundamental way of managing business and every organization can gain from institutionalizing the culture necessary to win this prize.” He dedicated this recognition to the employees of Tata Steel, its customers and business partners who have consistently embraced the culture of continuous improvement and demonstrated a great teamwork leading to several recognitions in the last 20 years since the TQM journey started at the Steel Company in 1988.
India continues to do very well, collecting more Deming Prizes than all other countries combined since 2000. Countries of organizations receiving the Deming Prize since 2000 (prior to that almost all winners were from Japan):
| Country | Prizes |
| India | 15 |
| Thailand | 8 |
| Japan | 4 |
| USA | 1 |
| Singapore | 1 |
The 2007 Deming Prize for Individuals went to Mr. Masahiro Sakane, Chairman, Komatsu Limited, Japan. Previous recipients include: Kaoru Ishikawa, Genichi Taguchi, Shoichiro Toyoda, Hitoshi Kume and Noriaki Kano.
Related: 2008 the Deming Prize Winners Announced - Tata Steel India wins Deming Application Prize-2008 - Deming Prize 2007 - 2005 Deming Prize - Dr. Deming’s Thoughts on Management
More and more people are willing to state the frustration with the performance appraisal process. Some have been willing to take the logical step of eliminating that which causes problems but many still don’t think elimination of performance appraisals is acceptable. Performance Reviews: Many Need Improvement
I would go with the elimination of performance appraisals, myself (see related links below for details). I strongly suggest chapter 9 (Performance Without Appraisal) of The Leader’s Handbook, by Peter Scholtes, for those thinking about this topic.
Related: Don’t Use Performance Appraisals - Continuous, Constructive Feedback - Performance Appraisals - Is Good Execution the Solution? - Performance Without Appraisal
Guest post from John McConnell, Wysowl Pty Ltd
Dr. Deming opened his first Australian seminar in 1986 with the question, “What are we here to do”? After some discussion he answered his own question with, “To learn”, and “To have a good time”.
He repeated this opening at subsequent seminars.
The Fifteenth Point
Mr. Murray Mansfield of Melbourne has what I believe to be the only completely up to date version of Dr. Deming’s famous Obligations for Top Management. After a long discussion with Murray during his last Australian seminar, Dr. Deming agreed that there ought to be a fifteenth point. He took Murray’s notes turned to the page containing the fourteen points and at the foot of the page wrote:
15. Have a good time!
Related: I Don’t Know - Find Joy and Success in Business - posts on respect for people - Destroyed by Best Efforts - Lets Play Work - Seven (plus 2) Deadly Diseases of Western Management
Pratt & Whitney Rocketdyne’s Enterprise Thinking Network Ongoing Discussion series this month features conference calls with Peter Scholtes (Thursday, September 25th, Noon to 2pm Pacific Time - USA) and Brian Joiner (Friday the 26th, Noon to 2pm Pacific Time - USA). See more details and register online.
Peter’s books (The Team Handbook and The Leader’s Handbook) are thought pieces for Thursday’s conversation with Peter. As a place to begin the conversation with Peter, we might consider the possibility that teamwork and leadership are perhaps even more in our awareness today than when Peter wrote these books. And if you’d like to explore more of Peter’s thinking and writing, see also a variety of articles and letters by and about Peter at his website.
Brian has offered us several Thought Pieces related to his current work. According to Brian, “The thing I am most excited about now is the Transition Towns movement which started in the UK a few years ago. It’s what I will be focusing on once the First Unitarian Society green building is effectively launched.” In addition, the following site gives a brief intro to the Transition Town approach, with much more detail on the Transition approach available in their Primer. Says Brian, “I hope this will be enough to start conversations.”
Both Brian and Peter are from Madison, Wisconsin (where I grew up) and both worked with my father: Bill Hunter. Brian Joiner also wrote Fourth Generation Management and co-authored the Team Handbook with Peter.
Related: Curious Cat Essential Management Books - Brain Joiner on Dr. Deming - Total Quality Leadership vs. Management by Control by Brian L. Joiner and Peter R. Scholtes
Dr. Deming encouraged the use of the Plan-Do-Study-Act cycle to improve. Agile Management encourages a similar mindset - to test out ideas in practice and adapt quickly. A key to both strategies is to quickly iterate over possible solutions. Tesco provides an example of this strategy:
For example, customers told us that they really liked our prepared meals, made fresh daily in our purpose-built kitchen, but they wanted a wider selection to choose from. So we’ve developed and introduced a number of new products for them.
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Of course, you could argue that this is all a sign of weakness, that we had got things wrong. But that would be to misunderstand the way we do business.
Listening, and then acting on it, is in our view the way to build long-term relationships with customers. It means our shopping trip is always improving, and staying in tune with changing needs. It’s a simple win-win. Customers get a better and better shopping trip, and we become more successful.
At the time Tesco paused the expansion I mentioned it seemed to me they should have allowed more time for PDSA.
To me, it is enormously important to design management systems that support and encourage continual improvement. That is much more important than superior results today. Results today are also, important, but a choice between an inflexible system that produce good results today and a flexible system with results not quite as good is not a close choice. Good management improvement requires continual improvement and therefore systems must be designed to support and encourage continual improvement.
Related: Experiment Quickly and Often - I own Tesco stock - management improvement tips - Tesco: Lean Provision
‘New’ management truths sometimes started as heresies by Cecil Johnson
One of the management heresies focused upon by Kleiner that has morphed into accepted management wisdom of the highest order is the Toyota Production System, which embraces much of the thinking of heretical quality advocate W. Edwards Deming. That system, Kleiner reminds the reader, entrusts teams at each station in the assembly process to control their local operations. Performance is not evaluated on a predetermined numeral basis.
I agree with this idea except the implication that these ideas are accepted now. To the extent they are excepted it is only a surface understanding of a couple of tools and concepts. The true power of the new ideas are still adopted in a very small number of organizations. Thankfully small initial steps are being made but there is much more to be done, before we can think of these ideas as accepted.
Which of Dr. Deming’s seven deadly diseases of western management have been effectively addressed in several decades? My opinion? Zero. Granted 2 are probably closer to economic failures (political issues that management could have spent time trying to fix but not really in the control of a single company): excessive medical costs and excessive legal damage awards.
Excessive legal damage awards was the one disease most business school graduates would have agreed was a disease decades ago, and they still do. They have spent a great deal of effort to reform the legal system, but have not been effective. Many now agree the health care system is broken. But I would say less than 50% understand this, even decades later, even after the situation has deteriorated much further. And certainly little effective effort at improving the health care system has been made. At least in the last 5 years some real efforts are being made by senior executives as some companies.
And I strongly believe Dr. Deming would see the current unjustified taking of companies resources by CEOs for their own use, in ludicrous pay packages, as a new disease. If these “new” (the system of management ideas are at least 30 years old, as a system, and it has been 60 years since Dr. Deming present them in Japan after World War II) management ideas were common, such horrible behavior as we continue to see would not be tolerated.
Related: Deming Companies - Toyota Execution Not Close to Being Copied - Management Advice Failures - Purpose of an Organization - New Rules for Management? No!
Gojko Adzic provides a nice post on Mary Poppendieck’s presentation at Agile 2008 on bonus, compensation and motivation: Paying programmers: are bonuses bad and what to do about it?
As usually Mary Poppendieck provides good advice: Mary Poppendieck webcast on Leadership in Software Development. The idea that bonuses are bad management is one of the more difficult management improvement ideas for people to accept. See related posts for much more on the problems with them and what to do instead.
Related: Interview with Mary Poppendieck - The Defect Black Market - Deming on the problems with targets or goals - Incentive Programs are Ineffective - Problems with Bonuses - Measuring and Managing Performance in Organizations
Pay for performance is a bad investment by Pete Waters
As Deming said (page 102 of Out of the Crisis): “The idea of a merit rating is alluring. The sound of the words captivates the imagination: pay for what you get; get what you pay for; motivate people to do their best, for their own good. The effect is exactly the opposite of what the words promise.” Understanding enough about managing organizations to know why it doesn’t work is not easy - which I think is a big reason why people go for the nice sounding, but flawed idea, I think. Read our posts on performance appraisals and the works we reference to learn.
Dr. Deming used to using the term continual improvement (rather than continuous improvement) later in his life because that would include continuous and dis-continuous improvement (innovation, etc.). I use continual improvement for that reason also. I think the improvement process
To me, continual improvement encompasses both continuous and discontinuous improvement.
Reflecting on: Continuous Improvement vs. Continual Improvement
Related: Process Improvement and Innovation - Better and Different - Kaizen the Toyota Way - Change is not Improvement - Think Long Term Act Daily - Encourage Improvement Action by Everyone
Here is an interesting example of an auto repair shop applying Deming’s ideas, AGCO Automotive in Baton Rouge, Louisiana:
The site includes several interesting articles including, Motivating Our Staff:
Related: Deming Companies - Stop De-motivating Employees - Deming Management Thoughts - At Ford, Quality Was Our Motto in the 1980s
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Guest post by David Kerridge (originally posted to the Deming Electronic Network):
This is part of a series in which I recall striking or thought-provoking things that W. Edwards Deming said, but did not put into his books.
I remember taking a manager to his first Deming 4-day seminar. Afterwards my friend said to me “I was very impressed with that man. He said ‘I don’t know.’”
Something in our culture makes us ashamed to admit ignorance. We expect quick, slick answers, whether from politicians, managers, or consultants.
Deming said “I don’t know” more often than anyone I have ever known. Sometimes you heard the answer about two years later, in his seminar.
I also remember him saying “I have learned more in the last six months than in the previous ten years.”
Maybe one quotation explains the other.
Related: Dr. Deming quotes - Instant Pudding - Deming on being Destroyed by Best Efforts - Where to Start Improvement
The Deming Institute is sponsoring, How to Create Unethical, Ineffective Organizations That Go Out of Business, 12-14 May, 2008 in Colorado Springs, Colorado. Kelly Allan and John Hunter will be presenting the seminar. Please let me know if you sign up.
Learn how governance practice leads to the heaviest losses, how inconsistencies between policy and strategy create sub-optimal outcomes, how mismanagement of people leads to unethical and ineffective behavior, and how to overcome these problems. Study the theory and practice of management. Not quality management, not good management, not excellent management, not knowledge management, not risk management, not process management, not performance management, not supply or asset management, not technology management, not time management, not emergency management, just plain management.
Related: Deming on Management - Curious Cat Management Improvement Calendar - Deming Seminar and Conference - Deming Companies
This is the 1,000th post to the Curious Cat Management Improvement Blog. Here are some highlights:
Information Technology: Toyota IT Overview - “customizing the code, to its business processes, and not the other way around.”
Guest post by Ron Kingen (originally posted to the Deming Electronic Network)
Several weeks ago someone in the DEN list ask what did Dr. Deming recommend about this issue, well I ask that very question of Dr. Deming back in the 80’s when I had the good fortune to work with him. I had expressed my concern to Dr. Deming about several of his fourteen points that I either didn’t understand completely or did not fit with my experience and/or education. Dr. Deming suggested we talk about it over dinner – during the subsequent dinner discussion Dr. Deming made several points relative to performance improvement (not appraisal):
The advice seemed valid, but I told him my company insisted we do performance appraisals. He laughed, he suggested I change the system; but Dr. Deming knew I worked for General Motors and that wouldn’t be easy. So he recommended I become a rebel and change my part of the system; which I did try. At the time I worked for one of the most progressive divisions within GM and was fortunate to work with many talented GM people and several well know and recognized experts, but I was convinced the best system change option was to leave GM.
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Well, this doesn’t sound very well thought out. Bonuses often distort behavior. Dr. Deming was not against such targets and bonuses because he thought they would not result in bugs being fixed: Dr. Deming on the problems with targets or goals. It is a question of how that will happen. The system being distorted is the most likely result of any such system.
Everyone worked even harder on the third day. On the fourth day, however, the well had started to dry up. The testers ran, re-ran, and re-ran again the test cases, but they could only find a handful of issues. The developers strained the issue-tracking system, constantly reloading the “unassigned bugs” page and rushing to self-assign anything that appeared.
And then something strange happened at lunch. Instead of going out to eat with his usual teammates, one of the developers went out with a tester. Soon after, another developer went out with another tester. Within a few minutes, almost all of the developers had paired up with testers.
As the developers returned from lunch, they immediately got to work. Instead of scavenging for newly found bugs, they worked on “code refactoring” and new functionality. And as soon as they deployed their changes, testers found bugs — minor, obscure bugs that a developer could easily overlook. And just as quickly as testers found bugs, the developers were able to fix them and re-deploy. By the end of the day, developers and testers had earned an average of $120.
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