Robert F. Mulligan, Ph.D.
Department of Economics, Finance, & International Business
14 Points for the Transformation of Management
From W. Edwards Deming, Out of the Crisis, MIT Center for Advanced Engineering Study, 1966.
1. Create constancy of purpose for improvement of product and service. Quality (and the lack of it) is made in the boardroom, not on the assembly line. Top management must define worthwhile, long range goals. A worthwhile company is not out to maximize accounting profits, but to benefit humanity by providing a needed product of always improving quality. This is the total implication of maximizing economic profits.
2. Adopt the new philosophy. Top management cannot be half-hearted in adopting the quality management approach. Quality is not a gimmick that can be tried on and discarded like a fad or this year's fashions. Quality requires a permanent commitment.
3. Cease dependence on mass inspection. Inspection is too late. It is not foolproof against shipping out defective pieces to customers. Defects caught by inspection must be discarded and reworked. It's cheaper to design and redesign the process to avoid defects, taking advantage of input from everyone who participates in the process, (e.g., suppliers, workers, and customers,) making inspection superfluous.
4. End the practice of awarding business on the price tag alone. American practice is to have a large number of suppliers and to play them off one another for the lowest price. This might be called GIGO management - garbage in, garbage out. Even if the quality is not poor, it is more difficult to get uniformity of inputs from two suppliers than from just one.
5. Improve constantly and forever the system of production and service. Quality never ends because it can always be improved. A firm that institutes a quality program, declares it a success, then goes on the way it was before, thinking all its problems have been solved, has missed the point. Many firms have a one-time-only "quality control" seminar run by an outside consultant, and then wonder why quality has not worked. It's because they haven't tried it.
6. Institute training. Most workers are not formally trained. They are given OJT, on-the-job-training, i.e., they're put on the assembly line, and expected to pick it up as they go along. In many situations, dramatic gains in productivity can be realized just by explaining to workers what is expected from them.
7. Institute leadership. This is management's responsibility. Nothing can relieve them of it. Only management can tell workers what to do, how to do it, and use their intelligence to set attainable, worthwhile goals. If management is not adequate here, the company is doomed.
8. Drive out fear. Employees must not fear for their jobs. If the firm doesn't care about them, why should they care about the firm? Workers cannot be told to "shut up and get back to work," when they have a question, a suggestion, or a complaint. A firm cannot improve quality without the willing contribution of its employees. Workers should be encouraged to innovate and make suggestions for improving quality. In most cases they are discouraged.
9. Break down barriers between staff areas. No one who can improve the production process should feel deterred because something is someone else's area. Virtually everyone has something to contribute, and it should be recognized that everyone has the right to do so. Often, on the basis of lowest bid, purchasing buys cheap, crummy tools that workers can't make a quality product with. Workers should be involved in evaluating the different alternatives.
10. Eliminate slogans, exhortations, and targets for the work force. These annoyances persuade your employees that you aren't serious about producing something worthwhile. They also demonstrate disrespect for worker's intelligence. What should a worker conclude when the firm provides substandard (lowest bidder) materials and tools, and then hires a battery of "corporate cheerleaders" to exhort them to produce high quality output. They think management is screwed in the head. And they're right. What if "tough, hard driving" management, (so much admired and emulated,) sets management by objectives targetswhich are unattainable precisely because management gives workers crap to work with? Who is blamed for the failure to meet the MBO targets? The workers. Who is really to blame? Management.
11. Eliminate numerical quotas. Quotas are the enemy of quality because they can be met by producing defective pieces. Management by objectives is just institutionalized quota setting, often in contexts where they are least appropriate. Better you should produce less output without defects than more output with defects.
12. Remove barriers to pride of workmanship. Tell and encourage workers to produce the best product and service they can. Then let them do it. Don't interfere by mandating inefficient procedures, providing low quality materials and tools, imposing management by objectives targets. Don't blame workers for the failures of management.
13. Institute a vigorous program of education and retraining. Everyone must understand that the firm is undergoing a sea change transformation and that they each have a vital role to play. Workers must believe that they have the support of management in making the transition, and the support must be real.
14. Take action to accomplish the transformation. Only top management is in the position to provide leadership, institute the new philosophy, and keep it going. That's what they get paid for.

The Seven Deadly Diseases

Deming suggested the diseases as serious flaws that need to be attacked aggressively.

1. Lack of constancy of purpose. Some companies periodically announce a new special program, complete with new buzzwords, new "strategic planning" documents, and new "top priorities." What is this company trying to accomplish? No one knows, least of all top management.
2. Emphasis on short term profits. Short term decisions often prevent the right long term decisions from being made. As far as possible, the short term should be ignored. The big picture is what counts. A company that wants to do something worthwhile is going to focus on the long haul.
3. Evaluation by performance, merit rating or annual review of performance. Half our employees still show below average performance. Workers won't cooperate when they can't be sure they'll be recognized for their own contribution. The firm needs its workers' cooperation. Workers fear receiving poor evaluations. Workers can't produce quality if they are afraid. Furthermore, although some workers may be "pathologically dysfunctional," management is at fault because such workers were hired in the first place. (Typically, for every bad worker a firm hires, 10-20 good workers have been summarily excluded from consideration for the same job.) Often performance ratings just shift blame from management, where the true fault lies, to the worker. Management is the leading cause of low productivity. Workers account for five to ten percent.
4. Mobility of management. Family businesses are the exception. The most apparently "successful" (and much admired) executives are gadflies or "corporate whores" who flit from firm to firm for ever higher salaries. In fact, these are the most destructive managers. They are only judged on short run results, because they aren't at one firm long enough to take the blame for long run problems they cause. "Quick results" are rewarded, long term steady performance, which is far more valuable to the company, is ignored.
5. Running a company on visible figures alone. There should be more to running a company than maximizing profit or minimizing cost, particularly short run accounting profit or cost. Creative accounting doesn't make a company a better place for anyone to work.
6. Excessive medical costs for employee health care, which increase the final costs of goods and services. Poorly run firms fail to protect their workers from occupational diseases and hazards. Demoralized workers without support from management take off more sick days.
7. Excessive costs of warranty, fueled by lawyers who work on the basis of contingency fees. Firms that produce junk often get sued for doing so.

Obstacles to Quality

These are like the diseases, but are less "deadly." They are easier to cure.

"Hope for instant pudding." Providing quality is a long arduous process, especially when you consider what you have to start with.
"The supposition that solving problems, automation, gadgets, [high technology] will transform industry." High technology, in and of itself, can only provide more expensive junk.
"Search for examples." There is more to quality than imitating other firms. Your company is unique, and its top management must come to terms with its unique problems and opportunities.
"Our problems are different." Of course they are. But usually this is just an excuse weak management uses to avoid the trauma of change.
"This goes against what they taught me in school." Managers have a responsibility to exercise independent, critical judgement. Most of what they taught you in business school was wrong anyway - there is a difference between theory and dogma.
"Our quality control department takes care of all our problems of quality." If they've been taking care of it, why is it still a problem. Quality is (inescapably) management's responsibility.
"The workers are not cooperating." What demands are management making? Are they reasonable demands? Do workers have the support from management, in terms of good instructions, supervision, (or is management a "babysitter?") In terms of good tools and materials? If not, how can workers cooperate? Management isn't cooperating with the workers.
"We inspect 100% of our output." This does not ensure that all defects are caught. Some make it to customers. It's better to produce fewer defects than to hunt for them after you've gone to the trouble and expense of producing defectives.
"False starts." Fads (e.g., "quality circles,") are often attractive and sound good, but require long term commitment from management to provide any benefit.
"The computer tells us the answer." Computers intimidate workers that aren't properly trained to use them. They also provide access to large volumes of useless data. Noise should not be mistaken for information.
"We met the specifications." But is your product any good? Do the specs matter to the customer? What does matter to the customer? Involve the customer in planning.
"The prototype performed well." But will the production models be comparable? Customers don't buy the prototype. If the prototype was carefully made by hand and precisely machined, and the production models are made of junk (which meets spec) the prototype really isn't one. Furthermore, the prototype should be designed and made to satisfy user needs, and accommodate worker and supplier strengths and weaknesses.
"Anyone who comes to help us with quality must understand everything about our business." Deming notes it is possible to understand everything about a business except how to improve it.