I'm somewhat interrupting my series on Dr. W. Edwards Deming's points as they apply to insurance in order to expand on these points overall—and in the context of management guru Tom Peters' most recent book, Re-imagine—Business Excellence in a Disruptive Age (2003). Dr. Peters appears to be critical of the quality disciplines advocated by Dr. Deming and Dr. Joseph Juran, yet he seems to actually support and reinforce these same principles of quality.
This article comments on references made by Dr. Peters to quality, Kaizen (continuous improvement), and other elements of Dr. Deming's 14 points.
- Whatever it's called, Total Quality Management (TQM) or Six Sigma, Peters says we need more dramatic breakthroughs—not incrementalism or mediocre improvement. Yet, continuous improvement is what Toyota and other Japanese organizations used to out-compete U.S. automakers—and Peters praises Japanese performance—highly.
- We need to play a whole new game, Peters says. We need to "Re-imagine"—what Deming calls "transformation" in his Point #2. Both are in agreement.
- "Zero Defects" doesn't work. Deming agrees.
- Insurance claims that require only 17 minutes of actual work yet have a cycle time of 23 days to finalize are outrageous. Deming would agree. That's a strong vote by Peters for continuous improvement—his protestations to the contrary notwithstanding.
- Meeting customer expectations isn't sufficient. It must be an "experience" that exceeds expectations. Deming's points concur.
- Peters says communication and work must be cross-functional—not confined in "stovepipes." Dr. Deming's Point #9 agrees completely.
- Peters wants to "cut the crap" and simplify. So do Deming, Juran, and Crosby.
- Peters isn't a fan of benchmarking. Neither is Deming.
- Peters is high on prototypes. So is Deming. That's what PDSA (Plan, Do, Study, Act) is all about.
- Peters wants innovation, so does Deming in his very first point (Point #1).
Here is an expanded summary of Tom Peters' major points as they relate to and actually support, even reinforce, the principles of quality advocated by Dr. Deming and others in the "Quality" movement.
Let's begin with Peters' point on page 25 entitled, "Losing Bet II: The Quality Thing." Here, he comments:
- Call it TQM. Call it Six Sigma. Call it (as the Japanese mostly did) …. Kaizen … that is, "continuous improvement." Or just call it tinkering … Those lessons represented the last scene of the Old Economy … Now we need something dramatically different from "getting better"—from even getting a whole lot better … Now we need to train ourselves to play an entirely New Game … a game called Re-imagine.
This is highly consistent with Deming's point #2: Adopt the new philosophy. Deming wrote in 1996 that "We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change. Transformation is required."
On page 44, Peters lists the leaders who have brought about big transformations (34 in total) with no mention of Deming or Juran. Yet he commends the Japanese on page 304 who were out-competing the United States with counsel from Deming and Juran.
Peters and Deming differ, if at all, only in the degree of change. Peters' ideal is breakthrough improvement—taking continuous improvement to higher and higher levels. He accuses Deming practitioners of incrementalism—as though major innovation should be expected from each and every effort.
That's not realistic, of course. Not every effort can conceivably trigger major innovation and significant breakthrough. Both Deming and Peters concur that continuous improvement is critical—and neither would object to a major breakthrough in this process. Peters does a good job helping us "raise our sights" in the Kaizen process.
Peters opens Chapter 6 (page 85) with his repeated chapter heading "I RANT" by saying, "We are not prepared ..." as follows:
- We believe that offering an excellent product or an excellent service is enough. Instead, we must understand [it] is but the "price of entry" … The systematic application of … a campaign to improve quality and customer satisfaction [is] devastating every kind of commodity producer.
In chapter 5 (page 77), Peters says under the heading of "BLACK HOLE":
- Go to Borders. Go to Barnes & Noble. Wander the business section. Twenty or 30 books on TQM, Another dozen on "installing self-managing work teams" … But not one single, solitary book on creating a … way cool Accounting Department … a Supercalifragilisticexpialidocious HR Dept. Why? Why? WHY?
He concludes his intermittent comments on quality on page 307 in chapter 24 with a ringing endorsement of Deming's counsel to the Japanese—again without mentioning Deming (or Juran) by name:
- As the 1960s yielded to the 1970s, Japanese industry began to embarrass its U.S. counterparts. First in shipbuilding. Then in steel. Then in automobile manufacturing. Then in semiconductors … When awakened, Americans learn quickly. This time around … we learned that the right way to manage was ... the Japanese way. In 1980, if you didn't "get" that—well, you didn't get anything.
No matter what these efforts may be called, the adoption of this new philosophy is essential—even if it's called "re-imagine."
That's the expanded summary. Here are the specifics.
In a sidebar on page 29, Peters says:
- "Zero defects" is great … in a known environment. But it is Death itself … in Ambiguous Surroundings. So join me. Raise the Flag. 100% Against Zero Defects.
Likewise, Deming makes the following comments on "Zero Defects":
- Focus on … zero defects … must be abolished, leadership put in place.
- The fallacy of zero defects [is] driving losses and costs to the maximum.
We all respected ITT Hartford's Phil Crosby who advocated many initiatives in addition to zero defects in his highly read books (Quality is Free, Quality without Tears, and Let's Talk Quality)—but both Peters and Deming effectively challenge the value of this latter notion.
Kaizen and Continuous Improvement
In chapter 2, page 31, Peters says, "I imagine … a World Where the Timid Goal of 'Improvement' (and the Tendency to Tinker) has given way to … an Unabashed Commitment to Destruction." On pages 40 and 41:
- The bias for Kaizen ("continuous improvement") in Japanese automobile and steel manufacturing equally affects Japanese science … But maybe calling incrementalism "the enemy" isn't strong enough. How about "the worst enemy"? MIT Media Lab boss Nicholas Negroponte: "Incrementalism is innovation's worst enemy." Sad fact: Big organizations … by their very nature … are addicted to incrementalism … CEO of one of the world's largest financial-services firm: "I don't intend to sit quietly and be known as the 'King of the Tinkerers'" … there usually isn't time to "improve things." Take your pick. "Improve" … or "Destroy and Build." The siren call of 2003 is almost inevitably the latter.
And as a sidebar on page 41:
- ASK YOURSELF … Hey, you … yes, you … the 42-year-old process manager who's leading a logistics overhaul for a 200-person division. Ask yourself: Will you "improve the system" to take advantage of the Web?" Or will you invent a mini-Dell … a Novel and Revolutionary Supply-Chain Model … that scares the pee out of people with its brashness? It's your choice. (Dammit) Think about it. (Hard.)
Deming comments early in his book that "statistical control open[s] the way to ... innovation. Without statistical control, the process [is] in unstable chaos, the noise of which would mask the effect of any attempt to bring improvement. With statistical control achieved, [we] become innovative, creative." Without metrics, how can you define—and measure—success?
On page 199 of Chapter 15, Peters resurrects his assault on continuous improvement:
- Remember Mr. Kaizen ... aka Continuous Improvement Man? Now's the time to ... just say "No" to Mr. K. To be sure, the work that Mr. K. does is valuable. A bit of improvement here. A touch of change there. In other words, one mediocre success after another. (Incrementalism ad nauseum.) ... These are times that demand ... Going For It ... So let's make this our motto for the times: No Damn JAMS. No more … "Just Another Mediocre Success." WOW or Wuss! BHAG or Bust! Excellent or Extinct! Different or Dead!
Peters again seems to want major breakthroughs without any regard to—or concern for—continuous improvement. They are not mutually exclusive as he seems to imply. Deming says within his comments on his Point #1 (Create constancy of purpose for improvement of product and service):
- Innovation, the foundation of the future, can not thrive unless top management have declared unshakable commitment to quality and productivity. Until this policy can be enthroned as an institution [corporate culture], middle management and everyone else in the company will be skeptical about the effectiveness of their best [and most innovative] efforts.
In chapter 20 (page 250), Peters again berates quality while, at the same time, illustrating what quality disciplines can accomplish at their best and highest levels. He implies that these principles are outdated and have outlived their usefulness when, in reality, they are every bit as valid today as they were when "Out of the Crisis" was published in 1982.
- You're not going to "make it" in the New Economy solely by pushing TQM or CI (Kaizen) or any of the other New Nostrums that we embraced so vigorously 20 years ago. You're going to "make it" by providing ... Solutions! ... Experiences! ... Beautiful Systems! ... Dream Fulfillment! ... Design that WOWs! ... Brands that Inspire! And this "new stuff" is (all) about ... Talent. The new technologies that undergird the White-Collar Revolution may seem like a dehumanizing force; but in fact, they herald the end of "grunge" work and thence a People's Revolution.
In his more recent book (1994), The New Economics for Industry, Government, Education, Deming says "it is necessary to innovate, to predict needs of the customer, give him more. He that innovates and is lucky will take the market."
Page 150 in Chapter 11 is also relevant to property and casualty insurance. Peters comments:
- System Overload. The magnitude of potential simplification is ... staggering ... Consider a process for verifying an insurance claim. It takes 23 working days. Yet ... literally, 17 minutes of actual work are performed. The rest is all about scraps of paper flying (crawling is more like it) from here to there. Sitting on desks. Unnecessary complications to forms to be filled out. And initialed. And initialed some more. And so on. And ... on. Yes, it is that bad. 23 days. 17 minutes.
This is the kind of situation that the Insurance Institute of America course in Delivering Insurance Services (AIS-25)—including Deming's teachings—is all about. No conflict here with Peters. Everyone is on this "same page."
Chapter 17 (page 217) includes this (somewhat backward) approach to system improvement:
- Bob Stone (Gore/Clinton administration) ... made a dent in the way the federal government performs ... Stone offers a simple mantra that puts a whole new spin on the idea of "corporate" culture change": SOME PEOPLE LOOK FOR THINGS THAT WENT WRONG and TRY TO FIX THEM. I LOOK FOR THINGS THAT WENT RIGHT and TRY TO BUILD ON THEM.
This is okay as far as it goes—but it misses Deming's point on correcting inputs in the process to begin with so "things that went wrong don't occur to begin with." In Point #5, Deming says, "Improve constantly and forever the system of production and service." A theme that appears over and over in this book [Out of Crisis] is that quality must be built in at the design stage. It may be too late once plans are on their way.
Peters begins Chapter 8 with an "I rant" on "customer focus":
- We (still) applaud the ideal of the "satisfied customer." Instead we must focus on creating a ... "customer experience." We continue to talk about "service" and "quality." Instead we must understand that "experience" is not only a Very Big Word ... but ... a Totally Revised Organizational Life Form. (Truly.)
Here are some direct quotations from Deming that convincingly show that Peters' focus on customers is consistent with those in the quality movement:
- The consumer is the most important part of the production line. Quality should be aimed at the needs of the consumer, present and future.
- It will not suffice to have customers that are merely satisfied. An unhappy customer will switch. Unfortunately, a satisfied customer may also switch, on the theory that he could not lose much, and might gain. Profit in business comes from repeat customers, customers that boast about your product and service, and that bring friends with them.
On page 224, Peters discovers what Deming has said for decades, i.e., at the end of every process is the customer—internal or external customer—the recipient of the output of each process.
- KEY POINT: Every project has "customers." Imagine that you're trying to bring "radical" change to a mere "business process" in finance. In particular, you have a seriously Cool Idea ... for your division. The "users" in other departments who will benefit from that method ... are your customers. No matter how "cool" your idea may be, those customers must become ... Enthusiasts ... of your project ... if you are to make a significant impact.
PDSA—Plan, Do, Study, Act
On page 57 (chapter 3), Peters contrasts planning versus what Deming would call "Plan Do, Study, Act"—what we call in AIS-25, "PDCA" or "Plan, Do, Check, Act." Each is essentially the same. Peters calls it "DTAF" in contrast to "planning, planning, planning":
- Plan a tug, planning, planning: Doing, Testing, Adjusting, Fast
He's talking about prototypes. So is Deming. On page 219, Peters introduces a version of Deming's PDSA:
- John Boyd, an Air Force Colonel, said that whoever has the fastest "OODA" Loop wins. OODA Loop: Observe—Orient—Decide—Act cycle, Confuse and confound the "enemy" by your speed per se. While the Champions of Inertia are busy scheduling the next "planning review," you swiftly get the job done ... and go public with it.
Whether it's called PDSA, DTAF, PDCA, OODA—or GE's DMIAC—the outcome is the same, i.e., plan a test aimed at improvement, carry out the test on a small scale (prototype), study the results, and adopt the change or abandon it—or run through the cycle again. There's clear concurrence here between Peters and Deming.
In chapter 4, on page 67, Peters says:
- Small business people understand this [the perception of being in Total Control]. "Changes in business processes will emphasize self-service," said Ray Lane when he was president of Oracle. Your costs as a business go down and the perceived service goes up because customers are conducting it themselves.
Deming (and in AIS-25) would call this "co-production." It's part and parcel of the Quality disciplines. In "The New Economics," he comments, "Anyone that works in an organization works jointly, or should, with his suppliers and customers."
Chapter 7 includes "Solutions50" an excellent listing by Peters of methods to avoid "stovepipe myopia"—what we would call "silo management"—through cross-functional communication and cross-functional work. Two Solutions relevant to quality disciplines are:
- #25 : XFTs (Cross-Functional Teams) are us. We do our work ... ALL OUR WORK ... via cross-functional project teams. Thus, "XF" must be as routine as breathing.
Deming's Point #9 is "Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service." Then he cites several illustrations and examples. In his "The New Economics," he takes this notion to a different dimension: "Make physical arrangements for informal dialogue between people in the various components of the company, regardless of level of position."
The second "Solutions50" by Peters is:
- #30: Proactively and Systematically and Perpetually Cut the Crap. We are our own worst enemies —via hopelessly complicated systems and procedures [processes]. We need ... TOTAL (ORGANIZED) WAR ON OVERCOMPLICATION!
In Chapter 11, Peters begins with his "! VISION ... I IMAGINE …"
- A policy manual that is one page long. A[n] ... insurance policy written in … "Plain English."
Both of these pronouncements are precisely what Deming and Juran—and even Crosby—convincingly argue. No conflict here with Peters.
Reminiscent of a recent political campaign statement (I voted for "x" before I voted against it), Peters downplays the value of benchmarking—yet says it's okay if done in a particular manner.
- I'm not a fan of "benchmarking." To be sure, I believe in "learning"—from anybody and everybody. I readily admit that's the useful idea behind benchmarking. But here is my (BIG) problem: In 9 cases out of 10, benchmarking is done against the "industry leader" … benchmarking is cool—but only if that benchmarking is a truly cool, far-out, four-sigma (six-sigma?) organization—doing something wild and wacky and oh-so-2013.
Deming said the following about benchmarking: "To me, benchmarking is a fancy name for copying. To select the "best in class" without understanding why it is best leads to disaster. Without understanding the theory needed to convert someone else's product to our use, we apply the process as the originator did. This can be completely wrong."
Indirectly unrelated to Quality disciplines and principles, are the principles of General Semantics as asserted by Alfred Korzybski and S.I. Hawakawa. These latter principles are highly valued—and correctly so—by Tom Peters. He appears to be very sensitive to the fundamental principles of General Semantics with particular emphasis on "how men use words—and how words use men." Both Deming and Juran, I suspect, would concur with this.
Although this paper isn't intended to be a full exposition of Dr. Peters' management and leadership philosophies—nor of Dr. Deming's—it is intended to conclusively show that each thinks in the same manner. Only the words chosen seem to be different.
Peters does seem to want to "push" everyone to higher levels of performance—which is commendable—from "incrementalism" to innovation. He does so without demeaning Deming's principles. He demeans only the names of quality disciplines such as TQM, Zero Defects, CI, Six Sigma—names Deming detested as well.
Peters' hyperbole, however sincere, sounds a lot like the story of the tortoise (Deming) and the hare (Peters). In the long run, the tortoise wins every time—and the hare is caught napping between innovations.
What's clearly missing from Peters' entire book is the high relevance and importance of metrics. The many kinds of "soft stuff" he describes are important—but not at the expense of data for measurement purposes and to maintain control of processes and systems. Peters is an engineer. Surely he "gets it" when the need for data is expressed.
It's critical for those who may read Dr. Peters' new book to understand that a casual review may lead to a conclusion that he "hates" quality when a deeper reading will convincingly show that, in actuality, he "loves" its principles no matter what he may call them.
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