In Their Own Words – Details, episodes & analysis

Many companies strive to automate by using more technology and fewer humans. But does their productivity really improve? Does it keep them agile? In this episode, Jacob Stoller and Andrew Stotz share stories of companies that improve productivity because they focus on processes instead of tech alone.

TRANSCRIPT

0:00:02.3 Andrew Stotz: My name is Andrew Stotz, and I'll be your host as we dive deeper into the teachings of Dr. W. Edwards Deming. Today, I continue my conversation with Jacob Stoller, Shingo Prize-winning author of The Lean CEO and Productivity Reimagined, which explores applying Lean and Deming management principles at the enterprise level. The topic for today is myth number five, the Myth of Tech Omnipotence. Jacob, take it away.

0:00:29.8 Jacob Stoller: Great, Andrew. Thanks. Great to be here again. Yeah. Tech omnipotence. Well, it's quite a myth. We sort of worship technology. We have for a long time, and we tend to think it can solve all our problems, and sometimes we get a little too optimistic about it. What I wanna talk about is in the context of companies adopting technology and go through some of the stories about that and how that relates to productivity. Really, the myth of tech omnipotence is kind of like a corollary to the the myth of segmented success. In other words, people have believed that you can take a chunk of a company. Now we'll take Dr. Deming's pyramid, and we take a chunk out of that and say, oh, well, that fits so and so in the org chart, let's automate that.

0:01:28.1 JS: And they don't consider what happens to the rest of the organization. It's just this idea that you can superimpose automation. So this has a long checkered history. And the way technology gets justified in organizations is generally what it's been, is reducing headcount. And I used to work in a tech firm, and we used to do this. We would do these studies, not really a study, but you do a questionnaire and you figure out if we adopt this, if we automate this workflow, let's just say, I don't know, it's accounts payable. So you automate accounts payable and you say, well, you got so many people involved, we think we could cut this by three people or something like that. So that becomes your business case. Now, they had categories in these little questionnaires where you would try to get other benefits from the technology, but they tended to be what they call soft benefits.

0:02:35.4 JS: And you know what that word means. Soft benefits means, well, okay, nice to have, but it's not going to get budget money or it's not gonna get approved. So anyway that's really been the kind of standard way of getting tech projects justified. And that goes through pretty much any industry. So what would happen is people adopt these technologies without looking at the whole system. And guess what? You put the software in, you start to implement it, and you run into problems. Doesn't quite work. Doesn't work the way it was supposed to. And so the tech people tended and still do tend to blame the company. They say, well, they had user problems. Users weren't really adjusting to it. These people are sort of way behind. We're a tech company. We've automated the same process for 50 different companies, we know what's good for them. We have to educate them, but they don't seem to want to be educated. So that was kind of the way it was. And I'll give you an extreme example. I did some freelance work for research firm, and one of the studies I worked on, I'm not making this up, it was called Aligning the Business with IT. So it was trying to get people to smarten up with their business and align it to what the smart people are doing with IT. So that's how extreme that kind of feeling was.

0:04:17.3 AS: As opposed to maybe aligning with the customer or something like that.

0:04:21.1 JS: Well, yeah, wouldn't that be crazy? Or how about aligning IT with the business? Finding out what the business wants. So anyway, that whole way of thinking has had, it's sort of filtered into manufacturing in the same way. And I found this out really researching Productivity Reimagined as I interviewed Ben Armstrong from MIT Industrial Performance Center. And what I learned from him is the whole history of automation and manufacturing in North America. And really, what he told me is that between 1990 and 2010, there were increases in productivity, but those were always from reducing headcount. They never found ways to actually grow the value of the business by using automation. So around 2010 or leading up to 2010, manufacturing started to change, and we started to transition into what they call a high-mix, low-volume type of markets.

0:05:33.3 JS: And I've talked to manufacturers that have said, 10 years ago, I only had to make two or three variations of this part, now I have to make 50 or 60. So you're getting shorter product cycles, larger mix. And the big buzzword now in manufacturing is agility. You've gotta be agile. So there was a study MIT, I think this Performance Center did a study. And they found that when you actually try to grow productivity, and this is really since 2010, you actually lose agility at the same time. You're kind of caught in that situation because you can't... That you lose agility when you let go of people. But that was the only way they could increase productivity. Does that make sense?

0:06:29.1 AS: Yeah. So I'm thinking about that's interesting because agility means being flexible, being able to accommodate. And when you think about the typical automation, it's about repetitive, repetitive, repetitive.

0:06:46.5 JS: Yeah.

0:06:47.3 AS: And so I can kind of get that picture about the agility versus, let's say automation or repetitive processes.

0:06:56.3 JS: Yeah. And I think that people are longing for this golden age. You go from the 1920s to 1960s, and manufacturers made incredible gains in productivity with automation. You put in these huge welding lines where they just weld. You look at the body welding, say in a plant, and it's at lightning speed. There's no question about that. But they basically ran into a plateau with that. And one of the robotics companies told me, he said, we learned decades ago how to automate these mass production processes, but now we're getting into a different kind of age where as somebody put it, we're moving from the industrial mass production age into what they call the process age, where processes are becoming more and more important. So to...

0:07:50.8 AS: And I'm thinking about the automation. I've seen videos on like online about let's say a fulfillment center with all these little robots going around and picking, putting things on them and packaging them, and all of that. So I'm thinking, well, automation has become definitely more maybe, I don't know if the words agile, but it's definitely, it's gone beyond like just automating one little part of the process.

0:08:21.4 JS: Yeah. It's gone away from the let's replace people type scenario. And so what the fastest growing segment right now in robotics is collaborative robots, which can work with people. So to put it very simply, instead of a human replacement, they're becoming tools. But these things are amazing. A worker online on the shop floor can programming these, and they have to be able to because things are changing so fast. So a worker, a welder can actually hold the robotic arm and guide it through a weld and thereby program it so it can learn how to do that weld. So then you can get the robot doing all the dangerous parts. If they're welding something large where they might have to get up on scaffolds or something, they might be able to get the robot to do some of the more dangerous types of positions. So that's when you get the real benefit.

0:09:27.7 AS: Yeah. I would think like in a paint booth, which we had in factories I worked at, now you can seal it off and have a robot in there, and all of a sudden lung problems and other things like that just go away.

0:09:40.8 JS: Interesting. Well, so anyway, we're still in a, I think in a rough spot generally with manufacturing because between 2010 and present day, at least in North America, productivity's gone down. And it's because people haven't been able to... They've depended on those people to keep their agility, but they haven't learned how to add value.

0:10:08.3 AS: Can you discuss that just for a second about productivity going down? That's a little bit of an odd thing because I think most people think that productivity's probably going up. What is the measure you're talking about, and how long and why is that happening?

0:10:23.5 JS: I think it's basically... At least I'd have to look at the study that they have, but it's basically output in proportion to the number of hours. I think that's pretty well accepted. So they're losing ground as the demands for agility are increasing. And their attempts to automate have been, caused problems. You automate and you lose your people, and then you're gonna have a heck of a time getting them back right now because that's really hard in manufacturing. But yeah, I would have to look at the study in detail to understand how they got that number, but I was taking it on faith that this is from Ben Armstrong, who's the director of the Industrial Performance Center.

0:11:11.8 AS: Yeah. You just mentioned something that I was just recently talking with another person about, and that was, one of the downsides of an aging workforce is that you're losing really senior people and you're replacing 'em with people that may not have the skills. Also, US kind of is notorious in America for a declining education. And with education coming down for the last 30 years or so, it's also hard to find, let's say, engineers and people that... There's not a deep market in some of these places where there's need. So that's a real challenge that businesses are facing.

0:11:55.2 JS: It is. Yeah.

0:11:56.3 JS: Yeah. And now what they're doing is they're looking at manufacturing from that standpoint. They're now acknowledging that the scarce resource is the human. And we have to actually build, if we're gonna automate, we have to build those processes around people. And that's... I'm gonna just read you a description here. There's, I think you heard of Technology 4.0, where they talked about putting sensors all over the place and having smart factories and that kind of thing.

0:12:27.7 AS: Yeah.

0:12:28.3 JS: Well, we now have something called Industry 5.0, and I'm just trying to get the wording here 'cause this has been around for a couple years, but it's on the EU website. It says it's "a vision that places the wellbeing of the worker at the center of the production process and uses new technologies to provide prosperity beyond jobs and growth while respecting the production limits of the planet." So they're really trying to center technology around that so you're not doing your sort of environmental and your DEI and all that independently of your production, it's all integrated part of it, which is I think something I'm sure Dr. Deming would have advocated.

0:13:17.8 AS: I'm still kind of fascinated by the productivity, and I just look at here in Asia, productivity is just rising. Education levels are rising. Engineering skills are rising. Competency in certain areas, specialties is just rising. And I oftentimes, I think that one of the things why this... One of the reasons why this is a good discussion that we're having is because in the West, in particular in the US, there's a new challenge. And that is how do you bring business... How do you bring jobs back to the economy when you're facing a very, very different workforce from when, let's say I left Ohio in 1985, roughly. It's a very different workforce nowadays.

0:14:07.1 JS: Well, yeah. And I think a lot of the offshoring arguments were about, well, we'll keep the smart jobs here 'cause we're all well educated and we'll export the low paying, less skilled jobs abroad, and we'll all win. But now, of course, we're finding that people overseas are getting darn well educated, so you can't have a more expensive labor force and have people that maybe aren't even as well educated.

0:14:40.0 AS: Yeah.

0:14:40.2 JS: So it's... Yeah, I think the West is in a very tight spot right now.

0:14:45.3 AS: Yeah. So speaking of automation and technology, I was just typing as you were speaking, and looking at productivity, it says... I was using ChatGPT and that says, US productivity growth average 2.7 annually from 2000 to 2007, but slowed to 1.4% from 2007 to 2019. There was a brief pickup in 2020, and then it's been slow since then. And they talked about this productivity paradox that I think is what you're referencing what Ben is saying.

0:15:21.3 JS: Solow's paradox? Yeah.

0:15:22.6 AS: Yeah. So that's interesting. Yep.

0:15:25.8 JS: Yeah. Solow's paradox, what does it say, that you can see the impact of technology everywhere except in the productivity numbers. I think that's what he said.

0:15:36.8 AS: Yeah, so he said that...

0:15:37.2 JS: He said that by the way in 1987. So anyway, yeah, maybe we're slow learners or something like that. But no, that's really fascinating. But I think that there's a difference between GDP growth and the growth of productivity in manufacturing. I think probably the ones that Ben Armstrong quoted were a little closer to actual manufacturing. But right now, GDP includes financial intermediation, it includes... If you own a home in North America, they include imputed rent, the rent you would have been paying as part of the GDP. So I think there's a bit of inflation, I guess, in the GDP over the years. So I think we have to take that sometimes with a little bit of a grain of salt and look a little more carefully at what the numbers are telling us.

0:16:32.8 AS: Yeah. The main ways that we typically look at it outside of GDP is like non-farm productivity, like non-farm worker, what's the output? And the other one is total factor of productivity. So yeah, GDP can be quite distorted for sure.

0:16:50.4 JS: Yeah, for sure. And anyway, and also just taking GDP per worker can be a very misleading number.

0:17:00.5 AS: Yeah.

0:17:01.3 JS: But anyway, yeah, it's fascinating. But again, the myth is... This myth that technology will solve everything is all over the place. I think with autonomous vehicles, the idea of being able to replace drivers is a just enormous economic cherry, I guess, that everybody wants to pick. You think about it what that would mean if you could... If you bought a car and then you could rent it out as a taxi at night, or what it would do to Uber if they didn't have to have people driving the cars. It's just enormous. But it's been very, very frustrating to get to that point. And when you look at a lot of the forecasts, it's still a long way away. So I think we have to be more conservative about that and talk about more the benefits really of technology and people working together. And I think the automatic driving features they have on cars now are fantastic. You can make a car a lot safer. You can slow down if you're tailgating somebody, it alerts you of just even the simple things that if there's a car to your left passing on the freeway, you get an alert, and that's... This is all really, really good stuff, but I still think that the self-driving part is maybe longer off than people think.

0:18:39.4 AS: Yeah. I think regulators too get panicked and then people want action when there's an accident or something like that. You also mentioned something about the computing power that's required for some of what this is doing, and that's a fascinating topic because it's funny, it's just amazing how much computing power is really going to be required over the next 10, 20 years.

0:19:05.0 JS: Yeah. I think there's a bell curve around some of this stuff, and I'm just gonna talk and I'm gonna jump to regenerative AI, which everybody is talking about. And they're saying, how long before I can have regenerative AI write a document that we could actually be held liable for? It can write documents, but you can't trust it. So they keep trying to improve it, but it's a kind of an exponential problem here where the wider you make your bell curve, the exponentially more power you need to do that. To the point where Microsoft is talking about buying Three Mile Island nuclear plant and rebuilding it to power all this AI stuff. So it's just phenomenal amount of power. I think that's somewhat... I don't know, relying purely on more computer power seems like it might not be a winning strategy.

0:20:13.3 AS: Yeah. It's the regenerative AI and all that's going on is also... I like to say when proponents talk about it and its strengths, which it definitely has strengths, I'm not arguing against that, I use ChatGPT almost every day. And I can say I used to have an editor sit next to me a lot of times and now I don't need that because I can go back and forth. But what I can say is that when a proponent of AI gets accused of murder and they're innocent and they're gonna go before a judge, is that proponent of AI gonna use purely AI to build their defense or would they prefer to have a lawyer who's using AI as a tool. I think I would argue we're far away from the trust level of being able to walk in there and say, I trust AI to get me out of this situation that I've been accused of murder and I'm innocent and it can get me out. There's no way any of the proponents of AI would take on that I would argue.

0:21:23.3 JS: Yeah. Well, it's interesting. I very recently had to write an affidavit and my lawyer was being a little slow on it, so I tried ChatGPT just for the heck of it and I created what I thought was pretty convincing. I gave it the facts and it gave a pretty convincing sounding affidavit, but then the lawyer did it and I saw what she did and it was so much... She had it... It was almost a human touch to it. It almost looked a little less like an affidavit. It was more of a sort of a document that had some meaning to it. That was an eyeopener for me.

0:22:10.8 AS: Yeah. Yeah. Interesting.

0:22:13.6 JS: But anyway, yeah, I'm wondering if we could jump back to automation and manufacturing because there's a story I wanted to share with you about some of the followers here of Toyota and, of course, company that's strongly dedicated to Deming's principles as well. And this is a company called Parker Hannifin. And what they do, and this is in the Lean tradition, is they're very conservative about adopting robots or any kind of automation. And they realize, when you bring in robots, you're bringing in software, you have to upgrade the software, you have to maintain it, you gotta train people, there's a risk of obsolescence or whatever, there's all that risk. So you really wanna be very, very careful. So what they do at Parker is you have to, but if you're gonna present a business case for a robot, you gotta be able to show that that's the only way that you can get the improvements you want.

0:23:22.3 JS: And by the way, you gotta have a target. You don't just say I wanna automate this, you say I wanna make this process better, here's how. So I got an example from Stephen Moore who's... He's retired now, but he was the VP I think of operations. So he was certainly the top person in terms of all the Lean initiatives that they did. But he told me and gave me an example. He said that somebody came to them, they had a cell with three people and they wanted to use the robot, one, so that they could reduce from three to two because they needed another person in another area. And secondly, there was a safety problem with that cell with loading and unloading the machines. So they came to Stephen and Stephen said, okay, let's divide our team into two groups. One group can sort out, plan the robotic implementation, how it's going to be done. The other group is gonna see if they can achieve the same objectives without a robot. So by the end of the week, the team that was without the robot team was able to achieve both objectives. They were able to reduce it down to two people and they solved the safety problem over the loading. So just by thinking it out by really going deeply into the process, they were able to do everything that people expected the automation to do.

0:24:58.3 JS: So that is a philosophy, I think is a lesson I think to anybody that's automating. 'Cause remember, we've got lots of companies that are just thinking about replacing people, whereas Parker Hannifin is talking about increasing the value of processes. They're concerned about safety here as well as headcount. And very often, they're looking at processes to improve the quality. So we've gotta look with a broader lens.

0:25:29.1 AS: That's fascinating. And for those people that don't know Parker Hannifin, I had mentioned before that was one of my father's big accounts when he was working in DuPont in the old days.

0:25:37.4 JS: Oh yeah.

0:25:38.4 AS: He was living in Cleveland. We were living... I grew up near Cleveland. But Parker Hannifin is about a $77 billion company. It's got a net profit margin of 14% versus the industry average of about 11%, which is already pretty high. And that's pretty impressive. But what's really impressive about Parker Hannifin is that it is the 11th most... If you look at all companies in America and you ask them which has been consecutively producing dividends since 1957, so about 66 years, Parker Hannifin has been producing an annual dividend. And in fact, they've been increasing that dividend ever so slightly every single year for 66 years. That is a very, very impressive feat. And very few companies are out there. In fact, only 10 companies are better than that, that are listed in the stock market. So there's some fun information from a finance guy.

0:26:35.4 JS: Well, of course, and the fact they've... We talked about some of the productivity challenges in the last while and the fact that they've sustained this. We're talking post 2010 when the productivity has been slowing down, and they've clearly kept things going, which is... We've seen that with Toyota and a lot of companies that follow these principles. It's a way of sustainable growth.

0:27:03.3 AS: Yeah. One of the things about Toyota is it's so fascinating is that they're not sold on automation, they're sold on improving processes. And if automation can help that, that's impressive. That do it, but otherwise, fix the process before you automate.

0:27:21.5 JS: Absolutely. And that's again I think this isolation of operations is a sort of a black box of the corporation where people sit in the boardroom and they just say to the operations person, well, that's your problem, solve it. We don't wanna know about it. So they see things outside the box in a sort of a financial lens. I think we talked about that in myth two.

0:27:45.2 AS: Yeah.

0:27:45.8 JS: Whereas the things that go on with process actually defy financial logic. We're improving quality and productivity and timeline very often too, delivery at the same time.

0:28:03.3 AS: Yeah.

0:28:04.2 JS: 'Cause it's a better process. It's simpler, it's better and it's a powerful concept. But I think a lot of people that are not inside process or not inside operations, aren't aware of that.

0:28:17.8 AS: Yeah. So how would you sum up what you want people to take away from this discussion?

0:28:25.3 JS: Okay. Well, I think there are a few, I guess, bullet points I would emphasise. First of all, there's no question that technology has potential to help companies get significant productivity gains. But you shouldn't see it as a technology-only solution, I think again like we were saying, you have to look at it as a way of improving processes and that's where the power of it really is. I think it shouldn't be about replacing people, but it should be combining the strengths of people and the strengths of technology. I think that's where a lot of the high potential is right now. But that means you've got to know how to optimize your process. And that's what Dr. Deming, what the Lean folks all work very hard on. And I kind of think this is a time when companies maybe need to think more seriously about that. And finally, last but not least, I think one of the wonderful things about technology is you can use it to remove the dull, dangerous aspects of work and you can make the jobs more, you know, safer and more human, I guess, more friendly for human workers by using technology. So I think that's a big hope there.

0:29:55.5 AS: Well, that's a great discussion of myth number five, The Myth of Tech Omnipotence. Jacob, on behalf of everyone at the Deming Institute, I wanna thank you again for this discussion. And for listeners, remember to go to deming.org to continue your journey. You can find Jacob's book Productivity Reimagined at jacobstoller.com. This is your host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming and I hope you're living it right now. "People are entitled to joy in work."

Traditional management uses "carrots," like bonuses, and "sticks", like Performance Improvement Plans, to motivate employees. But are humans really built that way? In this episode, Jacob Stoller and Andrew Stotz dive into the myth surrounding that approach and talk about what actually motivates people at work.

TRANSCRIPT

0:00:02.7 Andrew Stotz: My name is Andrew Stotz, and I'll be your host as we dive deeper into the teachings of Dr. W. Edwards Deming. Today, I'm continuing my discussion with Jacob Stoller, Shingo-Prize winning author of The Lean CEO and Productivity Reimagined, which explores applying Lean and Deming management principles at the enterprise level. The topic for today is myth number four, the myth of sticks and carrots. Jacob, take it away.

0:00:46.2 JS: Thank you, Andrew, and great to continue our conversation. Yeah, it is widely believed that people are motivated by threats and rewards. And to demonstrate that, all you have to do is go into an HR department and look at the job descriptions and the reward programs. And it's all assumes that people are motivated by externalities, right? And that goes back, actually, it's a very, very old way of looking at the world, that there's a term, it's a bit of Latin here, homo economicus. And it's the idea that humans are sort of goal seeking creatures. They seek what's better for them, and it's all material. They'll seek their material gain, and they will behave in very predictable ways, according to that. So you can set up external motivators, mainly money, and you can regulate the way people will behave.

0:01:38.2 JS: So that's the assumption that many businesses are built on. But science has proven that that's not the way human humans work. There've been a number... And starting really in the 1950s, a number of scientists have sort of poked serious holes in that thinking. One of them is Edward Deci, who talked about motivation and did a number of experiments to see that, to find out that people, you know, their motive for doing tasks really kind of transcends rewards. Often they'll do something, for the satisfaction of doing it, in spite of the rewards being greater. We have Frederick Herzberg who developed something called Hygiene Theory. And that's really that... He determined in an organization that money can't actually be a positive motivator. It can't motivate positive behavior, but lack of money can motivate negative behavior.

0:02:49.6 JS: So, you know, and a number of experiments to support that. And then we have, Mihaly Csikszentmihalyi, hard to pronounce, who talks about joy at work and really did experiments and kind of proved that joy at work isn't just some kind of fancy idea that somebody had. But it's actually a scientifically proven principle. Whereas when people have joy at work and they're fully engaged in their work, they do much higher quality work. So that's kind of the background really here. So what we want, when we manage, is we want people to be intrinsically motivated so that they do their best work. And Deming principles are very, very, I think representative of that. I think Dr. Deming understood that people are motivated when they feel a part of something, when they contribute, when they feel that their team members around them are supporting them. And so that's what we try to do. And Lean eorld tries to do that, and we try to do that with Deming principles.

0:04:06.8 AS: You know, when I start off my discussion on this with students and people that I teach in seminars and the like, I always ask them, you know, which, do you believe in, a carrot or a stick? Do you think more people are motivated by rewards or punishments? And it's a great...

0:04:18.1 Jacob Stoller: Oh, okay.

0:04:24.1 AS: Way to kick off a conversation. But, you know, obviously we're gonna get some people that say, I want people to be feeling, you know, positive rewards and feel positive. And then you have the other people that... What I invariably find is that people who are running large companies with lots of employees, it's sticks. Yes, because...

0:04:40.4 JS: Interesting.

0:04:41.8 AS: It's overwhelming. And then when I think about where it's easiest to do joy in work, and where it's easiest to get the intrinsic motivation is, you know, smaller companies where everybody's close and they're really working together. And that's a dilemma that I never really have had a great reconciling of, but I'm interested to learn more about it from the direction that you're coming. So continue on. But that's just something I have in my mind when heard you talk about it.

0:05:13.1 JS: It's tough to do with a big company, but I wanna tell you a big company story. And actually I'm gonna read, a page or two of the book just because it's, I don't want to, it's a complicated story and I wanna make sure you get all the...

0:05:32.5 AS: Well, you've it written so well. So might as well do that.

0:05:36.1 JS: Well, like, gosh, let's hope so. Let's hope so. But, anyway, this is actually by coincidence. I just, what appeared, this morning on their podcast, so, of this company called Barry-Wehmiller. So, but the CEO of Barry-Wehmiller is a gentleman named Bob Chapman. And he's become quite well known in the Lean world and outside of the Lean world because as a pioneer of what we could call human-centric leadership. So he believes in treating people in the company like family members. But he didn't start out that way. He started with a very traditional background. He took over his father's business and he had a typical MBA background with accounting. And so he grew that company in a traditional way. You know, it started, as one company, and it started really by acquisition.

0:06:25.5 JS: He got very, very good at finding undervalued companies and developing them. So the company grew and it became a sort of a multinational, diversified manufacturer of various kinds of machinery. And so he was a huge success. I mean, he was written up in Harvard Business Review, all this kind of stuff, but he had a feeling, he was very much a family man too, and he had a feeling that something wasn't quite right in the companies that he was running. And he's a... Bob is a very... He watches people, he's very sensitive about body language. And he told me of a time he was in the cafeteria of a company, and it was sort of basketball season, you know, March Madness. That's when the university teams, you know, have their finals and all that, and everybody's betting on them, you know, it's a big deal.

0:07:21.9 JS: So he remembers being in there, and the people in the cafeteria all just having a great time and watching them chatter. And then, he watched the... When the clock sort of moved, so it's a few minutes to having to go back to work, he said the body language changed, all of a sudden they just weren't that happy. You know, it just, all the joy kind of drained out of them. And then they went off to their jobs. And Bob said, you know, this is wrong. You know, that it shouldn't be this way. And he was a family man. He said, I wouldn't want my children who I care about to be working in this kind of environment. So how can we care for the people and how can we actually make that work? So here's what I'm gonna start to read, because here's where it gets complicated.

0:08:08.6 JS: "Chapman vowed to change how people were led at Barry-Wehmiller. His business background, however, didn't provide any help for this. 'When I was in business school, I was never taught to care,' he said. 'It was about creating economic value. It was all business models, market cap, market share. I don't remember in my undergraduate in accounting or my graduate school ever learning to care or inspire the people I had the privilege to lead. And I never read, never was told, never heard that the way I would run Barry-Wehmiller would impact the way people go home and treat their families and their health. But the biggest thing we've learned is that the way we learn impacts the way people live.' Working with a group of team members from across the organization, he developed a set of principles called the Guiding Principles of Leadership, or GPL, which put caring for people as front and center to the job for all leaders in the company.

0:09:05.2 JS: "But the question remained, how do we organize the work in a way that gives workers the experience of working in a caring environment? It happened that Barry-Wehmiller had recently acquired a Baltimore based manufacturer of corrugated paper machines called MarquipWardUnited the company had implemented a number of Lean tools and practices under the leadership of Jerry Solomon, who was also the author of several books on Lean accounting. In Chapman's first meeting with Solomon, he introduced him to the Guiding Principles of Leadership and Solomon immediately saw a connection with the challenges companies face when trying to create a Lean culture. Most companies practicing Lean, he noted, never get to the culture piece. The same concern that caused the Shingo Institute to revise its model in 2008." And by the way, I have to interject here. That was covered in a previous chapter, how Shingo Institute found that they had left out the people and the caring part.

0:10:14.4 JS: And that had caused a lot of companies that had adopted Shingo principles to actually, and had won Shingo prizes to actually fall off the ladder, so to speak. But that's another story. Anyway, "Solomon," Jerry Solomon, this is the, from MarquipWardUnited "felt that what the company needed was what he called a delivery mechanism to integrate the Guiding Principles of Leadership with the company's day-to-Day operations. How, for example, does a supervisor in the shop floor interact with the people doing the work? Solomon felt that Lean and GPL were an ideal fit. Chapman was skeptical, though, 'cause he'd heard that Lean is purely about reducing waste and increasing profits, but not about leading people ... passed.

0:11:06.2 JS: And the group that was working on it, this company in Green Bay, actually was ready to report on some of their results. So they invited Bob Chapman and Jerry to come, to fly in to see the report. So what they got was a sort of a typical consultant's report. They said, well, we've implemented this thing and we've got, we've shortened the lead time, we've reduced the defects, whatever. And Chapman's reaction was actually different than what you would expect. He was very, very upset. 'Cause he said, this is supposed to be about people and Guiding Principles of Leadership. That's what you told me Lean was about. But here all I hear is a bunch of numbers. So he was quite upset. He left the room, actually. And they sort of calmed him down, and they said, Bob, please give us another chance.

0:12:03.6 JS: And it so happened that, the next morning there was going to be a report out from people that were actually on the team that had made the improvements. So Bob says, okay, I'll give you another chance, but I want the people that were actually working on that project to come and report to the presidents. So, an incredible setup. You know, you can imagine, you have these people 7 o'clock in the morning. Well, that's not hard for you to imagine, with the hours you keep. But anyway, 7 in the morning, you have all the principals, presidents of these companies, and you have, a couple of, people in the team and a guy who's never presented to a group like that, getting up in front of a whole group of CEOs. So he had some notes, and he went through his presentation, which was very sort of, you know, what you would expect.

0:12:54.2 JS: It was, yeah, we've got the, pretty much what the consultants had said the day before, right? Yeah. We cut the lead time. We did this. And, Bob listened patiently. He said he listened for about 10 minutes, and then he says, and he says, I don't know where this came from. He stood up and said, Steve, that's the name of the guy presenting. How did this change your life? And there was a silence. And you imagine, right? All the CEOs and or the presidents. And then, and this guy who has never presented to a group like that. And Steve just sort of blurted out, my wife is talking to me more. And Bob said, help me, Steve. I don't understand. Please, please explain this. And Steve then went ahead and told, what Bob said was one of the most moving stories he'd ever heard, you know, and what Steve said is, well, Bob, you know how it is.

0:13:53.9 JS: You go to work and, you know, you punch in your clock. And then they give you some things to do. They give you a list of things to do, but they don't give you any support or anything, or they don't give you the tools you need, but you sort of figure it out. You know, you get through the day and you get nine out of 10 things, right? But then maybe that 10th thing you'll run into some problem. He said, and immediately what they do, they never thank you for the things you did right. They jump on you for the problem you have, that you confronted. They tell you, you didn't do things right. And then they complain about your salary and how they have to pay overtime and all these kinds of things.

0:14:41.6 JS: And he said, you know, at the end of the day, I wasn't feeling too good about myself. And I'd go home and I think it was rubbing off on me. I wasn't being very nice to my wife and she wasn't talking to me. But he said, now with this program we have, the Guiding Principles of Leadership with Lean, people, I'm part of something. I'm part of a team. We've worked on some things and I can see the results. And when I ask questions, these engineers are answering my questions. And when I say things, they listen to me. And, you know, we've got the satisfaction of this project where we see the flow now really working out in this area. So I go home and I'm feeling better about myself. And I think I'm nicer to my wife and she's talking to me. And at that point, Bob Chapman turned to Jerry Solomon and he said, we have a new metric for Lean's success. It's going to be the reduction of the divorce rate in America.

0:15:41.7 JS: So that's, I think, very, very central. That story to everything we're talking about here with intrinsic motivation. Because it's not about money. It's, you know, you've gotta pay people decently and then they have to be able to support their families. But it's about respect. It's about seeing yourself accomplish things. And this isn't just a frill, this is a basic human need. I think Dr. Deming recognized that. And he has a wonderful diagram in The New Economics where he talks about, he calls it Forces of Destruction. You know that diagram?

0:16:23.1 AS: Yeah.

0:16:27.5 JS: Yeah. It's the... How the school system and then the job environments just basically wear a person down, wear down their will and their enthusiasm. And, you know what, another CEO pointed out to me that, very interestingly, he said, we have a crisis in this country because people don't have purpose in their work. So they go from job to job when they don't like their job. It's, he said, it's like changing an app. Something goes wrong, they change it, but they got no purpose in their work.

0:17:03.3 JS: And this company, I should I call them out, 'cause he, mention his name is Mark Borsari. And it's a company that makes wire brushes in Massachusetts. But they do, you know... He said, you really have to find the purpose in the interactions of people. It's in the people and it's in the processes. You don't get people excited about wire brushes. You get people excited about being part of a work environment where your opinion is respected and where you can make improvements. So, he said, that's what people need in the workplace right now. And he said, the result is that people, you know, we have people just depressed and upset and, you know, it's a crisis that's perhaps underestimated, but really needs to be addressed. So that's why I feel maybe so passionate about this sticks and carrots myth, because I see how destructive it is to human beings. And I've experienced some of that myself in, you know, my early days in corporate life where you're kind of blamed and evaluated for things that often you have no control over. And it's, you know, you look at something like the Red Bead Game. There are people that actually live that.

0:18:31.0 AS: Just to highlight for the listeners and the viewers, the book that Bob Chapman wrote is called Everybody Matters: The Extraordinary Power of Caring for Your People Like Family, very highly rated on Amazon. And it looks like it's also in audible form, which would be a fun one. And you also mentioned about Jerry Solomon, his book, Who's Counting is another one on the topic.

0:18:32.5 AS: But you know, I was thinking about this for a moment. And I was thinking, you know, I was kind of inoculated to this, I was vaccinated against negative thinking by two things that happened to me when I was young. The first one is, you know, I went into rehab as as a young guy with drug addiction. And I came out of that when I was almost 18. And from that point till today, I've been drug free, alcohol free. And so I had to kind of face all the demons that I had, you know, accumulated at that time, but I left it with a really positive outlook on life.

0:19:29.7 AS: Like I wanted happiness.

0:19:29.8 JS: Interesting.

0:19:29.9 AS: I wanted serenity. And then and then I went to work... I went studied, enjoyed that, I went to work for Pepsi, I really enjoyed it. And then I met Dr. Deming when I was, you know, 24. And and he told me, you know, we should have joy in work. And from that moment on, it's like, that's what I wanted in life. And so I never, I never got caught up in this idea when I worked at Big Bank, you know, Citibank and other places, I just never, nobody could ever convince me that, you know, I should be unhappy with what I'm doing.

0:20:05.5 AS: Like, I really, really enjoyed it. And then I was just thinking about how painful it is, if you haven't been inoculated from the beginning, to have to go through this, and then you end up with, you know, it's it's 9 to 5, it's painful work, it's called work for a reason, it's hard, you know. And I think that before I come to the next questions, you know, about the question we always get on the topic of carrots and sticks, what do we do instead?

0:20:30.6 AS: Before I talk about that, I think I really wanna highlight that what's important is getting your thinking right about this. Whether it's the thinking about I wanna treat people like a family, I want people to enjoy work, I want work to be a source of pride, I want people to wanna work here. You know, if you can get those thoughts right, the solutions to the carrots and sticks, and how do we evaluate and all of those questions, you know, can kind of, they wither away to some extent. What are your thoughts on that?

0:21:02.4 JS: Well, I think Jerry Solomon said it very well, actually. He said, you need a delivery mechanism. And Lean provided that, you know, it has a bunch of tools and organizing principles. So does the Deming's System of Profound Knowledge, right, and the various frameworks that Dr. Deming put together. So that provides that kind of framework. It's not easy to do. I think one of the big hurdles, and this is kind of central to my book is that you're dealing with a lot of unlearning. And they say that it's harder to unlearn something than it is to learn new skills. So we really can't afford to underestimate that.

0:21:51.1 JS: And I think when we have managers and leaders facing massive unlearning challenges, I think what's needed is compassion, you know, we shouldn't be putting them down for applying what they learned, we should be understanding about the changes. And I think Dr. Deming, you know, from the stories I've heard was very good about that.

0:22:00.0 AS: Well, he had something he would say, which was kind of one of his methods of compassions, but I remember him saying, how could they know? How could they know, you know, like, they were brought up in this system, as you've just said, and so, but it's based upon the carrot and sticks and all of these different things. But I'm curious, you know, which I think we at some point we'll get to in our discussion is the, there's listeners and viewers out there. It's like, okay, Jacob, totally agree with you. Andrew, totally agree with you. I want people to have joy in work. But you know, I'm constrained by, you know, the performance appraisals that I got to do.

0:23:07.3 AS: I'm constrained by the punishments and rewards that my company does. And or a leader of a company says, if I let these things go, we're gonna fall apart. How do you respond to that?

0:23:11.6 JS: Well, gosh, I mean, I think you have to just look at the case studies of people that have let that go. And that's why I emphasize I one of the points I emphasize in the book with advice for companies moving forward is a very first step before you do anything is go visit companies that have been successful. You know, go visit Bama Foods, where they have a great culture. Go watch how people interact with people. Go to some of the great Lean companies. All these companies understand that the best gift they can give their employees is to allow them to share what they've learned with other people. It's a great motivator for people. So it's a real win win. So I think it begins with that you've got to see it first. And then you can start to assess where you stand.

0:24:13.6 JS: But we're talking about a transformation here, as Dr. Deming said. We're not talking about implementing a few tricks that we can superimpose on our management system. You've got to manage it completely differently to actually get this kind of intrinsic motivation to be a driving force in your workplace.

0:24:19.2 AS: It just made me think that I wanna come up with the five happiest companies in Bangkok and do a tour and take my students out and my teams out and my company managers out and let's go, you know, see how they're turning on intrinsic motivation, you know. And one thing about Thailand that's interesting is that what people want from work is very different than in the West.

0:24:50.1 JS: Right.

0:24:51.2 AS: And what people want from work is good relationships, harmony.

0:24:57.6 JS: Really.

0:24:57.8 AS: They want connection. They want meaning, more meaning from their work than the typical Western.

0:25:05.8 JS: Isn't that interesting? Interesting.

0:25:05.9 AS: And so when I see and I rail sometimes on to my students about, you know, be very careful about bringing this KPI disease into Thailand, where all of a sudden, you're setting up the Thai people to go against each other, which takes away from what is a core strength is their desire and ability to get along.

0:25:33.3 JS: Isn't that interesting? Wow, so they got a head start.

0:25:42.5 AS: Yeah. My first move to Thailand in 1992, I taught an MBA class. And the first thing I did is what was done with me in my MBA class is say, all right, here's a case study, break into groups, and then, you know, and then they came back and, and then after getting to know them in my first semester that I taught, now I've been teaching for 32 years in Thailand. The first lesson I learned is Thais do not need group work. They need individual work. And because they need to kind of flex that muscle.

0:26:08.8 AS: And then I thought, well, why are we do so much group work in America? Well, because it's Americans are trained and taught from the beginning to think independently, have their own idea, watch out for themselves. And they need help in, let's say, MBA classes to work together.

0:26:26.8 JS: Isn't that interesting?

0:26:26.9 AS: And so what I just saw was a very different dynamic.

0:26:30.3 JS: Wow.

0:26:30.9 AS: And it helped me also to understand that we... The good side of the American, let's say, I know, American worker, I know Americans, just 'cause that's where I grew up. But the good side of that is that there is a lot of independent thinking, they can come up with the good systems and all of that.

0:26:47.3 JS: Sure.

0:26:48.9 AS: But the bad side is that they're oftentimes fired up to be in competition with each other. And KPIs just ignite that fire that just...

0:26:58.2 JS: They do.

0:26:58.3 AS: Really causes, you know, a lot of damage.

0:27:00.5 JS: Well, I got to ask you something, then, do you think that that East versus West kind of mindset is why Dr. Deming's ideas were taken up in Japan when they had been kind of ignored in the US?

0:27:16.9 AS: Yeah, I mean, I definitely I mean, Japan is like an extreme example of Asia and trying to have harmony and everybody, the bigger mission is the company, the bigger mission is the community, the bigger mission is the country. I would say that Japan is like the ultimate in that. Thailand is less so there's more independence and people don't have to be completely allegiant to those things. But still, that desire to be happy at work is there, you know, I think it's there more, it's more innate, for some reason in Thailand, than I saw it in America.

0:27:55.8 AS: And I always explain that, when I worked in America, I think I never went out on a weekend with my colleagues.

0:28:04.5 JS: Really. Interesting.

0:28:05.3 AS: And in Thailand is a very common thing to arrange activities together with your workmates, and go bowling and do this and do that. And I thought, I saw that everywhere. And I was pretty, you know, that just was fascinating to me. So I really, you know, this discussion is all about opening up people's minds, that carrots and sticks are not the only way. And as you said, it's a transformation, it takes time, you got to think about it, you got to reconcile it.

0:28:37.8 JS: Well, and that brings up another really important point, Andrew. And that is that teamwork, team productivity really makes the difference in a company. And when you think about it, you've got a whole bunch of individuals that productivity is very often not gonna add up for reasons, you know, that we've already talked about, you know, it's not part of the system. So team productivity becomes really, really essential. But team productivity, and Kelly Allen actually pointed this out really well to me. And I mean, I'm gonna just look in my notes here to get his words exactly, 'cause he said it so well.

0:29:21.0 JS: Let's see here. And here's Kelly, "a useful operational definition of a team is the collaborative and coordinated efforts of people working together in an atmosphere of voluntary trust." So you got to build that. And, you know, that's kind of tough to do in a lot of North American companies.

0:29:48.5 AS: Yeah. It's such a great point. And I think I've recently been teaching a corporate strategy. And I talk about Michael Porter and all the he's taught about strategy. But one of the things that he mentions towards the end of his books is the idea of fit. And he's talking about how do the pieces fit together in the company. And everybody knows that feeling when the when the process before you or the process after you in your company is being run by somebody that you have a good fit with. It's like everything comes together. And so I think what I realize now is that the power of that coordination that Kelly Allen's talking about is all about how do we get these pieces fit together, working together, coordinating together. That's the magic.

0:30:37.3 AS: Interesting. But Porter, I mean, he talked about a lot of I think, you know, it's been a long time since I've looked at his books, but a lot of his stuff was either or, right? I mean, you know, you decide, am I gonna be a price leader or am I gonna be a quality leader? And I think a lot of what he did disregarded, you know, Deming's Chain Reaction, you know, where he where you actually invest in both. So I mean, that's got a problem and with strategy people in general. Now, I know you've taught strategy. So maybe you're gonna take me apart on this one. But it seems to me that the strategy folks are really missing something.

0:31:29.1 AS: Well, I think most people are missing the type of stuff that Dr. Deming's talking about, but I use an example of McDonald's and Starbucks.

0:31:35.5 JS: Okay.

0:31:37.3 AS: You know, one is a low cost leader. And one is a premium, you know, differentiated, you know, product and service. And we all know which one's which. So which one leads to a sustainable competitive advantage? Which one is better? I always talk to my students. And I say, the fact is, is that both of them have led to a competitive advantage. So part of what, you know, I would say, when I think about corporate strategy, from my perspective, is figure out the direction that fits your DNA, and then pursue that, whether that's about making, you know, I like to tell my students that think of a company run by an engineer, who may be focused on the processes and all that, who may create a very efficient operation, versus a business, let's say run by a marketing or sales person who has a much better contacting and messaging to the customer. Those two business owners should be developing their corporate strategy around their DNA, you know, and if they do that right, that, in theory, should lead to some competitive advantage.

0:31:58.9 AS: And to me, competitive advantage is how do we make sure that our company creates a level of profitability that is higher than the industry average over a sustained period of time. If we think we're doing a corporate strategy that works, and we're making a very low amount of profitability, I think that there's enough reason to argue that that's probably not achieving a competitive advantage.

0:32:37.1 JS: Yeah. And I think we have to put the word sustainable competitive advantage. But along the McDonald's, Starbucks, though, I have a very interesting twist. And I think this was done locally in Canada. But somebody did a blind test of coffees from various outlets to see what rated the highest. And I have to tell you that McDonald's coffee rated very high, higher than Starbucks. So...

0:33:47.1 AS: But it's definitely the case in Bangkok that McDonald's coffee is fantastic.

0:33:50.8 JS: Really.

0:33:51.8 AS: I happen to know very much about that. But I highly recommend that.

0:33:55.7 JS: Yeah. Well, I think we're, you know, we are focusing in this book, essentially on, you know, productivity. Now, marketing, marketing strategy and stuff like that is yeah, I'll acknowledge that. Sure. And that's maybe, you know, I think what Michael Porter was talking about it's very true in terms of marketing. But in terms of quality, output of quality, I think that's where the Deming magic and the Lean magic all come into play.

0:34:12.2 AS: Yeah, I mean, it took me a long time to figure out that what Dr. Deming saying is, if we are continually improving our products and service and our quality, we're driving down costs, and we're making people happier, and we're bringing more value to the market. How... Shall we wrap this up? And how would you summarize what you want people to take away from this?

0:34:26.1 JS: I would say that intrinsic motivation is underestimated in workplaces, it's misunderstood. It's not reflected in the way most companies are organized or their strategies. So it's a big learning curve for companies to create the kind of environment where intrinsic motivation is connected with the workplace. But I think it's worthwhile, it's a very, very important thing. And we have a lot of unhappiness in society. And a lot of it can be traced to a lack of that. So, you know, I hope that more companies will see the importance of this.

0:35:16.6 AS: You know, it's my, my friend who never... He was helping me when I was writing my book, Transform your Business with Dr. Deming's 14 points.

0:36:02.2 JS: That's a great book.

0:36:02.7 AS: And he was editing a book.

0:36:02.8 JS: I love that book, by the way.

0:36:04.3 AS: Thank you. I was trying to make it as simple as possible for the 14 points. But my friend, as he was helping me edit it, he turned to me after many hours of working together over many weeks, he said to me, I figured it out. Dr. Deming is a humanist, he cares about people. And that was just so funny, because he thought going into it, it's all gonna be about, you know, charts and graphs and statistics. And I think that's, you know, that's the key, it's the mindset. I wanna wrap up by by just going through some of Dr. Deming's 14 points that apply to what we're talking about. And, you know...

0:36:39.2 JS: Great.

0:36:39.6 AS: The question really is, you know, when my friend said that Dr. Deming was a humanist, it's 'cause as he started working on the 14 points with me, he started to realize, just listen to these points. Here's point number eight, drive out fear. Yeah, that's critical to having a joyful workplace. Number nine, break down barriers between department. That's the source of so much trouble for people at work is that they're working in silos. Number 10, eliminate slogans and targets and exhortations. Stop focusing on pushing the workers constantly. Figure out how to improve the system.

0:37:10.2 AS: Number 11, eliminate work standards or quotas, eliminate management by objective, management by numbers, substitute leadership. And number 12, remove barriers that rob the hourly worker of the right to pride of workmanship. Remove barriers that rob people in management and engineering of their right of pride of workmanship. My goodness, from eight, nine, 10, 11, 12, all focused on this concept of intrinsic motivation. And to me, that thinking, changing that thinking is what's so critical. Anything you would add as we wrap up?

0:37:25.0 JS: Yeah, I will add one thing to that. And this is very strongly in the book. That is why the first step if you're gonna transform your company is making everybody feel safe. That's got to be the first step, even before you start training them with methods and things like that. You have to build safety, then you can build trust.

0:37:47.2 AS: Fantastic. Well, Jacob, on behalf of everyone at the Deming Institute, I wanna thank you again for this discussion. And for listeners, remember to go to deming.org to continue your journey. So much happening there. You can find Jacob's book, Productivity Reimagined at jacobstoller.com. And this is your host, Andrew Stotz. And I'll leave you with one of my favorite quotes from Dr. Deming that I just never stop talking about. And today we talked about it a lot. And that is, "People are entitled to joy in work."

In this new series, John Dues and Andrew Stotz discuss John's model for improvement. This episode includes an overview of the model and how John uses it for goal-setting and planning in his school.

0:00:02.4 Andrew Stotz: My name is Andrew Stotz and I'll be your host as we continue our journey into the teachings of Dr. W. Edwards Deming. Today, I'm continuing my discussion with John Dues, who is part of the new generation of educators striving to apply Dr. Deming's principles to unleash student joy in learning. The topic for today is building an improvement model. John, take it away.

0:00:24.8 John Dues: It's good to be back, Andrew. Yeah, so we sort of wrapped up this last series. We had a six-part series on organizational goal setting. And we, if you remember, we talked through those four conditions that are important for organizational goal setting, especially healthy goal setting, where before we set a goal, we understand sort of how capable our system is. We understand how our data is varying within our system. We are looking at our system and seeing if it's stable or unstable. And then, of course, we want to have a method for how we go about improving. And so you kind of have to have an understanding of those four conditions before you set a goal.

0:01:03.6 JD: And I thought sort of as an extension of that, or possibly a new series, we could kind of take a look at an improvement model that would help us sort of better set ambitious goals. Because when we did those four conditions, it kind of leaves you wondering, well, how ambitious should my goals be? Should I still do stretch goals, those types of things? And I think this improvement model that we're building here at United Schools sort of addresses that. And it's something we're building.

0:01:34.4 JD: And so I think the listeners kind of get like a little bit of behind the scenes on what it looks like now. I think we'll see a version of it. And perhaps through this dialogue, through the series, we'll even think about ways to improve it.

0:01:48.4 AS: Can I ask you a question about that?

0:01:49.6 JD: Sure.

0:01:50.0 AS: One of the things, I do a lot of lectures on corporate strategy and workshops, and the lingo gets so confusing, vision, mission, values, and all kinds of different ways that people refer to things. But when I talk to my clients and my students, I oftentimes just tell them a vision is a long-term goal. And it could be a five-year or a 10-year goal. And because it's long-term, it's a little bit more of a vision as opposed to, you can see it very clearly. Like my goal is to get an A in this particular class, this particular semester. Whereas what I try to say is, a vision is: I want to be in the top of that mountain. And I want us all to be at the top of that mountain in five years. And I kind of interchangeably call that a long-term goal and a vision. And I'm just curious what your thoughts are on long-term versus short and medium as we go into this discussion.

0:02:53.8 JD: Yeah. I think as we get into the model, we'll actually see both of those things, sort of a long-term sort of goal, sort of a more intermediate thing, and then how you work back and forth between those two things. So I think that's a good segue.

0:03:08.4 AS: Let's get in it.

0:03:08.4 JD: Yeah. And so just maybe just a few other things about the model before we get right into it. So one thing to know I've come to appreciate is when when I say a model, I just mean something visually representative that helps us understand and communicate how we think things should be functioning in reality. So when I say improvement model, I'm actually like talking about a diagram on a piece of paper that you can put in front of everybody on your team. So everybody has an understanding for how you're approaching goal setting in this case.

0:03:38.1 AS: Would you call it an improvement visualization? Or what's the difference between what you mean by model and like something that I would call, let's say, a visualization?

0:03:49.5 JD: Yeah, I'd say it's a type of visualization when I say model.

0:03:52.8 AS: Okay. Excellent.

0:03:53.8 JD: Yeah, that's what I'm talking about. And I think you'll see it when we get into the model that definitely there's credit due to Mike Rother and his concept of Improvement Kata because this model heavily borrows from the work that he's done, if you're familiar with that four-step Improvement Kata process.

0:04:15.1 AS: Yeah. Very.

0:04:19.7 JD: But anytime, whatever the thing is that you call like key performance metrics, key metrics, whatever you call that thing that we all set in our organizations, there's always this gap between what we want and what we're currently getting. And this model gives us the scientific way of thinking and working to close basically that gap. In this world, the gap between the voice of the process and the voice of the customer, how do we close that gap? So that's sort of what the model is addressing. So I'll share my screen so you can see that and anybody that's watching can see what the model looks like. And I'll just kind of leave that up as I'm talking about it, put it in slideshow.

0:05:08.7 AS: Great. We can see that now.

0:05:14.6 JD: Great. So we can just start by just kind of giving an overview, especially for those people who are listening, but you can kind of picture like a path going up a mountain and that path has twists and turns. It has obstacles. In this particular diagram or model, there's rocks in the way of the path. There's a water hazard, there's trees in the way, there's a roadblock. And as you go, it's kind of strange because you're working your way up. And I'll explain this all as we go through it kind of one step at a time. But as you're working from left to right in the model, this four-step improvement model, you have a team over on the left. This team's working on a goal that you're setting. And then over on the left, you actually have step two, which is grasp the current condition. And then you have this big crack in the path that's called the threshold of knowledge. And I'll talk about what that is.

0:06:11.1 JD: And sort of the next step is actually step four, experiment to overcome obstacles as you're working left to right. You go further up this path, up this mountain. And number three, the step three is establish your next target condition. And then when you get all the way up the mountain and you have this challenge or direction. So that's what you were just talking about. So what's that long-term thing that you're trying to accomplish? We call that a challenge or direction. So the steps that you're taking actually chronologically are you're going to do number one first.

0:06:43.2 JD: You're going to set that challenge or direction, but it actually is the thing that you're working toward. That's the sort of beginning with the end in mind. So that's why it's way up on the mountain, but you're going to do that first. And the next thing you're going to do is go all the way back down to the start of the path and grasp whatever that current condition is in your organization. And then you're going to run experiments on the way to trying to get to the next sort of intermediate step, that next target condition. So four steps, and then you have this team working on it.

0:07:16.8 AS: Which I would say for the traditional American style, as from my perspective, it can be a bit confusing because you're starting with number one at the farthest point away instead of closest to you. Then you're going to come to number two. From a timeline perspective, it feels like you're kind of zigzagging back and forth in your thinking.

0:07:38.8 JD: Yep. You definitely are. And it takes a little bit to wrap your head around it, but we'll kind of work through this piece by piece. So let's start with the team. So you have these people on the left-hand side of this diagram. There's sort of three different groups within that team. And we've talked about this a number of times, but remember that there's this key concept when you're going to take a thinking systems or a systems view of an organization. That you have to have these three different groups of people. You have to have the people that are working on the system, the people that are working in the system, and then from Dr. Deming's perspective, you have to have somebody that has profound knowledge, has that lens. So again, someone from the outside that has profound knowledge. And then in our case, the people working in the system, generally speaking, are the students. And then you have to have the managers that have the authority to work on the system. So in our system, that would be teachers and school leaders. But this model is not specific to educational organizations. You could translate this to any other type of organization.

0:08:50.4 JD: So if we were a hospital, then perhaps the people working in the system, depending on the improvement project, could be nurses. And then the managers that have the authority to work on the system, maybe the hospital management team. And then someone from outside with profound knowledge could be either someone internally that has familiarity with the System of Profound Knowledge or someone that they bring in externally, like a consultant to help out. So the point is, is that, again, this team, whoever's working in the system is going to differ by the organizational sector that you're working in. But it translates in the system basically.

0:09:31.0 AS: It's interesting that I've seen this type of diagram or concept about work on the system, work in the system and a System of Profound Knowledge coach. But it just kind of clicked for me to think about it. It obviously, like when I work with a company, I'm working with the owners and the top management. And when I do that, we're working on the system.

0:09:58.5 JD: Yep.

0:10:00.2 AS: And I have the knowledge of the System of Profound Lnowledge. So I'm coaching them about the system. And then within the system, they have the employees who are executing on what they're trying to improve and do, but it just perfectly explains it. So I love that diagram.

0:10:17.8 JD: Yeah. And I have the same experience. And I think we've mentioned on this podcast before that in my world, we often have school or district-based improvement teams. And it's typically leaders of the organization, sometimes teachers, but almost never is it students working in the system that are a part of, or, providing significant input into the improvement. So, I think if you can combine, in our case, students working in the system, because they have things that they can identify in terms of how they experience the system that are different than the people that work on the system. And then having that third group that, or that person that has that outside profound knowledge, if you put all the three of those things together, I think you have a much better chance to improve. But I think in schools, that's probably never happening. I'm assuming that's the same in other industries as well.

0:11:08.3 AS: And this also explains why when Dr. Deming would see slogans and things like that, encouraging the workers to do better and higher quality, he was like, they don't have the authority to change the system.

0:11:22.5 JD: Right.

0:11:24.1 AS: And what you've said is the group that's working on the system has the authority or the ability to change the system.

0:11:35.4 JD: Yeah. This is one...the makeup of this team that's using this four-step process, that's one innovation that we've done to this model that would be different from the Improvement Kata. So in the Improvement Kata, there's just coach and learner. Usually sometimes there's a coach of the coach, a coach and a learner, depending on how it's represented, but this is in my view, an innovation where you have the work on the system group, the work in the system group, and then the System of Profound Knowledge coach. I haven't seen that in this model.

0:12:07.4 AS: And could that be because when Mike Rother was writing his book, he was particularly referring to Toyota.

0:12:18.7 JD: Could be. Could be.

0:12:19.5 AS: Where the workers have more authority to impact the system. Whereas in the typical American system, the worker doesn't really have the authority to stop the production line or something like that to the extent of the Japanese. So interesting point.

0:12:36.1 JD: Yeah, that's a really good point. My understanding of Mike Rother's work is he sort of derived this improvement model by watching, observing, working with Toyota over a very long period of time. So that very well could be the case. Cool. So we have the team, so let's go to step one, that's the challenge or direction. And I really like that because again, when we did that six part series on Goal Setting is Often an Act of Desperation, one thing that I did think was missing was like, well, still as an organization, we want to move forward. We want to improve. We want to be ambitious in how we're setting our goals, but I don't think that fully came through in the four conditions. And so I think layering this model on top of the four conditions really helps because I think it is important to be ambitious, especially when we're talking about like a mission driven organization, we need to be setting ambitious targets for student learning, coming to school, those types of things.

0:13:39.6 JD: So really what we're doing in step one of the model is we're asking the question, where do we want to be in the long run? So this is a long term goal. This is a longer range goal that would differentiate us from other schools if we achieved it. But currently when we think about this goal, it actually seems nearly impossible because it's so far from where we are currently performing. We don't know how we're going to get there. So an example in my world is, schools have been paying much closer attention to chronic absenteeism, which is when a student misses 10% or more of the school year. And those numbers basically skyrocketed towards the end of the pandemic and then for the last several years. So that's something we're focusing on as an organization. So our chronic absenteeism rate is really high, like 52%, something like that over the last several years. And we want to get that down to 5%. So there's this huge gap.

0:14:53.6 AS: That's a huge move.

0:14:54.5 JD: Huge gap, order of magnitude, right? To go from 52%, that's the voice of the process. That's what's actually happening. And the voice of the customer, what we want is 5%. And we really don't know how to get there. And that's going to be the case at the point where you're at step one, but you're doing that first. You're setting that challenge or direction. And that really is something that needs to be set, in my view, at the leadership level, at the management level. So, that's step one.

0:15:22.9 AS: And you just said something that's interesting is we really don't know how to get there.

0:15:25.6 JD: And we really don't know...

0:15:26.9 AS: I mean, if we knew how to get there, we'd probably be there.

0:15:28.6 JD: Yeah. Yep. Yep. So that's step one. That's why if you're able to view the model and you're watching the podcast and you can see the video, that's why number one happens first, even though it's on the far right hand in the upper right hand corner at the top of the mountain in the model.

0:15:45.8 AS: And is there a reason why it's a relatively vague thing, right? Challenge or direction.

0:15:54.0 JD: Yeah.

0:15:55.5 AS: Why is it vague as opposed to specific target, goal or saying something like that?

0:16:03.7 JD: Yeah. I mean, I think, I like challenge or direction. One, it fits on the page. And it sort of conveys that it's going to be a challenge. And it also, if you're going to work in this way to achieve something like that, that it's actually setting the direction of the organization, the direction that the organization is moving toward. So.

0:16:24.0 AS: In other words, is it acknowledging that we really won't, we really don't know that target. We think we know it, we see that mountain, but as we go closer to it, we want to go in that direction, but as we get closer, it'll become more clear exactly where we're going to be or want to be.

0:16:44.7 JD: Well, I think this would be something that... I think in my view, we're still learning. But when we set that challenge or direction, I guess I could see some circumstances where we would come off that, but I think we kind of want to set it in a way that really pushes us. Right. So I'd be, I mean, I think you could learn some things that would say, okay, maybe that wasn't the exact right number to set, but I'd also be careful about just adjusting it because it's hard.

0:17:13.2 AS: Okay. So you mentioned 5%.

0:17:17.9 JD: Yeah.

0:17:19.1 AS: Would that be, would you state it as achieve 5%?

0:17:25.9 JD: Yeah. 5% or less of our students are chronically absent.

0:17:30.4 AS: Okay. Keep going. I don't want to slow it down. But listeners may get it faster than I do. I'm a little bit slow and I have a lot of questions as we go along.

0:17:37.0 JD: No, no. And I think what we could do in future episodes is dig into each of the steps a little bit more too, and use this as an overview session.

0:17:46.9 AS: Yep.

0:17:48.3 JD: So that was step one. So now what's going to happen in step two, you're going to come all the way back down. Now you're at the very start of the path.

0:17:56.6 AS: Back to reality.

0:18:00.6 JD: Back to reality, step two. And the first thing you have to do, okay, we've set the target, this very challenging direction we want to head into because it's the right thing to do. The next thing we're going to do is grasp the current condition. And so in step two of the model, we're going to ask, where are we now? So we know the long-term goal and now we need to study the current process and how it operates basically. So basically this study represents our current knowledge threshold about the process. And then it's going to contribute to how we define the next target condition we've set that sort of intermediate step on the way to the challenge. And so a lot of that six-part series on goal setting is often an act of desperation, a lot of that learning is right here at what we're doing at step two, because we're creating a process behavior chart in a lot of cases, and understanding how our data is performing over time in this particular area. That's what grasping the current condition means.

0:19:02.6 JD: So part of it, it's a data thing. So in this chronic absenteeism example, what I'm gonna do is I know where I want to be. Now I need to understand where are we historically. And then also as a part of grasping the current condition, I may wanna do some things like interview students and families that are chronically absent, then sort of dig into why that is. Interview teachers about why they think that is. There's a number of things that you could do at this step on the ground where the work happens to grasp the current condition. And I think there can be a sort of quantitative component to that and a qualitative component to that. Also, we sort of understand like how are things actually working on the ground that contribute to us not being where we want to in this particular area.

0:19:56.7 JD: So that's step two. That's what we're gonna do next. After we've set the challenge or direction, we wanna sort of understand the situation on the ground, grasp the current condition. And then next what we're gonna do is step three, which is establish your next target condition. So in step three of the model, we ask where do we want to be next? So we know we can't make this leap, from 52% to, 'cause we wanna decrease it down to 5%. We know we're not, that's too big a step that we're just gonna get there somehow magically. So our target condition, then it's our next goal, usually within a time bound, achieve by date. In Mike Rother's work, he suggests something on a pretty short term scale. Something like one week or one month. So something like chronic absenteeism, I think one month would be sort of where I would set the next target condition. Just having experience with something like attendance rates.

0:21:07.0 JD: And at this point we don't exactly know how we'll achieve the next target condition, but it also, it doesn't feel as impossible as the challenge. So it's a step towards the challenge. So we're gonna do that next. So we set the big challenge that may take us three years to get to. Then we understand the current conditions on the ground and we use that knowledge to set our next target condition. So that's step three. And then the fourth step is we're gonna experiment to overcome obstacles.

0:21:45.9 AS: And before you go to fourth, let me just ask a question about establish your next target condition. One of the things that's missing from that, obviously is, you know, coming from a different perspective, is that when we say, all right, here's where we want to be, and let's go back to reality, and here's where we are. Sometimes, when people work like myself and others, work with people who say, okay, let's map out all the steps to get to that vision. What are the next five things we have to do? Whereas here you're saying, let's focus on the next target condition rather than the next five.

0:22:25.4 JD: Yep. And keep in mind when I say establish the next target condition, what I literally mean is what's our next intermediate goal that we're gonna shoot for? So if we're trying to get all the way down to 5% from 52, remember decrease is good in this case, establish my next target condition, maybe over the next month, I wanna see if I can get that from 52% down to 35% or down to 40%. Part of what I would look at when I set that next target condition is what did the variation look like when I was charting in step two? So the magnitude of that variation will give me some indication of what would be a reasonable sort of next step target for step three basically.

0:23:11.9 AS: And maybe just explain for those people not familiar with Mike Rother's work and, you know, terminology that you're using, why do you say establish your next target condition?

0:23:28.0 JD: I think, I don't know. I think that, you know, really what I mean is just establish the next target, establish the next intermediate goal, basically. Now, I think using the word condition is because when you think about something like chronic absenteeism, there's conditions that probably contribute to that and part of that condition may be the things that you wanna work on. So I kind of think of like, you know, 'cause when you look at step four, you're gonna experiment. So you're creating a new set of realities, a new set of conditions in your organization. And so sort of that coincides with the metric that you're shooting for. So it's not just the metrics, it's also like what are the conditions surrounding that metric. If that makes sense.

0:24:15.8 AS: Yep.

0:24:16.9 JD: Cool. And then step four then is experiment to overcome obstacles. So basically in step four of the model, we move toward the target condition with experiments. And by experiments, what I'm talking about is Plan, Do, Study, Act cycles or PDSA cycles, which uncover obstacles we'll need to work on. So the path, and that's the path in the model is windy 'cause it's this path to the target condition is not gonna be straight line, but it's gonna require this rapid learning to move in that direction basically. And so let's say we've set that next target condition to be one month from now, that's what we're shooting for. And we're gonna run a series of experiments. Maybe it's four one-week PSDA cycles, maybe it's two, two week PSDA cycles. Maybe it's one one month cycle. It depends on sort of the nature of the Plan, Do Study, Act cycle. But running these cycles where we make a plan, including a prediction, run the experiment, and then study what happens and see if it's moving us in the direction of the target condition.

0:25:40.0 JD: And so in that way, we're rapidly learning what it's gonna take to hit that next target condition. And the other important part of this, you'll see in between the grasping of the current condition at step two and running those experiments, there's this huge fault line, this huge crack in the path that you can't just jump over. And it's kinda labeled there, it says Threshold of Knowledge. And basically it's the point at which you have no facts and data to go on. That's the threshold of knowledge. There's always a threshold of knowledge. And so to see further beyond that threshold of knowledge, that's where you conduct your next experiment.

0:26:28.7 AS: Interesting.

0:26:29.8 JD: So because you, like you were saying, we wanna outline these five steps that we're gonna do. So with chronic absenteeism, I read somewhere a Harvard study where if you text parents what a kid's attendance rate is on a regular basis, they're then more likely to come to school on a frequent basis. So you could see where a school system would spend all this money to get a texting system, maybe even allocate a person or a half of a FTE of a person to run this system. And they faithfully implement this texting system, and it has no impact at their school to impact those chronic, because it had nothing to do with what the actual problem was in that context. And you've spent all this money. And that was just a hypothetical.

0:27:21.2 AS: And you could have done a pilot test of 10 parents or 20 and done it manually and sent out some messages and just tested a little bit.

0:27:31.1 JD: Yeah. You run a test with 10 chronically absent kids. Just to see if you can improve their attendance for a week. And maybe you learn something or for a month and maybe you learn something. And then if the early evidence is pointing in the right direction, then you can run that experiment with more kids or for a longer period of time or under slightly different conditions. Those types of things.

0:27:54.6 AS: So an example that I would say in relation to this for one of my clients is that we've identified that they need to get a higher gross profit margin.

0:28:04.7 JD: Okay.

0:28:05.5 JD: And their gross profit margin is about 23%. And I know that the average is about 30 in the industry. And so my work with them is how are we gonna get that profit margin to be 30 or 35%? 35 would be showing that you've really got pricing power because of something that we've done. And so, I'm pounding away that we've gotta improve this, but you know what? We don't have data to understand the current condition. And this week we've... It's taken us about a couple months to pull that data together. But now we have absolutely comprehensive data that my team has calculated on the profitability of every product, the profitability of every customer, and the profitability of every process. We know the capacity utilization of each part of the production process. So now we have the knowledge that we didn't have before that's gonna, that once get, digest this knowledge, it's gonna give us the indication of what to do next. Which is it's gonna be shut down a particular production process or increase price there. We may lose customers, but it's not worth doing it at this low price or so, but without that knowledge, we're just, it's a dream.

0:29:21.4 JD: Yeah. It sounds like you guys have done step one and step two in that process.

0:29:28.0 AS: Yeah. Which is exciting. 'Cause now Friday's meeting is gonna be about, all right, how do we take this huge amount of data and effort that we've put in and now it's time to come up with what are the steps that we're gonna take?

0:29:40.4 JD: Yeah. And I think even just in that situation, even just acknowledging that there's the threshold of knowledge. Even just getting people to acknowledge that in a room that they actually don't know what's gonna happen. That's the power of the PDSA because it makes you predict, okay, you say this thing is gonna work and when you put in this plan in place, this is your prediction. And then when you come back next week and it doesn't work, then you have to explain that, you know, it's not a gotcha, but it very quickly makes you think in a different way.

0:30:13.0 AS: It keeps a record so someone has gone back, well, I didn't think it was gonna work, you know, for sure.

0:30:18.8 JD: Well, right. And it's usually very like, some of the things that I found in that is when people are off on their predictions, it's very mundane things that they didn't account for. We're in student recruitment season and we set a goal for the number of calls we're gonna make to prospective families. And then hypothetically a recruitment director could fall short and it's like, well what happened? It's like, well, oh, the two part-time people that we had, I forgot they are actually out two days last week right? And so it's usually things like that are actually getting in the way of us accomplishing these grand targets that we have set.

0:31:05.5 AS: By the way, where does the threshold of knowledge fit? We've got number one challenge or direction, number two, grasp the current condition. It's after the grasp the current condition that we come to the threshold of knowledge.

0:31:17.7 JD: Yeah. Because, well, we have somewhat of an understanding of the condition on the ground, but we don't know what's gonna improve it until we run the experiments. So we start running the experiments and we try to sort of narrow that knowledge gap basically. And this is sort of the final part is basically like what do you do when you get to that experiment and when you hit that target condition, when you reach that by the achieve-by date, well now there's a new condition and you repeat the four steps because you haven't reached the challenge or the direction. You just met that sort of intermediate goal. And you basically keep running this four step cycle until that learned long-term challenge is achieved.

0:32:12.5 AS: Okay. Great. So we've got the establish your next condition down where it could be one week, it could be one month, in some cases it could be longer, but it's really our next intermediate goal. Where do we wanna go next? What's the next right step?

0:32:28.5 JD: Yeah. Well, so you go back to step two 'cause you're not gonna change the challenge or direction. Now there's a new set of conditions 'cause you've moved ahead, right? And now you're gonna go back and say, okay, what are the current conditions like? And now we're gonna, okay, let's say we move from 52% to 42%. Now we go back and sort of understand the experiments from that last cycle. And we're gonna set that next target condition. So maybe now we wanna get it down to 25%. And we're gonna run another round of experiments in a certain amount of time to see if it hits that next target condition. And basically you're just gonna keep doing this over and over again. That's really the continual improvement model that we're operating under.

0:33:22.7 AS: So how would we wrap this up?

0:33:24.4 JD: So the big thing for me is, you sort of have to have a model to bridge that gap between current conditions and future aspirations. Beause there's always a gap between those two things. And what this model does is it gives us a scientific way of thinking and working to close this gap. It's a more powerful model than I've ever sort of seen anywhere. And then literally you put it on a piece of paper like this and then you have to explain it to people over and over and over. And then you have to actually do it with people. So we're actually doing this, getting people excited about running PDSAs. And the most important thing is that the challenge or direction, especially for leaders that are listening to this, you don't stand on this mountaintop and set it and then say, go do it. That's why this team aspect is so important. We're setting this challenge or direction as a team, and then we're working together on the ground. Putting that work in, running those experiments to try to bring this thing about, is a completely different way of working. It's not an accountability system, it's an improvement system.

0:34:39.4 AS: Yeah. That's a great overview of this system that you guys are applying and it's exciting to learn more. So I wanna thank you on behalf of everyone at The Deming Institute, John. And I thought the discussion was very interesting myself. And for listeners, remember to go to deming.org to continue your journey. You can find John's book win-win W. Edwards Deming, the System of Profound Knowledge and the Science of Improving Schools on amazon.com. This is your host, Andrew Stotz, and I wanna leave you with one of my favorite quotes from Dr. Deming. "People are entitled to joy in work."

Deming frequently discussed the right to joy in work and in learning. But what does that mean exactly? David P. Langford explains Deming's intent, particularly as it applies to education.

TRANSCRIPT

Stotz: My name is Andrew Stotz, and I'll be your host as we continue our journey into the teachings of Dr. W. Edwards Deming. Today we're gonna be talking about the Langford application of Deming to bring joy in learning. David Langford has devoted his life to applying Dr. Deming's philosophy to help teachers and students get the most out of learning. David, let's get into it. I think we should start with what is joy in learning as one point.

Langford: Yeah, it sounds like sort of a mamby-pamby phrase like, "Oh, let's just all have joy in learning," or something that you might put on a poster and put on a wall, and Deming was probably the first one that got me to understand that those key phrases and stuff like that aren't gonna change the system at all, and that you actually have to change the system. So having joy in learning is different than thinking about joy in the education system as a whole, because I may really enjoy what I'm learning at the university or in an elementary classroom, but the way in which the system is run is not fun, it's not joyful. So the places that can really optimize both are the places that are gonna attract the most students, are gonna have the teachers that are happier, they're gonna have students that are happier, and when students are happier, parents are happier, and everything just starts to function better. So while it is a phrase, joy in learning, it's also a depth of knowledge about thinking about systems and what do you have to do in a system to achieve that?

Stotz: And one of the questions is like, what is the aim of the system? And I'm thinking about... There was a point in time where I didn't really like reading or doing homework or whatever, and then there was just a switch that went off where I just started reading books. And now I've read thousands of books in my life, and it's a pleasure to read books. And that switch brought joy to me as a learner. Is the... What is the objective of education in the world? Why are we doing this? Is it just babysitting kids or is it to transform or what?

Langford: Well, a lot of systems over the last 20 years or more have gotten misguided because they think the aim of the system is just to get test scores, and so when you set up a system just to get test scores, just to get those numbers, and Deming admonished us about that very thoroughly. That's what you're gonna get. But if you sort of break down learning and start to think about what were the most... Well, I do this all the time with educators and have them recall the most impactful learning experiences that they ever had in their entire education career, and they'll talk about making airplanes in sixth grade, or they'll talk about all kinds of applications and making robots, and they actually will get very excited about that. Oh, it was so exciting 'cause we got to do this. Nobody ever, ever says, "Oh, it's so exciting to get the top score on my SAT test, or... " Mostly, it was just a relief of pressure to get that or that, "Oh, every year, when we take that standardized test, that was so exciting. See what my score was and see how I advanced." Nobody's gonna remember any of those things.

Langford: So you're not gonna test in quality into a system, and if you're really optimizing joy in learning in a system, you may not have the very best test scores that you could get through drill and practice and getting people to get those scores. But a lot of systems, what they do is they drive out 1 the joy in learning, and exactly what you're describing, Andrew, is that... I don't think... I met Deming after I already had a Master's degree and I'd been teaching for a number of years, and I realized at that point, I'd never read a book, I couldn't even name a book that I had read simply for the joy of reading it. The only reason I would read a book is because it was assigned in the class, and you had to read this to get a grade or do a book report, or you had to do something, and so you had to discover that joy of reading, even though the system wasn't actually teaching you to do that. But wouldn't it be glorious worldwide if our systems were actually teaching and developing a joy of reading, wanting to read, and that takes a different, much, much different type of approach.

Langford: I have five children, and I'll never forget my oldest daughter, by second grade, she already knew she wanted to be a writer, and she was telling people... They say, "What do you wanna be when you grow up?" And she said, "I wanna be a writer." And the people were kinda stunned by that, but one of the reasons she did is because she had a second grade teacher and he knew that she just loved to write, and one day in the library, she was looking for books, and he walked up next to her and he pulled a book off the shelf and he said, "You know, one day I'm gonna pull this book off and it's gonna say, 'By Kendra Langford on it.'"

Stotz: Wow.

Langford: She never, ever forgot that, and now has a Master's degree in Creative Writing. But it can be so simple, and that's what Deming was talking about with the profound knowledge psychology of what you're doing and how you're managing the system, and the impact that it could have years and years later, and people ask Deming, why should we stop grading people and doing all this testing and all this kind of stuff, and he would say something like, "Well, since I don't know who among them is going to be great 15 or 20 years from now, why would I wanna limit their performance now with a grade?" See, that's a much deeper long-term purpose of what it is you're trying to do and what it is you're trying to develop.

Langford: The great irony is, the more you work on developing a system like that, your test scores go up because there's a joy in learning, and people are making neural connections that are lasting, and recall is happier. There's a lot of research on it, when you learn something and then later you recall it, whether that's a year later or years later, the first thing you recall is the emotion attached to that. So a lot of times in my seminars, I'll just say to people, "Tell me some emotions when I say the word math," oh my gosh. People are like, "Fear, tense, hatred."

Stotz: No joy?

Langford: No joy, no. There'll be some people like that, that'll be, "I love it," and usually, most of the audience were groan, but there are people that despite whatever the system does to you, I'm still gonna have joy in math because I just have a preponderance of cells in that part of my brain I was born with and I get a lot of pleasure and a good feeling when I'm actually doing that.

Stotz: It brings up a point too, that sometimes when we look at education, we think, "Okay, we have superstars that are really good at it, maybe those are the only ones that are really gonna be able 2 to get true joy out of it," whereas it sounds like what you're saying is, it's about one of the objectives of the system of education is it should be to bring joy in learning to everybody.

Langford: Yes, and I've known hundreds of valedictorians, the people that we would point to and say, "Okay, well, these were the people that really aced the system," and wouldn't those be the people that have the most joy in the learning system and it is not that way. So I know for my own children as they were going through the system, and my two oldest daughters are valedictorians, and I tried constantly to help them see that that's great, that you wanna do that and you understand the value of that long-term, but there's also a great joy in helping others in your classroom. I've heard this a lot about MBA classes, that they're so competitive that a professor will give an assignment and then students will run over to the library and check out all the books in the library so other teams, other students can't get them. Well, that's a strategy to get the highest grade. Get the highest grade you can, and if that's your aim, you're gonna employ a lot of strategies to do that.

Stotz: Right.

Langford: So even valedictorians have to at some point find joy in learning again. And...

Stotz: So if we wrap up this topic, I wanna think about a person listening to this, who is a teacher who's challenged, they're struggling, it's not easy, and they're listening to this, they're thinking about joy in learning, how would you close out this discussion to help them think about it, to inspire them, that we can have joy in learning.

Langford: Well, you brought up the topic about what is the aim of education, so if you get nothing else, but you say, "Okay, I'm gonna start to make my aim joy in learning. Now, what would I have to do?" That's why I came up with a tool or a statistical method that I call it Consensogram, just for that purpose. And I asked students on a scale of zero to 100 in 10% increments, to what degree do you feel joy in learning in my classroom? And just take those, put them on sticky notes, and then we build a histogram out of it, and to begin with, it was not a pretty picture. And I've taught this to other teachers, and I've had teachers say, "Oh, I'd never do that." I'd say, "Well, why not?" And they'd say, "Because the highest kid in the room would put down 30%." Wouldn't you wanna know that? Wouldn't you know the depths of despair that people have in what's going on, and if you did that once a week, takes 30 seconds, you get a bit of data, you start to get a run chart, you start to understand, and by continually, is my average creating joy in learning in this classroom going up?

Langford: And if you say, "Well, no, it's not." Then the people to start asking are the students, what's preventing you from having joy in this math class, or this English class, or German, or whatever it might be, what's preventing that from happening? And then prioritize it and go to work on it, but it can happen anywhere.

Stotz: It's so many great nuggets for that person, that teacher listening in, the last thing you just said means you're not alone, you don't have to go back to your desk and figure this out, just talk to the students and say, "How do we bring more joy in learning?" And I think also, you've talked about the idea of a clear aim, and I know that's a huge part of what Dr. Deming taught about systems and the 3 system needs to have a clear aim, and boy, the world... How much damage would it do to the world if, for one year, we switched the aim of education, the aim of our education system to bring joy in learning to every student in that classroom?

Langford: Yeah. I don't know if I got this from Deming or not, but it's just the phrase I use all the time is, we don't really know what could be accomplished in our education systems and classrooms, etcetera, because we've never really tried. And some people get offended by that. But if you go back and you actually start trying, you will find ways to change the system to see a larger amount of joy happening in the classrooms. Even when I asked Dr. Deming about his classes. I said, "How did you do that?" And he began to describe teaching graduate level statistics classes, which doesn't sound like much fun to me, but virtually everybody in there got an A or accomplished everything that he wanted them to accomplish.

Stotz: Well, on behalf of everybody at The Deming Institute, I want to end this session of the Langford application of Deming to bring joy in learning, and I wanna challenge everybody out there to do your best today to bring joy in learning

Langford: Thank you, Andrew.

Stotz: Thank you.

In this wide-ranging discussion, Kelly Allan shares his experience with bringing the Deming philosophy into many companies. So much of the leadership principles Dr. Deming taught have seeped into companies in all industries - though most don't know that their methods originated with Deming. Kelly believes we're reaching a tipping point, and shares his ideas on how easily anyone can get started on a path of sustainability.

TRANSCRIPT
Download the transcript here.

0:00:02.4 Andrew Stotz: My name is Andrew Stotz and I'll be your host as we continue our journey into the teachings of Dr. W. Edwards Deming. Today, I'm here with featured guest, Kelly Allan, who claims we are nearing the tipping point in which Dr. Deming's management methods will more rapidly replace traditional command and control methods. And he has suggestions for organizations that wanna get ahead of competitors to reap the rewards worth millions and billions of dollars depending on company size. Welcome Kelly, and please explain that bold call.   [chuckle]   0:00:40.4 Kelly Allan: Well, it's interesting. When Deming sort of burst on the scenes in the United States in 1980 in a documentary of "Japan Can, Why Can't We?," he was describing, and in his first book, "Out Of The Crisis," he was describing an entirely new way of thinking. A new way of looking into organizations to see how they work, to help them work better, to make them more productive, and so it could be more joy in work. And there was so much, I think, it was such a fresh and new way of thinking that for most folks, it was overwhelming. So, now 40 years have passed, and little by little, so much of what he wrote about in that time and during the next 13 years of his life, have seeped into the way organizations, many organizations, are run, even though the leaders and others in the organizations may not know that those ideas came from Deming, and the combination of ideas came from Deming. And part of the reason that was in my mind is the... In the new... The third edition of... I have a copy here of "The New Economics," the new chapter, chapter 11, there's a dialogue in which Deming makes... This is interesting, kind of a, I thought about this a lot, bold prediction. It's a question to Deming. It says, "Dr. Deming, how many organizations are using your methods 100% today?" And Deming says, "None." "Wow! Dr. Deming, if no organization is using your methods 100% today, how many will be using your methods in 100 years?" And he said, "All that survive."

[laughter]

0:02:39.6 KA: Blows your mind, right? What... Is this hubris? And I thought about this for years. I've known this quote for years and years. And how is that going to happen? Is the Deming Institute, the Deming practitioners, they're suddenly going to be all over the media? And I don't know if that's what he had... I don't know what he had in mind. But, here's what we're seeing is that many of the methods that he was proposing, not just the tools, the technical tools to improve quality of the charts and the graphs and the plots and the lines, et cetera, but the strategic part, the leadership part, we're seeing those become now more and more mainstream. And we're only 30, 40 years away from what he said, and the momentum that we're seeing is getting bigger. So, in another 60, 70 years, I won't be around to see it, but I would not be surprised. And I have a lot of data, not only anecdotal but research studies from universities, et cetera that was showing what's going on with this.

0:03:49.2 AS: It's interesting, as you were talking, I was thinking about, well, what else was going on in kind of the '80s and all that? And I was thinking about one of the things that was just starting was the obesity epidemic in America. And it's like in some ways, if somebody could have seen the future, they'd say, "Hey guys, we're gonna be in trouble."

0:04:09.1 KA: Super-Size Me.

0:04:11.0 AS: If this continues on, we're gonna have 30%, 40% of our population in the obese category. But who listened to that? Nobody listened to that, right? [chuckle] And now it's like, okay, so now we're here.

0:04:24.8 KA: Yeah. Well, I think it's... I'm not sure there's a direct analogy, but there is, are some, certainly some similarities that you mentioned. So, for example, with business, if I was one of those earlier adopters of something that Deming was talking about. Just to try something, right? Just not get my arms around everything but just to try something and it worked. And then, I'd try something else and it worked. And I'd try something else and it worked. So, whether we're talking about thinking about control charts instead of spreadsheets. And thinking about having managers be mentors instead of sheriffs. To be thinking about abolishing performance appraisals and focus on processes, and holding processes and systems accountable rather than just focusing on an individual and try to improve only people instead of the system on which they work. At a certain point, those organizations leapt ahead of their competitors.

0:05:26.4 KA: So it becomes... I mean part of human nature is to just, "Hey, it's familiar, it works, let's just keep doing more of that." And many of them never went back to the Deming well to get more tools. To learn more things because what they had, the few things that they tried were so powerful. Well, fast-forward. A lot of those things that were radical, revolutionary at the time Deming was first talking about them have now become more and more common practice, and they are what you need to get a seat at the table. They don't put you ahead anymore. You have to have them because your competitors are doing them. That's more with the sort of technical quality of service, improved service quality, improved product quality. But we're also seeing the things like having managers be mentors and coaches rather than sheriffs and disciplinarians, and holding people accountable for the output of the system.

0:06:31.5 KA: Younger folks, especially, will not migrate to the organizations that are still using those old tactics. Especially, we see it in technology firms, but we're seeing it everywhere. We're seeing it everywhere. So, a number of Deming-based companies during this time when it's impossible, seemingly impossible to hire people, have people waiting in line to go to work for them. And that's part of the Deming magic is you get both. As you focus on his methods, productivity increases as costs go down. Quality increases as costs go down. Joy in work increases as costs go down. Competitiveness increases as costs go down. That is powerful. Imagine having the lowest-cost service, lowest-cost product, and the highest quality with workers who want to stay and work with you and want to continue to learn. How can you not grow your market? How can you not grow your share of the pie, or grow the pie itself?

0:07:48.2 AS: Just thinking about... You were talking about going back to the well and getting other tools to apply. 'Cause I was just thinking, what you were saying, and one of the ideas I was thinking was that, if a typical person went to a typical Deming seminar and they just walked out of it and said, "Why don't I stop being confrontational with my management team and my workers? Why don't I just stop setting them against each other? And why don't I view things as a system where we're all gonna work together?" And that's the only thing they took back. They could get a huge benefit.

0:08:24.4 KA: Absolutely.

0:08:25.4 AS: There's also a lot of other aspects that can continue and build on that. So, when you're talking about... What you're saying, is that what you mean? Like there's some core principles that you could just pick up and start applying right away without having to understand everything about the technical aspects of Deming?

0:08:43.5 KA: Oh, absolutely. And in fact, a number of firms don't do much with the technical "quality tools." So, some maybe build a control chart or two a year, at the most. Some may have fishbone charts, but not all of them. Because they have focused more on the leadership methods, which are really in "The New Economics," rather than the technical quality. So when you add Professor Shraim, you're talking also about different methodologies, different disciplines to improve quality. Deming didn't make, to my mind, in my reading, it didn't make that distinction between producing a great service experience for a customer or producing a great product, with producing a great strategy in the boardroom or the C-suite, because the thinking is the same. The tools that you would use to improve product or service quality can be applied in the financial CFO's office. Right?

0:09:53.5 KA: You start looking at the numbers differently. You start understanding what the numbers are telling you or not. 'Cause spreadsheets are not really an analytical tool. They're simply a numerical record. Deming's tools provide true analysis. So, in the early days, it was easier for most organizations to grab, not all of them, Gallery Furniture for example, down in Houston, grabbed a lot of the leadership principles. Taking sales people off from commission, sales go up, turnover of employees goes down. Right? So, they did a lot of those things. Most other organizations though grabbed on to the "quality tools," right? They're very concerned about the metrics related to processes, and that's important.

0:10:46.7 KA: The thing is, we're at a point in most organizations now that if you just rely on the "Quality department" to try to improve the service that you're delivering, whether it's a customer service experience, call center experience, or whether it's a product or installing a satellite dish or whatever it is, you're not getting the full benefit of Deming because the improvements and the changes that you want to make to increase productivity and reduce costs run up against that old commanding control, traditional way of management. You mentioned, for example, causing people to compete against one another for rewards and recognition. It's interesting. Stanford did a study several years ago in which they asked, I think 435 CEOs of companies of size, I don't know if they were all public companies, I don't recall. But what was their number one issue that they're worried about? It wasn't competitor's products. It wasn't innovation. It wasn't worldwide issues. It wasn't any of these things. The number one issue was, "My direct reports don't get along, They won't play well together."

0:12:01.7 KA: Well, let's see, you make them compete against one another for your attention, for budgets, for rewards, for recognition, for all those things. Why would they get along? They're not on the same team and it's your management approach that has caused that to happen because you believe, you've been taught to believe, that competition is how you get the most out of people. Deming, of course, saw that people are maybe 3%, 4%, 5% of the results that you get. It's the process, it's the system, it's the culture in which they work that yields those results, and it's much better to have. And it's easy to do, right? That's what's amazing. It's not hard to do to improve. To make your processes and systems, whether they're HR systems, hiring systems, production systems, delivery systems, whatever it is, to make those above average, so that you can get more people who can get above-average results. It's magical. It's so simple, but it's not familiar. It's not familiar. They're in that Deming well. They're in buckets there, but most people have not been exposed to it.

0:13:19.0 AS: So, the next question I'm gonna ask you is gonna go back to what you were talking about. How some people just take some of the starting points in Deming's teaching and apply that and get a lot of benefits. And my question to you is, and you're gonna have a chance to think about this question because I'm gonna introduce you to the audience after I ask it.

0:13:37.9 KA: Okay. [chuckle]

0:13:38.6 AS: So you got a chance to think about it. But what I wanna think about is let's take a listener out there who's just very new. They're like, "Oh Deming, interesting. I've downloaded the book, I've read some of it. Some of it's confusing. It's a bit overwhelming." I want you to think about what you can tell people as far as kind of concrete things that they could do to start to bring the Deming philosophy into their work. And while you're thinking about your answer on that, let me introduce you to the audience. Kelly Allan is Chair of the Advisory Council of the W. Edwards Deming Institute, and he wrote the new chapter for the third edition of "The New Economics," Dr. Deming's seminal book on leadership. Kelly has also published in a variety of journals including "Forbes" and "The New York Times." As you might imagine, he also gives a lot of presentations and seminars on the topic. So now, Kelly, for the beginner out there who doesn't know much about Deming, they're learning. What would be the first kind of concrete things that they could implement in their business?

0:14:37.6 KA: Well, I'll give you several, because different people have different interests and different ways they like to learn and consume. So, starting with that new chapter in the third edition of "The New Economics," that's 45 pages. It's not a huge commitment, and it gives you lots of examples of what organizations have been doing, and why the thinking makes sense. And part of the beauty of what Deming gives is it's very natural, humane, authentic, genuine, intuitive. So,1 that's one thing. There's a lot of free materials at Deming.org. Just a vast amount of things. There's a new piece that's a new offering that's coming up here. It's called DemingNEXT, which is online learning, so, the self-paced learning or facilitated learning with a facilitator. That's useful.

0:15:34.1 KA: There are also seminars. So, there are one-day seminars. There's a two-and-a-half-day seminar, if you wanna go more deeply. But in one day, it's really more like six hours with breaks and lunch, et cetera, we call it one day, but you can get exposed to some of the key thinking. And it's not really lectures. It's hands-on, fun things that get past the gatekeeper in the brain said, "Well, this will never work." And people have aha moments from that. So, there's experiential, there's reading, there's... And the other nice things about the Deming Institute is a non-profit. So, our aim is about spreading the word, right? Getting people more exposed to this, so we try to make everything as affordable as possible just to cover costs.

0:16:26.0 AS: So, great actionable things. First is download "The New Economics" and read that new chapter as well as what's in the book. I think it's...

0:16:34.1 KA: Well yeah, we say the new chapter first because it's very approachable. And then you can go back and start to read Deming's own words, and it really sort of brings things together, is the theory in any case. That's what we've heard.

0:16:50.2 AS: Well, you can also see in "New Economics," you can just see that Dr. Deming's thinking and philosophy developed over time. He was continually improving. And I think that there was sometimes in early on stages where it wasn't as clear as his writing later like in "New Economics" where it really started to come together a lot more for me. So, we've got "New Economics." The other thing is to visit DemingNEXT, and I think that that's another great opportunity to do. And as far as... I wanna just talk about the first two points of Dr. Deming's 14 points because I think... I've read these over and over again, I've thought about these over over again, and sometimes I just like, "Wait a minute. I'm not exactly sure what he means." And then sometimes I feel like, I know exactly what he means. So, let's talk about create constancy of purpose towards improvement of product and service. And the final part is with the aim to become competitive and stay in business and provide jobs. So, he illustrates an aim of the business, but it's this constancy of purpose towards improvement of product and service. Can you talk a little bit about that 'cause that's one of the first things that people are gonna hit when they come into Deming's teaching?

0:18:07.3 KA: Yes, and I think at Deming.org, there may even be a video of him talking about that. And that's all free. So yeah, to bring into that, one of the deadly diseases is the job-hopping by managers, right? Because you don't really get to know a job. So, with constancy of purpose, it does two things I think that are key. One is it gives you a long-term view, but it also helps you make short-term... You get short-term results as well. And that's also part of the beauty of Deming is that you can start doing stuff after you learn. You can start making better decisions the very next day. It's very immediate. And you'll still have things that you can learn in 20 years. So, that constancy of purpose helps with employees for example, with associates, team members, who want to come and stay, and who are attracted to the organization because what is true and genuine today will be true and genuine six months from now. Twelve months from now. Years from now, because that purpose, that constancy of purpose is to work to optimize the organization, so everybody wins.

0:19:28.0 KA: That's pretty powerful. So, whether it's customers, suppliers, people who work in the organization, the community, the environment. Deming was really pushing for big picture view with that reliable trust that people can have in the organization. Trust is so important. There's so much garbage written about trust.

0:20:02.0 KA: If you'll pardon me saying so, and it's really quite easy. And that is to do the right things and keep doing the right things. And Deming provides a framework for that versus trying to manipulate people. Versus trying to rate and rank people, in a system that is more in control of their outcomes than any individual. And that's some of the things we do in the seminars is to show the famous Red Bead Experiment and the white bead factory, and it's in DemingNEXT as well. So, that people can actually experience for themselves what they experienced when they were willing workers and forgot about when they became managers. It takes them back, that anxiety of not being able to trust the manager. So, I'll bring up another piece here, which might be useful, and it's also on Deming.org. And you can search my name to find it, if you just go to the home page, and then the search box put in Kelly Allan. There's an article that Professor Schramm and I wrote, based on a bunch of research he'd done through the years with his students engaged in the engineering school at Ohio University. And what it's about, it's called using a Deming lens to investigate and solve managerial challenges.

0:21:35.4 KA: The top things that the managers list that are causing them incredible burnout, frustration, job hopping, are all solved by understanding the Deming leadership method. It's just that constancy of purpose of trying to ensure a win-win, not manipulating people, being authentic, working on collaboration rather than internal competition, helping people be successful rather than rating and ranking them. All of these schemes and organizations have, because they think that people have to be manipulated or they won't do their work, in case, and when it just actually just the opposite case.

0:22:22.4 AS: A great way of illustrating that is to think about children. Children, obviously. There are children that are subjected to just brute force by adults, and they don't have that much joy left in them. But the fact is, is that it's like they're born with this abundant energy, a positive and energetic spirit. And when you think about what you see, it's one of the reasons why we love going to kindergarten classes.

[chuckle]

0:22:53.4 AS: And to visit the kids, it's like, "Wow, this is amazing!," 'cause here I am in the corporate world. I gotta fit in this box. I gotta punish all these people, and I gotta reward these. I gotta make the tough decisions and all of that. And it's like the distance between what is natural of just that fun and joy that you have when you went to school when you were a kid, and what you're doing as an adult. Sometimes it just gets painful. Work is painful for many people.

0:23:20.7 KA: Well, and so I think this was Dr. Deming who said this that we were all born with the desire to learn, and then we go to school, and it's beaten out of us. [chuckle] Yeah, yeah, and it's interesting, the number one issue that these managers that were interviewed said was... And it's top three things, it's a Pareto chart distribution. Listen, number one by far, which is, I have to spend so much time trying to motivate people. Why are they so demotivated, right? Most people don't get up in the morning wanting to go to work to do a bad job. We all wanna go to work to make a difference, to improve something, to do something that's a quality. Deming said pride and joy in work. So, we get to the organization, and it's a prison. Deming used that word actually, people in jail because they cannot be all that they can be, that they want to be at work. So, Deming talks about removing the demotivators. Let's get rid of the demotivators of treating people as if they're responsible for the system in which they work. They're not. Treating people for the results they get that are results of a bad process. He said a bad process will beat a good person every time.

0:24:51.7 KA: So, senior leadership is focused, and so many organizations in the past have been focused on making people accountable. The reason I think we're getting to that tipping point is there are more organizations that are realizing it's our role as leaders to provide the system, so that more and more people can be more and more successful. Because that's win-win, optimizing the system for everybody. They treat customers better, they treat each other better. They have a framework of a process they get from analytical thinking, critical thinking skills. Man, it's just fun. It's just fun.

0:25:27.9 AS: Yeah. I wanna go back to this point number one about create constancy of purpose towards improvement of product and service. In some ways what Dr. Deming is saying is ... Wait a minute, as a new listener or new reader of Deming, is that it? Just all we're gonna do is improve and improve and improve? Isn't there... We've gotta focus on quarterly results or we've gotta focus on mergers and acquisitions, or we've gotta produce for the shareholders, or whatever that is. But there's kind of a leap of faith there, and I just wanna talk a little about that. And I also wanna talk about one of the tools like PDSA, and this concept of what do you get if you relentlessly pursue improvement of product and service?

0:26:18.7 KA: Well, you end up owning the market in most cases. If you're doing it in the right way. If you're doing it in a command and control away by setting quotas and targets and goals that have no foundation in reality whatsoever in terms of what is the capability of a process or a system. No, you won't ... That's improvement the old way. The improvement with Deming's approach is to a handful of thinking tools, if you will, that you can apply and start to see what's going on with why are we having so much variation?

0:27:02.8 KA: Why aren't we have really a learning organization? Why don't departments get along? Why do we have so many silos? Why isn't it working the way I thought it would work? So, that constancy of purpose provides the framework for an approach, right? And we don't want people to take more than one leap of faith, and it's not an expensive leap of faith at all. It's read a chapter, reach out to us at the Institute, and we'll start to get you connected with resources, et cetera. But you just have to try one experiment. When you referred earlier to PDSA, a Plan-Do-Study-Act. And we always help people design those so they're low cost, low risk and fast. So it's not a big commitment, some of them can be done in an afternoon, to show the power of thinking differently. So, we want people to start small and then they'll take the next step. One of the things I want to really emphasize though, because I think it's so important, is that if you have not started on Deming journey, and you're the business owner or the leader of the organization, and even if you don't own the business, if you've not started on this Deming journey, you'd better hope none of your competitors have.

0:28:35.8 KA: Because if they have, they will gain momentum. First, they'll eat their breakfast then they'll eat your lunch, and then you're done. [laughter] And my organization, the Kelly Allan Associates, has worked on a number of turnarounds through the years. Companies that were going out of business. And it would be... For me, that's the proof of the Deming approach, right? No resources, in fact, negative resources. The company is going to fail. They're not going to make payroll, right? Fairly soon. We've ever walked into organizations where the lights were out. We met in a conference room that had windows. $250 million top line organization turned the lights out because they didn't know if they're gonna make the electric bill. Money was just bleeding like crazy. That is a crucible. That is a test of the Deming method.

0:29:23.7 KA: To be able to turn that around. Right? So, that if you're not getting started on your Deming journey, you're leaving yourself really vulnerable to a competitor who discovers it. Now, you can catch up if your competitor is not really going quickly, because you can't do three years of work in three months. That's not what I'm suggesting. But you can go fast, and if your competitor's doing a nice steady pace, and that's a good pace to have. But if you need to catch up, then Deming approach allows you to ramp that up pretty quickly, because it's not hard to do. The main barrier to constancy of purpose is our belief system about how things either should be or must be. And that's why when Deming burst on the scenes in 1980 in this country, it was like, people thought he was talking a different language. He was talking a different language. He was thinking differently.

0:30:33.9 AS: Yeah.

0:30:34.3 KA: And that's the leap, and that's what we try to do in the seminars and the book, is to help people make that... See that there's a different universe there that is better, faster, cheaper, smarter and more fun.

0:30:47.0 AS: Yeah, there's two things that I was thinking about too as you were talking and that is Dr. Deming, he constantly refined his thinking in his work. And I just... I'm going back to the constancy of purpose 'cause I think that I've had my own challenges thinking about it, and I think you're clarifying a lot of it. One of the things that I wanna highlight is that he talked about create constancy of purpose for improvement of products and services.

0:31:16.9 AS: Now, it's interesting. Here is a guy that was so committed to quality and all of that, wouldn't you think that he would have said to improvement of quality of products and services? [laughter] But in fact, he was saying you've gotta improve your products and services, and then how do you know if you're improving your products and services? Well, if your customers are buying more, they're feeling satisfied. It's just interesting, as I think about what you're talking about and I'm looking at it, I'm realizing it's interesting that he said improvement of product and services, not the quality of products and services. Why do you think he didn't say the quality of products and services? Instead he said improve them.

0:31:56.6 KA: Well, of course, I don't know, and I don't want to try to channel him. But my sense from exposure to him and to his readings and seminars, et cetera, is that it's the Deming chain reaction that is what gets you to do to a better space. And if you're working on improvement in the ways he suggested, ways that make sense that are not commanding control, but collaborative and insightful, et cetera, there's a methodology there that's again, easy to learn.

0:32:36.7 KA: It doesn't matter whether you are the CFO, the COO, the chief legal officer or anyone else in the organization. Because what your focus is on is trying to figure stuff out. That's the fun of it. That's when you talk about children earlier, they're trying to figure stuff out. And when they get a methodology to figure stuff out, they grab it. And that's what happened in the '80s and '90s with Deming. I think what we were all exposed to was Deming was dubbed the quality guru because so much of the name of the NBC documentary was, "If Japan Can, Why Can't We?" Because the Japanese were producing high quality products, right? From they used to produce junk. Radios, right, that didn't work very well. And then once they got into Deming, quality went way up and cost went way down. So, he was dubbed the quality guru, and that's fine. But it puts him in a box, so people miss the strategic part. The original title of his first book, "Out of the Crisis," had to do with competitive advantage. He saw that. He understood that.

0:33:57.8 KA: So, that competitive advantage comes from thinking about figuring stuff out in ways that are not command control. That are not toxic.

0:34:10.4 AS: I want to talk about what you could argue is the end of an era. And I wanna go back in time to the post-World War II period when Dr. Deming was working with the Japanese and coming back to America and trying to get people's attention. And then we had about a decade of prosperity in America. Why pay attention to quality? It's just all about quantity. Last night, I was giving a lecture in economics and finance, and I was talking about this flow after World War II, and what happened. And I'm gonna share my screen for the people that are watching; and for the people that are listening, I'll read it out as we go through. So, I'm just gonna share one slide, and then let's think about this and discuss it a bit. So, let me do that right now. And this is the slide, and basically, it's a picture of Dr. Deming and a quote with his, what he said. But at the top of it, I wrote down that America was great because every other country was destroyed. And the quote goes like this. "In the decade after the war," meaning World War I or II, sorry, "the rest of the world was devastated. North America was the only source of manufactured products that the rest of the world needed. Almost any system of management will do well in a seller's market." What does that mean to you, Kelly? At that time as he was saying it, probably at that point in the '70s or the '80s, and then where we are right now.

0:35:57.6 KA: Yeah, it is now a worldwide economy, and many different countries are able to produce in volume products that people want to buy. So, that kinda takes me back to what I mentioned earlier is that that is a baseline now, right? Deming was pointing out that there was a period of time where the quality didn't really matter as much as quantity. But, as you say it, that era I think is long gone, and we expect now quality at a lower cost. And indeed, if you start to think about it, so many things that we have are remarkably inexpensive for what they do. And not just technology, but certainly technology is an example of that. So, it ratchets up my point about that is now just a seat at the table. Not only is quality able to produce quantity just a given. You have to be able to produce quantity in a way that produces quality without raising your cost inordinately, or in fact, if you can reduce your costs. And that's probably gonna be the way it is going forward. I talk in some presentations, I talk about the arc of quality being a long one but bending towards Deming. Reverend Dr. Martin Luther King Junior talked about the arc bending towards justice. Well, in terms of production, productivity, service delivery, excellence, if you will, it bends towards Deming. And I see that arc coming much faster now, both anecdotally and in the research studies that I see.

0:38:07.3 AS: It's interesting also because what we saw was a transformation that happened in Japan. And if people my age, your age and others, we knew that when we were young, if it said Made in Japan it was low quality. It was just a low quality item, and Japan really went up this quality scale into a complete transformation. And now something made in Japan is known as a very high quality product in most cases. Now, what's also interesting is China. For many people, younger generation, Made In China may have meant low quality items and possibly low price and low quality. But the quality of the cars that they're making, the manufacturing that they're doing, that the parts and the supplies that they're doing into iPhone as an example, these are very high levels of quality. And what I can imagine is that the Deming philosophy of continually improving could really be applied well in any country, whether that's Africa, countries in Africa, or whether that's in China. To say how do we keep moving up that quality scale. And as you say, if your competitor gets a hold of this, and before you, they're gonna move much faster than you. What are your thoughts about that globalization of it all?

0:39:30.0 KA: Yes, absolutely, so it's not just a competitor in any given country. It's the international. And so as you talk about they're improving quality of the products that they're manufacturing, if they don't adopt to the next one, if they don't adopt the new philosophy of management, Deming's philosophy of management, they will hit a wall. Because the commanding control approach of management by spreadsheets, management by quotas, management by the numbers, management by objectives as it's typically practiced hits a wall in a variety of ways. People don't wanna work for you. They start to sabotage you. You start to break things in the rest of the organization because you're managing through fear, right? That's why with the system of profound knowledge that Deming outlines, and the four elements of that in "The New Economics," that is the future. That is, to my mind from what I've seen in terms of impact, leverage, power, if people think the quality tools, right? And they're important and we have to have them. The charts, the graphs, the plots, et cetera. But if people thought they were powerful... And they were because if you're not doing that in your organization of any size at all, you can't... You're done. It's just... You won't be able to continue.

0:41:16.0 KA: So, almost any organization of any size that's left is doing that and they got great results from that. The system of profound knowledge, I would say, is at least four times more powerful than just using quality tools.

0:41:30.8 AS: You've touched on two things. You've started to talk about point number two: adopting a new philosophy. But you've also talked about the system of profound knowledge. So maybe you could just expound on that for a beginner who may not know anything about that and even for experts who wanna keep thinking and refining their thinking on it. Can you explain what that means to you?

0:41:53.0 KA: Well, it's such a rich area, and I like to think of it in this way. I don't wanna have to learn 400 things. I don't wanna have to learn 40 things. As a business owner, I want to do the least that I need to do to get the best results. The greater results. The system of profound knowledge is four things. I can do four things. I can figure out four things. Deming helps me figure out four things. Now, obviously, I'm over simplifying a bit because when he talks about knowledge of variation, there are some important things in there that we have to understand. What type of variation do we have? That's easy to figure out. You don't even have to do the statistics in most cases to figure out whether you have common cause type variation or special cause type variation. Because reducing variation increases productivity, joy in work, profits, customer satisfaction, et cetera.

0:42:55.9 KA: So, reducing variation is important. I'm not talking about innovation, more innovation. Deming is all about innovation. What we're talking about, variation in terms of how we can rely on output whether it's a service output or a product output. So, understanding what type of variation we have tells us what to do if we get a bad result. It tells us how to fix that, how to investigate that, or to improve the system. So, the next one has to do with appreciation for the organization as a system. People have been taught to optimize every department, which is a natural outcome of that sub-optimizes the organization. So, let me say it this way. Every organization is perfectly designed intentionally or unintentionally to get the results that it does. To produce the results that it does.

0:43:55.4 KA: I don't care if you're a financial institution, a technology organization, or a manufacturer, or a seller, or a distributor, or service organization, or whatever it is you happen to do. Whatever symptoms you're seeing that you don't like and that frustrate you are built-in, designed into your organization, and they sub-optimize it. So, we have to purposely look at the various departments and workflows to say what needs to be optimized to optimize the overall organization? What needs to be sub-optimized? We don't want everybody... And I think Deming gave the example of the symphony orchestra. You don't want everybody coming in playing loudly all the time. That's trying to optimize every person. It sub-optimizes the orchestra, right? So, that's the... So, there are some guidelines on how you optimize and have appreciation for a system, which goes beyond just systems thinking, by the way.

0:45:00.9 AS: So, we have a system, the system of profound knowledge now as you've gone through for the listeners out there that aren't familiar with it. What you've talked about is the knowledge about variation. Now, you've talked about the appreciation for a system, and then we have two other elements.

0:45:17.1 KA: Two. We have two more. Right. One has to do with theory of knowledge, which is, how do we know what we think we know is really so? [chuckle] Right? Deming's first questions was always, how are we doing and how do we know? So, how do we know what we think we know is really so? The numbers on the spreadsheet are not a proxy for reality. We have to have numbers, but let's make sure we don't imbue them with more importance than they should have. And then, how do we take that, and what we learn from that and spread it through the organization? And that's where the Plan Do Study Act experimentation comes in. That's where things like operational definitions come in. What does good mean? What does on time mean? Right? What does clean mean?

0:46:02.1 KA: And then the fourth one, the fourth element of the system of profound knowledge, has to do with psychology. How do we react and interact with one another? What causes us to collaborate? What causes us to compete against one another in our organizations? And let's leave the competition to the sports arena or against perhaps other companies. Deming also gave a lot of examples of how competitors can cooperate and get to win-win as well. Now, I should probably point out that there's one other thing that's really important to me and that is Deming called it the system of profound knowledge not because he thought he had come up with something profound. What he said is if you'll use these four elements: Understanding variation, appreciation for a system, human psychology and how we think we know what we know is really so, use them as a lens. A diagnostic lens to see what's really going on. You will... If you do that by asking just four questions: What's going on with variation? What's going on with psychology? What's going on with the system?, et cetera. You will get profound insight. You will have profound knowledge, and that's what you need to be able to reduce costs as you increase joy in work. To reduce costs that in the causes of costs as you produce things, whether it's a service or a product or whatever. So, productivity goes up, everything good that you want goes up, but the frustrations go down and the causes of cost goes away. Start to go away, get reduced.

0:47:43.0 AS: So for those that are listening or viewing this and you wanna really capture what Kelly is saying, I would challenge you to just write down four words: system, variation, knowledge and psychology. System, variation, knowledge and psychology. And what Kelly is telling us is that if we walk into a situation, and we're able to see things as a system. It's like we can back up and look at all the inputs and outputs and everything that's happening with different departments here rather than focusing in very narrowly. Number two, if we can understand variation and not freak out because something has variation in it knowing that, hey, we have to understand a little bit more about this variation before we react. And then if you think of... If your third part is the knowledge where you think, what do we know and how do we know that, and how are we building knowledge in this? Or are we are just coming at this cold every time? And then finally, what are people's psychology? What do people want? What do people feel? And if you think about system, variation, knowledge and psychology, what Kelly is telling us is that what Dr. Deming is saying is that you will have profound knowledge. Would that summarize it?

0:48:58.4 KA: Yeah, I think that's correct. Now, I think another place where the managers in the research study that I talked about, they've been taught at some seminar or something, that they're supposed... Not in Deming one, that they're supposed to manage every person as in a very special way. How can you scale doing that? I mean there are some Deming-based organizations, and there are no perfect ones, but there are some Deming-based organizations that have hundreds of thousands of employees coming through their doors every day. It makes no sense to try to have 300,000 different approaches to leadership. But because the Deming approach is so humane, it makes so much sense and it engages people. It just is so much easier than the typical things that managers have been taught about how to motivate people and how to give people bad news. And you know with Deming it's working on the work together to figure stuff out. Wow! That's a job I'd work, right?

0:50:09.7 AS: Yeah. You know, Kelly, I had an experience where I was consulting with two different companies, and I was teaching and advising them. And what I was so fascinated about was that both of the CEOs were kind of charismatic, smart, energetic, good guys. And then they had these management teams that if you talk to each of the individual managers--impressive. Cause I was reviewing LinkedIn profiles of the different managers as I was going in to get to know them and all that. Individually they were all impressive. And so, we had a great time. We did two days together, going through a bunch of stuff. And then at the end of it, I left those two different consulting jobs that I did in one week, and at the end of the week, I thought to myself, interesting. They're almost identical in so many ways, but one of them is losing money and crashing their business. And the other one is going from win to win. What's the difference?

0:51:08.9 AS: And what I came up with my conclusion was, there's really... It's intangible, which is very different from what I learned as a financial guy is that look at the numbers and that sort of things, but I learned that numbers are just tools. But it's intangibles. So, I've come to the conclusion that first, you need a good CEO that sets the right direction, that she or he knows where they're going, and they're taking in good input, and they're setting the right direction. If they're setting the wrong direction, you're in trouble. The second thing is it's not about the quality of each individual manager on a team, it's about how the CEO helps coordination of those managers, so that you do optimize that system. And I felt like it's CEO leadership, and it's the CEO's helping the management team to coordinate their activities. How does that fit in with what you've observed as a consultant over the years?

0:52:08.0 KA: Yes. So, one of the things is the gift of a CEO, and Deming writes about this in "The New Economics," and where the power of the CEO comes from the three places... I wish I was going through it right now. But it's basically if that CEO is able to adopt the new philosophy and understand it, you build a culture from that. The way we do things around here, the way we treat one another, the way we work on problems, the way we address issues is who we are. It's a part of the design of the system, and the design of the system produces the results, right? So, it's all linked together. So, charismatic CEOs can get a lot done, but a lot of not charismatic CEOs also can get a lot done with Deming. So, whether you're charismatic or not doesn't really matter. And, the thing is you can get insight about that in a day, and I'm not talking about spend a year to really dig into Deming. No, no. Give us a day at a seminar to get your feet wet, so you can go back and do some things in your organization. As an executive, you get to make some of those choices. A day is gonna pass whether you learn about Deming or not. A week's gonna pass. A year's gonna pass whether you learn anything about Deming or not. And as we interview CEOs say, "I wish I had done this years ago. I wish I had done this years ago."

0:53:48.9 AS: There's also documentation of what you were saying, Andrew. A university study that a couple of universities collaborated on over the course of 30 years, several studies that show that the results of adopting a new philosophy, the Deming approach, has incredible results. So, these are organizations that are long-lived, first of all, makes them very special, because organizations don't last that long these days. So, this is looking at organizations over 30 years who grew prosperous. They had a whole host of criteria that were needed, that they looked at, whether it's turnover rates, and pay rates, and all kinds of things. And in business, if something... If a way of leading or managing gets a 55% correlation to good results, that's pretty darn good, right? That's really very good. That's worth spending some money on, because most don't get anywhere near that. Right? Their research, if people wanna reach out it's a work that Cassandra Elrod and some of her colleagues did at the university, shows in some cases almost a 90% correlation. Unheard of. So, if you're doing things that work about 55% of the time but you're up against the Deming company that's doing things that are getting results 90% of the time. Do the math. Do the math. It's pretty easy.

0:55:35.3 AS: Right. Interesting. Well, let's get that... We'll get that link to that and put it into the show notes. So people can go in and...

0:55:40.4 KA: Yeah, I'll give it to you.

0:55:42.4 AS: I think that's a good one. In the spirit of wrapping up now, what I wanna do is ask you this question. Why Deming? Why now?

0:55:56.5 KA: Well, I think for all the things that I said, but if it's not fun, it's not done. I want to have fun. I mean, most of us want to. Not that we aren't serious about work. That's not what I'm saying, but Deming talked about it as joy in work. It is to create meaning, right? Viktor Frankl's book, "Man's Search For Meaning." It is very meaningful. At the end of the day, you don't leave work feeling like you have to go home and take a shower to wash off the toxicity. You walk out of your job knowing that your best efforts made a difference because you were working with profound knowledge. You are working with people who want to collaborate, want to figure stuff out. So, at a more... The name of Deming's second big book on leadership is "The New Economics." So, it's also about the money and the money being used to create more jobs because... And a friend of his, Peter Drucker, also an economist, recognized as many other have, of course, recognize that democracy rests in part on good jobs. Social unrest and a lot of bad things come from not having good jobs. So, at the end of the Deming chain reaction, it's being able to grow and create job, as he said create jobs, jobs and more good jobs.

0:57:35.1 AS: Beautiful. Now...

0:57:36.4 KA: It makes a...

0:57:38.3 AS: Yeah, it's a great one. And for the listeners out there and the viewers, are you bringing joy to work? Are you helping that process? Or are you causing competition at work? Think about it honestly, and start to work on bringing more joy to work. Kelly, as we wrap up, I wanna ask you a final question about your involvement with the Deming Institute. I think it's important for people to understand what's going on at the Deming Institute? And how people can understand what's going on the Deming institute, what's the direction? And also how can they support the Deming Institute in any way possible?

0:58:21.6 KA: Well, there's a lot more going on at Deming Institute than I can certainly elaborate on because it's a very robust organization these days. And the Institute attracts people who also wanna make a difference, because of the nature of their aim and Deming's principles. So, and the fact that I think it happens to be a non-profit is also a useful thing. So, it's a goodwill, right? It's about really affecting change for the better. And that's... I volunteer as do many, many people volunteer, including the executive director volunteer, Dr. Deming's grandson, volunteer time. He volunteers full-time. I would say the way to get involved is to start on a Deming journey. Deming talked about the transformation in two ways. One was it starts with the individual. Know thyself. Read Deming and think about yourself. Feel about yourself, and what is authentic about you, and how that matches Deming. But he also says that the change of recognizing improvement in quality starts in the boardroom. So, it's a combination, but you don't have to be the leader to affect change, right? And certainly for yourself as well. It applies to families, certainly also. And then once you start on that Deming journey, reach out because we'd love to hear from you and try to engage. We try to engage people, and the Institute offers some scholarships to some of the seminars for folks. It's pretty cool.

1:00:20.7 AS: Yeah, so just go to the... Just type in Deming Institute right now on your browser and you'll go straight there.

1:00:28.5 KA: Or even deming.org. It's easy for me to read. D-E-M-I... Yeah.

1:00:35.0 AS: Thinking about reaching out, I originally met you in 2014 when I saw that Deming Institute was offering a seminar in Hong Kong. And not only did I reach out and go to the event, but I also kept in touch. And you're a testament to the willingness of people within the community to help each other. And so, I really encourage everybody to reach out to Deming Institute and also Kelly and others there. So, Kelly, on behalf of everyone at the Deming Institute and in the Deming community, I want to thank you again for coming on this show. Do you have any parting words for the audience?

1:01:15.5 KA: My pleasure. Start now. Start now. It's so much fun. It's so interesting.

1:01:23.5 AS: It's an endless journey. And that concludes another great story from the worldwide Deming community. Remember to go to deming.org to continue your journey. This is your host, Andrew Stotz, and I will leave you with one of my favorite Dr. Deming quotes. "Innovation comes from people who take joy in their work."

Kevin Cahill, President and Executive Director of the Deming Institute, reflects on growing up with Dr. Deming, learning about his grandfather's impact on the world, and his own Deming journey.

Kevin also describes The Deming Institute's origins, the DemingNEXT initiative, and using Deming in the real world.

SHOW NOTES

Books mentioned
The New Economics and Out of the Crisis, both by Dr. Deming (available via www.deming.org)
Transform Your Business with Dr.Deming's 14 Points, by Andrew Stotz

0:00:36 Growing up in the Deming family

0:04:29 Watching If Japan Can, Why Can't We? with my grandfather

09:07 Kevin's own Deming journey

14:21 The origins of The Deming Institute

21:35 Why Deming, why now  

39:14 Introducing DemingNEXT

46:06 Andrew's Deming journey

53:34 Deming in the real world

TRANSCRIPT
Download: Transcript of Kevin Cahill's Podcast 4-22-22

Andrew Stotz: My name is Andrew Stotz, and I'll be your host as we continue our journey into the teachings of Dr. W. Edwards Deming. Today, I'm here with featured guest, Kevin Cahill. Kevin, are you ready to share your Deming journey?

Kevin Cahill: Absolutely, Andrew. Excited to be here, looking forward to it.

AS: Yeah. Well, I think we gotta kick this off by introducing you. Tell us what is your connection to Dr. W. Edwards Deming.

KC: Well, I'm very fortunate to be his grandson, and also very fortunate that as I grew up in the Washington DC area, I got to spend a tremendous amount of time with my grandparents, my grandfather, Dr. Deming, and his wife, Lola Deming, who also assisted him in his work for many, many years, and got to know them growing up. And so, it was absolutely fascinating to see this man that I knew as a kindly, gentle, soft-spoken man who worked out of the small basement of his house in Washington DC, not in a big office, this little, tiny basement that used to flood in the rainy season and was just very, very small. And I always wondered what he did because everything that I saw was just figures and numbers and all this stuff, and he never talked about work. When we were together with him on Thanksgivings and Christmases, he was always talking about family and what it was like with my mother and her sisters growing up. So, a very different perspective of who this man was. That all changed at one point in my life but growing up, it was a very different kind of relationship.

AS: You know, my first connection with your grandfather was when I was like 24, and I was just in awe, but I was also in terror because I watched him pretty strict, pretty tough when he was dealing with people that just had nonsense questions in some cases, or had the wrong idea, and he really needed to straighten them out in one way or another. And it's kind of surprising, but now that I think about it, in our families, we don't bring that toughness necessarily into the family. Is that the case?

KC: That was the case. We never noticed that. He would sit at the dining room table, and he would just be quiet at the head of the table, and occasionally he'd pull this little notebook out and make some notes. I always wonder what he was writing. I found out later. Something came to mind, and then, occasionally, in the middle of the dinner, he would say... He would have this great story about my mother or something that he had. He would tell us growing up, and he just burst into this fantastic laughter of his, and it was so much fun. And we really didn't know what he did. We knew he traveled, and we knew that... Like I said, growing up, we would get scrap paper from his office, and it always just had sheets of numbers on the one side, and my brother and I would always joke that, man, "I'll tell you the one thing we don't wanna do in life is grow up and do what he's doing." [chuckle]

AS: That's tough stuff, whatever it is he's thinking about. And I'm just curious. What was his relationship with his wife, Lola?

KC: Oh, she was just this terrific lady. They met, and they actually worked together. I believe was at the Fixed Nitrogen Lab in Washington DC, and they co-wrote some papers together. She had a master's degree in mathematics at a time, early in the last century, when women just didn't have advanced degrees, and she helped him for decades with his work. And I remember seeing a lot of photos of her traveling with him to Japan and around the world. That was absolutely fascinating. She was just a brilliant woman in her own time, and with what she was able to do in terms of helping him. And she doesn't get enough credit for what she did to assist him.

AS: And before we get into the Institute, I just wanna understand your own personal journey in life. You developed... You saw that stuff, and you thought, "I'm not gonna study that." But tell us just a little bit about your own personal journey in your education and in your work life.

KC: Sure. So like I said, I didn't really know much about what he did. But when I was a freshman in college, my family had moved away from the DC area to Los Angeles, and I came back for the summer for a job that I had. I called my grandfather, grandmother, and said, "Hey, you have an extra little, tiny room in your house. Is there any chance I could stay there for the summer?" And they, of course, said, "Yes." So, I stayed there for the summer. And in June of 1980, my mother called me and said, "Your grandfather travels around and has been to Japan. They're doing a show on NBC on June 24th, 1980 called, 'If Japan Can, Why Can't We?' And your grandfather is gonna be mentioned in that show for some of the work he's done in Japan." You can imagine how excited. This was at a time when there were three networks, ABC, NBC, CBS. There was no cable. There was nothing.

KC: And this was gonna be on prime time. And so she said, "Just make sure your grandfather watches it." And so, that night of 1980, I had to go downstairs and get him in the office and say, "We've gotta go upstairs and watch this show." And so, we all traipsed up to the third floor and sat down on his couch, and my grandfather, my grandmother, and then my grandmother's sister, who was also living at the house, we all sat down to watch the show. And a few minutes into it, you saw my grandfather who was, at the time, almost 80 years old, and he had about a 15-second part in the show, and I just remember being so excited, "Oh my god. That's you. It's so cool."

KC: And then there was nothing. That was it. And for the longest time... And you could tell my grandfather was getting very fidgety. He was ready... He mentioned something... He was unhappy with a few things they were saying in the show that he thought were off-base, and he was kind of mumbling a little bit about that. And he was getting ready to leave and go back down and do some work. And then they started talking about a man who was considered the... Helped transform Japan and was considered the key person in that Japanese transformation. And at that point, I looked over to my grandfather, 'cause I hadn't said anything in about 20 minutes, and I said, "Do you know who that is?"

KC: And the announcer, he said, "It's Dr. W. Edwards Deming." And it was just this disconnect. This is the man I know, who I grew up with, and the Emperor of Japan has given you credit for the Japanese economic miracle. I still get goosebumps when I think about that moment. I just could not believe it. And then we watched the rest of the show in just stunned silence. And of course, he had some comments, and at the end, they talked about the National Paper Corporation and how he had helped them, and I just remember thinking, "This is gonna change everything."

KC: And you know what, Andrew? I was actually a little bit sad because I thought, "He's 80 years old, almost 80. He's probably..." People are gonna call him, but he may not work for more than another year or two. And then I can tell you, it was astounding because, like I said, his office was in the basement, and my grandmother and my great-aunt and I would stand at the top of the stairs, 'cause my grandfather used a speaker phone, and his assistant would say, "Dr. Deming, you've got Don Peterson, the chairman of Ford Motor Company, on the phone. You've got the head of Xerox on the phone." You've got the head of all these different companies, and we're hearing him talk on the speaker phone, and it was just astounding. It was an amazing, amazing period.

KC: So at that point, I knew things were gonna change in my life. I just didn't know what or how or anything like that. And as I moved through college and then graduated, I was just amazed that my grandfather was continuing to work and just being quoted on news articles and everything like that, and on TV shows, just continuously. And as I got into the business world in a media business, I knew a little bit about my grandfather's philosophy, some things like how important systems are and understanding that and operational definitions.

KC: And there were some of the elements of the 14 points that I understood, breaking down barriers within the organization. And so even as an assistant, what it did, my grandfather's philosophy, even though I couldn't impact anything at the top, what I was able to do within my own sphere of influence was extraordinary in terms of how it helped me move up through the organization at a much, much, much more rapid rate than I would ever have been able to do. And so...

AS: And what would you say were the core... What was the core things if you say, you didn't know all of the different things that he said, but there was those core things that really stuck with you. What would you say was the one or two core things, particularly thinking about the listener or the viewer out there who's thinking, "Wow, I would like to be able to make that impact, and I'm not sure how quickly or how much time I have to learn everything."

KC: That's a really interesting question. I would say one of the key things that I did was making the system visible that we were actually working in. So, we were a media company that was selling advertising time on TV stations around the country. And we had all this workflow that we had to do, and nobody was making it visible what that flow was. And I remember when I was trained, and I was started off as an assistant to an assistant, and they were training me, all the training was done by memory that somebody else did it. So, a lot of times they were teaching me things that were erroneous that I was trying to do and so, as I got into that position, I made sure that I put that process down so that when I moved up, and I could hand it off to somebody else, they could see what that process was. And some of it was visual, and some of it was work instructions. Other things were like operational definitions of... Somebody was saying, "Hey, can you get this done for me?" "Well, by when?" "By the end of the day?" "By the end of the week?" "By the end of the month?

KC: So, there were a lot of little things like that that made a difference in terms of the way, I thought, that helped the other people within the organization, that really made a difference, and helped me move up very quickly within that organization.

AS: And then, how did you go from your career to now, The Deming Institute? Maybe you can talk to us about that and tell us about The Deming Institute and the aims of The Deming Institute.

KC: As I continued to move up and took on greater roles and responsibilities within this media organization, again, my grandfather and... I would call him and ask him questions about things that I needed help on. I remember one time, in particular, I had an assistant who could not get a particular job done, and we worked on it and worked on it, and I tried to make it visible. I tried to do different things, and I called my grandfather one day. I asked him a question, and I said... And he gave me some page numbers in one of his books to read. He didn't give me the answer; he gave me some page numbers. And it was fantastic because the way I was explaining it to her what needed to be done was the way I understood how it needed to be done and the way I learned. It was not the way she learned. And so, once we had her learn and express this in a different manner, we never had another issue with the job going forward. All this gave me the understanding after I went to one of my grandfather's seminars and continued to read the books. It gave me a sense that I could go out and start my own business.

KC: And so, I did with a colleague of mine, and he and I co-founded a software company that provided the sales systems to these companies like I worked for. And without having my grandfather's knowledge, I would never even begun to start a company like that. So, a startup is at such an incredible advantage if you understand the Deming philosophy. Because at the time we started it up, there were two companies that had about 90 share of the market on two different ends of the market. But when we were doing this in 1999, the internet was just starting to hit. And there were, I remember, about 15, 20 different companies that all were trying to get into the same space. Within two years, they were all gone except for two of us. They didn't have the value of understanding what my grandfather had taught, that I had learned from him. And then my partner had in the terms of the way we ran and operated the organization. So, to fast forward, we kept the company for a while, merged it with another company, and then ended up selling it to a big publicly traded company. And in retrospect, I almost wish we hadn't.

KC: But by doing that, I ended up at The Deming Institute. And then what was fascinating was I spent two years of what I call penance, staying at that company because of the contract. And Andrew, that was when I saw in just... What I experienced and what we had to put people through, because of the way they looked at things and the way they operated, was just extraordinary in terms of how much it hurt me, how much I knew it was hurting the people that worked for me in the business units that I was running. And I couldn't wait to get out of there. And when I did, I spoke to my mother, Dr. Deming's daughter, Diana Deming Cahill, who founded the Institute with her father and her sister. And I said, "This is an opportunity for me to give back what I have learned from my grandfather," to take an organization that's an all-volunteer organization, that was really focused on maintaining and gaining as many of my grandfather's assets as possible without really saying, "Well, what are we gonna do with all these things now that we have all the videos?" And they did a phenomenal job of getting the videos and articles, and all these different things in getting the organization started. And so, that was kind of the continuation of my journey, was to move into this role and to be one of the leaders in the organization in terms of helping move it forward.

AS: So, let's talk about... What you've described in some ways is something that I think anybody that gets deeper into Deming realizes, is that it's really a management philosophy rather than... Like a lot of times for people that don't know much about Deming, but they've heard his name, they go, "Oh yeah, quality, statistical quality control" or something like that. And they miss the whole aspect that it is a way of thinking, it's a way of managing, it's a way of interacting with other people. Like you said, the idea of trying to put yourself in the other person's shoes to make sure... The job of the senior management is to make sure people are trained to the level that they need to be. Maybe you can just talk about the Institute, generally, and that concept of what it is. What is Dr. Deming's teachings? And what is the Institute about?

KC: So the Institute, the aim of the Institute, excellent question, is "Enriching society through the understanding of the Deming philosophy." And that can take all sorts of different directions that you might be able to go in. And so what we try to do is, we look at, "Okay. Here's what the aim is; by what method can we achieve that aim? which is what my grandfather always talked about. And we also understand that people out there, like I just mentioned earlier, learn differently. Some people are auditory learners, some people are visual learners, and there's different ways of creating learning environments for people. That's one of the things that I think is great about this podcast, and I'm so thrilled that we're getting back into it and doing that 'cause many people learn by listening to podcasts like this and gain something out of it. Other people need to be in an environment where they're physically there to actually gain something. Others can do it online. Others can do it through webinars, so there's so many different things. So, I believe our responsibility is to utilize what he has given us in a manner that can reach the broadest number of people and have the greatest impact so that they have that yearning for new knowledge. And then when they have that yearning, we have a means by which that they can continue to learn, understand, and apply it.

AS: Maybe you can just talk about what's going on with the Institute, but also before you do that, I think for... Not everybody can understand. What is an institute? Is it for-profit? Is it not-for-profit? Are there 100 employees? Is it a few people? Is there a board? Are they volunteers? What is the Institute?

KC: Well, I can tell you. I'll talk a little bit about it, but one of the best things I would say, Andrew, is go to www.deming.org, and they can learn a little bit more. But when my grandfather and my mother formed the Institute, they decided to have it be a nonprofit. And I know there was a lot of questions about that because a for-profit organization, there's a lot of things a for-profit organization can do, but there's a lot a nonprofit can do, and I think it was important for my grandfather and my mother that this be something that is a nonprofit, a 501 [c], not-for-profit organization because it also opens a lot of doors.

KC: When my colleagues and I and other board members call people, and we're calling from The Deming Institute, a lot of times they'll take that call 'cause they know we're not calling to sell them something and try to sell them a whole bunch of expensive services and things like that. We're calling to help and make a difference. And so, while sometimes there are constraints with the nonprofit that we can and can't do, as you start to look at them, you realize it also opens up a tremendous number of opportunities that we might not also have as a nonprofit.

KC: So, we're a nonprofit organization. We have a board that has a number of family members on it besides my mother. My brother is on it. He's vice chairman, my mother is the chairman, and then I'm on it. And then we have several other board members who have been terrific in terms of supporting us. Paula Marshall is on there, Steven Haedrich is on there, Keith Sparkjoy is on there, Kelly Allan. So, we have this fantastic group that provides guidance for us and support for the organization and helps me... I'm also on the board and serve as the president of the board. And we just have this fantastic group. We also have just a outstanding staff right now that has helped propel this forward, whether it's the online learning that we're launching, whether it's our communication, whether it's our administration or fund development, all these different things that we have responsibilities for as a nonprofit. We've just got an unbelievable team, and they all operate virtually. We don't have a single office. We also have this advisory council. We have a Deming fellow and Dr. Ravi Roy who's out there. We have an emeritus trustee board. So, we have a lot of people that worked with my grandfather, and then a lot of others who have this just belief in this philosophy, in these principles, and they know they need to get out there, and they're helping us get it out there.

AS: So, before we go on, I think it's kind of important to talk about, "Why Deming? Why Now?" And I'm curious to hear your idea about that. There's all kinds of new books out there. There's all kinds of gurus. There's all kinds of people talking about all kinds of things, "Come on, Kevin, this is old stuff. The world has moved on." Tell us, "Why Deming. Why now?"

KC: Andrew, I get that all the time that... Hey, I remember hearing about this guy that helped Japan after World War II, "We're closing on past 75 years on that. Why do we need this guy now? Why do we need this philosophy now?" And what I can tell you is it has worked. Every time it is used in an organization, as they begin that journey and continue down, I never hear that it doesn't work. Now, there are some companies who've tried it, and they're already too far gone to be able to even come back from the abyss that they've already gotten in. As my grandfather put it, "the pit they've already dug themself in," and sometimes you just can't do that.

KC: But when these organizations do use this, and we have so many of them that do, it is astounding how it works. And so, the books that you're talking about and all these, what we call, oftentimes, "flavors of the month" that you hear about, just wait five years and see, does anybody really using them anymore, or have they moved on to the next flavor of the month and the next flavor of the month? You go back 20 years and look, a lot of those things are gone, or they've morphed into something completely different where they may have kept the name, and now they've kind of combined a few things to try to keep it going. But the one constant is Deming works and works, and the research shows that it makes a difference. And to me, in this world right now, where we are seeing all these issues with supply, with polarization, with the need to break down barriers, whether it's between countries or within different organizations, there is an answer. Deming, my grandfather, provided that answer, and he showed that pathway. How do you do it, and then how do you get to that next step that, all of a sudden, leads to resolution of these issues that we're facing right now?

AS: Yeah, it's a great point, and there's so much there...

KC: What do you think?

AS: Yeah, it's interesting 'cause I was thinking... The question that we often get, I often get too, I'm sure you get it, it's like, "Well, why isn't this everywhere? Why isn't his teachings everywhere?" And I was thinking about it, and my answer to that is, one of the most powerful things in this world is probably meditation. If you could meditate properly for 30 minutes a day, it would probably calm your mind, and it would make the world a better place and all that. But how many people actually do it? Very few. And I would say that my answer to that is that what Dr. Deming talked about was a transformation. And how many people are ready to make a transformation in their life? It's easier to pick up the flavor of the month and say, "Oh, let's do that, and let's do that," But what he's talking about is moving to a whole other level of starting to think of things as a system. And you and I have talked about caring for the elderly folks in our lives. And nowadays, doctors get more and more specialized, and they can't see the bigger picture. And everything operates in a system, and it's difficult to think in that way.

AS: And so, part of what I feel like is that what he's challenging, the challenge that he has put before us, is to start to transform our thinking, to understand statistics, to understand systems, to understand how to acquire knowledge, and to bring this together into something that can really make a difference. And that's not easy. That's a journey.

KC: No, it's not easy, and I think you hit it right on the head, Andrew. And I think part of the challenge is, if you're leading an organization, and you came out of, whether it's business school or you moved up through a certain way, well you are leading that organization because you learned how to do it a certain way. Well now, all of a sudden, your organization is having trouble. Because I can tell you right now, and I think it was a Rob Rodin, who worked with my grandfather, said this, "Somebody right now around the corner, around the world, believes they can do what you're doing better, cheaper, and faster than you."

KC: And they're just looking at you as an opportunity because you can't innovate as fast anymore. You can't do this as much. I can build a better this, better mouse trap, and all that type of stuff. But the challenge is, is that you've now... If you're leading that organization, you've gotten there. You have gotten to this point by doing it a certain way. Well now, all of a sudden, you're being asked to learn to do something differently, and I think that was... One of the big challenges my grandfather had was that in... When that program aired on June 24th, 1980, there were companies who were in crisis. Don Peterson, who was the Chairman and CEO of Ford when I met with him, when he spoke at one of our conferences at University of Michigan, and he said...

KC: One of the things he said to me was, he said, "We were two billion dollars in debt, and we were close to going under, and two years before," I believe it was two years before, "I was named 'CEO of the Year' in the U.S." And he said, "But even for me," he said, "It was so hard for us to change because we'd always done it this way. We always had these already systems in place, and now you're asking us to do these different things." And so, I think sometimes it gets rejected. The other thing that I would say, Andrew, is in 1980, while these companies did Deming at that point, they were in a crisis. And oftentimes, it's not until you're in the crisis that you end up saying, "Hey, I need to do something." And you can listen to podcasts by Paula Marshall and Steven Haedrich, who are on our board, where they were in deep crisis when they came to Deming and now, all of a sudden, they're huge advocates 'cause it not only pulled them out, but it made their organization successful. So oftentimes, it takes a crisis to have people say, "Hey, it's worth looking at something else."

AS: It reminds me of one of his quotes, "Learning is not compulsory, neither is survival." And I was thinking, when you were talking about, "Hey, your competitors are learning this," think about the transformation. When we were young, if you saw "Made in Japan" on a product, it meant low quality. And there was a transformation that happened and, all of a sudden, Japan became high quality. Now, think about China. Everything that most people have seen in the, let's say, past 20, 30 years, China, "made in China," was low quality. But they are moving up the quality ladder so fast. And I would argue that, in fact, they haven't really even gotten to some of the Deming teachings of taking that to a real transformation where you start to really bring the quality into the brands and all of that. And there is a possibility that China could go through that transformation, or at least some Chinese companies, just like the Japanese companies did. And then, "ho-hum," I'm sitting in middle America, and I'm realizing, "Whoa, wait a minute. They're transforming. What about me?" And I think that that's a lesson that you're talking about, too, is this idea that, "If you don't wanna learn, other people are learning around you, and by implementing this, you can protect yourself."

KC: You make a really good point. That's a very salient point. That's really key that if things are going well for you... And a lot of companies we're looking at before, for example, COVID hit, everything was going well. They weren't planning on a COVID hitting. They weren't... Supply chain was not an issue, and now, all of a sudden, people are having to rethink how they run and operate their business. And I'll tell you, it's fascinating, my colleague, Kelly Allan, and I have... A matter of fact, you went through one of the seminars that he put on, I believe, in Hong Kong if I remember correctly. And when he and I were traveling through the Asia-Pacific region, Singapore area, and we were going to a lot of different companies, one of the questions we would ask... And it happened to me when I started my business, my start-up, and we were struggling for a while, and we sat down at the table one day, there were only about 12 employees in the company, and we were really having a hard time. And we sat down and we talked about, "Does everybody understand what the aim of the business is?" And of course, they knew that... We had put some Deming ideas, and we were using Deming in there, they were like, "Oh yeah, yeah, we know that, Kevin. That's really important that we all know the aim of the business."

KC: So, we all wrote down the aim of the business. Well, guess what? All 12 people, including myself, wrote down different aims. So, we were working hard and giving our best efforts towards different aims. Can you imagine how much money, time, energy, and effort were being wasted because, Andrew, you were working for... You thought the aim was this, Kevin thought it was this, somebody else thought it was this. We saw the same thing in these companies as we traveled all around the country and around the world, and we would ask them, "What is the aim?" And these people, it wasn't from lack of... They were all working hard and giving their best efforts, but they all had a different understanding of the aim. Can you imagine how much more efficient and effective you'd be if everybody understood what the aim was? Just that alone... We have never once... Kelly and I together, going into different organizations and talking, never once have we seen one, unless they were a Deming organization, where everybody in that room understood what the aim was, had the same understanding of what the aim was, put it that way.

AS: They all had an aim.

KC: They all had an aim. Somebody thought it was making money, somebody thought it was selling more products, somebody thought it was... So...

AS: It reminds me of this... After many years of myself in the financial world, and I'm advising companies, and I'm... And I had these two clients and... Individually, the CEOs were fascinating and smart and all that. And individually, each member of the team, from both of these companies of the management team, were highly qualified, very experienced in their areas. And one of those companies was doing really well, and the other was doing really poorly. And I just remember thinking about that, and I thought to myself, "Number one, success is, you gotta have the right CEO." And the right CEO or the right leader, let's say, has gotta set the right direction. But more importantly, that's not enough. You can have a great guy, a man or a woman that's great, and they've set the direction. But if you let people fight against each other, you're never gonna get there, so it's that coordination amongst the management teams that's like, that's the magic. And you can't get coordination if everybody doesn't know what's the aim that we're working towards, so that coordination is kind of the systems-thinking aspect of Dr. Deming that I learned. Let's talk about the aim of the podcast. Here we are, and I'm just curious, what are your thoughts on where this podcast goes and what's the purpose?

KC: So what I see, the aim of the podcast is also tied into what listeners can expect, and that aim... What I see as the aim of the podcast is raising awareness and understanding of the Deming philosophies and teachings by presenting stories, sharing knowledge of the Deming philosophy, in a variety of different voices and from a variety of different types of organizations. And I think we look to do this by providing real-world examples of what makes Deming such a ground-breaking, unique, and unrivaled successful approach, which we just talked about a little while ago. I think we... We're also going to... And you and I've talked about this, is explore why is Deming different and so much more valuable than the wide variety of improvements and improvement programs and flavor-of-the-months out there? And I think with this podcast, it's really valuable for us to explore the Deming advantage in all of those type of organizations, how it's been implemented in different types of industries and businesses. Because one of the things, Andrew, and you and I have spoken about this before, is a lot of people think, "Well, I'm not gonna do Deming. That's manufacturing. When your grandfather was alive, he focused on manufacturing. It was Ford, it was General Motors, it was Xerox, it was... And all manufacturing companies, and if he wanted it for more than manufacturing, why didn't he spend time?"

KC: Well, the thing I would say on that is, that's where the greatest need was at that time, was in the manufacturing. But he spent time; he knew it was important to have this in education, in nonprofit, in government. He started to work, towards the latter part of his life, with Congress several times, trying to get them, as you can imagine how polarized they are, they all wanna help the country, but they all see, "We gotta do it this way or this way. And it's my way or the highway." How do you get to work together, think together, learn together, act together? And so, for us, if we wanna explore that, how it's been implemented in different types of organizations and businesses and industries, and what that transformation is like for these individuals, what challenge... Because it's not all a piece of cake, as you know. What "aha moments" did they have? What challenges were along the ways? Impacts and benefits? And then, talk to people at different stages of their Deming journey.

KC: We've got a couple of people that you and I've talked about that are on... That have been doing this... Like Paula Marshall who is the CEO of Bama Companies. She worked with my grandfather. I think she is the only one who not only worked with my grandfather, but has been the CEO all the way through to this day and is still implementing it within her organization. And so, I think the last thing I'd say is we believe that by providing people information and inspiration, they're gonna yearn to learn more, and they're gonna wanna delve deeper into Deming and hopefully apply it in their lives and organizations. And what could be better?

AS: Yeah, yeah. And I just wanna highlight that one word. One of the first words that you said is "stories," and this is a great podcast or a great platform for telling stories. We're not gonna go into super technical details about things. We've got great resources, we've got great books, we've got all that stuff. But the stories, and importantly, as you just said, to chronicle the stories of the people who knew Dr. Deming at the time while we have that opportunity, but also all the other people that are going through... And I think the other word that I like is the "journey" and the "transformation," and highlighting that journey and transformation. That's very exciting. So, how do people get the podcast?

KC: So, there's a couple of different ways that you can get the podcast going forward. For those of you.. There's many of you that have listened to the podcast in the past. We've had almost 1.6 million podcast... What would you call it downloads or listens?

AS: Yeah, downloads.

KC: And so, what we're gonna do is we're still gonna make that available just like we always have. But in one of our newer programs, which is called DemingNEXT that we're just launching right now, that program is a subscription program, DemingNEXT. We're gonna put the podcast in there with the video that you and I are talking right now, through Zoom that we're using, so that it will be in there with the video, audio, and then the transcript. And then our producer on the programs, in DemingNEXT, is also putting it in a different format so that you're not just watching a video with the words right next to it, it's in a very, very nice format. I think you saw a sample of that that I sent you the other day, and it's gonna be really cool how it's gonna be accessible through that mechanism so that within that subscription service, you'll be able to see it. But for those who aren't in the subscription, they'll still be able to hear it, just like they always have.

AS: So, if somebody is listening to it, let's say they've never really heard that much about Dr. Deming, they're listening and thinking, "This is good stuff. I like what I'm hearing on the podcast." Where do you want them to go so that they get that? Is it... Tell us the website and tell us where they should start.

KC: So, what I would suggest is you go to www.deming.org. And then from there, depending upon what you're looking to do, as an individual or with your organization, you're going to see that we have this online program, DemingNEXT, that we're just launching. We have workshops, in-person that we're gonna hopefully going back to soon, seminars in-person. We also have virtual workshops, webinars, some conferences coming up. So, there's a whole different, wide variety of ways that you can learn. But I think one of... The big thing that I would say is the launch of our DemingNEXT program which is an online learning program. It's a blended learning program where we're building in all sorts of webinars into it as a part of it. So, it's not just online.

KC: That opens us up to a whole different world that, as you know. You attended a seminar in person in Hong Kong, and I wanted to talk about that in a few minutes, but I don't know how many people were there, maybe 40, 50, 60, whatever that is. It's not 400, 800, 600, that we need to get that pivotal number of people that are learning this stuff, understanding, and applying it. So, the DemingNEXT online is a mechanism for us to be able to do that around the clock, around the world, at any time, with organizations of different sizes where they can use these in their own learning management systems. They can use it in our learning management system. They can use it in working with their consultants who they're... Who are advising. There's all sorts of different ways to do that.

AS: So, if someone is listening and think, "My goodness, I need my management team to get, to understand, some of these things," they can use the resources that DemingNEXT, just directly and say, "Hey, you guys, I want you to... Everybody to listen to this particular module," or that type of thing. Or if there's a consultant out there that's helping people implement, they could say, "Wow, why don't I use that as a tool within my toolbox?" So, it sounds like... It's really gonna be something that can be implemented across a company without having to go to a seminar if they can't or whatever.

KC: You hit it right on the head because what we have is that... We'll oftentimes have CEOs and executives come with their management teams to a workshop or seminar like the one you went to. Well, then they come to us afterwards and say, "This is fantastic. We're gonna start to implement it, but I've got another 200 people in my company. I don't have the ability to send them to the seminar, or have you bring the seminar to us." Some companies are doing that, but others are saying, "We don't have the ability to do that, yet I want everybody within the organization to have an understanding of the common language, what we're talking about when we talk about a special cause, a common cause, an operational definition, system, system of profound knowledge, understanding variation theory of... Just a basic understanding."

KC: And so, that was one of the things that pushed us to develop this DemingNEXT is, to not only have it available for leadership and management, but for all levels of the organization to be able to understand, learn, and apply it, and not to push back. Because that was one of the things, again, going back to Don Peterson and Ford was, even though they sent hundreds of people every month, sometimes thousands, he had 150,000 people around the world, they couldn't send everybody through. And the people that didn't go through were the ones that were a challenge. Not because they wanted to be a problem, but because they didn't understand what was being talked about when management was saying, "Hey, we need to look at our suppliers differently."

KC: Well, no, that's not how we do it. And so, it's hard. You know what it's like. When you push against somebody, they push back. They always do. So, what you need to do is provide them a level of understanding, and then it's accepted, and then they're not pushing back and fighting you. They're actually embracing it. And so, that's one of the advantages of using this approach, is that it can be blended learning. It can be done at your own and, like you said, with consultants. We already have a number of consultants that have their own specific external portal tied into our DemingNEXT where they're working with clients in a completely different environment to help support what they're already teaching them.

AS: It's exciting. That's a whole other level. When you think about my own Deming journey, I think about, there was limited resources. There are some books, and I found what I could find and that type of thing, but you kinda had to piece it together. And so, I think I'm really excited, and I feel like the journey going forward, it's so important to get this message out. But the ability to get it out now is really there, and so I would say that's really accomplishing the main aim of the Institute.

KC: You're right, and for those who are listening who know about it, a lot of my grandfather's videos, writings, case studies, articles, things like that that he did, they're also in there. But we've spent a lot of time using subject matter experts, some of whom worked directly with my grandfather, to help us develop specific courses that are tied into the way adults learn. Adults, a lot of times, don't wanna sit and watch my grandfather go through the red bead experiment for an hour and the lessons of the red beads on a video recording that is 40 years old. The audio is not that great, the video is not that great, but you know what's interesting, Andrew, what we have found is once they go through some of the developed courses that we've worked on, then all of a sudden they wanna learn more. They then go and watch it. They'll spend the hour watching my grandfather do the red beads and lessons of the red beads or talk about the 14 points in these long-form video formats that were acceptable back in the '80s and early '90s. But we need to get them there to be able to say, "I wanna learn and go ahead and do this."

AS: Yeah, it's... The method of learning has changed so much. But it's so fun to watch those old videos 'cause you see his reactions, and you see the way he's berating people and making... He was also a very funny guy at times. He would really have some great cracks. [chuckle]

KC: Yeah. He really did. Let me ask you a question if you don't mind. How did you come to know about my grandfather, and what was kind of your Deming journey? You and I came across each other years and years ago, but I'd love for the audience to also hear that.

AS: So, I was a young guy, studying finance at Cal State Long Beach in Los Angeles, and I got a job at Pepsi in operations in Los Angeles. And Pepsi was also kind enough to pay for my MBA if I got good grades, and I did. And basically, I worked in operations, and I just saw all of these troubles. Now, I happened to be... It was 1989 when I went to work for Pepsi. And I had learned how to use a computer so I could make charts and graphs, and I started charting stuff and putting stuff up on the walls. And I had this habit I've had all my life, is I just chart performance of different people and put it up there, and then I don't say anything about it. And then, I just let people go and look at it, and then they start asking questions. And then you start getting information from that, and so that was kind of where I... And then there was a manager at Pepsi, he's like, "Oh, you're really into statistics." I wasn't necessarily into statistics, but he thought I was, and he said, "You ought to go to listen to this guy."

AS: And so, Pepsi flew me in 1990, in October of 1990, to George Washington University and to take the instituting Dr. Deming's methods for management of productivity and quality. And I got 1.44 continuing education credits for it. But I remember...

KC: Wow, you got some CEUs.

AS: Yeah, I remember going to this event. It was a huge room. I was 23, maybe 24. I was a young guy, all the older people in there. And I just thought, the only thing I'm gonna do is, I'm just gonna go to the front row. And I just sat in the front row listening, and it just... Everything was blowing my mind. I had been working for a year or so in Pepsi, and I'd seen all of the problems we had in the factory, and then here was the solution. And so, I really caught on to that, and I went back and I started to try to implement that. And then, I started to realize what he was talking about. Change has to happen from the top because a young guy trying to make an impact, you can do something, but you can't make a huge impact. And that was kind of my first beginning. And then I got Dr. Deming's book, "Out of the Crisis." I still have the one he signed at that time, and I got a great picture of me with him at that time.

AS: And then I went back, and my roommate, Dale, and I used to read chapters and discuss them in my apartment, in our apartment where we lived in L.A. And then another time in 1992, he had a seminar done by quality... What was it called? A quality enhancement seminar. Yes, that was 1992. And so, I got a double dose, and I listened to him and was blown away. I just kept learning. And then I eventually moved to Thailand, and I was a young guy teaching finance, and I went to work in finance. But the point was, my best friend, that he and I were reading those chapters of Dr. Deming's teaching. Dale came, and we set up a company called CoffeeWORKS here in Thailand, and we just really wanted to implement Dr. Deming's teaching. We weren't fanatical about control charts or anything like that. We were operating in pretty much chaos here on the outskirts of Bangkok, but we definitely tried to implement ideas like systems thinking and treating people with respect and dignity and trying to get out fear in the workforce. That's a little bit of my journey.

KC: So, how is the company doing?

AS: Well, we've survived, and we've survived COVID, that's for sure. And basically, we've been in operation about 28 years. And so, we have about roughly 100 employees, and we're growing, and we're profitable, and we've learned a lot. I would say that also operating in a foreign country has always been a challenge. But I would say we're doing okay, and our objective is to try to make sure that we are making an environment where employees really enjoy their work and feel trust and feel cooperation in particular.

KC: And with you saying that, we're hearing in the States, and you're experiencing it, how many... So many companies seem to take it for granted that, hey, the employees are gonna stay because this is really their only job opportunity here, and that has been just spun completely out of control with the advent of COVID. And now, all of a sudden, people are saying, "Wait a second. I wanna be at a company where I feel I can make a difference, and I enjoy being there because I've now realized that life can be pretty darn short, and I need to have, as my grandfather always talked about, joy in work." And we would talk to executives in organizations in years past, a lot of times, we would never bring up joy in work because they didn't see it that way. It was just "grind it out," have these people just work. And now, all of a sudden, there's this realization how important that is, and I think that's another... Once you implement that Deming philosophy, it has an enormous impact on employee retention, on joy in work which is keeping people there, that they wanna stay. They wanna be a part of something where they enjoy being there, and I think that's just one more reason why the Deming philosophy, we talked about it earlier, is still even relevant today, and more so than ever.

AS: And that's part of driving out fear, is making a trusting place and Dale's... Now, it's interesting situation in my case. I never worked as an employee in my own company. Dale is the managing director, and we own it equally. But we decided in Thailand, it would be better if I focus my efforts on building my career in the world of finance.

AS: Now, this is where I think my experience with Dr. Deming becomes interesting. The first part is that I felt like I really wanted my employees in the coffee business to understand it, and that's the reason why I started taking notes about the 14 points and thinking about how would I explain this. The way he talked, I don't think it's gonna translate very well into Thai language and for Thai people. How do I simplify that? And that's when I started writing the book, "Transform Your Business with Doctor Deming's 14 Points," and ultimately translated it into a Thai language so that the employees would be able to get some access to this and understand it, and that was my only real goal. I did put it up on Amazon. But the main thing was how do I bring this teaching to these people who really didn't know anything about it?

KC: Oh, that's interesting, I didn't know that was really the basis for the book. I know there's some companies that we've mentioned already today who actually have purchased your book and use it as kind of a book club type thing that they do with their team members as they go through the one that you wrote. So, that's pretty interesting. I didn't realize that about... With you about the 14 points.

AS: Now, the other angle that I think it's been interesting because one of the things that Dr. Deming talked about was the idea of "don't be focused on quarterly results," but isn't that the whole financial world?

KC: Well, it's funny 'cause I was just about to ask you. With all your focus on finance and understanding it, you've gotta run up that... Even if you're not a publicly traded company, we talk to organizations that are always focused on that. One of the suppliers that we work with at the Deming Institute, we literally left them about six months ago because you could always tell it was it... I'd always look, and I'd go, I'd start getting the phone call going, and if I hadn't thought about it, it's gotta be the end of the quarter 'cause, man, they're just trying to sell me something now. And they were always trying to gain their numbers, do something by the end of the quarter. And I said, "You know what, I'll let you watch it, as my guest, go through some of the DemingNEXT stuff because as long as your management will do it because you have no idea the impact you're having," and we left them because...

KC: And we ended up going with a different vendor because we could see this happening, and it was getting worse and worse. And we were told there was a new CFO that had come in. There was a real focus on, "we've got to get the numbers up." And so, what they ended up doing was cutting customer support because that was an easy one. People like us already had a contract with them for a certain amount of time, and they figured they might be able to get us to renew it. But the impact... Stop. I can keep going on and on.

AS: Well, maybe I'll just explain it. I grew up as an analyst in the stock market in Thailand, and I was eventually voted the number one analyst in Thailand. And I was the head of the CFA Society for Chartered Financial Analysts which was an honor of a lifetime. And I had seen, maybe... I've met with maybe a thousand fund managers, and I've taken them to meet with a thousand CEOs. And a CEO asked me, "What would be your advice from everything you learned?" And I just said, "Never listen to analysts. They don't know about your business. They don't know how to run your business, and you have to be very careful. All they wanna do is set a fire of quarterly earnings." Which brings me to, having taught finance all my career, when I walk into a finance class nowadays, I tell the students, the first thing I tell them is, "Finance adds no value." And that puts their head in a spin, particularly, 'cause they're studying that topic, and I said, "What adds value?"

AS: And we have a long discussion about what adds value in a business, and I say, "Ultimately it's the products and the service, and finance is a support function just as human resources. And the purpose of finance is to operate as a mirror to reflect management's decisions to help us see the consequences, short term and long-term, of management decisions. And it's when finance starts being the head of the business that you get into trouble." Never make, as I say, "Never make the right finance decision over the right business decision."

AS: Always make the right business decision over the right finance decision. So, I've come at finance from a very, very different perspective, and that's allowed me also to help my clients improve their profitability and help them really think about profit very differently than a lot. And that's where I think the combination of my experience with Dr. Deming, as well as my finances, bring me to a place that I really enjoy talking about the finances of a business.

KC: Yeah, and I think what you said is really important because if the focus of the company is on... is solely on making a profit, they may make a profit to the detriment of the organization that eventually puts it out of business. I always loved what, I think it was Isaacson's book on Steve Jobs, where he was talking to Jobs about what was really the... I don't think they use the word aim, but what was the aim of the organization? And it wasn't to make money. Apple wasn't there to make money. It was to make insanely great products that help people. And then, the money was a byproduct of it. They sure did well taking that approach. Now, you look at somebody like Enron, for those of you that remember Enron. Well, their goal was to make money. Well, that didn't work out so well. And you can see that the finance, like you said, if that's where it becomes the focus on is how do we just make money, and every decision is based on making money, eventually that is going to bite you big time. And the companies that focus on that are usually gone at some point within a certain amount of time.

AS: Yeah, and that's one of the reasons why I feel like Deming is such a critical tool, or critical knowledge, that people need to have now because we're slipping into an era of data. And we are very fast, quickly slipping into this era where a young person graduating from university today may think that their job is setting key performance indicators and tracking them, and you can almost imagine the ideal job... I have a cartoonish picture in my head of a young manager these days with a bunch of screens in front of them and KPIs going. And then they've got this button that sends an electrical shock to the employee who's not hitting their KPIs, and then that's it. There's business and there's management, and I fear that a lot people are feeling like being tough on KPIs is what good management is, and they're lost on that.

KC: Well, and I can say if they come in and start to learn Deming, whether it's using DemingNEXT, whether it's using other resources or videos or books or things like that that we have, if their focus is on solely on KPIs, I encourage you. Come in and read and go through and learn some of this, whatever the best way for you to learn is, because it will open up a completely new world in terms of understanding what the impact of those on the organization.

KC: And it's usually a detrimental impact. And what the potential is by looking at things a little bit differently, or a lot differently, depending upon where you are, but you're right. There's so much stuff, and you hear about big data all the time, and we've all seen so much. So many journalists, and I always feel bad for them because they're looking at these data figures, whether it was COVID or other different things, and they make interpretations that are oftentimes erroneous. And we see it all the time. Andrew, it must drive you crazy when you see, "Well, the stock market was down yesterday, it must mean this is happening." Two days later, "Well, the stock market is up because this is happening." Talk about not understanding variation and special and common cause and reacting to a common cause as a special cause. It's unbelievable. But once you understand it, you start to see things, and it opens up a completely different world for you.

AS: And one part of my business is managing people's money. And for that part of my business and investing, it's so critical what I learned from Dr. Deming about that they're ultimately... What I say is that we can understand the variation and the randomness of a flip of a coin or at the roulette wheel. We understand these core principles of randomness and variation, but we then kind of abandon all that when we go into life, and we don't... We miss that there's this subtle thing happening below the scenes and the outcomes of things that we're seeing. There is a portion of those outcomes being driven by randomness and variation. And if we don't have awareness of that, we will get misled, and it will happen all the time to amateurs in the stock market that will assign special causes to different things. And they get all excited about things, and they miss the whole randomness and variation. And that is a carryover from the world of what Dr. Deming taught in statistics into the world of the markets and investing.

KC: Yeah, it's a big problem. I talk to people all the time. And that treating a special cause as a common, you know, common variation as special variation, and vice versa, ends up being huge. And the thing is, we already know it in our lives. We know to get to the grocery store is gonna take us between 9 1/2 minutes and 11 minutes, and the average is, whatever, 10 minutes. But we know we're never gonna arrive there exactly at 10 minutes. We know. And when you ask people, "Why is it?" Well, because there's variation in there. It's 9 1/2 to 11 minutes to get there. Yet they go in their companies and they teach. They, all of a sudden say, "Well, I got there in 9 1/2. Oh my gosh. I got there really quickly." That's great. Okay. Well then, the next time when you get there at 10 1/2, "What did I do wrong?" And they try to fix that instead of understanding that, "Well, wait a second. I know how this works when I go to the store. Why do I not apply the same concepts when I'm in the business?"

AS: And every now and then, they come home, and they say, "It took me two hours to go to the store." Oh, what happened?" "Well, I had a flat tire, or there was a fire, and there was a..." And all of a sudden, you start to understand special causes. Now, I think I would like to wrap it up at this point and ask you, do you have any parting words for the audience? What would you like the audience to understand about what's going on at the Institute? What's going on with the podcast? Let's leave them with something exciting.

KC: Well, I don't know how exciting this is, but one of the questions that I get right now, Andrew, is what would your grandfather say about DemingNEXT? Because it's completely different. It's not always using just him because there's people out there that tell me, "Unless you're using Deming's exact words, then it's wrong." And I'm like, "No, no." My grandfather, when I look through his books, quoted people all over the place, whether it was Don Wheeler, whether it was Ed Baker, Joyce Orsini, he was always learning. Bill Scherkenbach. He was learning from everybody.

KC: And I would say the one question I get a lot now is, what would your grandfather think about DemingNEXT? And I gotta tell you, I believe he would be absolutely thrilled because he would see that as another means, another way that we have done a PDSA Plan-Do-Study-Act where we have tried to improve the means for us to get his message out to a broader audience. And I think he would be absolutely thrilled with what we've done, how we're doing it, why we're doing it. And I believe he would be very excited about what that impact is to get that message out. Because I know when he departed from this earth, I think the thing that probably bothered him the most was he didn't have more time to get his message out. He knew that he was running out of time as he got older, and he formed this organization to get that message out. And I think that, to me, is an important thing, is by what method are we getting this message out that will accommodate the needs of how people learn, understand, interact within their own organizations?

AS: Well, ladies and gentlemen, you've heard it from the man who probably is the closest to understanding the ultimate aims of Dr. Deming. Kevin, I wanna thank you for this great time together and sharing your personal experiences, as well as divisions, and the opportunities that I see at the Institute and what you're doing. That concludes another great story from the worldwide Deming community. Remember to go to deming.org, as Kevin has told us, to continue your journey. This is your host, Andrew Stotz, and I will leave you with one of my favorite quotes from Dr. Deming, "People are entitled to joy in work."

In our 6th Interview episode, Plant Manager Dan Vermeesch and Quality Manager Brain Hoff discuss their Deming Journey. Topics include a discussion on variation and getting the Deming Philosophy into the education.

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Deming Institute Podcast Interview

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Micron Manufacturing

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History of Micron Manufacturing

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Dan Vermeesch

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Brian Hoff

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Dr. Deming at Micron

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Variation

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Eliminating Performance Reviews at Micron

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Struggles of Working with the Deming Philosophy

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Micron Gives Advice on Adopting the Deming Philosophy

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Shingo Silver Medallion

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Variation a Key to Micron Improvement

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Deming Needed in Education

Tripp: [00:00:12] In this Deming Institute interview, I speak with Dan Vermeesch and Brian Hoff of Μ Manufacturing in Grand Rapids, Michigan. We discuss the history of Μicron, their improvement journey and how the Dunning philosophy is affecting this journey today.

Tripp: [00:00:35] Hi, I'm Tripp Babbitt, host of the Deming Institute podcast. Our guests today are a couple of gentlemen from Micron Manufacturing, Dan Veermsch and Bryan Hoff. Welcome, gentlemen.

Dan: [00:00:48] Hi, Tripp. Thanks for having us.

Tripp: [00:00:50] Very good. So first of all, micro manufacturing I'm not familiar with it. Won't want to share a little bit about what Micron Manufacturing does and a little bit about both your gentlemans role in Micron churn, Micron manufacturing as it was using machine products company in Grand Rapids, Michigan.

Dan: [00:01:10] It's been in business since 1952, Ed and Jackie Preston founded it back then and until just a few months ago, Jackie Preston still came in every day, five days a week. She just turned ninety one a couple of weeks ago and she hasn't been in in a few months. But she was here every day until then. And it was great because her son currently is the president at Micron. And we have a niece and nephew that work here. And the nephew has a 5 year old daughter that comes in on Saturday and plays on a computer. So one of the best parts of the story of Micron is we have four generations in this building every week.

Dan: [00:01:51] And it really is part of the story that's important because there's a lot of family focus here at Micron that that's important to us. So I am the plant manager, have been the plant managers since 97 and also the lean champion that has tried to be the architect of some of the various improvements systems that we have had since the year 2000 is when we really begin implementing our transformational change. So I'll let Brian introduce you.

Tripp: [00:02:26] Okay.

Brian: [00:02:27] I'm Brian Hoff. I'm a quality manager at Micron. This would be my twenty second year with Micron. And as Dan said, it's around 2001. We began to be to transform our journey from kind of an old school business model to trying to adapt what is the best way to make change and improvement. And it's been an amazing journey. And lately we seem to have encountered Mr. Deming once again. And I guess I'm mature enough to understand it better than I did 20 years ago. And I'm using him almost daily to try to influence the decisions I make each day.

Tripp: [00:03:13] Very good. And where are you guys located?

Dan: [00:03:17] Grand Rapids, Michigan. OK. We're on a dead end street in the northwest corner of Grand Rapids, Michigan. So that's that's always part of my favorite part of the story here is we're kind of located on the edge to nothing. And despite all that, our folks here have made so many great changes over the years that we've had thousands of people from, I think, 26 states and eight countries that have come to visit us to see the systems that have been put into place over the years. And we're only a 40 person company. Twenty eight thousand square feet. So we're just a small about on the map that that over the years have made a big ripple in the pond. The precision machining industry. And it is exciting that we've got such a great group of folks that have not only made change, but we've made a lot of improvements over the years. But part of our story that we'll get into and will allow is we're making a lot of change, but we kind of lost sight of whether or not some of that was improvement. So we could see a lot of change around here. But the dials stopped moving after awhile. And so we had to go back to the drawing board. And that drawing board was Dr. Demings work.

Dan: [00:04:35] Okay, very good. Well, let's pick it up from there. So how did you guys come across Dr. Demings work? It sounds like maybe you initially knew Dr. Deming then kind of got away from it. So once you share a little bit about your journey there.

Brian: [00:04:52] So this, Brian, and back when I was a young 20 some year old, I happened to go to a statistics course, and during that course the instructor had mentioned Juran and Deming. So I began with Juran and in Juran Zone books, he mentioned Dr. Deming, so once I completed listening to the doctor, Mr. Grant, I read out of the crisis and.

Brian: [00:05:18] I don't know that it made complete sense to me at the time, but it did. The thing that got me was the study of variation. But so I spent five or six years diving kind of deep into statistics and I made some headway that wasn't I wasn't at Micron at that time. I was I was in the plastics industry. So when I joined my Mike Brown back in ninety one and.

Brian: [00:05:46] We were able to use some of the statistical tools so that in a way I was holding on to some old blood. Dr. Deming talked about variation. But I wasn't I wasn't truly knowledgeable about profound knowledge and the way to think of all of that. And then I admit to somehow I lost track of Dr. Deming for a decade or more. And then later, when Μicron started doing its deep transformation, Dr. Deming started coming to my mind more often. So I re-read the books again. And since then, it seems as though. There was a trajectory of adopting a little more of Dr. Deming, and then recently we seem to have found a new gear in regards to appreciating what he said.

Dan: [00:06:41] So a number of years ago, maybe the early 2000s. Brian and I have had a lot of conversations over our years of transformation. We always called it our lean journey. And that's that's how we knew it. But he would bring up regularly his views on variation. And then I asked, would you come up with all this? And we mentioned Dr. Deming and I need to learn more about this.

Dan: [00:07:07] Never, never really put forth the effort to do so. Until I was at a conference in Columbus, Ohio, I think about eight or nine years ago, and the speaker talked about the 14 points. It seems like I've heard of those in the past. Any you talk further about the doing performance evaluations and the disrespect that came from it. It just so happened to be the high end and pushing performance reviews here created a very in depth system. We're doing them quarterly. We're doing all this stuff and I hated every minute of it. And I couldn't put my finger on what was it that I felt that was wrong with it until I heard the speaker say just how disrespectful Dr. Deming felt that they were and why that day.

Dan: [00:07:58] I decided before I left that meeting, we were never doing another one. And I came back and I told our management team it's called team strategy. I apologize for pushing it so hard for so many years and shoved it down everybody's throat. And today we stop. I. I wish I would have gotten a picture of the room on that day, because I think the shock phase, after pushing it so hard that doing a complete 180, but it truly was like like seeing the sun come up because it put words to the feeling that was growing in me, that this is just wrong because half the people were walking out of the room feeling they were below average. Right. Who do you want to feel that way? And that was the day that I thought, I need to learn more about this guy.

Tripp: [00:08:46] Very interesting. So. So, yeah, go ahead.

Dan: [00:08:50] Oh, I'm sorry. So I was a few years after that that I don't and I can't recall right now how I caught wind of the Deming research conference in Fordham University in New York. And we've done a lot of presentations, like I mentioned earlier, sharing our lead story. And so I thought I'll submit and see us there is interested in her interest in hearing our story at the research conference. And then I was honored to be selected to do that. And.

Dan: [00:09:23] It was then that I met Dr. Demings, daughter and grandson, great grandson, and and heard everybody else that was speaking there, it truly became inspired by what I heard. And and Brian joined me on that trip and I brought my 15 year old daughter at the time and I thought because the story was about this whole story of Μicron. And I just wanted. I thought she needs to hear what grandpa and grandma created because I didn't mention earlier, I'm the son in law of the founders, but so I brought her with me.

Dan: [00:09:58] And it turns out she was the youngest attendee at a DME conference, I think, in the history of the den. And so Kevin and his wife is her name's Judy, I think, right? Yep. Yep. So they embraced her so much. I was really touched by that. So when the conference came to Michigan State University, where my daughter attends now at the conference, we walked in and she was just going to visit and say hi and whatever. And they made her so welcome. And got her a badge and invited her to attend a conference and everything. And it was really touching that they had a remembered her and they have really embraced a young person. And she's brought it up so many times. And and it's just that to me, that whole story just adds flavor to what I believe is the Deming community that I'm beginning to learn more about. So it's not just about the things he taught, but it's I'm beginning to see that the people that truly understand them are beginning to it. It's a group that we need to hang out with more. Right.

Tripp: [00:11:06] Very good..

Tripp: [00:11:07] So so let me ask you guys, when you started in to the Deming philosophy or as you've worked with with it, what things have you either personally struggle with or maybe even the organization has struggled with?

Dan: [00:11:23] So for me, I mentioned it again today in our strategy meeting to Brian and others that my 2019 transformation that came earlier this year when Dennis Sergent was the instructor of our Deming CQ Academy is what he calls it. And there was so much reference to improve it. So I love the statement. All premier requires change. Not all change results in improvement. So that was great to hear her have heard that before. But. I am a numbers guy. True and true on the facts and figures and dates and deadlines, you gotta go. You know, maybe that's part of being a plant manager. I don't know, but I begin to understand that.

Dan: [00:12:18] And then we've done a great job recently with our team strategy meetings. We are going to take a step in the right direction every day. And we we don't hold our feet to the fire like we used to about by this date. This thing has, you know, those kinds of things that the made up numbers of.

Dan: [00:12:35] You got to hit this goal by this day. We still have some of that. But there's far less focus on that than there was coming into 2019. And I struggle with it every day, every day that I bite my tongue and say, don't kick a no, don't create a no, don't push a number. Push the improvement and true change towards what we are looking to accomplish.

Dan: [00:13:01] And it's it's liberating, to say the very least. And again, it's humbling. It's almost like that day came back and say and said, when I do another performance evaluations offered me by longshot that because it's such a one idea who I am.

Tripp: [00:13:18] Interesting. Brian. Brian, how about you?

Brian: [00:13:22] Well, first, I want to attest to watching Dan's struggle with Martin.

Tripp: [00:13:28] Okay, so you've witnessed it. Okay, I got it. I think me.

Brian: [00:13:36] Oh, recently I encountered a. A customer had a problem, and normally if if we have material here that we asked to re-inspect, we learn how to do it. And we show another person how. And we call that a training system.

Brian: [00:13:53] And for some reason, and this particular incident, I decided instead of training the way I always have, I'm going to do it different. Because Mr. Deming said you should look harder at your training systems. There are likely problems there. And so I decided what would be a better way. And when I was done, it literally opened my mind to the amount of variation in a training system.

Brian: [00:14:22] Either doesn't pay attention to or creates all by itself, and so that would be a thing that recently happened to me in regards to understanding better, something that Mr. Deming talked about.

Tripp: [00:14:39] Very good. So here's a question for both of you. And it does matter what order that you respond. But if you were if you're a manufacturer, it's, say, listening to this podcast episode and you were thinking about this. What are some of the maybe, I don't know, pointers that you might give them about going to this philosophy, Will? What are the steps that you think they might go through or what advice might you have?

Dan: [00:15:10] That's a very good question. I think that as in most things, learning has to take place. And for me and for Brian, that fact he's got out of the crisis in his hands now, I've got some sticky notes in it.

Dan: [00:15:25] I get it. I always give Ryan a little ribbing because I call his Brian Dowling Bible here because he carries with him everywhere. I don't think I'd recognize him if he came to work about the thing in his hands. I think you have to start there. And I didn't start there. I just read the New Economics. In fact, I just got done with it in recent ago. First book I ever read.

Dan: [00:15:52] And then I have a long time ago, before I went to the Research Council that I read online, I learned more. I loved the history. I loved the fact that he grew up in a farming area and studied. How should it be? Because I grew up on of farm in Michigan here. So that really all resonated with me. And as I began to learn his story and his half life begins to patch together a lot of thoughts about how this may have all developed for him. And I want the history part of it. That's great. So I would suggest people be read about him and listen to these podcasts for sure.

Dan: [00:16:33] Look online if the educational beginning. But it was instrumental earlier this year. After all this time, haven't taken the Dennis Surgeons CGI Academy that really gave us this. It's what we did, guys. And I have to believe these types of sessions are all over the United States for people to be able to learn more and participate in groups. Exactly. And implement exactly what he's what he's trying to implement. And so through that, one of the things that's occurred to me this year is I began to have a greater recognition and appreciation for. Let's go back to our founders, Ed and Jackie Preston. You know, back in 1952, they they started this business.

Dan: [00:17:18] And so when I came on board in '96. There was a a few things that stood out to me. A phone never rang more than three times because it was disrespectful to the customer to make them have to listen to the ring on the phone more than three times. It was just a thing. Everybody here still knows by the time that there is a fourth ring, everybody in the plant is running for a form because it shouldn't ring more than three times. That system still by Mr President from the beginning.

Dan: [00:17:46] The other thing is when we have meetings here and we have a lot of meals at this company, the first an Ed or Jackie Ed's passed away now. And anytime we had a meal, they always eat last. They always insisted everybody else. You go first. We go laugh. Simon Sinek wrote a book. Leaders eat last. And when I read that, I saw Jackie. But I still believe it's all part of what Deming. His respect that he had for people. And and I saw so much of that and have seen so much in adding Jackie over the years that respect for people to make sure that the people in this company are taken care of first.

Dan: [00:18:30] And how so? So I would read, learn and then recognize and appreciate what already exists around you. And then I would start, I think, trying to implement the things that you were there.

Tripp: [00:18:43] Brian -do you have something to add.

Brian: [00:18:46] Not really know that.

Tripp: [00:18:50] No, that's fine. So let me ask you. Just kind of a broader question. I guess it looked like you guys sell globally, correct?

Dan: [00:19:00] Mostly in the United States. OK. If something goes outside of the United States and through our customers, not not directly from us to a customer outside the United States.

Tripp: [00:19:12] Ok. So has the environment changed much? I mean, there's a lot going on economically for your company. Is it gotten a lot better or is it kind of been stable all along or what's it like out there as far as manufacturing goes?

Dan: [00:19:28] So this year there's been a softening in general across pretty much all of the industries that we serve.

Dan: [00:19:37] And we we serve a number of them. Most of our business is relatively local. About 70 to 73 percent is in Michigan and the rest is either in southern Indiana or Texas. Shooting down that quarter in general have softened. And I just saw the numbers today that manufacturing in the third quarter actually went up a touch, which surprised me because we haven't seen it and I haven't heard that from our suppliers, to be quite honest with you. But one of the things that we've tried to do over the years, as we called our lean journey or on our shifting gears and to we actually trademarked a year or two ago the term system, Micron, because the reason people come here, the reason three thousand people visited are to see our systems. We had fire departments, health care, the company that created the resistor. And A we've had people from all over the world come to see how we schedule production.

Dan: [00:20:39] We have no mid-level management, how we have total flex time. People can decide which days they work, what hours they work. The whole nine yards. And and so people have come from all over to see how well how can we manage a company to where there are no bosses. There's a movie that tells people what to do. Brian, are the managers of quality in manufacturing and there's there's an engineering manager. We're responsible for the systems and making sure the people, the resources are there, of course. But it's it's really there's so much autonomy that people have. And and this year, really, over the last three or four years that we've been using the Toyota car, it really began to teach us a better understanding of the kind of calls PDCA.

Dan: [00:21:31] And that PDSA. So we use that language mostly because of that. But because of that, we began to emphasize every conversation. What did we learn? What did we learn? I think if I were to look back in the three last three years, the number one question that we ask yourself is what did we learn? Fill in the blank on whatever the heck it is that we're talking about. So I would I would dare say that the Deming philosophy is all about what have you learned? And we've embraced that.

Tripp: [00:22:04] And you guys have mentioned the lean journey that you kind of started on before you kind of got into Deming. What do you see as kind of the differences between them or or how did they maybe synergistically and engage with each other as you work through this or or what's happened with this this lean journey still continuing that as the Deming philosophy, enhance it. What's your view?

Dan: [00:22:34] So. I think that. Like most things in life, it's the perspective you choose. And I think that you can and perhaps many companies have chosen the perspective of Lean as the elimination of waste. And of course, that's an element of it.

Dan: [00:23:00] But I believe and we've used that language here a lot, but I believe truly that what we've tried to do with our lean journey is to best use our resources. So Dr. Deming talks about optimization of processes, right? We haven't used that language exactly a lot, but that's what our journey has been about. How do we optimize what we do? How do we create standards, stick to improve the standard and make things the lives of our people better?

Dan: [00:23:28] And that from day one, when we are first meeting about why are we going to take this lean journey? Way back in August of 2000, our management team said it is for one reason and that it is to make the lives of our people better and.

Dan: [00:23:46] From that day on, I felt as long as we have that focus. We're on the right path. And and so as we went through our lean journey, we were. Awarded the Shingo Silver Medallion for operational excellence back in 2008 93. And it's referred to as the Nobel Prize of Business or Manufacturing by Business Week. And that was nice to get. It was kind of a confirmation that we're on a good path, but the best thing about us told us all things we could do better. And so we tried to embrace them. And so on. As we learned more about the teachings of Dr. Deming, here's a thing that we weren't using properly our entire lean during that we're only now starting to learn and use much better.

Dan: [00:24:39] And that is the understanding of variation that Brian mentioned earlier or in control charts and we hadn't used. I don't know if we used a control Chart. Fifteen years probably that are 20 0 0 0. And now we really are. We're embracing the heck out of that. And we're beginning to understand where we have to measure data and where you continue on.

Dan: [00:25:02] Probably the greatest weakness, though, for us, the difference between how we treated women and what we're learning from Dr. Deming, though, is we are making a lot of change and we're necessarily tracking whether or not that change was an improvement towards the saying we needed improvement on. Right. Yeah. In that corner of the planet might look better now, but is it truly improving anything that's going to help the customer? And we lost sight of that for a while, I believe. And I think we're getting on back, Brian, to everything else then was pretty good a.

Brian: [00:25:37] The appreciation of a system as as we did the room. I think we learned more about systems because you have to diagram them out and understand the interactions between them. And so that kind of opened our eyes and just happened to fit in with a kind of reconfirms that Dr. Deming needs says. You should understand your system as good as you can. I think it also psychology. You know, in the beginning there are resistors because change is scary. And I'm sure some people wonder if you truly mean it. Or is that just the passing thing this month? And so you understand as you push that journey through and you get the buy in from people that that were once resistors. OK, that's cool. You get to watch and growth in your own people. You learn how to achieve that growth faster. Either by learning from your mistakes or the occasional times we we somehow did it right. So I thought all of that. There is a consistency between Lean and Dr. Deming. I think I can see that.

Tripp: [00:26:50] Okay. And Brian, you have to ask, because you mentioned that you kind of got into variation, you know, years ago or maybe even a couple of decades ago. And we're using it, you know, in what's different today, what it what it sounds like. You started into it kind of got away from it and then went back to it. What would take me a little bit on that journey?

Brian: [00:27:13] Long ago when I was when I first was introduced to it, we were trying to everything classic's and we wanted to learn how to build Dai's better. So is there a way to design a dye with more success by the time you're done, by the time you're finished? And I couldn't believe how much statistics help you in design. So that was kind of low hanging fruit and. So it's fun to play with.

Brian: [00:27:43] But we didn't necessarily use it in day to day production at that facility I worked with.

Tripp: [00:27:49] OK,.

Brian: [00:27:50] So then I. I moved on to Micron and that was my first attempt. OK. We don't use it to design our process, but we do use it to monitor our process. And back then, it was sort of driven by customers. They were requiring statistical data. And that's fine. But what's more, fighing are more fun to actually learn that you can predict your process. But I find that fascinating every day.

Brian: [00:28:19] So we're into that pretty deep for about four or five years. And for some reason, the customers decided to let those requirements go. And somehow that that seemed to be it took the wind out of the sails of that process.

Brian: [00:28:37] And so for some time, we didn't use statistics for quite some time. And then I would say in the last five or six years. We are doing more and more statistical studies and realizing once again the benefits of doing so. And now we're actually applying it to management processes rather than just parts or machines. And we're finding that. That is even more fascinating than than going out new in capability studies out next to a fancy.

Dan: [00:29:10] I think though, one of the stark differences between then and now is we did it because the customer demanded it and the sooner they stop demanding it, we stop doing it tells you how mature where I am right now.

Dan: [00:29:27] Now we go this beginning. We realize, as Brian said, it's helping us understand our management systems in ways we never would have dreamt before. And we're doing it because it's the right thing to do and you're learning from it. And we're the kind of company that there's no doubt in my mind that sometime very nearly down the road, we're going to be pushing this to our customers to try to do the same thing as we did that with our lean systems. When when we first started Dileep Journey by time 2003 rolled around, we had made a lot of changes and we realized that one of our customers had any idea what lean was. And we we began to bump up into. We can only improve our systems so well if we can't tie it to where our customers are demanding or needing from us. So we went on this magical mystery tour out to our customers for three years to try to see how can we link what we're doing to what you might need. And pretty soon, all of our customers want to delinked their systems to ours. And we went from like 16 percent of what we built was on some kind of pulse system to 68 percent within those three years. And it was an amazing thing because when they began to recognize what it could do for them and it helped us help them, it was great. So we were still and we began then to take what we've learned and what we knew and share it with the customer. So here's just another thing that as we learn more, I can see that we're going to share it with the customers because it will help them help us.

Tripp: [00:31:07] Very cool. So my last question for you guys is, is my typical one, which is. Is there anything that we've talked about or that you've responded to that you'd like to make a clarification of? Or is there any question I didn't ask that you wish I would have?

Dan: [00:31:28] That's really that's a great question.

Dan: [00:31:33] I know that they're the Deming Institute is reaching out to educational organizations across the country. I'm not aware of any of that in Michigan. There are individuals, like I mentioned Dennis a few times now that is trying to help industry. But it's important that we believe that the school systems are help. Few years ago, Mike Rather, the author of The Toyota Kata, was gracious enough to stop that. Mike Brown wandered through the plant. And then I was so bold as to invite him to teach the school that my kids went to grade school or how to do the participate in the Kata, which of course, as I mentioned, includes the whole PDCA cycle of improvements. And he did so and I thought it was a fantastic session. And it began the thinking, how can we get more AUTHERS? How can we get more people helping teach the schools that teach students how to be more critical thinkers? So I think that that would be something of. All certain interests of manufacturers all over the country. Here, as we try to help, you know, he knows the skills gap all the time, right?

Dan: [00:32:53] Mostly is a critical thinking gap in our opinion. We can teach the skill. So anything like that. We would love to see and hear more about it as time goes by.

Tripp: [00:33:03] Very cool, Brian. Thoughts? Last thoughts.

Brian: [00:33:07] Yeah, I don't remember who you were talking to and one of your podcasts, but your guest. You ask the question of them and I'm going to paraphrase. Do you think the Deming Philosophy is growing or shrinking or remaining the same. And he said he did not believe it to be growing.

Brian: [00:33:29] My guess, I was disappointed. Whoever your guest was, it seemed like a person that would probably know that answer better than I did. And that made me sad to think. And so I am curious, as Dan just said, you know, not only getting to the local school systems, but also the business schools. What is what is coming out of the business schools now? The people that we're going to hire soon?

Brian: [00:33:56] And then how do we get even further ahead, as Dan said? And get this all the way down to how do you teach young people to think in a better way? And.

Dan: [00:34:08] It's important for us. So earlier this year, Ryan and I both referred to CQI Academy that we had taken to learn more about Dr. Demings work, and I had coordinated through an organization called Discover Manufacturing here in West Michigan.

Dan: [00:34:26] They coordinated and I see it an industry led collaborative where four of our companies, 19 different people or 20, went to this class and one was in carbon composites, another one furniture, and there another machining company like ours.

Dan: [00:34:45] And it didn't matter that we were basically different industries and different walks of life. It was somebody from shipping to, you know, my position, brines as managers and everything in between. And it was a fantastic way to learn these collaboratives of different companies. So we're intending to do it again this next spring. I'm signed up as the co-lead for Discovery Manufacturing and make sure you do. And that's that's our contribution to try to make sure that we're spreading the teachings of Dr. Demings in West Michigan here, because regardless, I'm not sure what else we can do other than it here. We have tours every two or three weeks and people who come see it and we're trying to help this. I'll see more companies learn about it. So I hope that your listeners and companies that are getting involved open the doors and bring people in and show what they're learning. It doesn't matter how minor it is. Teach what you're learning and then try to get other companies together to do the same.

Tripp: [00:35:53] And that's sage advice. We appreciate it. Well, Dan and Bryan, we certainly appreciate you being part of the Deming Institute podcast.

Dan: [00:36:04] Well, thank you, Tripp. Greatly appreciate it.

Tripp: [00:36:08] Thank you for listening to the Deming Institute podcast. Stay updated on the latest blogs, podcasts, programs and other activities at Deming dot org.

In our 5th interview podcast of 2019, Alan Winlow, MBE, former Managing Director of Yorkshire Brick Company, Continuous Improvement Director at Marshalls PLC, and 2019 ASQ Deming Medal Recipient, offers insights on his efforts to lead a Deming transformation.

(This is Tripp's first interview with Alan)

Highlights include:

• Opening quote from Myron Tribus, “If you continue to do what you’ve always done, you will continue to get what you’ve always got”
• In the late 1980s, while serving as Managing Director of the Yorkshire Brick Company (YBC), employment in the UK brick industry plunged from 14K to 8K employees and plants were closing
• Question at hand, "How to survive in a labor-intensive business?"
• How had the Japanese captured critical UK business segments?
• Started to read about Dr. Deming and attend British Deming Association conferences
• Discovered sources of variation and PDSA, plus the importance of data
• Found the majority of variation came from manufacturing equipment and raw materials for the bricks
• Discovered how to change the brick manufacturing process to improve brick uniformity
• Began to meet regularly with YBC's production team to continue to improve brick uniformity, savings in water use, energy use, and discarded bricks
• Discovered mental models, including the Taguchi Loss Function
• Explored how to remove barriers within workforce, everyone came on staff
• Began to understand what his job was, including reading books and seeking new learning
• Alan led consulting visits to China in 1987 to assist in developing the Land Fill Gas business.  The Chinese were extremely interested in the landfill gas abstraction at YBC and sent no less than 8 delegations to visit the Yorkshire site. Alan was invited to visit by the Mayor of the city of Anshan.
• Teaming with local schools and universities, a local jail, and a county council to share lessons learned within YBC, including environmental projects
• Yorkshire Brick was honored in 1991 for contributions to environmental causes
• In 2000, Alan was honored by Queen Elizabeth as a Member of the British Empire for his leadership within YBC
• Never met Dr. Deming at BDA events; met Myron Tribus on many occasions
• Comments on challenges in implementing the Deming Philosophy
• Continued relevance of the Deming Philosophy today  

In our 4th interview podcast of 2019, Donald Berwick, co-founder and former President and CEO of IHI, the Institute for Healthcare Improvement, shares his Deming Journey.  Dr. Berwick, who presented at The Deming Institute's 2018 Conference, is one of the nation's leading authorities on healthcare quality and improvement. 

(This is Tripp's first interview with Dr. Berwick)

Highlights include:

• His training as a pediatrician
• His efforts to apply quality management, before his introduction to the Deming Philosophy
• Co-Founded IHI in 1989 as a non-profit organization
• Appointed by President Obama, in July 2010, to the position of Administrator of the Centers for Medicare and Medicaid Services (CMS), which he held until December, 2011
• Ran for governor of Massachusetts in 2014
• 4 children and 7 grandchildren
• Attended a Four-day Seminar with Dr. Deming in 1986, leaving early and then returning
• Prior to meeting Dr. Deming, serving as "VP of Inspection"
• In the world of inspection, everything stayed the same
• Waiting times of 2 minutes for x-rays were reported to him (with falsification) by the radiology department 
• "Do something about it"
• Question: What is the pushback that you see today in healthcare?
• The Red Bead Experiment was "electrifying," including triggering a vicious cycle of blame by management and withdrawal by willing workers.
• The workforce (willing workers) wants to do well
• The influence of Dr. Deming, and others, on IHI
• Prescriptions for fixing healthcare - "It takes leadership"
• General tone of healthcare today; "measure enough, yell enough, things get better"
• Continued focus today (backsliding) on measurement for inspection
• Question: What are physicians learning today about management? Answer: "Heroism as the route to excellence"

In our 3rd interview podcast of 2019, Wendi Middleton, Director of Continual Quality Improvement, from the Aging Adult Services Agency within the State of Michigan’s Department of Health and Human Services, and Dennis Sergent, President, Sergent Results Group, share reflections on the "Challenges and Opportunities in Applying the Deming Philosophy in Government."

(This is Tripp's first interview with Wendi and Dennis)

Highlights include:

• A 5-year history of applying the Deming Philosophy within the State of Michigan's Department of Health and Human Services (HHS)
• The development of Aging and Disability Resource Centers
• Learning "Who are our partners?"
• Where to start? / Who does what to whom?
• Family services and a cat
• First exposure to the Deming Red Bead Experiment
• Getting to know each other better within Michigan's HHS
• Creation of the BOLD ("Building Options for Long Term Decision-Making") Council
• Acronyms as an art-form
• Detailing the processes - Where to start and where to integrate?
• Exposure to control charts within the Bell Telephone System
• Education and steps to move forward
• Creation of the BOLD ("Be OLD") Councils
• Acronyms as an art-form
• Grant funding provided consulting help
• Process steps, including road blocks and issues
• Subject Matter Experts (SME) and Design Teams
• A focus on quality improvement, not change
• Policy changes, with improvements
• Living at home, using improvements in non-emergency transportation services
• Weekly Stand-and-Deliver meetings to review ongoing PDSA efforts
• Continual Improvement efforts are not always “linear,” with forward improvement (sometimes they go backwards)
• State government is a culture all by itself
• People sometimes become their job (position)
• Getting people on board with improvement; not always happy fits, some move on to other positions
• Managing “Level-of-Care Determinations”
• When facing system obstacles, take inspiration from Eleanor Roosevelt, Don’t take a “No” (answer) from someone without the authority to say “Yes”
• Setting new standards for working with state vendors
• New skills by Design Team members
• “Everything is designed around getting money from the federal government”
• Design Team roles are about improving access to state services, not finding sources of funding
• Effectiveness (doing the right thing), before efficiency (faster, better, cheaper)
• Cost savings have been measured, yet the bigger impact is serving more people for a given budget allocation
• Reducing the waiting list for services
• Instead of asking for more money, ask if the existing process can be improved to provide better service
• Discovering a mindset that if some don’t have a problem with a given process, others won't as well (meaning, the process is deemed to be OK as is, while it may well need improvement) 
• Impact on Design Teams after attending The Deming Institute’s “Me vs We workshop” 
• Getting over self-interest issues
• T-Shirt idea, “The Status Quo is Not an Option”
• Avoiding doing better what needs not be done
• Design Teams need ongoing support, including starting with on-boarding and ground rules
• Emergence of self-respect and respect for others