Out of the Crisis
The fourteen points; quality as the cheapest way to produce.
Summary
Deming's book is the fullest statement of the management philosophy he developed through decades of statistical quality work in the United States and Japan. Its centre is the fourteen points for management and the associated seven deadly diseases.
The fourteen points include constancy of purpose, adopting the new philosophy, ceasing dependence on inspection to achieve quality, ending the practice of awarding business on price alone, improving the system constantly, instituting training, instituting leadership, driving out fear, breaking down barriers between departments, eliminating slogans and exhortations, eliminating numerical quotas and management by objective, removing barriers to pride of workmanship, instituting education, and putting everyone to work on the transformation.
The statistical foundation is what distinguishes this from ordinary management advice. Deming argues from Shewhart's distinction between common cause variation, which is inherent in a system, and special cause variation, which comes from an identifiable external source. His claim is that the great majority of problems are common cause, meaning they are properties of the system that management designed, and that treating them as special causes by blaming individuals makes performance worse rather than better. He demonstrates this with the red bead experiment and the funnel experiment, both of which show that responding to random variation as though it were signal amplifies the variation.
The writing is disorganised and repetitive, and the book is difficult to read straight through. Deming's rejection of performance appraisal and of numerical targets remains contested and most organisations have not adopted it. The variation argument is his durable contribution and it is correct.
Key takeaways 7
- Most problems in an organisation come from the system rather than from the individuals working in it, and the system is management's responsibility.
- Common cause variation is inherent in a process and cannot be reduced by responding to individual results, while special cause variation has an identifiable source and should be investigated.
- Reacting to random variation as though it carried information makes the variation worse, which the funnel experiment demonstrates directly.
- Inspection to find defects is too late and too expensive, and quality must be built into the process rather than tested into the product.
- Numerical quotas and management by objective produce the number at the expense of everything not being measured.
- Performance appraisal ranking individuals against each other measures system variation and attributes it to people, which destroys motivation and produces no information.
- Awarding business on lowest price alone raises total cost, because supplier variability imposes costs elsewhere that the purchase price does not capture.
Who should read it
Operators who want the statistical basis for treating performance problems as system properties, in the original if disorganised statement.
Where it sits in the reference 3
Who recommended it 1 · 1 direct
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