Out of Crisis
by W. Edwards Deming
Central Theme: Quality is the results of work effort divided by the total cost.
[The 14 points apply to production and service companies, large and small.]
Show examples of 7 of these concepts used in business.
Theory of Profound Knowledge --
The ideal is cooperation. In order to fulfill its own potential, a company must harness the power of every worker in its employment. In order to promote cooperation, the Theory of Profound Knowledge involves expanded views and an understanding of the seemingly individual yet truly interdependent elements that compose the larger system, the company. Deming believed that every worker has nearly unlimited potential if placed in an environment that adequately supports, educates, and nurtures senses of pride and responsibility; he stated that the majority--85 percent--of a worker's effectiveness is determined by his environment and only minimally by his own skill. A manager seeking to establish such an environment must:
"Create constancy of purpose toward improvement" of product and
service, replacing short-term reaction with long-term planning.
"Adopt the new philosophy." Management must awaken to the challenge, and actually learn their
responsibilities, take on leadership for change, and not merely expect the workforce to do so.
"Cease dependence on inspection" to achieve quality. Building quality into
the product in the first place will eliminate the need for inspections. Use statistical process control.
"Move towards a single supplier for any one item," on a long-term relationship of loyalty and
trust. Multiple suppliers mean variation between feedstocks.
"Improve constantly and forever" the system of production and service,
to improve quality and productivity, reduce variation, and thus continuously decrease costs.
"Institute training on the job." Managers should know now to do the jobs they supervise and be able to train workers.
Managers also need training to understand the system of production.
"Institute leadership." Management should strive to help people and machines do a better job.
The greatest waste is the failure to use the abilities of people.
"Drive out fear," so everyone may work effectively for the organization's best interests.
People need to feel secure in order to do their job well.
"Break down barriers between departments." Create cross-functional teams, so everyone can understand each other's
perspective. Do not undermine team cooperation by rewarding individual performance. The concept of the "internal customer,"
emphasizes the each department serves, not management, but the other departments that use its outputs.
"Eliminate slogans, exhortations, and targets for the workforce." Such exhortations only create
adversarial relationships. It is the system, not the workers, the creates defects and lowers productivity.
The system is management's responsibility.
"Eliminate management by objective." Production targets encourage the delivery of poor-quality goods
"Remove barriers to pride in workmanship." The responsibility of supervisors
must be changed from sheer numbers to quality. This means abolishing the annual or merit rating.
"Institute a vigorous program of education and self-improvement."
"The transformation is everybody's job." The top management team must lead the effort with action, not just support.
"It is not enough to just do your best or work hard. You must know what to work on."
- employ an understanding of psychology--of groups and individuals.
- eliminate tools such as production quotas and sloganeering which only alienate workers from their supervisors and breed divisive competition between the workers themselves.
- form the company into a large team divided into sub-teams all working on different aspects of the same goal; barriers between departments often give rise conflicting objectives and create unnecessary competition.
- spread profit to workers as teams, not individuals.
- eliminate fear, envy, anger, and revenge from the workplace.
- employ sensible methods such as rigorous on-the-job training programs.
W. Edwards Deming