Podcasts about New Economics

Playing for Team Human today, activist, Blogger, and Director of the Reinventing the CommonsProgram at the Schumacher Center for a New Economics, David Bollier.Team Human is proudly sponsored by Everyone's Earth.Learn more about Everyone's Earth: https://everyonesearth.com/Change Diapers: https://changediapers.com/Cobi Dryer Sheets: https://cobidryersheets.com/Support Team Human on Patreon: https://www.patreon.com/teamhumanFollow Team Human with Douglas Rushkoff:Instagram: https:/www.instagram.com/douglasrushkoffBluesky: https://bsky.app/profile/rushkoff.comGet bonus content on Patreon: patreon.com/teamhuman  Hosted on Acast. See acast.com/privacy for more information. Get bonus content on Patreon Hosted on Acast. See acast.com/privacy for more information.

Connor Boyack is the founder of the Libertas Network, and co-creator of the popular Tuttle Twins book series. He discusses a recent controversy in which the children's books were (temporarily) removed from public libraries in New York state. He also discusses Bob's new economics course which is part of the Tuttle Twins Academy.Mentioned in the Episode and Other Links of Interest:The YouTube version of this interview.The link to Bob's online economics course at the Tuttle Twins Academy.Connor Boyack's website, with links to his various projects.Help support the Bob Murphy Show.

Today we're examining the evolution of asset management and financial advisory services. As technology transforms how we invest and manage wealth, we're exploring the critical balance between innovation and human expertise. We'll discuss how disruption in the advisory space creates new opportunities for clients and advisors alike, why personal relationships remain essential even as AI expands, and how progressive firms are reimagining compensation models. We'll also look at the hybrid approach resonating with next-gen clients who want both self-directed tools and personalized guidance. Joining me to explore these topics are Steven Woods, CEO and Founder of Stirlingshire, and Jim Webb, VP of Investments. Their firm is working to remake the asset management model for both clients and advisors. Today, we'll hear about their non-traditional approach to wealth management, how they're balancing technology with the human touch, and why this matters for both financial professionals and their clients. The Big Ideas: Challenging the Traditional Asset Management Fee Structure: Stirlingshire allows advisors to keep 100% of asset management fees and commissions with zero expenses. This flips the traditional model where firms take substantial cuts from advisor earnings, creating better economics for both clients and advisors. The "Advice on Demand" Innovation: Stirlingshire offers a hybrid model between self-directed investing and full management. Clients can self-direct at zero commission but access professional advisors when needed, with advisors only getting paid when their specific recommendations result in profits. Technology-Enabled Compliance and Remote Work: By embedding compliance directly into their technology systems, Stirlingshire eliminates the need for physical offices and reduces compliance staffing. This automation significantly reduces overhead costs while increasing advisor flexibility. AI as an Efficiency Tool, Not a Replacement: Rather than replacing human advisors, Stirlingshire uses AI to make them more efficient. Their AI tools quickly analyze portfolios and provide market context, saving advisors time without making actual investment decisions. Disrupting the Industry to Drive Broader Change: Stirlingshire aims to force change across the entire financial advisory industry, similar to how Robinhood disrupted commission structures. Their goal is to push other independent firms toward more advisor-friendly compensation models by demonstrating a successful alternative approach.

How does "quality" apply in all areas of an organization? In this final episode of the Misunderstanding Quality series, Bill Bellows and host Andrew Stotz discuss lessons from the first twelve episodes, and the big ah-ha moments that happen when we stop limiting our thinking. TRANSCRIPT 0:00:02.6 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 Bill Bellows, who has spent 31 years helping people apply Dr. Deming's ideas to become aware of how their thinking is holding them back from their biggest opportunities. Today is episode 13 and the title is Quality Management: Don't be limited. Bill, take it away. 0:00:30.5 Bill Bellows: Hey, Andrew. So this is episode. What number did you say it was? 0:00:36.2 Andrew Stotz: 13. Lucky 13. 0:00:38.1 Bill Bellows: Lucky 13. So then for those who are concerned about the use of the number 13, this is episode 14. 0:00:51.0 Andrew Stotz: I thought you're gonna say episode 12A. 0:00:54.7 Bill Bellows: And for those who don't mind the number 13, this is episode 13. And as we talked earlier, if Dr. Deming was to title the episode it would be... It would not be "don't." It would be "do not", do not be limited. So at the start I wanted to go back to review the path we're on. We've been on episode one back in end of May, Quality, Back to the Start. All part of the Misunderstanding Quality series for The Deming Institute. Episode two, we got into the Eight Dimensions of Quality with David Garvin. One of those dimensions was acceptability. 0:01:49.8 Bill Bellows: Another was reliability. Another was I say dependability performance. Okay. And I think it's important in a series about misunderstanding quality to look at the work of David Garvin. Just realize I think it's fascinating to... You move out of the world of the American Society Quality and control charts and whatnot. And that's why I think Garvin's work paints a nice... Gives a nice perspective to not be limited.  And then we got into in the third episode Acceptability and Desirability. Episode four, Pay Attention to Choices and the choice of differentiating acceptability which is I'll take anything which meets requirements, and desirability. 0:02:42.3 Bill Bellows: I want that little doggy in the window. Not any doggy in the window. And then we followed that with episode five, the Red Bead Experiment which for many is their first exposure to Dr. Deming's work. I know when I worked for the Deming Institute for a few years the Red Bead Experiment website was one of one of the most popular pages. I believe another one was the 14 Points for Management. And, personally, I've presented the Red Bead Experiment think just once, just once. And I'm going to be doing it at the 2025 at, let me back up, the Bryce Canyon Deming... The Bryce Canyon...Bryce Canyon Forum. I can't remember the name. It's a partnership between Southern Utah University and The Deming Institute, and we're doing it at Southern Utah University. And on one of those days, I'll be doing the Red Bead Experiment, which takes a lot of time and then studying to present it a few years ago I was getting all the videos that I could find of it, many of them on The Deming Institute web page and none of them have the entire data collection. 0:04:18.5 Bill Bellows: They kind of fast forward through six people putting the... drawing the beads each four times and when you're up on stage trying to do that, I had four people that's, you gotta do a lot of work to make it that exciting. But the reason I present it, I say I present it for a number of reasons. One is to do the classic "The red beads are not caused by the workers are taken separately. They're caused by the system which includes the workers. It's an understanding of variation and introduction to control charts" and all of that is as exposed by Dr. Deming is classic. 0:05:00.7 Bill Bellows: But, I'd like to take it one step further, which is to go back into that desirability thinking and look at the concept that we've talked about of going through the doorway and going past the achievement of zero defects, zero red beads, and realize that there's further opportunities for improvement when you start to look at variation in the white beads. And, that then takes into account how the beads are used. And that gets us into the realm of looking at quality as a system.   Looking at quality with a systems view as opposed... That's good, that's good, that's good. With or without an appreciation on how the bead is used. So anyway, that was episode five. We explored that. Next we got into the differentiation of Category Thinking and Continuum Thinking. 0:05:55.5 Bill Bellows: And for those who haven't listened to it, maybe not in a while, the differentiation is category thinking. Putting things in categories such as red beads and white beads are the... It could be any categories, categories of fruit, categories of religion, categories of political systems. We have categories and then within a category we have variation. We have different. We have apples and oranges and then we have a given type of orange. And then there's variation in the juiciness, ripeness. That's called continuum thinking, which goes back to, if we go back to the red beads and the white beads is notion that the white beads are not uniformly white, not uniform in diameter or weight. 0:06:44.5 Bill Bellows: And, what are the implications there? Well, if we think in terms of categories, red beads and white beads, if all the beads are white have we stopped improving? And Dr. Deming and I believe it was Point 5 of the 14 Points stressed the need for continual improvement. And yes, you can continuously improve and reduce cost, you can continuously reduce cycle time, but can you continuously improve quality? Well, not if you're stuck in a category of good, then the role of that is to just to remind people that there's opportunities to go further when you begin to look at variation in white, which is the essence of looking at how what you're looking at is part of a system, which Dr. Deming was well, well aware of. 0:07:33.7 Bill Bellows: Next we got into the Paradigms of Variation and a big part there was differentiating acceptability. Well, going beyond acceptability was differentiating accuracy from precision. Precision is getting the same result shrinking the variation, otherwise known as getting achieving great piece-to-piece consistency. Metrics that begin with the letter C and sub P could be Cp, Cpk, are the two most popular. Those are measures of precision that we're getting small standard deviations that they are very, very close to each other. But in the paradigms of variation that was what I referred to as Paradigm B thinking we're looking for uniformity. Paradigm A thinking being acceptance, we'll take anything that meets requirements... Or academically called paradigm A. Paradigm C is what Dr. Taguchi was talking about with the desirability, where we're saying I want this value, I want uniformity around this specific value. 0:08:43.9 Bill Bellows: Here what we're looking at is uniformity around the target, around an ideal, otherwise known as piece-to-target variability. And, the idea there is that the closer we are to that ideal, the easier it is for others downstream to integrate what we're passing forward. Whether that's putting something into a hole or does this person we want to hire best integrate into our system. So, integration is not just a mechanical thing. In episode eight we then got into Beyond Looking Good which then shatters the Paradigm A acceptability thinking, going more deeply into the opportunities for continual improvement of quality. 0:09:29.1 Bill Bellows: If you shift to continuum thinking. Next, Worse than a thief coming from Dr. Taguchi. And that's the issue of achieving uniform. Part of what we looked at is the downside of looking at things in isolation and not looking at the greater system. Then episode 10 we look at Are you in favor of improvement of quality? 0:09:53.6 Andrew Stotz: I'm in favor. 0:09:55.7 Bill Bellows: To which he would always say, but of course. That was a reference back to chapter one of The New Economics. And he said everyone's got an answer. Improving quality computers and gadgets. And what we spoke about is Quality 4.0, which is gadgets of the 21st century, tools and techniques. And again, what we said is, there's nothing wrong with tools and techniques. Tools and techniques are about efficiency, doing things well, but they lack what Russ Ackoff would say in asking, are we doing the right things well. And then episode 11 delved into what I've...amongst the things I've learned from Dr. Taguchi, To improve quality, don't measure quality. 0:10:42.5 Bill Bellows: If we have a problem with, we want to reduce scrap, we want to reduce rework, we want to eliminate the problems that the customer has experienced or that someone downstream is experiencing. And what Dr. Taguchi emphasized was start asking, what is the function of the thing we're trying to do? And the idea is that if you improve the function, then you're likely to improve the quality as measured by what the customer is looking for. If you focus on what the... If you focus your efforts on reducing what the customer is complaining about, you're likely to get something else the customer is complaining about. And for more on that, go to episode 11. 0:11:19.0 Bill Bellows: And then episode 12, Do specification limits limit improvement? Which again goes back to what I experienced on a regular basis is in my university courses with people I interact with and consulting is a very heavy emphasis on meeting requirements and moving on. And not a lot of thought of going beyond that or even that there's anything more to do, that's alive and well. And that's reinforced by Six Sigma Quality is filled with that mindset. If you pay attention closely to Lean Manufacturing, you'll see that mindset again, alive and well. So, what I wanted to get to tonight in episode 13, Quality. 0:12:04.3 Andrew Stotz: That was quite a review, by the way. 0:12:06.7 Bill Bellows: Yeah, Quality Management: don't be limited, as and I'm teaching for the sixth time a class in quality management at Cal State Northridge. The title used to be Seminar in Quality Management. The title this year is Engineering Quality Management and Analytics. One of the assignments I give them, essays, the quizzes, attending the lectures. 0:12:34.9 Bill Bellows: Learning Capacity Matrix that I learned about from David Langford. But what I was sharing with you earlier, Andrew, is one of the first things I thought about and designed in this course, back in 2019 was I could just imagine students going through the course. And, what I'm going to hear is, what I've heard before is professor, these are very, very interesting ideas, but I'm not sure how I would apply them where I work. Because where I work is different. It's different. And to avoid that question, I came up with an assignment I called the Application Proposal. And there's four parts to it. But part one is: imagine upon completion of this course. And I let them know about this in the first lecture and I say, imagine upon completion of the course, your boss, someone you work with, challenges you to find three things you can do within three to six months of the of the completion of the course. 0:13:34.6 Bill Bellows: And it must include something you learned in this course. I don't say what thing, I don't say two things, I don't say three things. I leave it to them. But all it comes down to is I'd like you to contemplate and within three to six months of the completion of the course, what could you do? And I call that the near-term application. Well, subtask one is come up with three. They have to meet your job, your role, not your boss's role, not another department's role. They have to fit your role because only you know then the method by which you would go about that. And, so for that near-term, I ask them to let me know what is the present state of that near term, the before, the current condition and what is the after. What is the future state of that near-term? So I assign that before the course begins, I give them until week five to submit and give me those three things. The reason I asked for three is if one, if the first one they give me, if they only asked for one and one didn't quite fit, then I say, well, okay, Andrew, go back and give me another one that same time. 0:14:49.7 Bill Bellows: So I said, give me three. And most often all three are fantastic. In which case I say they're all great. Which one would you like to do? But again, it has to fit their role because in Sub-Task 2, the next thing I want them to do is not so much tell me about the present state, tell me more about the future state. And again, the future state is how much can you accomplish within that three-to-six month period? And that's subtask two. Then they come back to me and tell me the plan. What is the plan by which you go from the near-term present state to the near-term future state, tell me about the plan. Tell me what some of the obstacles might be and how you plan to deal with the obstacles. And then I say now what I want you to do is imagine that is wildly successful, jump ahead a year and a half to two years and tell me what you would do next. How would you build upon this? And in that mid-term time frame, what is the present? What is the future of the mid-term? And then go a few years out and tell me how you're going to further expand on what you've learned. 0:16:03.4 Bill Bellows: I call that the far-term. And for the far-term, what's the present, what's the future? So when they submit that to me, then I come back with - it could be questions about some of the terminology.  It could be a suggestion that they look at something with the use of Production Viewed as a System. Or, I ask them to think about operational definitions or perhaps suggest a control chart and, or a book. So, part of the reason I wanted to bring that up is few of the title, few of the topics we are looking at are specifically quality related. They're all about improving how the organization operates. Which goes back to what Dr. Deming stressed is the importance of continual improvement. 0:16:50.9 Andrew Stotz: Can you explain that just for a second? Because that was interesting about quality versus improving the organization. What did you mean by that? 0:17:00.4 Bill Bellows: Well, I, they didn't come to me with this process I have, has lots, has a very high defect rate and I thought that's where I need to focus. Or this process has a lot of scrap and rework. That's where I want to focus. What I was excited by is that they were looking at how to take a bunch of things they already do and better integrate them. Just fundamentally what I found them thinking about is how can I spend time to organize these activities as a system and as a result spend a whole lot less time on this and move on to the next thing. And, what I found fascinating about that is if we keep our thinking to quality and quality's about good parts and bad parts, good things and bad things, and having less bad things and more good things, that could be a really narrow view of what Dr. Deming was proposing. Now another aspect of the assignment was not only do I want them to give me three ideas, we down-select to one. It could be they're writing a new piece of software. One of the applications has to do with a really fascinating use of artificial intelligence. 0:18:27.0 Bill Bellows: And what's that got to do with quality? Well, what's interesting is it has a lot to do with improving the functionality of a product or a service, having it be more reliable, more consistent, easier to integrate. But, the other thing I want to point out is not only do I ask them to come up with three things and then assuming all three things fit well with their job, their responsibilities, their experience.  What I'm also interested in is what from the course are you going to use in this application? And, two things came up that fit again and again.  One is the value proposition of a feedback loop. 0:19:12.9 Bill Bellows: And they would ask me, what do you mean by feedback? I said, well, you're going to come along and you're going to tie these things together based on a theory that's going to work better. Yes. Well, how will you know it's doing that? How will you know how well this is performing? And, I said when I see this is what people refer to as Plan-Do, but there's no Study. It's just... And, I saw that Rocketdyne, then people would come along and say, oh, I know what to do, I'm just gonna go off and change the requirements and do this. 0:19:44.6 Bill Bellows: But, there was no feedback loop. In fact, it was even hard to say that I saw it implemented. It just saw the planning and the doing. But, no study, no acting. 0:19:57.3 Andrew Stotz: Is that the Do-Do style? 0:20:01.3 Bill Bellows: Yes. But what was really exciting to share with them is I said in a non-Deming company, which we have referred to as a Red Pen Company or, or a Me Organization or a Last Straw. And I don't think we covered those terms all that much in this episode, in this series, we definitely covered it in our first series. But what I found is in a Deming or in a non -Deming company, there's not a lot of feedback. And even if I deliver to you something which barely meets requirements and we spoke about this, that in the world of acceptability, a D- letter grade is acceptable. Why is it acceptable? Because it's not enough. It's good parts and bad parts. And so even if I deliver to you, Andrew, something which barely met requirements, and you said to me, Bill, this barely meets requirements. And I say, Andrew, did you say barely meets requirements? And you say, yes. So, Andrew, it did meet requirements and you say, yes. So I say, "Why are you calling me Andrew?" 0:21:12.1 Andrew Stotz: By the way that just made me think about the difference between a pass fail course structure and a gradient course structure. 0:21:20.7 Bill Bellows: Exactly. 0:21:21.5 Andrew Stotz: Yeah. Okay. 0:21:22.5 Bill Bellows: Yeah. So even if you give me that feedback. I reject it. I'm just going to say, Andrew, move on. But I said, in a Deming organization, feedback is everything. The students were giving me feedback on the quizzes and some things that caused me to go off and modify some things I'm doing. And I told them, if I don't have that feedback, I cannot improve the course. So, I met with each of them last week for an hour, and the feedback I was getting is instrumental in improving the course for the remainder of the semester as well as for next year. And, so that's what I found is what really differentiates a Deming approach to improving a process or a service or a product is feedback, which goes then to watching how it's used. It is, I think I mentioned to you Gipsie Ranney, who was the first president of The Deming Institute, a Professor of Statistics at University of Tennessee, when she met Dr. Deming and later became a senior consultant, maybe advisor to General Motors Powertrain. And once she told me, she said to Dr. Deming "You know, Dr. Deming, what do people get out of your seminars?" And. he said, "I know what I told them. 0:22:42.0 Bill Bellows: I don't know what they heard." And, the challenge is without knowing what they heard, because we would also say, and I'm pretty sure we brought this up in one of our this series or the prior series, Deming would say the questions are more important than the answers because the questions provide them with feedback as to what is going on. So anyway, part of what I wanted to bring out today in this quality management, don't be limited, is whether or not you're focusing on quality per se, minimizing scrap, minimizing work. If you're trying to improve a process, again, you're not improving it necessarily because there's more I want to have less scrap. But if your improvement is, I want it to take less time, I want it to be easier to do. I want it to be cheaper to do. Well, while you're at it, think about a feedback loop.  And the role of the feedback is to give you a sense of is it achieving what you're hoping it would achieve? It would allow you over time to maybe find out it's getting better.  Maybe there's a special cause you want to take advantage of or a special cause you want to avoid.  But, without that feedback, how do you know how it's working and then beyond that? 0:23:55.7 Andrew Stotz: And where is the origin of the information coming from for the feedback loop? Is it a feedback loop within your area or is it feedback loop from the next process or what do you. 0:24:08.3 Bill Bellows: All of that. That's what I told her. I said one is, I said, when you're developing the process. I told them, I said, when you're. If in Sub-Ttask 1, your idea is to flowchart a process, come up with a template, a prototype. Part of the feedback is showing that to people. And part of the feedback is, does it make sense to them?  Do they have suggestions for improvement? Do they... Is there an issue with operational definitions?  There would be better clarity based on the words you're using.  You may say in there clean this thing, or early in the semester, one of the assignments I gave the students was to explain some aspect of the course within their organization. And then I thought, well, then now it will explain to who. And I thought, well, unless I say if I felt that without giving clarity to who they're explaining it to, they're going to get lost in the assignment. Am I explaining it to a co-worker? Am I explaining it to someone in management? Am I explaining it to the CEO? And, finally I just thought, well, that's kind of crazy. 0:25:18.3 Bill Bellows: I just said, well, as if you're explaining it to a classmate. But, my concern was if I didn't provide clarity on who they're explaining it to, then they're going to be all over the place in terms of what I'm looking for versus what they're trying to do. And that being feedback and that also being what I told them is part of collecting, part of feedback is looking for how can I improve the operation, how can I improve? Or, what are the opportunities for paying closer attention to operational definitions, which means the words or the processes that we're asking people to follow. 0:25:58.3 Bill Bellows: But, I found in in joining Rocketdyne, I was in the TQM Office and then I began to see what engineering does. Oh, I had a sense of that when I worked in Connecticut, paid more attention to what manufacturing does. Well, then when I moved into a project management office. Well, project management is just like quality management. It's breaking things into parts, managing the parts in isolation. And, so when I talk about quality management, don't be limited. There's a lot Dr. Deming's offering that could be applied to project management, which is again, looking at how the efforts integrate, not looking at the actions taken separately. 0:26:45.4 Andrew Stotz: And, so how would you wrap up what you want to take away. What you want people to take away from this discussion? You went over a very great review of what we talked about, which was kind of the first half of this discussion. And what did you want people to get from that review? 0:27:05.2 Bill Bellows: The big thing, the big aha has been: this is so much more than quality. And, I've always felt that way, that when people look at Dr. Deming's work and talk about Dr. Deming is improving quality, and then when I work for The Deming Institute, the inquiries I would get it was part of my job to respond to people. And they want to know I work for a non-profit, do Dr. Deming's ideas apply. And, so for our target audience of people wanting to bring Dr. Deming's ideas to their respective organizations, even though the focus here is quality, we call this series Misunderstanding Quality. At this point, I'd like you to think more broadly that this is far more than how to improve quality.  This is improving management of resources, management of our time, management of our energy.  So this is a universal phenomenon. Not again, you can look at it as good parts and bad parts, and that's looking at things in isolation. That's what project managers do. That's what program managers do. That's what organizations do relentlessly. And this is what Ackoff would call the characteristic way of management. Break it into parts and manage the parts as well as possible. 0:28:21.5 Bill Bellows: So, I just wanted to bring that back as a reminder of this quality, quality, quality focuses. There's a lot more to this than improving quality when it comes to applying these ideas. 0:28:34.7 Andrew Stotz: And, I would just reiterate that from my first interactions with Dr. Deming when I was 24, and then I moved to Thailand and I did finance business and all that. So I wasn't, applying statistical tools in my business at the time. That just wasn't where I was at. But the message that I got from him about understanding variation and understanding to not be misled by variation, to see things as part of a system. Also to understand that if we really wanted to improve something, we had to go back to the beginning and think about how have we designed this? 0:29:20.3 Andrew Stotz: How do we reduce the final variability of it? And, so, it was those core principles that really turned me on. Where I could imagine, if I was an engineer or a statistician, that I would have latched on maybe more to the tools, but from where I was at, I was really excited about the message. And, I also really resonated with that message that stop blaming the worker. And, I saw that at Pepsi, that the worker just had very little control. I mean, we're told to take control, but the fact is that if we're not given the resources, we can only get to a certain level. 0:29:58.3 Andrew Stotz: Plus, also the thinking of senior management, you are shaped by their thinking. And, I always tell the story of the accumulation tables in between processes at a Pepsi production facility. And that basically allows two operators of these two different machines to, when one goes down, let's say the latest, the farthest along in the production process, let's say the bottling goes down, the bottle cleaning process behind it can keep cranking and build up that accumulation table until it's absolutely full. And, that gives time for the maintenance guys to go fix the bottling problem that you have and not stop the guy behind. And, that was a very natural thing from management perspective and from my perspective. But, when I came to Thailand, I did learn a lot more about the Japanese and the way they were doing thing at Toyota. 0:30:51.4 Andrew Stotz: I went out and looked at some factories here and I started realizing they don't do that. They have their string on the production line, that they stop the whole thing. But the point is the thing, if a worker can't go beyond that, you know what the senior management believe about it. So, that was another thing that I would say it goes way beyond just some tools and other things. So, I'll wrap it up there. And Bill, on behalf of everyone at The Deming Institute, I want to thank you again for this discussion and for listeners. Remember to go to deming.org to continue your journey. And if you want to keep in touch with Bill, just find him on LinkedIn. This is your host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming and that is people are entitled to joy in work. 

In this episode, Doc Danny breaks down the latest trends in cash-based and hybrid physical therapy practices and why these models are thriving in 2025. From patient spending behavior to economic factors like inflation and interest rates, he highlights what clinic owners need to know to stay profitable and scale successfully this year. Key Takeaways: ✔ Cash & hybrid PT clinics are growing, not slowing—patient spending remains strong ✔ Hiring is the biggest challenge for growing clinics, not lack of patients ✔ High deductibles & co-pays drive patients to cash-based providers ✔ Inflation, interest rates & tariffs affect the economy, but PT clinics remain stable ✔ AI will automate admin tasks, but hands-on PT remains in demand ✔ A strong brand, niche focus & customer experience are key to growth ✔ Prevention & performance services drive recurring revenue and clinic stability Resources Mentioned:

In this episode of Misunderstanding Quality, host Andrew Stotz and Bill Bellows discuss what not to measure when it comes to quality. Bill offers some great examples to show how organizations get it wrong, and how to get it right. TRANSCRIPT 0:00:02.4 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 Bill Bellows, we're gonna have a lot of fun, who has spent 31 plus years now that it's 2025, helping people apply Dr. Deming's ideas to become aware of how their thinking is holding them back from their biggest opportunities in the episode, today is episode 11, and the title is "To Improve Quality, Don't Measure Quality". Bill, take it away.   0:00:35.6 Bill Bellows: Thank you, Andrew. And, so the title of episode 10, came from chapter 10... Chapter 1 of The New Economics, and I used a quote from Dr. Deming, which was, "Are you in favor of the improvement of quality?" Which Dr. Deming says, "Are you in favor of the improvement of quality? We can have a national referendum, yes or no?" Everyone says yes. Then he says... Then he say, "We could have a secret ballot." And... But I... At the beginning of the podcast, I had said, "Are you in favor of quality?" And it's... No, it's, "Are you in favor of the improvement of quality?" And so today I wanna, in episode 11, share it with our listeners and viewers, more of the profound insights from Genichi Taguchi. But I think, what I was just thinking is saying, "Are you in favor of quality?" And I've used that quote, which now I now realize it's a misquote. It's not, "Are you in favor of quality?" It's "Are you in favor of improvement of quality?" But in seminars, what I've done is used the quote, the misquote, I would say Dr. Deming would ask, "Are you in favor of quality?" And he would say, "We're gonna have a secret ballot. Is everyone in favor of ballot?" In quality, everyone says yes. So I would go through that.   0:02:16.3 Bill Bellows: And then I would go to the next question, and I would say to the audience, I'd say, "Okay. Dr. Deming made reference to secret ballot. So I wanna do a secret ballot. I want you to close your eyes, and I'm gonna ask you a question, and if your answer is yes, raise your hand. But I want you to close your eyes when you raise your hand, 'cause I don't want you to raise your hand 'cause everybody else does. Okay, so close your eyes." And I say, "Are you in favor of teamwork?" And all the hands go up. [laughter] And it's not so much "Are you in favor of improvement of teamwork?" But it's the idea that, acceptability saying this part is acceptable, as we've shared in prior episodes, is the essence of looking at that part, my task, my effort in isolation. And what that has to do with teamwork, I question. Now, with a few of us at Rocketdyne years ago used to talk about, we would say, you give out a term paper assignment, the term paper must be between 10 and 20 pages long. And what happens? They're close to 10 pages. Then I would share, we'd tell Allison, our daughter, I'd say when she was in high school, "Be home by between 8:00 and 10 o'clock," and she shows up around 10 o'clock.   0:03:51.6 Bill Bellows: And I would show a distribution over there. Then I would say, "What about a machinist? The machinist is given a hole to machine. And what does machinist do is machine the hole on the low side, and then a machinist is machining the outer diameter of a shaft or a tube. And what does machinist do? Machines to the high side." And so I would show those four distributions either on the low side or the high side, and say, "What do they all have in common?" And people would say, "Each of those people's looking out for themself. They're focusing on their work in isolation." Then I would say, "So what do you call that in a non-Deming company or in a... " In the first podcast there is a, called it a Red Pen Company or a ME organization, or a Last Straw companies... What do you call that behavior where people look at the requirements and say, "What's best for me?" What do you call that? What do you call, people scratch their head? We say... You ready? "Teamwork."   [laughter]   0:05:00.6 Bill Bellows: And everybody laughs. And then I turn to somebody in class and I say, "So Andrew, are you a team player?" And Andrew says, "Yes." And I say, "Andrew, if you machine the holes to the low side, are you a team player?" And you might say, "I'm not sure." And I would say, "Say yes." And you'd say, "Okay. I say yes." And I say, "Okay, Andrew, who's on your team?" And you say, "Me." "So, oh, you are a team player, man."   0:05:24.2 Andrew Stotz: I'm a team player. Team Andrew always wins.   0:05:28.2 Bill Bellows: Yeah. And I would say, so I say, "In a non-Deming company, everyone's a team player. All right. But who's on the team?" So I would say to people, "You'd be a fool not to be on your own team. The only question is, who else is on your team?" All right. Back to Dr. Taguchi to improve quality, don't measure quality. And I was, got into this in an explanation with some others recently, and somebody was showing me a bunch of defect rate data involving some process. And the question was, how to apply this occurrence of defect rate data to Dr. Taguchi's loss function. And so, again, reminder to our listeners, acceptability is everything that meets requirements is okay. Either I am unaware of differences or the differences don't matter, any parking spot, any professor any Thermo 2, any doctor and desirability is "I want this doctor, this parking spot, this, this, this, this, this." And so not just anything that meets requirements.   0:06:50.3 Bill Bellows: And Dr. Taguchi's work has a lot to do with that thinking. And Andrew, yeah, I'm on a month, on a regular basis, meeting more and more people that are listening to the podcast and reaching out to me on LinkedIn. And one shared with me recently then, and he started to listen to this series, and he said, he never thought about desirability. He says everything he knows, everything he sees every day, is acceptability. And he's like, "You mean, there's more than that?" And it's like, "Hello. That's what our series is trying to do." So...   0:07:26.6 Andrew Stotz: And let me introduce you to door number three, which opens you up into this whole 'nother world of...   0:07:35.6 Bill Bellows: Yes.   0:07:35.7 Andrew Stotz: The interconnectedness and understanding quality from the impact on all the different parts of the organization, not just the one thing and the one area. Yep.   0:07:46.6 Bill Bellows: Yes. Yeah, yeah, yeah. Exactly.   0:07:48.9 Andrew Stotz: But that's door number three. Now, we don't wanna go through that right off the bat, but when you go through it, unfortunately door number three disappears as you walk through it, and it's a wall...   [laughter]   0:08:00.4 Andrew Stotz: And you can't go back because now you understand that what is a system, what is the interconnectedness of everything, and once you see that, you can't unsee it.   0:08:09.6 Bill Bellows: That's right. Now, it's like, it's a holistic view in which... And a from a holistic perspective, parts don't exist, parts of exist, but everything is connected.   0:08:27.4 Andrew Stotz: Right.   0:08:28.2 Bill Bellows: And what does that mean? So anyway...   0:08:30.1 Andrew Stotz: And just to put that into context, let's just take a car. A customer never buys a part. And they don't buy a jumble of parts, they buy the car. So to the customer's perspective, it's even more meaningless, the independent parts of that.   0:08:50.3 Bill Bellows: When I would go to Seattle and do training when Rocketdyne was owned by Boeing, and I'd be doing training for people working on commercial airplanes or 737s, 47s and whatnot. And one of the jokes I would use is that, "Hey, 747... " People went, "What's a 747?" How about 787? If I was today, I'd say "a 787 is not a bunch of parts that fly in close formation." But that is, the mindset is that... But anyway, so acceptability is looking at the parts in isolation, looking at things in isolation, it's assigning a grade to a student, it's performance appraisals, that's all about isolation, it's thinking, "I won the game, I get an award. I lost the game." All of that thinking, from engineering to, how we look at human resources, the idea that the savings add additional only works when the activities are independent. So that's all acceptability, looking at things in isolation. Desirability in this idea of a preferred value, I don't know that anyone contributed to that, besides Dr. Taguchi. In fact, this morning, I was talking with some friends overseas about Joseph Juran's work. And, do you remember last time you and I worked, I was sharing with them that our last podcast followed the last meeting I had with these friends in Europe. And I said that conversation led to our podcast conversation about Quality 4.0, and it's all acceptability, acceptability, acceptability, meet, meet, meet requirements.   0:10:35.6 Bill Bellows: This very conversation. And I said, I went back and did some research on what Joseph Juran... How Juran defined quality. 'Cause I looked at the ASQs definition of quality and it gave two definitions of quality, one attributed to Juran talking about quality as fitness for use, and then Philip Crosby's definition is, meeting requirements. But you may recall, I said, there is no explanation of how Dr. Deming defined quality. Yeah, maybe that will come. But, so I was sharing that with them, and also shared with them a model I've used. And it might have come up in our first series, but I think the classic model within organizations is, I work, I follow a bunch of steps to make a part, a thing, a module, something. And if all the requirements are met, I hand off to you, you're downstream. And then likewise, there's others in parallel with me that hand off good parts, good things to you. Because they're good, we can hand off to you. And then the model is you take the parts that are good and put them together, and because they are good, they fit. And then you pass that integrated component downstream where other integrated components come together. And we progressively go from, it could be that we're putting together the fuselage, somebody else is putting together the wings, and it's all coming together. And at the other end, it's an airplane.   0:12:22.5 Bill Bellows: And on every handoff we hand off what is, so the parts that are good fit, the components that are good fit together with other, then we turn the whole thing on, it works. And I show this flow to people and I say, "So what do you see going on in there?" And what eventually they start to see is that all the thinking is black and white, because they're good, they fit, because they fit, they fit, and when you turn it on, it works. There's nothing relative about that. And so I was sharing that with these folks this morning, and I said, after you and I spoke last time, went back and looked, and Juran talks about fitness for use, and the question was, is Juran's definition of fitness, absolute fitness or relative fitness? Meaning that there's a degree of good in the parts associated with desirability thinking, and if we've got degrees of good in the parts, then there's degrees of fit. And, well, it turns out there's plenty of reason to believe that Juran had a model of acceptability that the parts are good, then they fit. All to come back to what Dr. Taguchi is talking about in terms of improving quality, is improving quality from a variable perspective that there's degrees of good. And so now we go back to, to improve quality, don't measure quality. And I remember when he said that and we were dumbfounded, "Well, what do you mean by that?"   0:13:52.5 Bill Bellows: And then he would go on to explain, that traditionally, we look at the quality... The lack of quality of something. An inspector says, "There's a scratch on the door. There's a ding here. There's a crack there. There's a, the weld has a drop in it. The weld has porosity." You know what that means is that's not a... The quality inspector is looking for the absence of a crack, the absence of porosity and things like that. And it also parallels with what I learned from Ackoff, Russ would say, [chuckle] "Getting less of what you want doesn't get you what you want." So you could say, "I want less waste, less defects." Well, what is it you want? Again, the clarification is, Russ would say, "Getting less of what you don't want doesn't get you what you want." And likewise, Dr. Taguchi talked about, what is the function of the process? So if you're talking about, imagine on a washing machine, when you have a... Or a dryer, and you have a motor that's spinning, and around the motor is a belt that's spinning the drum. Well, the quality problem, classic quality problem could be that the belt slips, or the belt cracks, or the belt is vibrating.   0:15:28.3 Bill Bellows: Well, then you say, "Well, okay, what's the function of the belt?" Well, it's not about cracking. The function of the belt is to transmit energy from the motor to the drum. And if it does that really well over sustained periods of time, then that suggests there's probably less cracking going on and less slipping going on. But if you don't look at it from a function perspective and ask, "What's the function of the belt?" And move away from, "Well, I don't want it to crack and I don't want it to slip." Well, then tell me what you want it to do. What is it you want it to do? Now, let's get into more of what we do want. And then, and this is what's neat listening to Dr. Taguchi as an engineer, you say, "Well, okay, so what is the belt trying to do? It's trying to transmit energy." So if I can design the belt, and by changing the materials of the belt to transmit energy, under wide-ranging temperatures, wide-ranging usage conditions, if I do a good job of that, then I should see less cracking problems. Absent that, if I try to reduce the number of cracks, I may end up with a belt slipping more often. So then what happens is you end up trading one problem for another, which is not uncommon.   0:16:57.7 Bill Bellows: You go from, the cookies being undercooked to overcooked as opposed to saying, "What's the role of the baking process?" And he would say, "To transmit energy to the cookie in the precise amount. And if we have the precise amount and distribution, then that should work out." Now, relative to welding. Welding, there is, there may be a dozen different weld anomalies that inspectors are looking for, with X-rays, they see porosity, they see, what's called drop-through with the material and the weld, drops a little bit, which could result in a fatigue problem leading to cracking. Well, here Dr. Taguchi would say, "Well, what's the function of a weld?" Say, well, to join two pieces of material together with a given strength. And so you join them together. And then once they're joined together, now you run tests and you say, "I wanna... " It could be, "I wanna heat and cool the weld to see how it does with that. I wanna introduce vibration to the weld." And if you can show that under vibration, under wide-ranging changes in the environment, that the strength holds up, then by focusing on the strength, which is what you want, you end up with fewer quality problems. But it's turning things around and saying, "Not what I don't want, what do I want?"   0:18:35.3 Andrew Stotz: And...   0:18:36.4 Bill Bellows: And that's what... Go ahead. Go ahead. Andrew.   0:18:37.6 Andrew Stotz: There's two things. The more I think about this quote that you're talking about, to improve quality, don't measure quality, sometimes I think I got it, but sometimes I don't. I just wanna think about a couple of parallels. One of them is sometimes we say in the field of sales and marketing, we may say, "Fill your pipeline and your sales will happen." So focus on the beginning of the process. If you don't have a pipeline of people coming in to your company, into your sales team, there's nobody to sell. So that's an example. We also say sometimes, focus on the inputs and the outputs will take care of themselves. That's another way that we would use something similar. But I'm just curious, what does it mean by "Don't measure quality"?   0:19:25.0 Bill Bellows: Yeah. And that's a good question. I'd say, Taguchi's used to quality being the absence of defects. And quality is what the customer's complaining about. So he's saying, quality problems in terms of don't measure quality, he's saying, "So what are the quality problems?" "Oh, let me tell you, we've got porosity, we've got cracks, we've got drop-through, we've got cracking, cracking of the belt and slipping and the... " This is what people are complaining about. And what he's saying is, the customer's not articulating, "Hey, Andrew, improve the function." They're complaining about the... You just have to interpret that what they're saying is, you have to take where they are. They don't want it to crack. They want it to last longer. They want all these things and say... And the idea is, don't get sucked into what they don't want. Turn it around to, well then, I'm the engineer, and this is what Dr. Taguchi would say, "As an engineer, don't be dumbed down into the complaint world. Turn it around and say, what could you improve? What is the function of that thing you're selling?" And if you improve the function, because again, the beauty of talking about function, if you focus on problems, you eliminate one problem, create another problem, then another problem. Now you're just... And what...   0:21:00.8 Andrew Stotz: So it's whack-a-mole...   0:21:02.3 Bill Bellows: Exactly.   0:21:03.6 Andrew Stotz: It's whack-a-mole in the back end of the process without the awareness of, "What are the customer's needs and how do we understand whether we're hitting the mark?" And...   0:21:12.7 Bill Bellows: Oh, and this is what Dr. Taguchi used to call as whack-a-mole engineering. It's what Ackoff would say, "Today's problems come from yesterday's solutions."   0:21:24.6 Andrew Stotz: So just just to visualize that, can imagine going into a factory and saying, "Look at all these charts and how we reduce the defects of this and that. And this is... " We've reduced all these defects, but in fact, that could be out of touch with what the customer really needs at the end of that production.   0:21:44.1 Bill Bellows: Yes, it is... The beauty is, it is saying... And he would get really angry with people who got sucked into the rabbit hole of eliminating defects, scrap and rework and things like that. And just say... What he's trying to say is, "I want you to be smarter than that. I want you to start to think about what is the function of the machining process? What is the function of the welding process? What is the... " And what was neat was, I spent... On three different occasions, I spent a week with him, watching him engage every day with four teams. A team would come in for two hours, and he would discuss with them whatever the hardware was. I'm not at liberty to say what company it was. [laughter] But it was a really cool company.   0:22:56.9 Bill Bellows: And the people there invited me in because I learned at Dr. Deming's... I attended Dr. Deming's very last four-day seminar, and there met some people that were very close to him. And one of them shared that, there were people for many years, traveled with Dr. Deming. They found out where he was gonna be a given week, maybe called up his secretary Ceilia Kilian and, once he became, bonded when... And somehow Dr. Deming liked you. And then you would say, "Dr. Deming, I'm gonna take a week's vacation next summer. Where are you gonna be in June?" And he'd say, "Well, I'm gonna be at GM corporate headquarters." And what these people told me is that, they would be with him that week, whether he is doing a four-day seminar in Ohio. Now, I don't know who paid for it.   0:23:50.8 Andrew Stotz: No.   0:23:50.9 Bill Bellows: But he gave them access to be with him wherever he was. And one guy told me he was at some high-level GM meetings that week, and he said, "Dr. Deming is there and he and some others." And I think they may have been called "Deming Scholars". I know that term was used. But anyway, this guy was telling me they were there, and this GM executive comes over to him and it says to him, "So, who are you again?" And you say, "Andrew Stotz." And he says something like, "So what might I ask are your qualifications for being here?" And he says, "If Deming overheard that, Deming would turn to the executive, snap at him and say, 'These are my people. What are your qualifications?'" So anyway, inspired by that, I walked out of Dr. Deming's four-day seminar, called up a friend of mine who worked for Dr. Taguchi's company and said, "Deming had people travel with him. I wanna travel with Dr. Taguchi. I don't wanna go to a seminar. I wanna see him in action."   0:24:56.1 Andrew Stotz: Yep.   0:24:56.4 Bill Bellows: And I said, "Can we make that happen?" And it happened, and I got to go inside a company. The lawyers didn't know I was there. And I asked him, I said, to the lawyer, "Do I have to sign anything?" He said, "No. If we let the lawyers know you were here, you wouldn't be here. So, here are the rules. You can't tell anybody what happened, blah, blah, blah, blah, blah." So I get to be a fly on the wall watching him. So, a team would come in and say, "Here's this stuff we're working on." And he would... And they had an approach, which would be, reducing defects or scrap rework. And then he would turn it around for the next hour and a half and get them thinking about function. And after the first week of doing this four times a day for five days, I walked out of there thinking, "There's five basic functions." I started to notice the patterns. And then the second time I did this, a team would come in and I'm thinking, "I know what he's gonna do. He's gonna... He has in mind a function model. And all these things relative to how things come together." And so I did that three times. But, it was neat to get my brain adapted to, "Okay, what's the function? Where's he gonna come? Where's he gonna come?"   0:26:16.0 Bill Bellows: And then I would... The people would present it, and I'm thinking, "I think it's gonna go for function five. Yep. Bingo." So that's what I just wanted to share with the audience tonight. Again, there's a lot of depth. I taught two 40-hour courses at Rocketdyne in Taguchi Methods. So, a 40-hour intro and a 40-hour more advanced. So all I wanted to cover tonight, is that wisdom of not being defect-focused, but for our audience to start thinking about, start to think about the function. In fact, when I was having this conversation with a colleague recently and, 'cause he's talking about turning defect rate, he was thinking turning defect rate data into a loss function. I said, "No, defect rate thinking is acceptability thinking, the loss function is desirability thinking. They don't go together." I said, "What I wanna know is what's causing the defects." And we start diving into what's causing the defects, we can turn it into a variable data as opposed to a discontinuous data. Anyway. And I just wanted to throw out... Go ahead, Andrew.   0:27:34.4 Andrew Stotz: To wrap this up, I'm thinking about, I like what you just said, "Stop being defect-focused." Replace that with...   0:27:44.5 Bill Bellows: What is it we're trying to accomplish?   0:27:47.8 Andrew Stotz: Yeah.   0:27:48.2 Bill Bellows: If you say, "Well, we don't want defects." I know we don't want defects. But what do we want?   0:27:52.9 Andrew Stotz: Do we say replace it with outcome focus, customer focus? What would you say?   0:27:58.1 Bill Bellows: Yeah, well, absolutely it's customer focus. The idea is that, now you start to think in terms of, is what is the greater system in which this is used.   0:28:11.0 Andrew Stotz: Okay. So...   0:28:11.1 Bill Bellows: The defect thinking is just saying it doesn't fit, it doesn't meet requirements. But that doesn't tell me what you're trying to do.   0:28:17.0 Andrew Stotz: Okay. So I think I know what you're saying. Stop being defect-focused, and please walk through door number three.   0:28:25.3 Bill Bellows: Yes! Stop...   0:28:27.7 Andrew Stotz: And in door number three, you're gonna be aware of the customer, the next process, the next flow, the customer of your area and the ultimate customer, and start focusing on the needs and the desires of them, and bring that back in the chain of your process. And you'll be improving, you'll stop being focused on "Fix this, stop this. Don't do that." Let's not have any more of that, and you'll be more into, "Let's do this because this is going to drive a much better outcome, or the exact outcome that our customer wants."   0:29:05.2 Bill Bellows: Yeah, it is, which changes the hat. That may not be the purview of people in the quality organization. So, they're out there counting defects. This is not to say it's their job. Not that they're not in the loop, but it's turning to the people that are more aware... That are more in tune with functionality, which is likely gonna be that people designing the thing, thinking about what's the role of the windshield wiper? Is it to skip across the windshield? Is it to, which is, that chatter. No, we don't want the chatter. So what is it we do want? We want the windshield wiper to move smoothly. And what does that mean? It means at a given second, we want it to be... And this is where the smoothness functionality comes in that I saw Dr. Taguchi many times is, is saying at a given interval of seconds, it should be here, here, here, here, here. And if it does match those positions, then what have we done? We have improved the smoothness of the flow of the wiper blade, or whatever it is that thing.   0:30:21.5 Bill Bellows: And that's the type of thing I'm trying to introduce, in this short episode, people thinking about function, not the lack of quality, but what is it we're trying to achieve? Now, otherwise, we can also say, Ackoff would say, and Dr. Deming would agree with him, is that organizations aren't in business to make a profit. They're in business to do something really well. That's the function of the organization. And then profit is the result of that. As opposed to being profit focus, in which case you start to... You run it as a finance company and misunderstand the focus and you start believing in addition and you end up with a mess.   0:31:04.2 Andrew Stotz: So, let's end it with a cartoon that I saw in The Wall Street Journal. And in that cartoon, it was a couple of guys, young guys wearing suits, and they were talking to each other, and they were either, it was either in an MBA class or they were in a factory or something, and it said, "Things? I don't wanna make things. I wanna make money." [laughter] And the whole point is, money is the result of making great things.   0:31:38.3 Bill Bellows: Exactly. Exactly. Exactly. And that's why... And this is why I so enjoyed about listening to Ackoff, conversations with Russ... Conversations with Dr. Taguchi. And then reading Deming. I don't have any conversation with Dr. Deming and thinking of that there. They, each were astute enough to see the process, the means leading to the result. Tom Johnson would say, "The means are the ends in the making." So you have organizations that are either means-focused, which is process focus, versus, "Did you deliver the report? Did you deliver the thing?" And Dr. Deming's big thing is, by what method? Tom would say, "By what means?" So...   0:32:25.2 Andrew Stotz: All right. Well...   0:32:25.2 Bill Bellows: Anyway, that's what I wanted to expose our audience to tonight.   0:32:29.4 Andrew Stotz: There it is. They've been exposed. Ladies and gentlemen, the exposure has happened. Bill, 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. And if you wanna keep in touch with Bill, just find him on LinkedIn. And this is your host, Andrew Stotz. And I'll leave you with one of my favorite quotes from Dr. Deming. And you know this one, you can say it along with me 'cause I say it all the time. People are entitled to joy in work.

In this week's episode of Economic Update, Professor Richard Wolff delves into the heroic efforts of California firefighters and their extraordinary work in battling the recent wildfires in Los Angeles. We also explore the progressive transformations occurring within U.S. labor unions and shed light on the escalating housing affordability crisis across the United States. Additionally, we interview Professor Clara Mattei, Director of the newly established Center for Heterodox Economics in Oklahoma. Professor Mattei shares details about this groundbreaking initiative, outlining its goals, mission, and activities, as well as how it distinguishes itself from mainstream economic approaches.   The d@w Team Economic Update with Richard D. Wolff is a DemocracyatWork.info Inc. production. We make it a point to provide the show free of ads and rely on viewer support to continue doing so. You can support our work by joining our Patreon community: https://www.patreon.com/democracyatwork Or you can go to our website: https://www.democracyatwork.info/donate   Every donation counts and helps us provide a larger audience with the information they need to better understand the events around the world they can't get anywhere else. We want to thank our devoted community of supporters who help make this show and others we produce possible each week.1:01 We kindly ask you to also support the work we do by encouraging others to subscribe to our YouTube channel and website: www.democracyatwork.info

As we head into times where rising temperatures, superstorms, and mega-fires dominate the headlines, what has happened to our disaster-averting solutions? In this episode, we explore 'The Carbon Conundrum' and rethink our relationship with nature. Join host Jack Eidt as he features a discussion with post-humanist philosopher Báyò Akómoláfé and environmental leader and author Paul Hawken, moderated by Alex Forrester, Board Member of the Schumacher Center for a New Economics and Co-Founder of Rising Tide capital. They delve into the failures of current climate strategies, the pitfalls of solutionism, and the importance of reconnecting with Traditional Ecological Knowledge. This enlightening conversation challenges listeners to reconsider their approaches to environmentalism and climate action. Support the Podcast via PayPal https://www.paypal.com/donate/?hosted_button_id=LBGXTRM292TFC&source=url Paul Hawken [https://paulhawken.com/] starts ecological businesses, writes about nature and commerce. He has written nine books, including six national and NYT bestsellers: ‘Growing a Business', ‘The Next Economy', ‘The Ecology of Commerce', ‘Blessed Unrest', ‘Drawdown', and ‘Regeneration'. His latest book, ‘Carbon, The Book of Life', is available from Penguin RandomHouse in February 2025. Paul is the founder of Project Drawdown and Project Regeneration (https://regeneration.org/), which is the world's largest, most complete listing and network of solutions to the climate crisis. Báyò Akómoláfé Ph.D., [https://www.bayoakomolafe.net/] rooted with the Yoruba people in a more-than-human world, is a posthumanist thinker, poet, teacher, public intellectual, essayist, and author of two books, These Wilds Beyond our Fences: Letters to My Daughter on Humanity's Search for Home (North Atlantic Books) and We Will Tell our Own Story: The Lions of Africa Speak. Bayo Akomolafe is the visionary founder of The Emergence Network, a planet-wide networking project and inquiry at the edges of the Anthropocene that seeks to convene new kinds of responsivities, sensuous solidarities, and experimental practices for a posthumanist parapolitics. He currently lectures at Pacifica Graduate Institute, California. He sits on the Board of many organizations. A frequent keynote speaker and guest lecturer, Dr. Akomolafe's critically popular expression, “the times are urgent, let us slow down,” with which he attempts to frame new concepts (such as ontofugitivity, the Afrocene, iatropolitics, curapoiesis, white syncopation, ecocognitive assemblage theory, postactivism and parapolitics) that reframe and renaturalize human action, agency, and responsibility in an immanent, agonistic worlding of possibilities for life-death. Dr. Akomolafe is a Member of the Club of Rome and an Ambassador for the Wellbeing Economy Alliance. He is currently writing his third book, ‘An Ocean of Milk: Morality, Desire, and the Monster at the Edge of the World'. Jack Eidt is an urban planner, environmental journalist, and climate organizer, as well as award-winning fiction writer. He is Co-Founder of SoCal 350 Climate Action and Executive Producer of EcoJustice Radio. He writes a column on PBS SoCal called High & Dry [https://www.pbssocal.org/people/high-dry]. He is also Founder and Publisher of WilderUtopia [https://wilderutopia.com], a website dedicated to the question of Earth sustainability, finding society-level solutions to environmental, community, economic, transportation and energy needs. Podcast Website: http://ecojusticeradio.org/ Podcast Blog: https://www.wilderutopia.com/category/ecojustice-radio/ Support the Podcast: Patreon https://www.patreon.com/ecojusticeradio PayPal https://www.paypal.com/donate/?hosted_button_id=LBGXTRM292TFC&source=url Executive Producer and Host: Jack Eidt Engineer and Original Music: Blake Quake Beats Episode 249 Photo credit: Carbon book cover

Everyone is in favor of improving quality, but what does that mean? In this episode Bill Bellows and Andrew Stotz discuss stories of meeting requirements, missing the mark, and what Dr. Deming said about how to do better. TRANSCRIPT 0:00:02.2 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 discussions with Bill Bellows, who has spent 31 years helping people apply Dr. Deming's ideas to become aware of how their thinking is holding them back from their biggest opportunities. And I guess now that we're into 2025, it's gonna be 32 years pretty soon. The episode for today is episode 10, are you in favor of quality? Bill, take it away.   0:00:33.5 Bill Bellows: Thank you, Andrew, and Happy New Year.   0:00:35.1 Andrew Stotz: Happy New Year.   0:00:36.4 Bill Bellows: Happy New Year to our listeners. And yeah, so here we are episode 10 of Misunderstanding Quality. We got up to 22 episodes in our first series and then we'll have a follow-on series. One is I would like to thank those who took the invite to reach out to me on LinkedIn. And I've just started connecting with a few new people who are doing some interesting things involved in types of work that I'm not familiar with, it's just fascinating to listen to the types of issues they deal with. And they each come to me with an interest in Dr. Deming's work. So they're following the podcast series, this one, the others that you're doing, and they listen to all of them. And I'm not sure if they've contacted the others, but they've reached out to me. So I wanna once again say for those of you that are enjoying this conversation, my conversation with you, Andrew, then please reach out to me.   0:01:50.0 Bill Bellows: If you'd like to know more, that's one thing. The last episode was called Worse Than a Thief. And one thing I wanna mention, there's a bunch of meanings relative to being worse than a thief. One distinctly from Dr. Taguchi was... And I don't... He gave examples of manufacturers that made plastic sheeting for crops to protect the crops and his complaint was that they made it to the minimum side of the requirement. So there was a requirement on the thickness, so again, even if you have a 1mil thick here, we have in the States, there's you can buy plastic 1mil, which is 0.001 inch or something heavier. And so, and obviously, in the world of manufacturing, you're not gonna get exactly 0.001, it's gonna be a little low, a little high. So what Dr. Taguchi was referencing is companies in Japan that were making plastic sheeting that would be used for a number of things. But in particular, he talked about it, what if it's being used to protect crops?   0:03:19.8 Bill Bellows: And what if the manufacturers, to save money because they're buying the plastic by the pound, selling it by the yard, so they're gonna make it as thin as possible. And his concern was, so how much are you saving to make it as thin as possible? And what is the impact of being on the thin side when a crop is lost? And that was his reference to being worse than a thief, that you're saving a few pennies but costing the farmer the... Right? And so that could be... So that's a situation where there's a requirement, the requirement is met minimally. You and I reference that as leaving the bowling ball in the doorway, delivering to the absolute minimum, or I mean delivering to the minimum, the maximum of the requirement, whatever best suits me. So if I'm delivering to you a term paper and you as the professor say, "It must be between five and 10 pages," and I say, "Well, I'm gonna make it five pages."   0:04:23.9 Bill Bellows: If in another situation, [chuckle] an example, I guess is if when our daughter was in high school and we said, "Allison, make sure you're home between 10:00 and midnight," then she may move that to the high side of the tolerance and come home at 10:00 or 11:59. But in either case, what Taguchi is referencing is in the world of acceptability, the requirements have been met. But the worse than a thief aspect is, is what is the personal gain versus the impact to others in the system. So that could be picking up the nail in the parking lot or deciding not to do it. So I just wanna point out that I see that as a very broad statement, not just in terms of meeting requirements, but within your organization are you... To what degree are you focusing on your department at the detriment of the organization? That's another way of being worse than a thief.   0:05:28.7 Bill Bellows: It could be you're spending all of your budget just before the end of the year. 'Cause you know what happens, Andrew, if you don't spend all of your budget.   0:05:38.0 Andrew Stotz: Gonna get taken away.   0:05:38.9 Bill Bellows: So if you're 10 percent under, the next year you're gonna get 10% less. So I used to kid people is, so what will I spend... Again, so you learn the hard way, if you don't spend the entire budget then your boss the next year says, "Well, Andrew, you only spent 80% of the budget, so we're only gonna give you 80% of last year." So what's the... What message does Andrew learn? I tell people is you go a little bit over the 100%, right? You go a little bit over. And so even that I would say is worse than a thief 'cause what are you doing? You're withholding your resources that others may find. So I just wanna say that that statement is not as narrow as looking at a set of requirements, it is looking at things from what's good for me versus good for the system. All right, have fun to that one.   0:06:30.0 Andrew Stotz: Right.   0:06:31.0 Bill Bellows: So relative to the title you mentioned. Are you in favor of quality? What inspired that? There's another thing I've been looking at recently, whether on LinkedIn or elsewhere on the internet. I'm a member of ASQ, the American Society for Quality, so I get regular notes from them. And I go off and look, and I'm just reminded of how most organizations think about quality, which is meeting requirements, and it could be much more than that. But anyway, in The New Economics, Dr. Deming's book, first edition, came out in 1993. In there in the first chapter, he says, let me pull it up, and I wanna read it exactly from the good doctor.   Near the end of chapter one of the New Economics, Dr. Deming, in bold text, our listeners will find a statement, “a look at some of the usual suggestions for improvement of quality.” And Dr. Deming says, "There's widespread interest in quality. Suppose that we were to conduct next Tuesday a national referendum with the question, are you in favor of improvement of quality? Yes or no? The results." predicted Dr. Deming "would show, I believe," and again, I'm quoting Deming, "an avalanche in favor of quality. Moreover, unfortunately, almost everybody has the answer on how to achieve it. Just read the letters to the editor, speeches, books. It seems so simple. Here are some of the answers offered, all insufficient, some even negative in results."   0:09:17.9 Bill Bellows: "Automation, new machinery, more computers, gadgets, hard work, best efforts, merit system, annual appraisal, make everybody accountable, MBO, management by objective as practiced, MBR, management by results." And I'll just pause. Dr. Deming, when he would read this list in a seminar, would also make reference to MBIR, management by imposition of results. All right, back to Dr. Deming. "Rank people, rank teams, rank divisions, rank salesmen, reward them at the top, punish them at the bottom. More SQC, statistical quality control, more inspection, establish an office of quality, appoint someone as VP in charge of quality, incentive pay, work standards," in parentheses, "quotas," comma, "time standards," end quote. "Zero defects, meet specifications, motivate people." And then in bold print, Dr. Deming adds, "What is wrong with these suggestions?" He says, "the fallacy of the suggestions listed above will be obvious from subsequent pages of the text," meaning The New Economics.   0:10:36.1 Bill Bellows: "Every one of them ducks the responsibility of management," Andrew. "A company that advertised that the future belongs to him that invest in it, and thereupon proceeded to invest heavily," 40 million, no, 40 billion, I'm sorry, that's ten to the ninth. "40 billion in new machinery and automation, results, trouble, overcapacity, high cost, low quality. It must be said in defense of the management that they obviously had faith in the future." And I asked some people that knew Dr. Deming far better than me. Once upon a time, I said, "So who was Dr. Deming talking about, the company that invested $40 billion?" He said, "Oh, that was General Motors." And I used to think when I was at Rocketdyne that you could not ask for a better competitor than one that would invest $40 billion to lose market share, right? Talk about self-inflicted gunshot wounds that they're gonna go off, invest heavily in technology gadgets. That's what Dr. Deming's calling 'em, gadgets.   0:11:55.2 Andrew Stotz: Gadgets.   0:11:55.8 Bill Bellows: Did you ever hear what Dr. Deming said about, he says, there's a couple of things he said. This is one of the things I heard him say live. He said, "Where's the data in the computer? Gone forever." And then he'd say, "the hardest thing in all the world to find..." You know what he said, Andrew, was the hardest thing in all the world to find?   0:12:24.0 Andrew Stotz: No, what was that?   0:12:27.3 Bill Bellows: "A piece of paper and a pencil." 'Cause his mindset was just put the data that you wanna plot on a piece of paper, as opposed to in the computer, gone forever. Now, I worked with a company as a consultant for three years. And one of the first things they had me work on, of course, was trying to learn about a problem that happened a few years earlier. A problem, meaning something that did not conform to requirements. And in the middle of working on that for about three months and working on that, and the issue was, let's learn about what happened a couple of years ago so it doesn't happen again. And what happened a few years ago was a very stringent set of requirements for this aerospace hardware, missed the requirement by 10%. It was close. It was close, but the customer would not buy it. And it was a multimillion dollar asset that they held onto 'cause they were hoping they can convince the customer to buy it. And the customer just said, "You keep it, you keep it." So the issue was, "Come over and help us understand what happened. We don't do that again."   0:13:54.1 Bill Bellows: Well, in the midst of that, the same product being produced a few months later, instead of missing the requirement by about 10%, missed the requirement by about 70%.   0:14:12.9 Andrew Stotz: Oh.   0:14:13.2 Bill Bellows: Oh, oh. It was a nightmare. And the company spent a whole lot of money chasing that. In the long run, it may have been a bad test. We never found exactly what it was. And when I caught up with them years later, they eventually went back into production. But the reason I bring that up is, after the incident, I was called over. It was a very intense time to go figure out what's going on, only to find out that the data was in a computer. So, the data was not being plotted real time. So after the incident, one of the things that happened within a few days of the incident was to go back and plot the data. So when I was in a meeting and they showed the data and I knew what they were saying was they had pulled it out of the computer. I thought, "Dr. Deming's not kidding. Where's the data, in the computer? Gone forever." So I wanted to...   0:15:23.8 Andrew Stotz: I had something I wanted to add to that, and that is I have a couple of great classic pictures in our family that were made 100 years, 120 years ago.   0:15:36.8 Bill Bellows: Oh wow. Lucky you.   0:15:39.9 Andrew Stotz: Great grandma, those old, really old pictures. And I was just showing them to my, to some of the ladies that take care of my mom and they just can't. And I said, "Now think about all the improvements that have been done in photography. What is the chance that one out of your 10,000 pictures on your iPhone that you've taken is going to survive 120 years like this picture?" And the answer is zero. There's zero chance.   0:16:14.4 Bill Bellows: That's right. Because even if you have kids, they don't want 4000 photos then... 4000...   0:16:25.0 Andrew Stotz: Nobody can deal with that.   0:16:26.4 Bill Bellows: No one could... You're absolutely right. They will not. Unless that photo is printed and turned into a keepsake. Gone forever.   0:16:38.7 Andrew Stotz: Yeah.   0:16:39.0 Bill Bellows: Yeah. No, that's a good point. That's a very... And the fact that these photos lasted that long is pretty damn amazing.   0:16:47.2 Andrew Stotz: Well, there's a great book. I forgot the name of it, but I'll remember it. There's a great book about how slow this... The pace. It's called "Future Hype" is the name of it. It's all about the slow pace of innovation. And this is a great example. Going from no photo to a great photo 120 years ago was true innovation.   0:17:12.0 Bill Bellows: Oh, yeah. Yes.   0:17:13.8 Andrew Stotz: Just coming up with ways to do thousands of photos. And the author just basically crushes everything that you think is innovation. That there's millions of patents now that are coming out. We're much more innovative than we were in the past. And then his whole point is, "Yeah, and go and look at them, and what you see is that they've changed the color a little bit, they've changed this, they've changed that, and they're just doing modifications." So, every single area that you think there is innovation. And I think that's part of what Dr. Deming's talking about, about it's in the computer that doesn't. Tools and gadgets don't solve the problem.   0:17:56.1 Bill Bellows: No, it's... Well, they are tools. And as we've talked about in this series, in the first series, there are tools and techniques. Cell phones, computers, automobiles. These are tools. Techniques are how to use them. And tools, to borrow from Ackoff, are about efficiency, doing things well. But not to be confused with effectiveness, also from Ackoff, which is doing the right thing. And what I admire... I think what we both admire about Dr. Deming's work is the ability of the System of Profound Knowledge to provoke the question of whether or not something is... Doing something is worthwhile to do. And that has to do with not doing things faster, but stepping back and asking, "Why am I doing this in the first place?" Dr. Deming talked about. I think he used to say... He phrased it as, be, Dr. Deming saying, "Andrew, do you know how companies make toast?" And Andrew says, "No, Dr. Deming, how do companies make toast?" You ever hear that?   0:19:16.0 Andrew Stotz: No.   0:19:17.1 Bill Bellows: He says, "First, they burn it, then they scrape it." [laughter] And so what I see in organizations is the people who make the toast pass it off to the next person who does the inspection, and then upon the inspection, is sent to the toast scraper, then the toast scraper scrapes the toast and then sends it to somebody else, which could be a second toasting. [laughter] And then on to the next. And the person who makes the toast in the first place is none the wiser that X percent of the toast, they're just passing it on and so the technology is used to speed that up. And what's not happening is some type of feedback on adjusting the controls. It's just, it's... And this is what I saw when I worked in Connecticut, was immense toast scraping. Oh, it was just phenomenal. We had a machine making these plates for a heat exchanger for the Army's current main engine battle tank. A 1500 horsepower gas turbine engine. And half the volume, Andrew, of the tank is a heat exchanger to capture the exhaust heat to preheat the compressed air to improve the fuel economy.   0:20:52.4 Bill Bellows: Even when half the volume of the tank engine is a heat exchanger to capture every ounce of excess energy and convert it back to the efficiency of the engine. Even with that, the fuel economy of the Army's today main battle tank is measured in gallons per mile 'cause it drinks gasoline. Now, it's phenomenal performance. But they can't move too fast to outrun the tankers. So, these heat exchanger plates have, in the original design, I'm not sure what design is nowadays, had roughly 2 miles of welding in the heat exchanger. And the welding was what's known as resistance welding. And these very, very thin plates were welded together with a little dot of current to melt the metal to create a little bead, and then another one on, and they were overlapping melts, and that created a seam. And after these plates were welded together, you know, two together, each of them was put on to this under a bright light, a literally a Lazy Susan.   0:22:11.0 Bill Bellows: This thing had a 27 inch outer diameter and there'd be a bead around the outside and a bead around the inside. Two different diameters. And on a given plate one inspector would look under a magnifying glass to see, are there any gaps in the beads? And then flip it over and look at the other side, and then hand off to the next person to look at the same plate again.   0:22:37.1 Bill Bellows: So, every plate was 200% inspected. There were 10 machines making these plates. There was no traceability from the inspector. All the problems might have been coming from machine number one. There was no such awareness. And so, after the inspector, "I found a quarter of an inch where you... " "Okay. Then we send it to Andrew for a re-weld." There's no feedback and is that system any better today? I'm aware of systems today that are very similar to that. So, anyway, that's what Deming's talking about relative to the... Yeah. How do companies make toast? Well, the other thing I want to jump to, relative to this "Are you in favor of quality?" Which got it on my one is, I thought, is something really neat to include in this series that we're doing Misunderstanding Quality. But as I'm getting these prompts from ASQ on a regular basis, I was reminded of a few things that are near and dear within the world of the American Society of Quality. And one is what's known as Quality 4.0. Not, 1.0, Andrew, 4.0. 4.0.   0:24:00.1 Andrew Stotz: So, we're out of the crisis.   0:24:01.1 Bill Bellows: Oh, and so the phrase, Quality 4.0, this is today, right? And actually, the incentive, "Quality 4.0," this is actually five years old. So maybe they're on to Quality 5.0, Andrew. The phrase, "Quality 4.0," derived from the German industrialization program called Industry 4.0, is an evaluation of the role of quality in the increasing digital and automated world. One question surrounding Quality 4.0 is where increasing automation will leave quality professionals in the future. Technology, Andrew, has changed quality work and now offers useful statistical software that allows the Six Sigma quality movement to grow. Tons of data that allow quality professionals to act on quality issues in almost real time and new statistical methods. So, what I find is, "Quality 4.0" is artificial intelligence. It's the Internet of Things. It is technology. So if Deming was writing the, you know, the chapter on that we just mentioned earlier, the list of all the things on that list would be pretty much everything I see in "Quality 4.0." Right.   0:25:23.9 Bill Bellows: So, how far have we come in the professional world of quality? At least I am... I find there's a lot missing relative to what Dr. Deming was talking about 30 some years ago. So, that's what I wanted to put on the table is, you know, we're again not... None of us have said we're against tools and techniques. Whether it's chat GPT, artificial intelligence, those are fantastic. But if they're not guided with a System of Profound Knowledge, then you're going to improve uniformity in isolation.   0:26:09.8 Bill Bellows: And we've talked about that in this series and that is the difference between precision and not accuracy. It is making things uniform. Then you have to ask, again when I... What I challenge for those that are in the Six Sigma world is everything I've seen and I've been reading a lot about Six Sigma for the last 30 years. Everything I see about it when it comes to reducing variability, it is about reducing variability to shrink the distribution such that, what, Andrew? Such that we end up with acceptability 100% all. No red beads, all white beads. And then we get into... I went in preparation for a call today to the ASQ website to learn, just a reminder, refresher on Quality 4.0 and again, nothing wrong with advanced digital technologies, but what if we coupled that with a strong foundation that we're trying to offer people in the Deming ??? who are interested in what Dr. Deming's ideas bring to improve, to guide that technology. So anyway, that's, you know, Quality 4.0. Also, I'm on the ASQ website and their glossary section if anyone wants to go look there. If you're a member, you get free access to this. "Quality, a subjective term for which each person or sector has its own definition."   0:27:42.7 Bill Bellows: Okay. "In technical usage, quality can have two meanings. One, the characteristic of a product or service that bears on its ability to satisfy stated or implied needs. Two, a product or service free of deficiencies." Excuse me. "According to Joseph Juran, quality means fitness for use. According to Philip Crosby, it means conformance to requirements." And I don't see in here a reference to Dr. Deming and how he defined quality, Andrew. Huh? Interesting. What I enjoyed about being a member of the... In fact I'm still a member of the American Society for Quality. The reason I joined is I was excited by quality. Everything I was learning about Dr. Taguchi's work and then Dr. Deming's work and then began to wonder if the American Society for Quality was advancing and doc... So if anyone listening has access to the American Society for Quality and people that make decisions there, you might want to include Dr. Deming's definition of quality.   0:29:00.2 Bill Bellows: Where Dr. Deming would say a product or service possesses quality if it helps someone and enjoys a sustainable market. And what I find is unique about that is my interpretation, as Dr. Deming is saying a lecture I deliver, a podcast we present, that we are not the judge of the quality that our listeners, students are. The people downstream are the judge of that. So, it's not me handing off a part that meets requirements saying this is good. Even when Juran says fitness for use, what I would ask is fitness absolute or is fitness relative? And so that's... So anyway, I just thought it'd be fascinating to remind our listeners of the simplicity of Dr. Deming's message from The New Economics. You know, is everyone and anyone in favor of quality? Yes. And again, nothing wrong with tools and techniques, but what a Deming organization, a Blue Pen Company, a "We" organization. What they could do, guided by the Deming philosophy, with computers, where computers make sense, with AI, where AI makes sense, would seriously outpace what other companies are doing. It's interesting, but it's just not enough to compete with companies who will do that.   0:30:32.3 Bill Bellows: So, if nobody is following the Deming philosophy, then you can get by with Quality 4.0, doing AI and doing those things. But if you've got competitors and what Dr. Deming would say, Andrew, is be thankful for a good competitor, one who raises your game, right. And so, if you and I are playing tennis and you know, we're out there to become better tennis players, and as soon as I find out that you're out there so you can go brag to your mom about how you beat me last night, then I say, "Andrew, find somebody else to beat." But if you're interest and my interest is, you know, getting a lot of exercise and improving our game. That's a different story. So, that's what I just wanted to share with our ongoing listeners, is there's a lot to be gained by continuing to study the Deming philosophy. Add it to your repertoire, build a foundation guided by what The Deming Institute is doing and sponsoring podcasts like this, as well as DemingNEXT is, there's just a lot of opportunities for what Dr. Deming is offering. And I'm reminded of that on a regular basis that people are saying, "Boy, why didn't I learn about this a long time ago, what this can bring organizations?" So that's what I wanted to bring to the table today.   0:31:50.1 Andrew Stotz: That's wonderful. Well, Bill, on behalf of everyone at The Deming Institute, I want to thank you again for this discussion and for listeners, remember to go to deming.org to continue your journey. You'll see DemingNEXT there and the like. If you want to keep in touch with Bill, just find him on LinkedIn and reach out to him because he is responsive. This is your host, Andrew Stotz, and I want to leave you with one of my favorite quotes from Dr. Deming. I just never stop talking about this quote 'cause I love it. "People are entitled to joy in work."  

In this episode, we go back to the future with the groundbreaking book by Dr. W. Edwards Deming - "The New Economics." Join us as we explore this goldmine of wisdom on leading organizations that are built to last. This podcast is a no-holds-barred breakdown of Deming's System of Profound Knowledge and its four key elements:Appreciation for a system Knowledge about variationTheory of knowledgePsychologyWatch or listen to learn why pursuing short-term wins often leads to long-term ruin, and how to cultivate an organization-wide focus on quality as a strategic priority. With insights on leadership, teamwork, continuous improvement and more, this episode is a must-listen for managers, executives and anyone passionate about building great organizations!!!= = = = = = = = = = = =Watch on YouTube= = = = = = = = = = = =Subscribe on YouTubeApplehttps://podcasts.apple.com/us/podcast/agile-podcast/id1568557596Spotifyhttps://open.spotify.com/show/362QvYORmtZRKAeTAE57v3Amazonhttps://music.amazon.com/podcasts/ee3506fc-38f2-46d1-a301-79681c55ed82/Agile-Podcast= = = = = = = = = = = =Toronto Is My Beat (Music Sample)By Whitewolf (Source: https://ccmixter.org/files/whitewolf225/60181)CC BY 4.0 DEED (https://creativecommons.org/licenses/by/4.0/deed.en)

My guest today is Eric Beinhocker, Professor of Practice in Public Policy at the Blavatnik School of Government, University of Oxford, and the founder and Executive Director of the Institute for New Economic Thinking at the University's Oxford Martin School. Eric is the author of numerous academic articles and books, including The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics (2007). In our conversation, Eric and I contrast traditional economics (neoclassical theory) with new economics (complexity economics). We also explore the policy implications of these differing economic theories, discussing topics ranging from aggressive growth strategies to complexity catastrophes in digital economies. I hope you enjoy our conversation. References: The origin of wealth: Evolution, complexity, and the radical remaking of economics (2007) ⁠https://moldham74.github.io/AussieCAS/papers/Origins⁠ of Wealth.pdf Getting Big Too Fast: Strategic Dynamics with Increasing Returns and Bounded Rationality (2007) ⁠https://pubsonline.informs.org/doi/pdf/10.1287/mnsc.1060.0673⁠ Fair Social Contracts and the Foundations of Large-Scale Collaboration (2022) ⁠https://oms-inet.files.svdcdn.com/staging/files/Fair-Social-Contracts-Beinhocker-v8-22-22.pdf⁠ Reflexivity, complexity, and the nature of social science (2013) ⁠https://www.tandfonline.com/doi/full/10.1080/1350178X.2013.859403⁠

When 460,000+ law firms compete for attention, casting a wide net is no longer enough. In this episode of Personal Injury Mastermind, we explore how AI and innovative business models are reshaping case acquisition. From precision targeting to owning distribution channels, discover how forward-thinking firms land premium cases by fishing with a spear instead of a net. Dominate your market today. Grab a copy of Chris' latest book, Personal Injury Lawyer Marketing: From Good to GOAT.  We discuss: How FirmPilot's AI platform uses psychographic data to target ideal clients Why vanity metrics like organic traffic matter less than qualified leads The real metrics that determine Google Ads placement and cost How Top Class Actions built a 1.5M monthly visitor platform The economics of commercial vehicle cases and mass torts Why traditional case acquisition methods are becoming obsolete Using data feedback loops to optimize marketing spend Guest Details Jake Soffer is the founder and CEO of FirmPilot, an AI-powered marketing platform helping law firms target premium cases. With a background in computer engineering and natural language processing, Jake is revolutionizing how firms approach digital marketing.  Jake Soffer: LinkedIn Firm Pilotl: Website  Scott Hardy is the founder of Top Class Actions and Leagify Law Firm. Through his innovative approach to case acquisition and Arizona's new rules allowing non-lawyer ownership, Scott has built a platform that attracts 1.5 million potential clients monthly.  Scott Hardy: LinkedIn  Top Class Actions: Website, Legal Fi Website Chris Dreyer and Rankings Details Chris Dreyer is the CEO and founder of Rankings.io, the elite legal digital marketing agency.  Rankings: Website, Instagram, Twitter Chris Dreyer: Website, Instagram Newsletters: The Dreyer Sheet  Books: Personal Injury Lawyer Marketing: From Good to GOAT; Niching Up: The Narrower the Market, the Bigger the Prize Work with Rankings: Connect Time Stamps 00:00 Intro  00:43 Meet Jake Soffer & FirmPilot 03:22 The Evolution of Legal Marketing  07:06 AI Marketing Capabilities  10:30 Scott Hardy & Top Class Actions  12:14 Commercial Vehicle Cases  14:59 Forward Integration Strategy  18:36 Closing Thoughts Additional Episodes You Might Enjoy 80. Mike Papantonio, Levin, Papantonio, & Rafferty — Doing Well by Doing Good 84. Glen Lerner, Lerner and Rowe – A Steady Hand in a Shifting Industry 101. Pratik Shah, EsquireTek — Discovering the Power of Automation 134. Darryl Isaacs, Isaacs & Isaacs — The Hammer: Insights from a Marketing Legend 104. Taly Goody, Goody Law Group — Finding PI Clients on TikTok 63. Joe Fried, Fried Goldberg LLC — How To Become An Expert And Revolutionize Your PI Niche 96. Brian Dean, Backlinko — Becoming a Linkable Source 83. Seth Godin — Differentiation: How to Make Your Law Firm a Purple Cow 73. Neil Patel, Neil Patel — Digital A New Approach to Content and Emerging Marketing Channels

What does 'sustainability' really mean and how do we get there? This radio documentary features some of Australia's most eminent thinkers. A  wide ranging analysis digs into the fundamental causes of our predicament, based on interviews I recorded for the book with Stephen Williams Sustainability and the New Economics and The Path to a Sustainable Civilisation co-authored with Mark Diesendorf.   This is a re-podcast from the Post Growth Australia Podcast https://pgap.fireside.fm/7rethinksustain   • Prof David Lindenmayer • Prof Will Steffen • Prof Clive Hamilton • Dr Kerryn Higgs • Prof Philip Lawn • Dr Mark Diesendorf • Prof Steve Keen • Ian Dunlop • Prof Steven Hail • High Court Justice Michael Kirby • Prof Ian Lowe

Welcome back to a brand-new Season Seven of Post Growth Australia Podcast! As our world teeters on the edge of an increasingly perilous environmental future—extending beyond climate change—we must ask: what does true sustainability entail? How far are we from it, what are the root causes of our current trajectory, and what paths could lead us there? Rod Taylor (author, columnist, radio host) asks these very questions to eleven esteemed Australian scientists and thinkers in a brand-new radio documentary. PGAP is proud to be the first platform to share this thought-provoking documentary, which explores ecological economics, planned Degrowth and Modern Monetary Theory. Rod Taylor is author of “Ten Journeys on a Fragile Planet (https://www.abc.net.au/listen/programs/scienceshow/ten-journeys-on-a-fragile-planet/13173096)”, co-author with Mark Diesendorf of “The Path to a Sustainable Civilisation (https://link.springer.com/book/10.1007/978-981-99-0663-5)” and co-editor with Stephen Williams, of the groundbreaking book, “Sustainability and the New Economics (https://link.springer.com/book/10.1007/978-3-030-78795-0)”. Rod is also host of the ‘Fuzzy Logic Science Show (https://fuzzylogicon2xx.podbean.com/).” Rod was a previous guest on PGAP (Fuzzy Logic on a Fragile Planet with Rod Taylor (https://pgap.fireside.fm/rodtaylor)). Stephen Williams and Mark Disendorf were also past guests on PGAP. You can listen to their episodes HERE (https://pgap.fireside.fm/stevewilliams) and HERE (https://pgap.fireside.fm/pathsustainableciv). The impressive list of guests on the documentary ‘Rethinking Sustainability' include (in order of appearance): • Prof David Lindenmayer • Prof Will Steffen • Prof Clive Hamilton • Dr Kerryn Higgs • Prof Philip Lawn • Dr Mark Diesendorf • Prof Steve Keen • Ian Dunlop • Prof Steven Hail • High Court Justice Michael Kirby • Prof Ian Lowe Last but not least, a shout out to environmental scientist David Tiller, who provided production assistance in the making of this documentary. This episode of PGAP was produced just before the disastrous election results in the USA. As such your co-hosts Michael Bayliss (https://michaelbayliss.org/) and Mark Allen come across as merely VERY pessimistic at the state of the world, instead of EXTREMELY. Stay tuned for our upcoming episode, where we'll address these events in more depth and discuss the underlying systemic issues that shape our society. In the meantime, you can explore these ideas further through Mark's Holistic Activism (https://holisticactivism.net/)movement. Now more than ever, it is important that progressive podcasts are supported, as some panacea to the extreme right leaning media that are dominating the airwaves. Please consider supporting PGAP by sharing this and other episodes with your networks, leaving a review on Apple Podcast (https://podcasts.apple.com/au/podcast/post-growth-australia-podcast/id1522194099) and contacting us (https://pgap.fireside.fm/contact) with your thoughts and feedback. This episode of Post-Growth Australia Podcast was made possible with the kind support of Sustainable Population Australia (https://population.org.au/). Special Guest: Rod Taylor.

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."  

By the time this episode comes out, the new Labour government will have been in charge of the country for one hundred days. So what do we know about how they'll run the economy? Can they rescue our threadbare public services while promising a tight grip on government spending? And will their focus on growth deliver real change for those who need it most? Ayeisha Thomas-Smith is joined by Aditya Chakrabortty, senior economic commentator at the Guardian, and Ailbhe Rea, associate editor at Bloomberg UK, for the first episode in a new series of the New Economics podcast. ....... Music: Gathering by Poddington Bear (available: https://freemusicarchive.org/music/Podington_Bear/Encouraging/Gathering/), used under Creative Commons licence: creativecommons.org/licenses/by-nc/4.0/. Produced by Katrina Gaffney, Margaret Welsh and James Rush. The New Economics Podcast is brought to you by the New Economics Foundation. Find out more about becoming a NEF supporter at: neweconomics.org/donate/build-a-better-future New Economics Foundation is a registered charity in England and Wales. Charity No. 1055254

Is quality simply a matter of two categories: good and bad? But then how do you get to "better"? In this episode, Bill Bellows and Andrew Stotz discuss categories and continuum thinking. TRANSCRIPT 0:00:02.4 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 Bill Bellows who has spent 31 years helping people apply Dr. Deming's ideas to become aware of how their thinking is holding them back from their biggest opportunities. And today is episode six, Category Thinking and Continuum Thinking. Bill, take it away.   0:00:27.9 Bill Bellows: Welcome Andrew great to see you again. All right, so in podcast five, I went back and it was just posted by The Deming Institute. And I just wanna clarify again on the topic of acceptability and desirability. Where we're going tonight is looking at acceptability and desirability in a little bit more detail, a little bit differently, but those are still the prevailing themes. And again, I just wanna reinforce that none of this is to imply that desirability is better than acceptability. What's important is to be aware of when I'm using acceptability thinking. And when I'm using desirability thinking and use the one that makes the most sense in that situation. We were talking earlier about companies whose products we enjoy using and we're loyal to them. And I mentioned that my wife and I have developed a loyalty to Toyota products.   0:01:40.4 BB: Going back to 1989 was our first Toyota product. And I knew I wanted a pickup truck. 'Cause I was borrowing a pickup truck from a number of friends and I thought, I really like a pickup truck. There's a lot you can do with a pickup truck. So, I knew I wanted a pickup truck. And I knew from having worked in my father's gas station, I had reason to believe I wanted a Japanese pickup truck and not an American pickup truck. So, I then it was a question of is it a Mazda, Toyota.   0:02:11.1 AS: Nissan.   0:02:13.2 BB: Sorry Nissan. And I looked at all of them and yeah I just all I knew is I was gonna be one of those. And I think the major reason I went with... My wife and I went with a Toyota... I don't think the prices were that different. But it just had a, it was the styling was a little bit better. But I did not... That's why I bought it.   0:02:46.5 AS: The loyalty wasn't built yet.   0:02:49.0 BB: No I knew to stay away... I knew I had seen plenty of examples of... Well, I had traded in my first car that my father, my parents got me when I was in college was a 1975 Chevy Nova. Four door Chevy Nova. And the reason four doors is important is a... If it was a two door, the door would be longer. But it was a four door. By the time I gave that car to a friend, the engine was running beautifully but the body was falling apart. And, so, by the time I sold it to get the pickup truck, in order to get out of it, I'd have to throw my shoulder into the driver's door. Why? Because the door droop was so great that when you close the door, I mean the door drooped and this is not a four door, this is a two door. So, imagine if it was a two door the door would be even heavier. So, on a four door, the door drooped. And, so, when you closed it, you'd had to lift it and then close it in order to get out you had to... Oh, it's just my wife couldn't drive. It was just a nuisance.   0:04:17.6 AS: And, that in '75 was just about when the Japanese were really starting to go after the US car makers. And but I want to tell you just a quick one. I can't remember if I've told you, but I used to have a 1963 Lincoln Continental here in beautiful Bangkok. And I owned it for 10 years. And then eventually I sold it. But what a beautiful car. And people always ask me the same thing and they said, isn't it hard to take care of? And I said, you gotta remember back in those days, cars were simple.   0:04:49.1 BB: Yeah, yeah. So, the... So, with... So, the experience of 14 years or so, with the '75 Chevy Nova. And the door was like the straw that broke the camel's back. It just done with this, all right. So, we're gonna buy Japanese, bought a Toyota. That was the first one. And I think I've mentioned in the first podcast I mentioned that we had a 1998 Toyota Sienna, which is their first, it was their Toyota third attempt at a minivan. The first one I think was underpowered, the second one... And we knew we wanted a minivan. It was time, the kids were getting a little bit bigger. It was time for minivan. And just as we were ready to go buy it, they had a... I think a competitor came out with dual sliding doors. Dual sliding doors. And, so, instead of Toyota coming out with a one sliding door, they stepped back. I think Chrysler came out with two sliding doors. And they figured we can't come to market with one sliding door. They've got two sliding doors. So, then we waited another year and they finally came out and given all of our delight with the Toyota pickup truck, boom, that's what we wanted. And then the transmission failed, six months later with 10,000 miles in the car.   0:06:18.5 BB: And I have a photo of that. Not only did the transmission fail at 10,000 miles, but it failed on Christmas morning on our way to see friends about an hour away. And this guy, people were going to see, he knew I loved Toyota. And when he drove to pick us up, we transferred everything from that to his Ford F-150. He says to me... So, then we had to have the car towed on a flatbed to his house and the next day to the dealership, what a nuisance headache. But when he showed up, he looks at me knowing that I like Toyota. And he says, how's this data point change your theory about Toyota?   0:07:06.5 AS: I thought he was gonna say, if it was me, I would've said pop in the back.   0:07:12.6 BB: And I was like, yeah, that really hurts. Well when I shared that story with students at Northwestern's Business School, the Kellogg Business School, their advice and these are students that had worked in all different industries from Coke to banking, and a number of 'em have worked in the auto industry. And their advice was, I said, Professor Bellows never buy anyone's first model year, even Toyota. Now I have a friend who he and his wife bought the same model year Toyota Sienna. They did not have a problem.  Oe did. When I met at a Deming conference, a guy who worked in Georgetown, Kentucky which is where the Sienna was made. And, so, I met him at a conference and when he said he worked for Toyota, I said, oh, my wife and I buy nothing but Toyotas. He says, oh. And I said, we have a first model...   0:08:08.6 BB: Year Sienna. And everything was good. And then I'm thinking, I'm gonna ask the guy a question. And I looked straight in his eyes. We were pretty close together. And I'm about to ask him a question. I'm looking straight in his eyes and I said, we got a Toyota Sienna. He says, how do you like it? And I looked right at him and I said, the transmission failed at 10,000 miles. And he rolled his eyes. And I said, so, you know about this. It wasn't a look of shock. It was, yeah, all right. So, I said, all right, all right. Your expression just told me that you know something about this. I said, what's up? He says, we tried. This is so cool. He says, we tried to save a few pennies on a bearing.   0:09:00.8 BB: I said, you did but what you did cost me more than you saved. So, yeah you guys saved a few pennies on a bearing and cost my wife weeks of aggravation to have it towed from where it happened to the place we were going because it Christmas Day, it broke. Everything's shut down on Christmas days. You can't have it right? And, so, we had it towed, had to get a rental car. Then they're complaining about, we had... Who authorized this rental car? We only pay... It was just headache after headache. But we still buy Toyota Andrew. We still buy Toyota. Why? Because I'm afraid to buy from anybody else. Well, part of the reason I wanted to share that with our audience is I buy Toyota products based on value. And I believe that the best value we get in transportation, personal transportation is the money we spend buying a Toyota most often brand new. We've also bought some used, got great use out of them, never had a problem, anything like what I just shared with you. And that's having owned five or six different Toyotas. I mean, right now in our family we have three of them.   0:10:16.7 AS: I think I need to correct you.   0:10:19.1 BB: Go ahead.   0:10:19.9 AS: You buy Toyotas on value and values.   0:10:25.7 BB: Yes!   0:10:28.2 AS: You're aligned with their values and therefore you're willing to look beyond the mistakes and problems that it comes with every product, every service, every company, because you're aligned with their values.   0:10:42.2 BB: Well, what's funny is when we bought the Sienna and we're talking with 'em, doing the driving and signed agree to buy it, that's the color we want. We want these seats, blah, blah, blah. And then you go talk to the closer and the closer's a guy, the gal at the dealership that wants to add on the undercoating and the this and the this and the this and the this. And he wanted to sell us at a premium price, this extended warranty and I dunno what it costs, but I said, I've done a whole lot of research. And he says to me it's so funny. He says, when these things break down, a circuit board breaks and that'll cost you this and this and this, and, so, I'm gonna sign you up for the insurance policy, the extra coverage. And I said, no, and he is going on and on. And I said, look it, I've done a lot of research into how they're made and I said, and the values of that organization. So, I said, the reason we buy Toyota is that I have an understanding, a pretty damn good understanding of how they manage the product, the pieces and how it all comes together. And he's pushing back at me. Finally, I said, I teach university courses on how Toyota operates and their quality system.   0:12:14.8 BB: So, we didn't get the extra coverage. Now it was still covered under warranty, so, it was kind of laughable that. But anyways, the reason I bring that up is that...   0:12:27.3 AS: Before you do that, I want to just say for the listeners and viewers out there, what is the messaging from a corporate strategy perspective? And that is have values that you stand for. Communicate those to the market, stay loyal to them and the customers who align with those values will stick with you through the hard times that you're gonna definitely have. There's a quote by Alexander Hamilton says, "those who stand for nothing, fall for everything." If you do not stand for a clear set of values that the market can perceive, then people are gonna fall away from you as soon as times get tough.   0:13:07.2 BB: Oh yeah. And I...I, I. It's about that and that's why I've read lots about Toyota. How they operate written by people outside of Toyota trying to explain it, people inside of Toyota and their explanations. But part of the reason I bring this up is my fascination, my interest in Dr. Deming's philosophy, is a great deal to do with his system is based on an incredible appreciation of the difference between acceptability and desirability. All other quality management systems, whether it's the quality management within Lean is acceptability based, good parts and bad parts, Operational Excellence, Six Sigma Quality. In fact, there's a quote at the end of chapter 10 in "The New Economics". And chapter 10 was the original last chapter until the third edition came out. In which case there's chapter 11 written in large part by Kelly Allen, a good friend.   0:14:15.1 BB: And when chapter 10 was the end I thought it was pretty cool that at the very end of chapter 10. The last few pages of chapter 10 of “The New Economics” are about Dr. Taguchi's loss function. And this is what turned me on to Dr. Taguchi, was finding “The New Economics" in a brick and mortar bookstore. I knew from ASQ Quality Progress that this was coming out. So, I remember when it came out, this was before Amazon, going to the bookstore. Going through it and saying what does this guy think about Taguchi? Because Taguchi was my, the one I really idolized. And I opened it up and I turned to chapter 10 and it's all about the loss function, the problem and I thought this is way cool. So, the closing quote... The closing... The last sentence in chapter 10 which again was the original last chapter until third edition came out, is the following "Conformance to specifications," that's acceptability, "zero defects," that's acceptability. "Six Sigma quality," which is acceptability "and all other specification-based nostrums all miss the point, ,stated by Donald J. Wheeler."   0:15:42.6 BB: So, then I looked up, but what is a nostrum? And Dr. Deming not Dr. Deming a nostrum is defined as “quack medicine.”  So, "Conformance to specifications, zero defect, Six Sigma quality, and all other specification-based nostrums all miss the point." And, so, I wrote an article about this, gosh, 20 years ago. I said, what's the point? And my explanation, the point is, all of them are about managing parts in isolation. Looking at things in isolation. Again that's acceptability. And as I said earlier, I'm not saying acceptability is bad, I'm just saying acceptability is not desirability. And the other thing I wanna add is, why do I... My wife and I love Toyota products. I've got reason to believe through a lot of research and talking, sharing the ideas that we talk about in these podcasts with people within Toyota. And they have a desirability focus that nobody else... That I'm not aware of anybody else has.   0:16:54.9 BB: And, that's having presented around the world doing classes, at Kellogg Business School, at university. Yeah, the Kellogg Business School Northwestern University. I teach online classes at Cal State Northridge, Southern Utah University. I've lectured at many universities. And I never had anyone come to me working in industry saying, Bill, what you're talking about, we practice where I work. No. And, so, for those that are pursuing the Toyota Production System stuff. My response is, I don't buy Toyota products because they use the Toyota Production System. Now, that may help with getting the car to market faster. But I don't believe the Toyota Production System is why people buy Toyota products. I believe Toyota's quality management system... At least I buy Toyotas because I believe their quality management system, inspired by Dr. Taguchi, inspired by Dr. Deming, is providing something that nobody else has in many industries. All right. So, I wanted to get that out.   0:18:06.7 AS: So, are you saying Toyota Production System is more of a tool that is in their toolbox of quality management system?   0:18:18.4 BB: Um, the Toyota Production System is classic Industrial Engineering.   0:18:26.8 AS: Right.   0:18:27.0 BB: It's how to...   0:18:28.3 AS: It's a natural.   0:18:30.5 BB: How to improve flow, how to improve throughput by minimizing number of steps, by minimizing inventory. It's highly credited to Taiichi Ohno, who was mentored by the founder of the Toyota Motor Company. And it's all about, they don't have a lot of money. So, we need minimal inventory, minimum steps. So, it's like... So, the Toyota Production System is an efficiency based system based on, we don't have a lot of money, we're not gonna buy a lot of inventory. But the quality aspect of the Toyota Production System everywhere, everything I've written, everything I've read by people describing the Toyota Production System it's all explained by acceptability. So, that they may be moving things closer together so people don't walk so far.   0:19:27.8 BB: But what I'm looking at with Dr. Deming's work inspired by Dr. Taguchi is what is it about the quality system that causes those parts to come together so well and the products to perform so well? So, it's not just having the parts when I reach out, the part is there, but those parts integrate better. I've mentioned in the first podcast series that Toyota had 100% snap-fit pickup truck in 1969 at a time when Ford was banging things together using rubber mallets to get the parts together. They took apart and assembled a Toyota pickup truck twice 'cause they didn't believe the results the first time the parts went together without mallets. That's what I'm talking about, that within that system, the ability for the parts to come together to work together cannot be explained by an acceptability based system. And, so, having spoken with people and having the opportunity to share with people within Toyota the ideas we talk about inspired by Dr. Deming, I've learned that they do desirability in a way that nobody... I'm not aware of anyone else having done.   0:20:48.5 BB: All right, so, what I want to get into, add to the discussion tonight, relative to category thinking, is this idea of category thinking, continuum thinking. Category thinking quite simply is putting things in categories. So, in acceptability we have two categories, good or bad, or maybe three categories. It's good or it's scrap or it's rework. So, category thinking is generically putting things into categories. And so, we could look at category... Categories could be... There could be two categories, three categories.   0:21:27.1 BB: It's been a while since I've gone to see a movie, but I believe they still have a rating system of PG, PG-13, R, R-17, maybe X. Those are categories. Fruits and vegetables. Those are two high level categories. Within each of those categories, we have types of, we have apples and oranges, and within them we have types of apples. That's all category thinking. You go into a supermarket and every aisle... There's the cereal aisle. That's a category. There's the canned goods, those are categories. Religions - talk about categories. So, every religion you look at is its own category. And, then within those categories they have subcategories. How about music? How many categories in music are there Andrew?   0:22:18.9 AS: Well, it gets all messed up on my iTunes where I'm like, that's not heavy metal. That's rock.   0:22:28.6 BB: Yeah. And then there's types of rock. In the beginning it was rock and roll, and then there's types of rock and roll.   0:22:34.0 AS: Progressive rock.   0:22:34.0 BB: Progressive rock. And then we have people... So, what category would we put... I think somebody asked Lucinda Williams, we're going to see her in a few weeks. So, what category? Well, she doesn't fit a category. So, that's category thinking. Category thinking is putting things in categories. We could say, where did you go to college? That's a category. These are USC grads, those are Cal State grads. And, part of the point I want to make is that we use category thinking all the time. Putting people in categories is what we do. Such as you and our daughter are Cal State graduates.   0:23:17.6 BB: And, so, what degrees do they have? Those are categories. So, I don't know what we would do if we couldn't put things in the categories. So, I don't think category, putting people in category is not a bad thing. Now, when you start to associate values with the categories, now we're getting into racism or sexism and then, okay. But this idea that putting people in categories is a bad thing, I'd say category thinking is our simple way of organizing everything around us and these little file cabinets. Now added to that is when you put four or five things into a category, then what you're implying is that they're all the same. And that gets into acceptability.   0:24:12.8 BB: So, if this is a good part, that's a good part. That's a bad part. That's a good part. So, all the good parts go into the good part category. Then we say, oh, these are all good. Then we get into the sense of, and they're interchangeable. Well, maybe not. And that has to do with what I call continuum thinking. All right, so before we get to continuum thinking, Andrew, remember the question. What do you call the person who graduates last in their class of medical school?   0:24:43.3 AS: I don't remember that.   0:24:45.2 BB: Okay, so take a wild guess, Andrew, putting the pressure on, what do you call the person that graduates last in his or her class in medical school?   0:24:55.7 AS: Surgeon general.   0:24:56.9 BB: What's cool is that's a question I've been able to ask all around the world. Now, depending on where I go, I can't talk about baseball because they don't understand baseball. Or depending on where I go, I can't say soccer or I have to say football. Then if I say football, I have to say, well, I mean your football, not American football. But what's neat about this question, what do you call the person that graduates last in their class in medical school, that's "doctor." That's also acceptability thinking. From the first in class to the last in class, they all met requirements. Andrew, you know what that is? Acceptability. So, category thinking is a form... Acceptability is a form of category thinking. All right. Now I'm gonna give you three numbers and I'm going to ask you which two of the three are closest to being the same. You ready?   0:25:58.0 AS: Yep.   0:26:01.7 BB: 5.001, 5.999 and 6.001.   0:26:11.1 AS: 5.999 and 6.001.   0:26:17.6 BB: Are close to being the same?   0:26:18.8 AS: Yeah.   0:26:20.2 S3: That's what most people think. Okay. But...   0:26:25.7 AS: One's a six and one's a five. That's a problem.   0:26:29.5 BB: All right. And, so, again, the numbers were 5.001, 5.999 and 6.001. And the question is, which two of the three are close to being the same? And, what most people will say is 5.999 and 6.001, which infers that what does same mean?   0:26:48.5 AS: The integers?   0:26:49.1 BB: If you answered.   0:26:49.9 AS: I looked at the integers at the end rather than the whole number at the beginning.   0:26:56.7 BB: But is it safe to say you chose those numbers by saying they were closest together?   0:27:01.6 AS: Correct. Yes.   0:27:03.2 BB: So, in your case you're saying, if I plot those numbers from zero to infinity. Then those two are really close together. That's one definition of same is proximity. But, same could also be, they begin with five, in which case the first two are close to being the same. 'cause they both begin with five or they're both less than six. Or, I could say 5.001 and 6.001, because they both end in .001. So, it turns out there's three answers to the question. But the answer of the last two and proximity is what category is what continuum thinking is about. On a continuum these two are closest together. All right.   0:27:51.2 AS: And I have to tell you, we're gonna be running out of time, so we gotta wrap this up.   0:27:55.4 BB: All right. So, when I asked you the question, what do you call the person who graduates last in their class of medical school? And you said doctor, that's category thinking. If you used... Well actually the thing is, if I ask, what do you call the person who graduates last in their class at the United States, US Army's Military Academy, known as West Point, one answer is Second Lieutenant. 'cause they're all Second Lieutenants. But West Point uses continuum thinking to define the very last person in their class. So, it's the last person in class is not called second lieutenant. The last person in the class is called goat, as in the animal.   0:28:43.2 BB: And a very famous goat at West Point, who from my reading, was very proud to have graduated last because there's... I think Mike Pompeo, who was Secretary of State under president Trump, was first in his class at West Point, first in his class. A very famous, I wanna be the last person in my graduating class at West Point was George Custer. You've heard of him?   0:29:14.3 AS: Yep.   0:29:15.5 BB: And, he was deliberately lazy, so he wanted to be the very last person in his class. But that's, but the idea is that category thinking says they're all Second Lieutenants, they're all doctors. Continuum thinking is when you say this is the first, this is the second, this is the third. And when you come up, when you start to order them and say, the last one is goat, that's looking at things on a continuum, which is continuum thinking. Well, given that most quality systems, including Boeing's Advanced Quality System, are based on category thinking and category thinking, you have good parts and bad parts. When I ask a question as I brought up in the podcast five. I said I go to audiences and ask, how much time do you spend discussing parts which are good, that arrive on time? And the answer is none. And I say, well why is that? 'Cause in that system they're focusing on taking things from bad to good. And then what? Stopping at good.   0:30:20.0 BB: Well, part of the thing I wanna get across in this episode is the reason we're stuck in that model of stopping at good is because the quality system is based on category thinking of bad and good. And in a world of good and bad, there is no better. In a world of short and tall, there is no taller. And, so, continuum thinking allows us to go beyond that. And, so, going back to Dr. Deming's quote, conformance requirements, which is category thinking, zero defect, Six Sigma quality, those are all category based systems, which means it's good parts and bad parts. But then I come back to how does a system which is based on good parts and bad parts deliver such incredible reliability in the products? And, I believe it's because they're using continuum thinking. Not... And again not continuum thinking everywhere, but I think they have very judiciously figured out where to use continuum thinking and that is their differentiator. In my admiration for Dr. Deming's System of Profound Knowledge is, I've not come across any other type of management theory, which has that level of fidelity to explain that. And, in order to practice continuum thinking, implement it, you have to work together.   0:31:43.9 AS: And I'm gonna wrap this up by... One of the revelations that I come upon when I listen to what you're saying is. That's also what makes Deming's teachings sometimes hard to grasp, because there is no clear category and there is no clear beginning and end. There is no certification and therefore it's just hard for us who are used to being in categories to grasp. And that's my conclusion what I draw from everything you've just said.   0:32:16.6 BB: Well and let me add to that, really appreciate you saying that. Let me add to that,much of what I was doing at Rocketdyne... When I began to appreciate that the reason I was focusing on solving problems, solving problems and the problems we didn't solve were the problems where the customer, NASA said, we're gonna take this work and take it to the company down the street because you guys can't make it happen.  And, that scared the hell out of me that we're gonna lose this work to competitors because... And when I looked at it, was why are we stuck?  And I looked at Dr. Deming's work, the reason we're stuck is we're... 'cause our quality system is based on good parts and bad parts. We're waiting for trouble to happen. And, so, but still what I found is, and when I started to focus on... I went from being 100% Taguchi to more about Dr. Deming's work and trying to come up with everyday examples to make Dr. Deming's work more accessible.   0:33:16.9 BB: So, in Dr. Deming's work, you're not gonna find category thinking, continuum thinking. So many of the concepts we talk about in this series, in the prior series are... I refer to them as InThinking Concepts, just trying to make it easier for people to begin to absorb the brilliance of Dr. Deming's work. Because, I think absent that, when he says quality, what kind of quality is he talking about? Acceptability quality, desirability quality. So, I'm with you, I think the work is brilliant. I'm just hoping through our conversations and these podcasts that we can make his work far more accessible.   0:33:56.4 AS: Yep. Well, I think we're doing that. And Bill, on behalf of everyone at The Deming Institute and the audience, I wanna thank you again for this discussion. For listeners, remember to go to deming.org to continue your journey. Of course, if you wanna keep in touch with Bill, just find him on LinkedIn. This is your host Andrew Stotz. And I'm gonna leave you with one of my favorite quotes from Dr. Deming. "People are entitled to joy in work."

Bayo Akomolafe (Ph.D.), rooted with the Yoruba people in a more-than-human world, is a widely celebrated international speaker, posthumanist thinker, poet, teacher, public intellectual, essayist, and author of two books, These Wilds Beyond our Fences: Letters to My Daughter on Humanity's Search for Home (North Atlantic Books) and We Will Tell our Own Story: The Lions of Africa Speak. Dr. Akomolafe is the Founder of The Emergence Network, a planet-wide initiative that seeks to convene communities in new ways in response to the critical, civilizational challenges we face as a species. He is host of the postactivist course/festival/event, ‘We Will Dance with Mountains' and currently lectures at Pacifica Graduate Institute, California. He sits on the Board of many organizations including Science and Non-Duality (US) and Ancient Futures (Australia).In July 2022, Dr. Akomolafe was appointed the inaugural Global Senior Fellow of University of California's (Berkeley) Othering and Belonging Institute. He is also the inaugural Special Fellow of the Schumacher Centre for New Economics, the Inaugural Scholar in Residence for the Aspen Institute, the inaugural Special Fellow for the Council of an Uncertain Human Future, as well as Visiting Scholar to Clark University, Massachusetts, USA (2024). He has been Fellow for The New Institute in Hamburg, Germany, and Visiting Critic-in-Residence for the Otis College of Art and Design, Los Angeles (2023).Finally Bayo is the father to Alethea Aanya and Kyah Jayden Abayomi, the grateful life-partner to Ije, son and brother. In This EpisodeDr. Bayo Akomolafe's WebsiteBayo's writingsSocials:  FB: bayoakomolafeampersandIG: @the_emergence_networkBecome a supporter of this podcast: https://www.spreaker.com/podcast/the-trauma-therapist--5739761/support.

Is the whole simply a sum of its parts? In this episode, Jacob Stoller and Andrew Stotz discuss what happens when you divide a company into pieces and manage them separately - and what to do instead. TRANSCRIPT 0:00:02.5 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 conversation with Jacob Stoller, Shingo Prize winning author of The Lean CEO and Productivity Reimagined, which explores Lean and Deming management principles at the enterprise level. The topic for today is myth number one, the myth of segmented success. Jacob, take it away.   0:00:30.4 Jacob Stoller: Great to be here with you, Andrew. And yeah, before I dive into that myth, I'd like to just start with a quote by Albert Einstein. "There is no failure in learning, but there can be in refusing to unlearn." Now that's something that's gonna occur over and over when we talk about the different myths. And the fact is, as many people have observed, unlearning can be a lot tougher than learning. So I think we always have to keep that in mind. So I want to tell a little story which kind of illustrates just how deep this unlearning can go. And this was told to me by Rich Sheridan, who has a company called Menlo Innovations, they're a software development company. And very interestingly, the theme of his work has been about joy in work. Sounds familiar?   0:01:28.3 AS: I love it.   0:01:28.5 JS: Well, he didn't really discover Dr. Deming until he had already written two of his books. So it just shows to me that there's some very underlying truths behind what Dr. Deming was teaching. But anyway, the story Rich tells is that he had his family in for a wedding. And they had a new office they'd moved into, so everyone wanted to see it. So he brought his granddaughter in, an eight-year-old. And he said, well, where do you sit, pop-pop? And he said, right here. Here's my desk. Here's my computer. And the granddaughter looked at his desk and was puzzled. You know, she said, well, where's your name? You got to have your name somewhere. And so, I mean, Sheridan was amazed. He says, I thought, wow, she already has it in her head that as CEO, I should have a corner office with a placard that showed how important I am. And you know, I felt a little embarrassed. She was somehow implying that I can't be much of a CEO if I didn't have a placard with my name on it.   0:02:35.5 JS: And she's only eight. So no, here's a CEO that's just really, really, you know, ahead of a lot of people. You know, he understands a lot of the Deming principles. And he sees just how deeply people hold these myths. She believed that there's this pyramid structure and there's got to be a CEO at the top and there have to be all these departments and people reporting to various people, et cetera, et cetera. So this really, this belief she had is really, it's sort of the pyramid that Dr. Deming described. And Dr. Deming actually wrote, he said, in The New Economics, you know, his last book, he wrote, this book is for people who are living under the tyranny of the prevailing style of management. And he talks about the pyramid. And I think that kind of encapsulates everything we're dealing with in terms of beliefs. And I'm just going to read it because he was so concise about saying it. "The pyramid only shows responsibilities for reporting who reports to whom. It shows the chain of command and accountability."   0:03:55.3 JS: "The pyramid does not describe the system of production. It does not tell anybody how his work fits into the work of other people in the company. If a pyramid conveys any message at all, it is that anybody should first and foremost, try to satisfy his boss and get a good rating. The customer is not in the pyramid. A pyramid as an organization chart, thus destroys the system, if ever one was intended." So I've never seen a more pointed description of the prevailing style of management. But think of this young girl at age eight, you know, I mean, and a lot of them, what happens is they go to school and they learn. And then maybe they eventually go to business school. And then sometime, maybe 30 years later or something, this person, this young woman is being told, we're not going to manage according to a pyramid anymore.   0:04:54.3 JS: We're gonna change the whole structure. We're gonna respect people and we're gonna respect their opinions. And we're not gonna assume that all these departments automatically fit together like building blocks. We're gonna work to define a system. All these things that Deming taught, you know, how do you think she's gonna react to that? You know, we're talking about things that this person has believed, not just from training in business school, but for years and years. So I think that kind of underlines the task we all have in terms of learning and unlearning. It's just an enormous thing we have to deal with, which is why I think it's important to look at the myths and various myths. And that's why I really worked to define those. So, when we...   0:05:46.5 AS: I would just highlight one thing about, if we go back to maybe, I don't know, constructing the pyramids, it was all about power and force, you know, get things done. It was about power and force. And I think what Dr. Deming was saying at a very, you know, many, many decades ago, he was saying that power and force are just, you know, a tiny factor in the world of business. The real motivating factor is intrinsic motivation, satisfying the customer, working together. Those types of things are the forces that will bring a much better outcome in your business, rather than just having an organizational chart that just shows the flow of power and force.   0:06:30.4 JS: Exactly. You know, and I think that if you look at the pyramid structure, it's actually a great system for consolidating power. So it works that, and, you know, but if you start to look at producing quality products and services for customers, it doesn't work at all. And, you know, so we need a new kind of logic, not this kind of logic. If we really do, like I say, we want to produce excellence. And if we want to have productivity as our competitive advantage, right?   0:07:06.4 AS: And one thing I just want to, for the listeners and viewers out there that may get confused, like what is a pyramid chart? We're talking about an organizational chart with a CEO, you know, and the like at the top, and then all the different department heads and the people below them. So Dr. Deming referred to that, and Jacob's also referring to that as a pyramid chart. Let's continue.   0:07:27.5 JS: That's right. Yeah. Yeah. Thanks for clarifying that. Okay. So that gets us to myth number one, because, and myth number one is the myth of segmented success. And the idea behind it is that the productive resources, this is a myth, this isn't true, but according to the myth, the productive resources of a company can be organized as a collection of independent components. The whole equals the sum of the parts. So this is essentially the glue that holds this org chart structure together. If that myth were true, then that org chart structure would be perfect for organizing a productive organization. But it is a myth. And what we see is that when you run a company according to that, with that assumption, you get into all kinds of trouble.   0:08:20.5 JS: And I'll just give you a very simple example. We have, let's say we have a company that does heating, ventilating, air conditioning, and they're selling stuff to industry, various machines, and they're installing them, and they're servicing them, all that kind of thing. Right? So let's say there's the end of the quarter and the sales rep has to make his or her numbers. Now salespeople are rewarded based on their sales numbers. Production people or the service people are rewarded based on their numbers, on how many service calls they satisfy or whatever. So installation people are rewarded for how much installing they do. So everybody's got quotas, and they're all sort of independent like components. So you get this sort of negative chain reaction where the sales rep does a big deal to make the numbers at the end of the quarter. He brings it in, the bell rings, you know, hooray, this person's made his numbers, he gets to go to Hawaii or whatever it is. Right?   0:09:27.6 JS: But let's supposing to get that deal, that's a big deal, it's high volume. So guess what? Low margin. And guess what? Maybe the sales rep had to make a few concessions to get that deal. Maybe the sales rep didn't reveal all the fine print to the customer, you know, in sort of the rush of getting the deal. So after the deal, the next quarter, well, the service department's got problems now dealing with this order. The installation department's got problems. So both of these departments have to hire extra people, have to pay overtime. So the end of that quarter, their numbers are going to look bad. Right? So that's a classic case. But it just happens over and over and over again, because you have all these different business entities compensated based on their own separate objectives as if they were separate companies. And yet that's glorified, that's seen as entrepreneurial. We'll run our department as a business, as a profit center. But they don't consider the whole overall system. So that's the kind of the tragedy, I guess, in modern business. And again, it's assuming that everything is kind of gonna work out if you manage them independently.   0:10:53.2 AS: And I was thinking that, you know, the head of the sales department is gonna be rewarding the salesperson for what they're doing. And if the head of the manufacturing or service department could anticipate that this deal that the salesperson's closing is gonna cause a lot of problems because of, you know, they're rushing it and they're trying to give great terms to get something under a deadline. There's just a very difficult for the head of the sales department to listen to that complaint to the head of, let's say the service department as an example, because they're being judged by the numbers they're delivering in their department by their boss. And so they got to kind of let it happen.   0:11:33.5 JS: Yeah. Yeah. And this is by the way, based on a real life story. And this is a company called Air Force, I think, Air Force One, it's called actually, and it's based in Ohio. It's a heating, ventilating air condition company. I could say HVAC, but they use the acronym. And they worked with Kelly Allen. And very soon after working with Kelly, they got rid of sales quotas and put everybody on salary. And the whole thing took off, you know, as the CEO told me. They're getting better deals, customers are happier, veteran sales reps are helping the younger ones close deals. Everyone's helping everybody. And the business is really, really expanded rapidly. You know, they've, I think, doubled or tripled their revenues in the last three or four years. So yeah, these things, when you get rid of these artificial barriers, businesses can really take off. And we got all kinds of case studies showing that.   0:12:45.3 AS: Yeah. And for the listeners and viewers out there, like, wait a minute, I can't do this. You know, my salespeople, they only are gonna work when they're incentivized individually as a department. I think the first thing that I would say is listen to what Jacob's telling you, listen to the stories that you're hearing and think about it. You don't have to move on it. I think that transformation in the way that you think about, you know, things takes time. And the natural reaction, when you hear something new, you know, you started with the idea of unlearning the natural reaction, when you hear something new is to say that can't work, but just keep that open mind as we continue through myth number one. So why don't you continue on, Jacob?   0:13:25.3 JS: Yeah, well, and as Kelly Alley, Kelly Allen you know, made some points on that. First of all, he said, you don't go in with your guns blazing and just take away the sales quotas. He said they worked very carefully so that CEO understood the whole system, how all the parts interact. And then once you understand the system, then you're in a position. Often people go in prematurely, remove all the sales quotas and you get chaos because people don't understand all the dependencies that are there. So it's really, really important, I think to manage the change in a responsible way. And again, as Kelly says, you've got to understand the system and how it works.   0:14:10.4 AS: Great. And I think you have more stories to tell.   0:14:14.2 JS: Oh yeah. Well, I actually a wonderful one. It's, and it's not just sales quotas, by the way, it's any kind of rating and ranking system. And one of the real classics is the, a company called Bama, Bama Foods, which is, uses Deming's principles. And the CEO, Paula Marshall, actually might've been this little girl, eight-year-old girl who was looking for the desk of the CEO 30 years later, because she started working with Deming just by accident, really, because she had taken over the company business at a young age and she, they were trying to deal with some quality problems. And she went to a Deming seminar and Dr. Deming asked who in the audience is the CEO? And she was the only one that raised her hand. And so he said, will you come and , be part of a study group? So that's how she got to work and got to become actually today's the only living CEO that's actually worked directly with Deming, or the only active CEO that's actually worked with Dr. Deming.   0:15:32.4 JS: But anyway, she started to talk with Dr. Deming about the problems they were having and he said, and she described a rating and ranking system that they had had, and they had spent, I think millions of dollars even back then with a very, very reputable consulting firm. And it was one of these things where they rank people on a scale of one to 10. And the idea was let's make all our people accountable. That's how we're going to get quality. We'll have accountability. Everybody has to be rated by their managers and we'll create some fear and we'll create some incentive for people to work harder and solve our problems. Well, the first thing Dr. Deming told her is get rid of that rating and ranking system. So it was very, very hard for her at first, you know, she'd spent a lot of money on it. And she said, you know, but eventually she said she realized that it wasn't helping the company. It wasn't doing anything, but it was still very, very hard to let go of that idea. But eventually she did. Eventually she got on a conference call.   0:16:40.3 JS: They got rid of it and the results were just incredible. She said by the, you know, everyone had hated the system and it just turned the conversation around. I mean, instead of saying, well, here's why I've ranked you, Andrew, on, I've only given you a seven instead of a nine. We would be having a sort of a constructive conversation about the problems you're facing in the workplace, how we can make things better, how can we work together, that sort of thing. So it was, it became much more constructive and much more cooperative. And they were able to evolve to a whole system where teams of people work together to solve problems. But without taking away that system, it would have been very, very difficult to do that 'cause, you know, well, that means that person will be ranked higher than me maybe, you know.   0:17:31.2 AS: And we know very well in the area of sports that, you know, great coaches are not sitting there ranking and rating and ranking their employees and beating them over the head with that. They're trying to identify the strengths and weaknesses. How do we, you know, build this team so that we can beat the other teams? And that really requires coordination. And if you do rating and ranking type of thing, you start to destroy coordination. And for those people that are thinking, of course, you know, I'm terrified to look at this and remove my rating and ranking. One thing you can do is take, you know, five or 10 people that you respect their opinion within the company and ask them how they feel about the rating and ranking system. And you'd be surprised what you hear.   0:18:15.3 JS: Oh, yeah. Oh, yeah, for sure. Right. And, but yeah, about the sports team, I guess. Yeah. I mean, there's some documentaries on the Chicago Bulls, you know, and I think they had some very good stories about teamwork and stuff like that.   0:18:30.5 AS: Well, Phil Jackson was amazing in that the documentary on Netflix was great, The Last Dance. But what you can see and you can hear it from the players, I think Dennis Rodman was a great example where Phil Jackson understood how to deal with this kind of disruptive kind of situation and guy. How do you deal with that and get the most out of him on the court in a way that still follows the values of yourself and your team? And he just showed that very well in that. And so I think that that was a great example of how you coordinate your resources.   0:19:08.5 JS: Yeah, a great example, I think, for people to watch. Yeah, 'cause it really does. It does really show that.   0:19:15.3 AS: You know, you were talking to me about just before we turned on the recorder about Deming was a scientist and physics and all this, some things I never even thought about. But maybe you can tell us a little bit about your thoughts in that area.   0:19:28.4 JS: Yeah, you know, I mean, I think that, first of all, the when you look at the traditional pyramid and all the traditional style of management, I mean, that's really based on reductionism, cause-and-effect. Essentially, it's Newton, you know, it's Newton's golden principles. So you have a business system that's built on 17th century logic, basically. And so what I think is wonderful about Dr. Deming, I mean, we think of him as this philosopher. But here he was, Dr. Deming in the 1920s, getting his PhD in mathematical physics. So at the time he's doing his PhD, I mean, there's Heisenberg developing his uncertainty theorems, all that kind of stuff was just exploding. And the whole view that people had of the physical world was just being turned upside down. So Dr. Deming was very, very cognizant of that.   0:20:35.2 JS: You know, when it started, you know, with statistics, but gosh, you know, science of psychology was changing too. And I think Deming, you know, when you read him, he was really thinking like a scientist. You know, this is the way the world works. And was very, very sensitive about all the components of that. You know, the science of the way people think and what motivates them. You know, he knew that people aren't motivated by sticks and carrots. And we'll talk about that later. He knew that there are limits to how much you can know if you're not right there in the workplace. You know, he understood all that because of variation. But I think when he was introducing those ideas, people really weren't thinking that way. I think they are a bit more today, but he was really a pioneer in that.   0:21:33.4 AS: Yeah. In fact, I was just looking at, he got his degree in mathematical physics from Yale university in 1928. So yeah, there was a lot going on in the world then.   0:21:46.3 JS: Sure was. Yeah. So yeah. And he, I guess he's very patient with us. You know, you think of someone having a degree like that talking, you know, over everybody's heads, but I think he really developed the style of communicating.   0:22:06.5 AS: So what else you got for us on this topic? I think you had some takeaways that you mentioned some four points or some other items.   0:22:14.3 JS: Sure. Yeah. I can, I did summarize at the end of the chapter just to sort of a bluffers guide, I guess, to, you know, this myth of segmented success. But, you know, first of all, you know, as we were just saying, conventional management practices are based on an outdated view of the world that emphasizes reductionism and predictability and ignores the influence of complexity and interdependencies. So you don't see how things actually affect each other in a company. Operating companies so that interdependencies are reflected in management practices and understood by all employees enables wide engagement in improving quality and productivity. To create a strong team environment, managers need to remove barriers such as siloed incentive plans and clearly communicate the aim of the organization. And finally, recent lessons from supply chain disruptions during the COVID epidemic show how segmentation extends beyond the walls of a company and how closer collaboration with supply chain partners can prevent such disruptions.   0:23:41.3 AS: So how would you, let me ask you, how would you wrap everything up in a very short statement? What do you want people to remember?   0:23:53.4 JS: I want people to remember that just because it says so in an org chart doesn't mean that that reflects the way things actually happen.   0:24:05.7 AS: Yeah, that's a great one. And I think we're trained, and this is where Dr. Deming used to say that, you know, what we're being taught in management schools, you know, is the wrong thing. And this is exact type of thing where we're talking about this concept of the, you know, the org chart and the way power flows and all of that stuff. So yeah, great points.   0:24:28.4 JS: Yeah. Not only in management school, but in grade school, you know, when we're rating and ranking kids before they even know how to learn and read, even before they know how to read and write.   0:24:41.2 AS: Yeah. And that brings us back to that first story where a kid walks in and what has she seen? She's seen the teacher and the principal with the name tag at the front, in front of the class.   0:24:53.4 JS: Exactly. Yeah. Yeah. And I don't know if we can keep talking, but you know, Rich Sheridan also discovered a drawing, which is actually, it's a diagram in The New Economics, but it shows how people's creativity and joy in work and stuff are systematically destroyed throughout their lifetime. They're constantly put down by teachers, principals, and they go to college and university and there's competition. And then they go into the workplace and they're rated and ranked. And it just destroys the natural of joy in work that people have and the enthusiasm people could have in the workplace.   0:25:39.5 AS: And for those listeners out there who used to listen to The Wall by Pink Floyd, Roger Waters was talking about how the school system was just pounding out any creativity, any fun, any joy. And so it's not unusual. And it's the case in many educational systems around the world. And so I think, you know, this is a good reminder of, you know, joy in work. And also this idea of segmented success. I think you had a statement that you said to me just before we started, which I thought summed it up perfectly, which was the whole doesn't equal the sum of the parts.   0:26:18.3 JS: Yeah, that's exactly. And we can basically reduce it all to that.   0:26:28.4 AS: Yeah. So I'm going to wrap up there. So for ladies and gentlemen, I think that's a great description of myth number one in Jacob's book, but I think ending it with this, the whole doesn't equal the sum of the parts, helps us all to realize that, you know, just bringing competition between different people and different units within an organization does not bring the optimum output. Jacob, on behalf of everyone at Deming Institute, I wanna thank you again for the 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. And this is your host Andrew Stotz. And I'll leave you with one of my favorite quotes from Dr. Deming. We've been talking about it today. "People are entitled to joy in work".

Harvard professor of international political economy Dani Rodrik has long been skeptical of what he calls "hyperglobalization," or an advanced level of interconnectedness between countries and their economies. He first introduced his theory of the "globalization trilemma" in the late 1990s, which states that no country can simultaneously support democracy, national sovereignty, and global economic integration.At the time when he proposed his trilemma, Rodrik was considered an outcast. However, economists and policymakers have come to accept his theory as governments seek to address populism, trade imbalances, and uneven growth through renewed interest in industrial policy, or government efforts to improve the performance of key business sectors. Rodrik joins co-hosts Bethany and Luigi to discuss changing attitudes towards globalization: its distributional effects, how it affects politics, and how it is still searching for a narrative consistent between academic circles and the media. Together, the three of them discuss what role corporate America should play in our world restructured by economic and political populism and if economics is getting too far away from the rest of the social sciences when it comes to shaping industrial policy and creating the jobs of tomorrow.Show Notes:Read Rodrik's co-authored December 2023 paper on the "New Economics of Industrial Policy"Read an ebook by ProMarket on cutting-edge contemporary debates around industrial policy

Is reaching A+ quality always the right answer? What happens when you consider factors that are part of the system, and not just the product in isolation? In this episode, Bill Bellows and Andrew Stotz discuss acceptability versus desirability in the quality realm. TRANSCRIPT 0:00:02.5 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 Bill Bellows, who has spent 31 years helping people apply Dr. Deming's ideas to become aware of how their thinking is holding them back from their biggest opportunities. Today's episode, episode three, is Acceptability and Desirability. Bill, take it away.   0:00:28.1 Bill Bellows: Thank you, Andrew, and welcome back to our listeners.   0:00:30.7 AS: Oh, yeah.   0:00:31.4 BB: Hey, do you know how long we've been doing these podcasts?   0:00:36.6 AS: No.   0:00:40.8 BB: We started... Our very first podcast was Valentine's Day 2023. I was gonna say 2013. 2023, so roughly 17 months of podcast, Andrew.   0:00:53.4 AS: That was our first date, huh?   0:00:55.0 BB: Our first date was Valentine's Day 2023.   0:00:58.9 AS: All right. Don't tell your wife.   [laughter]   0:01:03.1 BB: All right. And so along the way, I've shared reflections from my first exposures to Dr. Deming, as well as my first exposures to Genichi Taguchi. Talked about Edward de Bono, Tom Johnson, others, mentors, Bill Cooper, Phil Monroe, Gipsie Ranney was a great mentor. Last week, Andrew, while on vacation in New England with my wife, I visited for a day my 85-year-old graduate school advisor who I worked with for ten years, Bob Mayle, who lives in, I would say, the farthest reaches of Maine, a place called Roque Bluffs. Roque Bluffs. How's that for... That could be North Dakota. Roque Bluffs. He's in what they call Down East Maine. He's recently got a flip phone. He's very proud. He's got like a Motorola 1985 vintage flip phone. Anyway, he's cool, he's cool. He's...   0:02:15.9 AS: I'm just looking at that place on the map, and looks incredible.   0:02:19.0 BB: Oh, yeah. He's uh, until he got the phone, he was off the grid. We correspond by letters. He's no internet, no email. And he has electricity, lives in about an 800 square-foot, one-floor bungalow with his wife. This is the third time we've visited him. Every time we go up, we spend one day getting there, one day driving home from where my in-laws live in New York. And then one day with him, and the day ends with going to the nearby fisherman's place. He buys us fresh lobster and we take care of them. [chuckle]   0:03:01.3 AS: Yeah, my sister lives in Kennebunk, so when I go back to the US, I'm...   0:03:08.8 BB: Yeah, Kennebunk is maybe 4 hours away on that same coast.   0:03:15.3 AS: I'm just looking at the guide and map book for Roque Bluffs' State Park, and it says, "a beautiful setting with oceanfront beach, freshwater pond, and hiking trails."   0:03:25.9 BB: Yeah, he's got 10 acres... No, he's got, I think, 20, 25 acres of property. Sadly, he's slowly going blind. He has macular degeneration. But, boy, for a guy who's slowly going blind, he and I went for a walk around his property for a couple hours, and it's around and around... He's holding branches from hitting me, I'm holding branches from hitting him and there's... Let alone the terrain going up and down, you gotta step up and over around the rocks and the pine needles and all. And it was great. It was great. The week before, we were close to Lake George, which is a 32-mile lake in Upstate New York. And what was neat was we went on a three-hour tour, boat ride. And on that lake, there are 30 some islands of various sizes, many of them owned by the state, a number of them owned privately. Within the first hour, we're going by and he points to the island on the left and he says it was purchased in the late '30s by Irving Langmuir. Yeah, so he says, "Irving Langmuir," and I thought, I know that name from Dr. Deming. That name is referenced in The New Economics.   0:04:49.1 BB: In fact, at the opening of Chapter Five of The New Economics, the title is 'Leadership.' Every chapter begins with a quote, right? Chapter Five quote is, "You cannot plan to make a discovery," so says Irving Langmuir. So what is... The guy's describing this island purchased back in the late '30s by Langmuir for like $5,000. I think it's... I don't know if he still owns it, if it's owned by a nonprofit. It's not developed. It's privately held. I'm trying, I wrote to Langmuir's grandson who did a documentary about him. He was a Nobel Prize-winning physicist from GE's R&D center in Schenectady, New York, which is a couple hours south of there. But I'm certain, and I was looking for it earlier, I know I heard of him, of Irving Langmuir through Dr. Deming. And I believe in his lectures, Deming talked about Langmuir's emphasis on having fun at work, having fun. And so I gotta go back and check on that, but I did some research after the day, and sure enough came across some old videos, black and white videos that Langmuir produced for a local television station, talking about his... There's like show and tell with him in the laboratory. And in there, he talks about joy and work and all that.   0:06:33.5 BB: So I'm thinking, that's pretty cool. So I'm waiting to hear from his grandson. And ideally, I can have a conversation with his grandson, introduce him to Kevin and talk about Deming's work and the connection. Who knows what comes out of that? Who knows? Maybe an interview opportunity with you and Irving Langmuir's grandson. So, anyway.   0:06:52.7 AS: Fantastic.   0:06:54.7 BB: But going back to what I mentioned earlier in my background in association with Deming and whatnot, and Taguchi, and I offer these comments to reinforce that while my interests in quality were initially all things Taguchi, and then largely Deming, and it wasn't long before I stopped, stepped back and an old friend from Rocketdyne 20 some years ago started focusing on thinking about thinking, which he later called InThinking. And it's what others would call awareness of our... Well, we called it... Rudy called it, better awareness of our thinking patterns, otherwise known as paradigms, mental models.  We just like the way of explaining it in terms of becoming more aware of our thinking patterns. And I say that because... And what I'm presenting relative to quality in this series, a whole lot of what I'm focusing on is thinking about thinking relative to quality.   0:07:58.8 BB: And so last time, we talked about the eight dimensions of quality from David Garvin, and one of them was acceptability. And that is this notion in quality, alive and well today, Phil Crosby has created this focus on achieving zero defects. Everything meets the requirements, that gets us into the realm, everything is good. Dr. Deming and his red bead experiments talked about red beads and white beads. The white beads is what we're striving for. All the beads are good. The red beads represent defects, things we don't want. And that's this... Thinking wise, that's a thinking pattern of "things are good or bad." Well, then we can have high quality, low quality and quality. But at Rocketdyne, when I started referring to that as category thinking, putting things into categories, but in the world of quality, there's only two categories, Andrew: good and bad. This either meets requirements or it doesn't. And if it's good, then we're allowed to pass it on to the next person. If we pass it on and it's not good, then they're going to send it back to us and say, "Uh-uh, you didn't meet all the requirements." And what I used to do in class, I would take something, a pen or something, and I would go to someone in the seminar and I'd say, "If I hand this to you and it doesn't meet requirements, what are you going to say?" You're gonna say, "I'm not going to take it. It hasn't met the requirements."   0:09:36.4 BB: And I would say you're right. All the I's are not dotted, all the T's are not crossed, I'm not taking it. Then I would take it back and I'd say, "Okay, now what if I go off and dot all those I's and cross all those T's?" Then I would hand them the pen or whatever the thing was, and I'd say, "If all those things have been met," now we're talking acceptability. "Now, what do you say?" I said, "Can you reject it?" "No." I say, "So what do you say now that all those things... If you're aware that all those requirements have been met, in the world of quality, it is as good, now what do you say?" And they look at me and they're like, "What do I say?" I say, "Now you say, thank you." But what I also do is one more time... And I would play this out to people, I'd say, "Okay, Andrew, one more time. I hand you the pen, Andrew, all the requirements are met. And what do you say?" And you say, "Thank you." And I say, "What else just happened when you took it?"   0:10:45.4 AS: You accepted it.   0:10:47.3 BB: Yes. And I say, "And what does that mean?" "I don't know. What does that mean?" I said, "It means if you call me the next day and say, I've got a problem with this, you know what I'm going to say, Andrew?"   0:10:58.5 AS: "You accepted it."   0:11:01.5 BB: Right. And so, what acceptability means is don't call me later and complain. [laughter] So, I get a photo of you accepting it, you're smiling. So if you call me back the next day and say, "I've got a problem with this," I'd say, "No, no, no." So acceptability as a mental model is this idea that once you accept it, there's no coming back. If you reveal to me issues with it later, I deny all that. I'd say, I don't know what your problem with Andrew... It must be a problem on your end, because what I delivered to you is good. And if it is good, then there can't be any problems associated with it. So, if there are problems, have to be on your end, because defect-free, everything good, implies, ain't no problems, ain't no issues with it. I'm thinking of that Disney song, trouble-free mentality, Hakuna Matata.   [chuckle]   0:12:04.5 BB: But now I go back to the title, Acceptability and Desirability. One of Dr. Deming's Ph.D. students, Kauro [actually, Kosaku] Yoshida, he used to teach at Cal State Dominguez Hills back in the '80s, and I think sometime in the '90s, he went to Japan. I don't know if he was born and raised in Japan, but he was one of Dr. Deming's Ph.D. students, I believe, at NYU. Anyway, I know he's a Ph.D. student of Dr. Deming, he would do guest lectures in Dr. Deming's four-day seminars in and around Los Angeles. And, Yoshida is known for this saying that Americans are all about acceptability meets requirements, and the Japanese are about desirability. And what is that? Well, it's more than meeting requirements. And, I wanna get into more detail on that in future episodes. But for now, we could say acceptability is meeting requirements. In a binary world, it can be really hard to think of, if everything's met requirements, how do I do better than that? How do I continue to improve if everything meets requirements?  Well, one clue, and I'll give a clue, is what I shared with the senior most ranking NASA executive responsible for quality.   0:13:46.4 BB: And this goes back to 2002 timeframe. And we had done some amazing things with desirability at Rocketdyne, which. is more than meeting requirements. And the Vice President of Quality at Rocketdyne knew this guy at NASA headquarters, and he says, "You should go show him what we're doing." So I called him up a week in advance of going out there. I had made the date, but I figured if I'm going to go all the way out there, a week in advance, I called him up just to make sure he knew I was coming. And he said something like, "What are we going to talk about?" He said something like, "We're going to talk about that Lean or Six Sigma stuff?" And I said, "No, more than that." And I think I described it as, we're going to challenge the model of interchangeable parts. And he's like, "Okay, so what does that mean?" So the explanation I gave him is I said, "What letter grade is required for everything that NASA purchases from any contractor? What letter grade is ostensibly in the contract? What letter grade? A, B, C, D. What letter grade is in the contract?" And he says, "Well, A+."   [laughter]   0:15:01.2 BB: And I said, "A+ is not the requirement." And he's like, "Well, what do you mean?" I said, "It's a pass-fail system." That's what acceptability is, Andrew. Acceptability is something is either good or bad, and if it's bad, you won't accept it. But if it's good, if I dot all the I's and cross all the T's, you will take it. It has met all the requirements. And that gets into what I talked about in the first podcast series of what I used to call the first question of quality management. Does this quality characteristic, does the thrust of this engine, does the roughness of this surface, does the diameter of this hole, does the pH of this bath meet requirements? And there's only two answers to that question, yes or no. And if yes is acceptable, and if no, that's unacceptable. And so I pointed out to him, much to his chagrin, is that the letter grade requirement is not A+, it's D- or better. [chuckle] And so as a preview of we'll get into in a future podcast, acceptability could be, acceptability is passing. And this guy was really shocked. I said, "Procurement at NASA is a pass-fail system."   0:16:21.9 BB: Every element of anything which is in that system purchased by NASA, everything in there today meets a set of requirements, is subject to a set of requirements which are met on a pass-fail basis. They're either, yes, it either meets requirements, acceptable, or not. That's NASA's, the quality system used by every NASA contractor I'm aware of. Boeing's advanced quality system is good parts and bad parts. Balls and strikes. And so again, for our viewers, acceptability is a pass-fail system. And what Yoshida... You can be thinking about what Yoshida's talked about, is Japanese companies. And again, I think it's foolish to think of all Japanese companies, but back in the '80s, that's really the way it came across, is all Japanese companies really have this figured out, and all American companies don't. I think that's naive. But nonetheless, what he's talking about is shifting from a pass-fail system, that's acceptability, to, let's say, letter grades of A's or B's. That would be more like desirability, is that it's not just passing, but an A grade or a B grade or a C grade. So that's, in round terms, a preview of Yoshida... A sense of, for this episode, of what I mean by acceptability and desirability.   0:17:54.7 BB: In the first podcast which was posted the other day, I made reference to, instead of achieving acceptability, now I can use that term, instead of achieving zero defects as the goal, in the world of acceptability, once we continuously improve and achieve acceptability, now everything is passing, not failing. This is in a world of what I refer to as category thinking, putting things in categories. In the world of black and white, black is one category, white is a category. You got two categories, good and bad. If everything meets requirements, how do you continuously improve if everything is good? Well, part of the challenge is realize that everything is good has variation in terms... Now we could talk about the not all letter grade A, and so we could focus on the things that are not A's and ask the question, is an A worthwhile or not? But what I was saying in the first podcast is my admiration for Dr. Deming's work uniquely... And Dr. Deming was inspired towards this end by Dr. Taguchi, and he gave great credit to that in Chapter Ten of The New Economics. And what I don't see in Lean nor Six Sigma, nor Lean/Six Sigma, nor Operational Excellence, what I don't see anywhere outside of Dr. Deming's work or Dr. Taguchi's work is anything in quality which is more than acceptability.   0:19:32.0 BB: It's all black and white. Again, Boeing's Advanced Quality System is good parts and bad parts. Now, again, I'm not suggesting that there's anything wrong with that. And I would also suggest in a Deming-based organization there may be characteristics for which all we need is that they're good. We don't need to know how good they are, we don't need to know the letter grade. And why is that? Because maybe it's not worth the trouble to discern more than that. And this is where I use the analogy of balls and strikes or kicking the ball into the net.  If you've got an open net... That's Euro Cup soccer. There's no reason to be precisely placing the ball. All you want to do is get it into the net. And that's an area of zero defects, maybe all that is worthwhile, but there could be other situations where I want the ball in a very particular location in the strike zone. That's more of this desirability sense. So I want to clarify for those who listened to the first podcast, is what I'm inferring is I'm not aware of any quality management system, any management system in which, inspired by Dr. Deming and Taguchi, we have the ability to ask the question, is acceptability all that is required?   0:20:55.7 BB: And it could be for a lot of what we do, acceptability is not a bad place to be. But I'm proposing that as a choice, that we've thought about it and said, "You know what? In this situation, it's not worth, economically, the extra effort. And so let's put the extra effort into the things where it really matters." And if it doesn't... So use desirability where it makes sense, use acceptability elsewhere. Right now, what I see going on in organizations unaware of Dr. Deming's work, again, Dr. Taguchi's work, is that they're really blindly focusing on acceptability. And I think what we're going to get into is, I think there's confusion in desirability. But again, I want to keep that for a later episode. Now, people will say, "Well, Bill, the Six Sigma people are about desirability." No, the Six Sigma people have found a new way to define acceptability. And I'll give you one other fun story. When I taught at Northwestern's Kellogg Business School back in the late '90s, and I would start these seminars off by saying, "We're going to look at quality management practices, past, present, future." And so one year, I said, "So what quality management practices are you aware of?" And again, these are students that have worked in industry for five or six years.   0:22:17.6 BB: They've worked at GM, they worked at General Electric, they worked for Coca Cola, banking. These are sharp, sharp people. But you got into the program having worked somewhere in the world, in industry, so they came in with experience. And so they would say, zero defect quality is a quality management practice. And I'd say, "Okay, so where'd that come from?" And again, this is the late '90s. They were aware of the term, zero defects. They didn't know it was Philip Crosby, who I learned yesterday was... His undergraduate degree is from a school of podiatry. I don't know if he was a podiatrist, but he had an undergraduate... A degree in podiatry, somebody pointed out to me. Okay, fine. But Philip Crosby, his big thing was pushing for zero defects. And you can go to the American Society for Quality website to learn more about him. Philip Crosby is the acceptability paradigm. So, students would bring him up and I'd say, "Okay, so what about present? What about present?" And somebody said, "Six Sigma Quality." So I said, "So what do you know about Six Sigma Quality?" And somebody said," Cpk's of 2.00." And I said, "So what's... " again, in a future episode, we could talk about Cpk's."   0:23:48.5 AS: But I said to the guy, "Well, what's the defect rate for Six Sigma... For Cpk's or Six Sigma Quality or Cpk's of 2?" And very matter of factly, he says, "3.4 defects per million." So I said, "How does that compare to Phil Crosby's quality goal from 1962? Here we are, 1997, and he's talking about Motorola and Six Sigma Quality, a defect goal of 3.4 defects per million. And I said, "How does that compare to Phil Crosby's quality goal of zero defects in 1962?" And the guy says... [chuckle] So cool, he says, "Well, maybe zero is not worth achieving." 'Cause again, zero was the goal in 1962. Six Sigma sets the goal for 3.4 per million. Not zero, 3.4, to which this guy says... And I thought it was so cool, he says, "Well, maybe zero is not worth achieving." So, there. Well, my response was, "Well, what makes 3.4 the magic number for every process in every company around the world? So, what about that?" To which the response was crickets. But what I want to point out is we're still talking about zero... I mean 3.4 is like striving towards zero and admitting some. It is another way of looking at acceptability. It is... And again, and people claim it's really about desirability. I think, well, there's some confusion in desirability and my hope in this episode is to clear up some of that misunderstanding in acceptability as well as in desirability. And they... Let me just throw that out.   0:25:58.1 AS: Yeah, there's two things that I want to say, and the first one is what he should have replied is, for those older people listening or viewing that can remember the movie, Mr. Mom with Michael Keaton, I think it was. And he should have replied, "220, 221, whatever it takes." And he should have said, "Well, yeah, 3.4, 3.5, 3.6. It's could be around there."   0:26:27.5 BB: Well, the other thing is, why we're on that is... And I think this is... I'm really glad you brought that up, is, what I would push back on the Lean and the Six Sigma, those striving for zero defects or Cpk's of 2 or whatever they are is, how much money are we going to spend to achieve a Cpk of 2, a zero defects? And again, what I said and... Well, actually, when I posted on LinkedIn yesterday, "I'm okay with a quality goal of 3.4 defects per million." What I'm proposing is, instead of blindly saying zero defects is the goal and stop, or I want Cpk's of 1.33 or whatever they are everywhere in the organization, in terms of the economics of variation or the new economics, is how much money are we going to spend to achieve zero or 3.4 or whatever it is? And, is it worth the return on the investment? And this is where Dr. Taguchi's loss function comes in.   0:27:49.2 BB: And so what I'm proposing, inspired by Genichi Taguchi and W. Edwards Deming is, let's be thinking more about what is... Let's not blindly stop at zero, but if we choose to stop at zero, it's an economic choice that it's not worth the money at this time in comparison to other things we could be working on to improve this quality characteristic and that we've chosen to be here... Because what I don't want people to think is what Dr. Deming and Taguchi are talking about is we can spend any amount of money to achieve any quality goal without thinking of the consequences, nor thinking about, how does this goal on this thing in isolation, not make things bad elsewhere. So we have to be thinking about a quality goal, whether it's worth achieving and will that achievement be in concert with other goals and what we're doing there? That's what I'd like people thinking about as a result of this podcast tonight.   0:28:56.0 AS: And I think I have a good way of wrapping this up, and that is going back to Dr. Deming's first of his 14 Points, which is, create constancy of purpose towards improvement of product and service with the aim to become competitive, to stay in business, and to provide jobs. And I think that what that... I link that to what you're saying with the idea that we're trying to improve our products and services constantly. We're not trying to improve one process. And also, to become competitive in the market means we're improving the right things because we will become more competitive if we are hitting what the client wants and appreciates. And so... Yeah.   0:29:46.3 BB: But with regard to... Absolutely with regard to our customers, absolutely with regard to how it affects different aspects of our company, that we don't get head over heels in one aspect of our company and lose elsewhere, that we don't deliver A+ products to the customer in a losing way, meaning that the A+ is great for you, but financially, we can't afford currently... Now, again, there may be a moment where it's worthwhile to achieve the A... We know we can achieve the A+, but we may not know how to do it financially. We may have the technology to achieve that number. Now, we have to figure out, is, how can we do it in an economically advantaged way, not just for you, the customer, but for us. Otherwise, we're losing money by delivering desirability. So it's gotta work for us, for you, but it's also understanding how that improvement... That improvement of that product within your overall system might not be worthwhile to your customer, in which case we're providing a... The classic...   0:31:18.8 AS: You're not becoming competitive then.   0:31:21.8 BB: The better buggy whip. But that gets into looking at things as a system. And this is... What's invaluable is, all of this is covered with a grasp of the System of Profound Knowledge. The challenge is not to look at goals in isolation. And even I've seen people at Lean conferences quote Dr. Deming and his constancy of purpose and I thought, well, you can have a... A non-Deming company has a constancy of purpose. [chuckle]  The only question is, what is the purpose? [laughter] And that's when I thought, a constancy of purpose on a focus on acceptability is good provided all of your competitors are likewise focusing on acceptability. So I just be... I just am fascinated to find people taking Deming's 14 Points one at a time, out of context, and just saying, "Well, Dr. Deming said this." Well, there we go again. [laughter]   0:32:29.9 AS: Bill, on behalf of everyone at The Deming Institute, I want to thank you again for this discussion. For listeners, remember to go to deming.org to continue your journey. If you want to keep in touch with Bill, just find him on LinkedIn. This is your host, Andrew Stotz. And I'll leave you with one of my favorite quotes from Dr. Deming, "People are entitled to joy in work."

In this episode of Hawthorne Valley's Roots to Renewal podcast, we are honored to welcome Dr. Bayo  Akomolafe. Post humanist thinker, poet, teacher, essayist, and author. Together, he and our host, Martin Ping share a thought provoking conversation exploring a rich tapestry of ideas, beginning with Bayo's inspiring fellowship at the Schumacher Center for New Economics. The conversation delves into the concept of drifting and its relevance in our current times, the value of embracing uncertainty, grieving as a form of politics and so much more. It's a deep and reflective dialogue you won't want to miss. Learn more about Bayo's work and explore his writings and offerings at his website, https://www.bayoakomolafe.net. To get tickets for the carnival, Vunja: A Gathering of the Seeds, with Bayo Akomalafe and Friends at the Schumacher Center in Great Barrington on August 6-8, visit https://centerforneweconomics.org/events/vunja-carnival-2024/.More About Bayo:Bayo Akomolafe (Ph.D.), rooted with the Yoruba people in a more-than-human world, is the father to Alethea Aanya and Kyah Jayden Abayomi, the grateful life-partner to Ije, son and brother. A widely celebrated international speaker, posthumanist thinker, poet, teacher, public intellectual, essayist, and author of two books, These Wilds Beyond our Fences: Letters to My Daughter on Humanity's Search for Home (North Atlantic Books) and We Will Tell our Own Story: The Lions of Africa Speak, Bayo Akomolafe is the Founder of The Emergence Network, a planet-wide initiative that seeks to convene communities in new ways in response to the critical, civilizational challenges we face as a species. He is host of the postactivist course/festival/event, ‘We Will Dance with Mountains'. He currently lectures at Pacifica Graduate Institute, California. He sits on the Board of many organizations including Science and Non-Duality (US) and Ancient Futures (Australia). In July 2022, Dr. Akomolafe was appointed the inaugural Global Senior Fellow of University of California's (Berkeley) Othering and Belonging Institute. He is also the inaugural Special Fellow of the Schumacher Centre for New Economics, the Inaugural Scholar in Residence for the Aspen Institute, the inaugural Special Fellow for the Council of an Uncertain Human Future, as well as Visiting Scholar to Clark University, Massachusetts, USA (2024). He has been Fellow for The New Institute in Hamburg, Germany, and Visiting Critic-in-Residence for the Otis College of Art and Design, Los Angeles (2023). He is the recipient of an Honorary Doctorate from the California Institute of Integral Studies (CIIS) and has been Commencement Speaker in two universities convocation events. He is also the recipient of the New Thought Leadership AThanks for listening to Hawthorne Valley's Roots to Renewal podcast. We are an association comprised of a variety of interconnected initiatives that work collectively to meet our mission. You can learn more about our work by visiting our website at hawthornevalley.org. Hawthorne Valley is a registered 501c3 nonprofit organization, and we rely on the generosity of people like you to make our work a reality. Please consider making a donation to support us today. If you'd like to help us in other ways, please help us spread the word about this podcast by sharing it with your friends, and leaving us a rating and review.If you'd like to follow the goings-on at the farm and our initiatives, follow us on Instagram!

In this episode, Bill Bellows and Andrew Stotz discuss David Garvin's 8 Dimensions of Quality and how they apply in the Deming world. Bill references this article by Garvin: https://hbr.org/1987/11/competing-on-the-eight-dimensions-of-quality TRANSCRIPT 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 Bill Bellows, who has spent 31 years helping people apply Dr. Deming's ideas to become aware of how their thinking is holding them back from their biggest opportunities. This is the Misunderstanding Quality series, episode two, The Eight Dimensions of Quality. Bill, take it away.   0:00:30.4 Bill Bellows: Welcome back, Andrew. Great to see you again. All right, episode two, we're moving right along. So in episode one, which the title I proposed, waiting to see what comes out, the title I proposed was, Quality, Back to the Start. And that was inspired by some lyrics from Coldplay. Anyway, but this is a, it's going back to my start in quality and last time I mentioned discovering Taguchi's work long before I discovered Dr. Deming. In fact, Gipsie Ranney, who is the first president of the Deming Institute, the nonprofit formed by Dr. Deming and his family just before he passed away, and Gipsie became the first president and was on the board when I was on the board for many years. And I spoke with her nearly every day, either driving to work or driving home. And once, she calls me up and she says, "Bill," that was her Tennessee accent, "Bill."   0:01:50.5 BB: She says, "It says on The Deming Institute webpage that you infused Dr. Taguchi's work into Dr. Deming's work," something like that, that I... Something like I infused or introduced or I brought Taguchi's work into Deming's work, and I said, "Yes." I said, "Yeah, that sounds familiar." She says, "Isn't it the other way around?" That I brought Deming's work into Taguchi's work. And I said, "No, Gipsie," I said, "It depends on your starting point. And my starting point was Dr. Taguchi." But I thought it was so cool. She says, "Bill don't you have it? Don't you... " She is like, "Isn't it the other way around?" I said, "No, to me, it was all things Taguchi, then I discovered Dr. Deming." But I was thinking earlier before the podcast, and I walked around putting together how, what I wanna talk about tonight. And I thought, when I discovered Taguchi's work, I looked at everything in terms of an application of Dr. Taguchi's ideas.   0:03:29.7 AS: And one question about Taguchi for those people that don't know him and understand a little bit about him, was he... If I think about where Dr. Deming got at the end of his life, it was about a whole system, the System of Profound Knowledge and a comprehensive way of looking at things. Was Taguchi similar in that way or was he focused in on a couple different areas where he really made his contribution?   0:04:03.9 BB: Narrower than Dr. Deming's work. I mean, if we look at... And thank you for that... If we look at Dr. Deming's work in terms of the System of Profound Knowledge, the elements of systems psychology, variation, theory of knowledge, Taguchi's work is a lot about variation and a lot about systems. And not systems in the sense of Russ Ackoff systems thinking, but variation in the sense of where's the variation coming from looking upstream, what are the causes of that variation that create variation in that product, in that service?   0:04:50.9 BB: And then coupled with that is that, how is that variation impacting elsewhere in the system? So here I am receiving sources of variation. So what I deliver it to you has variation because of what's upstream of me and Taguchi's looking at that coupled with how is that variation impacting you? So those are the systems side, the variation side. Now, is there anything in Deming, in Taguchi's work about psychology and what happens when you're labelling workers and performance appraisals and, no, not at all.   0:05:37.6 AS: Okay, got it.   0:05:38.4 BB: Is there anything in there about theory of knowledge, how do we know that what we know is so? No, but there's a depth of work in variation which compliments very much so what Dr. Deming was doing. So anyway, so no. And so I discovered Taguchi's work, and I mentioned that in the first episode. I discovered his work, became fascinated with it, started looking at his ideas in terms of managing variation to achieve incredible... I mean, improved uniformity to the extent that it's worthwhile to achieve. So we were not striving for the ultimate uniformity, it's just the idea that we can manage the uniformity. And if we... And we'll look at this in more detail later, but for our audience now, if you think of a distribution of the variation in the performance of a product or a service, and you think in terms of... It doesn't have to be a bell-shaped distribution, but you have a distribution and it has an average and it has variation.   0:06:50.4 BB: What Dr. Taguchi's work is about in terms of a very brief, succinct point here in episode two is how might we change the shape of that distribution? How might we make it narrower, if that's a worthwhile adventure? It may be worthwhile to make it wider, not just narrower, but in both cases, we're changing the shape of the distribution and changing the location. So Taguchi's work, Taguchi's Methods, driven by variation comes to me, variation impacts you is how do I change the shape and location of that distribution? So on a regular basis, as I became more fascinated with that, I started thinking about, well, how might I apply Taguchi's ideas to these things that I encountered every day? Well, prior to that before discovering Taguchi's work, when I was a facilitator in problem solving and decision making training, I did the same thing, Andrew.   0:07:52.4 BB: I started looking at, oh, is this a problem? Is this a decision? Is this a situation that needs to be appraised? And so prior to that, what I was thinking about is when I was just a heat transfer analyst working on my Ph.D., I didn't look at how the heat transfer stuff affected all these other aspects of my lives. I didn't think about it when I went into a supermarket, but there was something about the problem solving and decision making that just infatuated me. And I would look at, oh, is Andrew talking about a decision or is Andrew talking about a problem? So I started hearing things. And so when I went into Taguchi's work, it was the same thing. And then shifting into Deming's work, it's the same thing. And I've... There's nothing else that I've studied that I look at things through those lenses. Anyway, so in studying, getting exposed to Taguchi, I mentioned that I had some time away from work, I went out on medical for some reasons and went and bought a book, a bunch of books.   0:09:02.4 BB: And one of the books I bought by David Garvin had come out in 1987, is entitled "The Eight Dimensions of Quality." There's a Harvard Business Review article that I wanna reference in this episode, and I'll put a link to the article. It's a free link. And so when you hear people talk about a quality product or a quality service or quality healthcare. We think in terms of it's quality as things, it's either good quality or bad quality or high quality, or somebody calls it low quality, or we just say it's a quality product. But what does that mean? So what I find is very loosely, we think in terms of categories of quality, good, bad, high, low. What we'll look at in a future episode is what would happen if we thought about quality on a continuum, which I believe Taguchi's work really demonstrates vividly as well as Dr. Deming's work.   0:10:07.4 BB: But even to back up before we talk about the eight dimensions of quality, I wanted to give some background on the word quality. The word quality, and this comes from an article and I'll put a link to this article, I wrote it for the Lean Management Journal a number of years ago, the word quality has Latin roots, beginning as qualitas, T-A-S, coined by the Roman philosopher and statesman, Marcus Tullius Cicero. He later became an adversary of this bad guy named Mark Antony. You've heard of him. Feared by Antony, this guy was feared by Antony because his power of speech led, you know what it led to, Andrew, his power of speech?   0:10:54.5 AS: What?   0:10:54.6 BB: His beheading.   0:10:55.8 AS: Oh my goodness.   0:10:56.5 BB: So for those of you with great powers of speech, watch out for your Mark Antony. But meanwhile, he introduced fellow Romans to the vocabulary of qualitas, quantitas, quantity, humanitas, humanities, essentia, which is, essence, he also is credited with an extensive list of expressions that translate into English today. Difference, infinity, science, morale. Cicero spoke of qualitas with his peers when focusing on the essential nature, character or property of an object. And this is kind of interesting. I mean, you can count how many apples do we have. And again, he came up with the term quantitas for quantity, but he is also talking about the essence of the apples. That's the quality word. And then 2000 years later when writing "The New Economics", Dr. Deming provided his definition and a little bit different.   0:12:05.3 BB: He says, "The problem anywhere is quality. What is quality?" Says the good doctor, "A product or service possesses quality if it helps somebody, it enjoys a good and sustainable market." And I said in the article, "As with Cicero, Deming saw quality as a property." And then some other background on quality before I talk about Garvin, "long after Cicero and well before Deming, quality as a property was a responsibility of guilds." Guilds. I mean, now we have writers guilds, we have actors guilds, and it's kind of cool that these guilds still exist and they are associations of artisans who control the practice of their craft, each with a revered trademark. So here in Los Angeles, we have writers guilds, actors guilds. They were organized as professional societies, just like unions.   0:13:00.2 BB: And these fraternities were developed, and within these fraternities they created standards for high quality. All right. So what is this quality management stuff from David Garvin? So this article was written 37 years ago and reviewing it for tonight's episode and I thought it fit in really, really well. I was reminded of... First time I read this article, 1989, I knew a lot about... Well, I knew, I was excited about Taguchi as I knew a lot about Taguchi, didn't know a lot about Dr. Deming. So I'm now reviewing it years later with a much deeper, broader Deming perspective than at that time. But I do believe, and I would encourage the listeners to get ahold of the article, look at it, if you wanna go into more depth, there's Garvin's book. And doing some research for tonight, I found out that he passed away in 2017, seven or so years ago.   0:14:04.6 BB: He was, I guess from, most of his career and education he was at the Harvard Business School, very well respected there. And so in the article it talks about, again, this, 1987, that's the era of Total Quality Management. That's the era in which Dr. Deming was attracting 2000 people to go to his seminars. 1987 is two years before Six Sigma Quality, two years before “The Machine That Changed The World.” And in the article, he says, "Part of the problem, of course, is that Japanese and European competition have intensified. Not many companies tried to make quality programs work even as they implemented them." This is back when quality was an era of quality circles. He says, "In my view, most of the principles about quality were narrow in scope. They were designed as purely defensive measures to preempt failures or eliminate defects, eliminate red beads."   0:15:10.3 BB: "What managers need now is an aggressive strategy to gain and hold markets with high quality," there we go again, "as a competitive linchpin." All right. So in the article, he has some interesting explanations of... Highlights. In the book is more depth. He talks about Joseph Juran, "Juran's Quality Handbook". Juran observed that quality could be understood in terms of avoidable and unavoidable costs. Dr. Deming talked about the economics. The New Economics, right? But Juran is looking at avoidable, unavailable costs resulting from defects in product failures. That's very traditional quality today.  The latter associated with prevention, inspection, sampling, sorting, quality control. And so this is what I found fascinating, is 37 years later, this is still the heavy sense of what quality is all about. Avoiding failure, avoiding defects.   0:16:18.3 BB: Then he talks about Total Quality Control coming from Armand Feigenbaum, who was a big name in the '80s. Again Dr. Deming's work kind of created this big quality movement but it wasn't just Dr. Deming people discovered, they discovered Philip Crosby in a Zero Defects advocacy, Feigenbaum, Juran, sometime later. Again, mid '80s, Dr. Taguchi's name started to be heard. All right. And then the reliability. All right. Now I wanna get into the... Oh, here's, this is good. "In 1961, the Martin Corporation, Martin Company was building Pershing missiles for the US Army. The design of the missile was sound, but Martin found that it could maintain high quality only through massive inspection programs."   0:17:13.0 BB: You know what Dr. Deming would say about inspection? It's after the fact. Sorting the good ones from the bad ones after the fact. No prevention there. But Martin found that it could only do it with inspection. And decided to offer... Again, this is 1961, and this is still the solution today, decided to offer workers incentives to lower the defect rate. And in December, 1961, delivered a Pershing missile to Cape Canaveral with zero discrepancies. Buoyed by this success, Martin's general manager in Florida accepted a challenge issued by the Army's missile command to deliver the first Pershing missile one month ahead of schedule. He went even further, he promised that the missile would be perfect. Perfect. You know what that means, Andrew?   0:18:12.3 AS: Tell us.   0:18:12.8 BB: All good, not bad.   0:18:14.9 AS: All good, not bad.   0:18:15.9 BB: He promised missile would be perfect with no hardware problems or document errors, and that all equipment would be fully operational 10 days after delivering. And so what was neat in going back to this is we still have this mindset that quality is about things being good, not bad. What is bad we call that scrap, we call that rework. That's alive and well today.   0:18:45.0 AS: The proclamations are interesting when you listen to what he's saying, when you're quoting that.   0:18:52.4 BB: Yeah, no, and I remember, 'cause again, I read this recently for the first time in 37 years and I'm going through it. And at the time I was thinking, "Wow, wow, wow, this is a really big deal. This is a really big deal." Now I look at it and say, "This is what we're still talking about today, 37 years later." The absence of defects is the essence of quality. All right. But so I would highly recommend the article. Now we get into what he proposes as eight critical dimensions of quality that can serve as a framework for strategic analysis. And I think even in a Deming environment, I think it's... I think what's really cool about this is it provides a broad view of quality that I think Deming's work fits in very well to, Dr. Taguchi's work fits in very well to, and I think covers a lot of what people call quality. So the first dimension he talks about is performance.   0:20:01.4 BB: And he says, "Of course, performance refers to a product's primary operating characteristics." He says, "For an automobile, performance would include traits like acceleration, handling, cruising speed. For a television, sound and picture clarity." He says "A power shovel in the excavation business that excavates 100 cubic yards per hour will outperform one that excavates 10 cubic yards per hour." So the capacity, that could be miles per gallon, carrying capacity, the resolution of the pixels, that's what he calls performance. Okay. Features is the second dimension of quality. Examples include free drinks on an airplane, but not if you're flying a number of airlines they charge you for those drinks, permanent press cycles on a washing machine, automatic tuners on a color television set. A number of people in our audience won't know what those are, bells and whistles. Features are bells and whistles.   0:21:17.2 BB: There was a time people would say the number of cup holders in your automobile, a feature could be intermittent wipers. So these are features. So again, I mean, so performance is kind of cool. What is the capacity, is it 100 horsepower, 200 horsepower, that's performance. Features, bells and whistles. Okay. Fine. Reliability, now we're talking. The dimension represents the probability of a product malfunctioning or failing within a specified period of time. So your car breaking down, are you gonna drive to work every day and one morning you're gonna go out and it's... That's a reliability issue. Okay. That's... When I think about reliability, that's a Taguchi thing, that's a Deming thing.  And looking at time between failures, okay, fine. Reliability comes down to... And if importance for the impact of downtime, if you're looking at engines not working and you're sitting at the gate, that's a reliability issue. The reliability is, it can be repaired, but it's gonna take some time, perhaps. Conformance. All right.   0:22:40.4 AS: Is number four, right?   0:22:42.2 BB: This is number four, a related dimension of quality is conformance or the degree to which a product's design and operating characteristics meet established standards. "This dimension owes to the importance of traditional approaches," it says, "to quality pioneers such as Juran." All products and services involve specifications of some sort. When new designs or models are developed, dimensions are set for parts or purity, these specifications are normally expressed as a target or a center. Now it's starting to sound a little bit like Dr. Taguchi's work, an ideal value, deviance from the center within a specified range. But this approach equates good quality with operating inside the tolerance band. There is little interest in whether the specifications have been met exactly. For the most part, dispersion within specifications is ignored. Ignored. That's balls and strikes, Andrew, balls and strikes.   0:23:51.2 BB: As long as the ball is somewhere in the strike zone, as long as the characteristic is somewhere within requirements, conformance, this gets into what I talk about in terms of the question number one of quality management. Has the requirement been met, the requirement for the performance, the dimension, is it within requirements? And there's only two answers, yes or no. That's conformance. I used to think that the American Society for Quality might be better known as the American Society for the Preservation of Conformance. I find there's a lot of conformance thinking. I'm reminded of, I'm a member of the American Society for Quality as I'm on the Deming Medal Committee, so I have to be a member of ASQ. So I get a daily or every other day newsletter with comments and conformance is a big part of the conversation. Good parts and bad parts, scrap and rework. All right.   0:25:02.3 BB: Conformance is number four. And it's not to say there isn't a place for the conformance, but conformance is then again different from what Dr. Taguchi is talking about. All right. Durability, the measure of a product life. Durability has both economic and technical dimensions. Durability is how long does it work before I throw it away? So reliability is about, I can repair it. Okay. And that's an inconvenience. Durability is like light bulbs. It runs and runs or a refrigerator and someone says, "Well, it's time for a new one." That's a durability issue. Okay. Durability is the amount of use you get before you haul it off to the junkyard. That's durability. Okay. Serviceability. And back in the '60s, now I'm dating myself, there would be commercials for... I don't know which television brand, but what they talked about is, and these would be commercials. Commercials on television as to "our TV is easy to repair." And I thought, is that a good thing?   [laughter]   0:26:22.4 AS: Is that a foreboding?   0:26:24.4 BB: Yeah. And so... But again, the last couple of days I had to fix the sprinkler system in the backyard. And here in California we have, everybody has a sprinkler system. In the East Coast, people have above ground sprinkler systems. Here, they're all below ground. You don't have to worry about the lines freezing, at least in Los Angeles. And so anyway, one of the valves broke and I thought I was gonna buy a new one and take some of the parts from the new one to put it into the old one. And that didn't quite work. And so meaning to say, serviceability on the design was awful. I couldn't service it.   0:27:11.5 BB: I had to replace the whole damn thing, which was a lot more work than I was expecting. Anyway, however they designed it, serviceability didn't seem to be a consideration in the... That's dimension number six. Again, not to say there's anything wrong with thinking about serviceability. In terms of... Yeah. Okay, I'll leave it with that. Okay, serviceability. Number seven, aesthetics. The final two dimensions of quality are the most subjective, aesthetics, how a product looks, feels, sounds, taste, or smells is clearly a matter of personal judgment. Nevertheless, there seem to be patterns, a rich and full flavor aroma.   0:28:01.0 BB: That's got nothing to do with Dr. Taguchi's work. I mean, you can go off and do market research, find out what is the most appealing flavor, the most appealing taste, the most appealing aroma. And this is what I used to tell students is, and once you understand that or that vivid color that attracts the customer, then you could use Dr. Taguchi's work for, how can I reliably, predictably recreate, week after week, day by day, car by car, that aroma, that flavor, but Taguchi's work is not gonna tell you what it is. And then the last dimension of quality, you ready, Andrew?   0:28:45.8 AS: Give it to me, Bill.   0:28:47.7 BB: Perceived quality. "Consumers do not always have complete information on a product's attributes and direct measure is maybe their only basis. A product's durability can seldom be observed." And so we talk about perceptions of quality. Again, this is 1987, he says, "For this reason, Honda, which makes cars in Marysville, Ohio, and Sony, which builds color TVs have been reluctant to publicize that their products..." Ready? "Are made in America." Because the perception in 1987 is we want them to be made in Japan. And then we could talk about the perception of Cadillac quality, the perception of Jaguar quality.   0:29:35.7 BB: My father's gas station back in the early '70s, it was a block away from the nearby hospital. So a lot of our customers were doctors and they came in in their Cadillacs and Mercedes. And it was just a lot of fun. It was pretty cool. And one doctor against all of his peers' recommendations bought a Jaguar XJ12, V12, 12 cylinders, and they told him again and again, they said, "It'll spend more time in the shop than you driving it." No, no, no, he had to have one, he had to have one. And sure enough, it spent most of the time in the shop, but I got to drive it now and then, which was pretty cool. But that's perceived quality.   0:30:27.5 BB: So I just wanted to, in this episode, throughout those eight dimensions of quality. Again, I encourage our listeners, viewers, I think to get a broader sense of quality before you just look at quality from Dr. Deming's perspective, quality from anyone else's. I think that Garvin has done a really good job covering eight bases, if I can use that term, of quality. And then what I think is neat is to look at which of these tie into Deming's work, which of these tie into Dr. Taguchi's work? And that's what I wanted to cover in this episode.   0:31:01.8 AS: Fantastic. Well, let's just review that for the listeners and the viewers out there, eight dimensions. The first one is performance, the second one is features, the third one is reliability, the fourth one is conformance, the fifth one is durability, the sixth one is serviceability, the seventh one is aesthetics, how it feels and all that, and then the eighth one is perceived quality. Woah, that was...   0:31:29.4 BB: All about... Yeah. And it is reputation. You either have a great reputation or not.   0:31:38.3 AS: All right. Well, Bill, on behalf of everyone at the Deming Institute, I want to thank you again for this discussion. For listeners, remember to go to deming.org to continue your journey. And if you wanna keep in touch with Bill, just find him on LinkedIn. This is your host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming, "People are entitled to joy in work."

US government debt isn't a crisis to Paul Krugman. The Nobel laureate has long argued that history and arithmetic suggest a crisis is unlikely. But does that hold true in other countries around the world? Can they live with the levels of debt that have become the norm, or is there a nasty shock or full-blown crisis in the offing? Krugman joins host Carmel Crimmins to talk global debt, spending and the politics driving decision-making. Plus, we take a ride on a Berlin commuter train for a real world look at the downside of balancing the books. Sign up for the Reuters Econ World newsletter here. Visit the Thomson Reuters Privacy Statement for information on our privacy and data protection practices. You may also visit megaphone.fm/adchoices to opt out of targeted advertising. Learn more about your ad choices. Visit megaphone.fm/adchoices

How do you know that the learning you and your colleagues are doing is leading to changes in behavior? In this episode, Bill and Andrew discuss little tests you can do to see if the transformation you're working toward is really happening.  0:00:02.0 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 Bill Bellows, who has spent 30 years helping people apply Dr. Deming's ideas to become aware of how their thinking is holding them back from their biggest opportunity. Today is episode 22, and the title is, Test for Understanding Transformation. Bill, take it away.   0:00:30.7 Bill Bellows: Hey, we've been at this podcast for about a year now, right?   0:00:36.6 AS: It's incredible how long it's been.   0:00:39.8 BB: And in the beginning you said, I've been at this for 30 years, right?   0:00:43.7 AS: Yeah.   [laughter]   0:00:46.7 BB: Maybe we should change that to 31.   0:00:48.3 AS: Oh, man, there you go.   0:00:51.2 BB: All right.   0:00:53.0 AS: That reminds me of the joke of the janitor at the exhibition of the dinosaurs and the group of kids was being led through the museum and their guide had to run to the bathroom. And so they were looking at this dinosaur and they asked the janitor, "How old is that dinosaur?" And he said, "Well, that dinosaur is 300,032 years old." "Oh, how do they know it so exactly?" He said, "Well, it was 300,000 when I started working here 30 years ago."   [laughter]   0:01:28.8 AS: So there we are.   0:01:31.4 BB: That's great.   0:01:33.3 AS: Thirty-one years.   0:01:34.0 BB: All right, all right, all right. So first thing I wanna say is, as you know and our listeners know, I go back and listen to this podcast and I interact with people that are listening too, and I get some feedback. And in episode 19, I said the Germans were developing jet engines in the late 1940s. No, it turns out the Germans were developing jet engines in the late 1930s and they had a fighter plane with a turbine engine, a developmental engine in the late '30s. They didn't get into full-scale development and production. Production didn't start till the tail end of the war. But anyway, but I was off by a decade. In episode 21, I mentioned that checks were awarded within Rocketdyne for improvement suggestions and individuals who submitted this and it could be for an individual, maybe it was done for two people, three people, I don't know, but they got 10% of the annual savings on a suggestion that was implemented in a one-time lump sum payment.   0:02:36.1 BB: So you got 10% of the savings for one year and I thought, imagine going to the president of the company and let's say I walk into the president's office and you're my attorney. And I walk in and I say, "Hey, Mr. President, I've got a suggestion. You know that suggestion program?" He says, "Yeah, yeah, yeah. Come on in, come on in. And who's this guy with you?" "Well that's Andrew Stotz." "And who's Andrew?" "He's my attorney, and he and I have been thinking about what this is worth." "Well, tell me about it." "No, well, before we get into it, we've got this form to sign here."   0:03:10.9 AS: Andrew.   0:03:11.1 BB: "Right? And you wanna see the idea or not? But we don't have to share it." But I thought, imagine people going to great length and really taking advantage of it. Well, a few of us that were involved in our InThinking Roadmap training, what we started to propose is we want a piece of the action, Andrew. So the proposal we had is that, Andrew, if you come to one of our classes, a study session on The New Economics or Managing Variation of a System, we'll have you sign a roster, right? And so if you are ever given a check for big numbers, Andrew, then we're gonna claim that our training contributed to your idea and all we ask is 10%, right?   0:03:58.1 AS: Of your 10%.   0:04:00.9 BB: I mean, I think that's fair, right? But imagine everybody in the organization becoming a profit center.   0:04:08.7 AS: Crazy.   0:04:10.4 BB: That's what you get. All right.   0:04:14.5 AS: And the lesson from that is focus on intrinsic motivation. People wanna make improvements, they wanna contribute.   0:04:23.8 BB: You start... You go down the slippery slope of incentives, which will be part of what we look at later. There's just no end to that. All right?   0:04:31.4 AS: Yeah.   0:04:32.2 BB: So I mentioned in a previous podcast that I had an interaction, met the army's first woman four-star general, and I just wanna give you some more background and interesting things that happened with her relative to this test for understanding transformation. I don't know April, May, 2008, someone on her staff reached out to me and when they first... When the guy got a hold of me, I said... From the Pentagon, he called me, I think it was like 8:00 or 9:00 o'clock at night here. Whatever it was, it was after hours in LA so it was after hours in DC. I remember saying to the guy, "How did you find me?" He says, "There's a lot of stuff on the internet." So he says, "I came across a presentation you did for Goodwill Industries." And he says, "In there you talk about... " He says, "There's some really good stuff in there."   0:05:29.0 BB: And I said, "Like what?" He said, "You have a slide in there about you can minimize loss to society by picking up nails in a parking lot." And that was an example of what I used Dr. Taguchi's work, minimizing loss to society. I said, "Yeah, I remember that slide." He says, "We don't do enough of that in the Army." And he says, "Hey, we've got a conference next week, late notice. The keynote speaker bailed out." And he's calling me on a Monday. The presentation's a week from Wednesday and he says... And also he said that the Army had an initiative called Enterprise Thinking and Enterprise Thinking was part of what we called our effort within Rocketdyne. We used the terms Enterprise Thinking, organizational awareness, and that InThinking personal awareness. We were using those two terms. So he did a search on that, found my name, and he says, "What do you think?" And he says, "We're gonna... "   0:06:24.3 BB: If I agree, we'll have a follow-up vetting call the next day. So he calls me up the next day and it's him and a two-star general. There are three people in the room, all senior officers, and he says, "Okay, so, but tell us what you do." So I shared the last... It sounds funny, is what seems to have been the last straw in their interest was having me speak, was my last straw story. Remember the executive from the European airline and... Right? So I tell that story about my efforts within Rocketdyne and Boeing about this airline executive and how this deeply resonated with this executive of this customer of this company that buys a lot of Boeing airplanes that we focused on the one cause, not the greater system.   0:07:13.2 BB: And within minutes of sharing that story, they started laughing, leading to it a few minutes later to them saying, "you're the one."   0:07:19.2 AS: [laughter] That's very interesting.   0:07:21.3 BB: You're the one. So for our listeners, I'd say, let this be a reminder of how a personal story guided by insights on how Dr. Deming's System of Profound Knowledge can open doors for you. And you can use that story, come up with your own stories, but you just never know when you're gonna be in a situation where you need a really simple story. So as an aside, they contact me, like I mentioned, 10 years later, and I think I shared with you offline that the speaker I was replacing was the great Richard Rumelt, the strategy professor from UCLA, who for whatever reason needed to bail out. And then when this podcast is posted, I'll put a link to the slides of the presentation.   0:08:05.7 BB: It's about 45 minutes long. What was not covered... I went back and looked at it earlier to say, what did I share with them that got them so excited? All I know is it fit into 45 minutes to an hour. What was not covered was the trip reports, whether Red Pen or Blue Pen, Last Straw/All Straw, Me/We organizations. But after it was done, as I'm coming off the stage, General Dunwoody in uniform comes up to me. She was thrilled. Her exact words were, "You hit it." She says, "Bill, you hit it out of the park." And I thought, well, I had help from a lot of people. She then says something to me that I'll never forget. So we're face-to-face, right? Let me just... Right?   0:08:45.1 BB: And she says to me, "Bill, you've got a real challenge on your hands. Bill, you've got a real challenge on your hands." So prompted by that, I held my hand out, my right hand, which is what you do to initiate a handshake, and then she reaches out to shakes my hand and I said, "General Dunwoody, we have a challenge on our hands." [laughter] And she erupted in laughter. And my only regret, even though we went out for drinks for the next couple of hours, but my regret was not having a photo of her and I doing a double high five as she laughed. So then I remained in touch with her for the next six to eight months when she was promoted to four-star and she looked for opportunities to get me to the Pentagon, which she did. And I was trying to get her or somebody on her staff to come to Rocketdyne to learn more about what we're doing.   0:09:38.1 BB: But I say I share this anecdote as an example of a Test for Understanding of a transformation. So what is a TFU, test for understanding? This is something I got exposed to in my Kepner-Tregoe Problem Solving and Decision Making training, which I talked about in one of the first episodes. And in our training to deliver what was then a five-day course, we were coached on how to interact with seminar attendees, including how to answer questions and how to ask questions. And one of the things we got our knuckles wrapped for was saying, are there any questions? Because no one answers that. There is... And if I had said that when I was being certified, I'd have failed. So instead we're coached on how to ask questions or make comments, which serve as a test for someone's understanding of what I presented.   0:10:27.9 BB: For example, for me to reply to General Dunwoody with we have a challenge on our hands was to test her understanding of what I said and her laughter is a response that I could be expecting with something short. As an aside, an appreciation, we've talked about Ackoff's D-I-K-U-W model data, raw data information. You turn that into what, where, when, extent, knowledge. If we convert that to how does something operate looking inside of an automobile, how do the pieces work together? Remember he said understanding is when you look outward 'cause knowledge looking inward, Russ would say, doesn't tell you why the car is designed for four passengers. That comes from looking outward. And then wisdom is what do we do with all this? Well, the Kepner-Tregoe training was Test for Understanding and now that I'm inspired by Ackoff, well in my university classes, I ask "Test for Information" classes. I have them watch videos and say, what company was Russ working for?   0:11:31.1 BB: This anecdote, that's information. Nothing wrong with those questions. I can ask for "Test for Knowledge" questions asking how something operates. So what I don't know is like, why are they called Test for Understanding? They could be Test for Knowledge, Test for Information, Test for Wisdom. And obviously TFI test for information could be true, false, multiple choice and test for knowledge and understanding could be short, but then I want to go deeper. And so what I wanna share is in one of my university courses, I share the following, true, you can't make it up news stories. It says, once upon a time a national airline came in dead last on on-time performance one month even though it had offered its employees everything from cash to pizza to finish first in the US Department of Transportation's monthly rankings. Does that sound like incentives, Andrew?   0:12:33.0 AS: It's all there.   0:12:33.8 BB: If we finish first, pizza parties. Now if they got exposed to Rocketdyne, they'd be handing out checks for $10,000. So in one of the research essays, for a number of the courses, every week, every module, I give them a research essay very similarly, giving them a situation and then what's going on with the questions is having them think about what they've been exposed to so far. And so question one in this assignment is given this account, list five assumptions that were made by the management team of this airline? And so I just wanna share one student's response. He says, "assumption one..." And also let me say this comes from the second of two Deming courses I do. So these students have been exposed to a one, one-semester course prior to this. So this is not intro stuff. This is getting deep into it.   0:13:34.3 BB: And so anyway he says, "assumption one, offering incentives like cash and pizza would motivate employees to prioritize on-time performance." Okay? That's an assumption. "Assumption two, employee morale and satisfaction directly correlate with on-time performance. Assumption three, the issue of on-time performance primarily stems from..." Are you ready? "Employee motivation or effort. The incentives provided were perceived as valuable by employees." And you're gonna love where this goes. "Assumption five, employees have significant control over factors that influence on-time performance such as aircraft maintenance, air traffic control and weather conditions."   0:14:20.2 AS: Good answers.   0:14:23.0 BB: Again, what I think is cool and for our listeners is what you're gonna get in question two, three, four, and five is builds upon a foundation where these students have, for one and a half semesters been exposed to Deming, Taguchi, Ackoff, Gipsie Ranney, Tom Johnson, the System of Profound Knowledge, hours and hours of videos. And so this is my way of Testing their Understanding. And so if you're a university professor, you might find interest in this. If you're within an organization, this could be a sense of how do you know what people are hearing in your explanations of Deming's work or whatever you're trying to bring to your organization? So anyway, I then have them read a blog at a Deming Institute link, and I'll add this blog when this is posted but it's deming.org/the insanity of extrinsic motivation. All right. And they've been exposed to these concepts but I just said, "Hey, go off and read this blog." And it was likely a blog by John Hunter.   0:15:32.0 AS: Yep.   0:15:32.2 BB: All right, question two. All right. Now it gets interesting, is that "in appreciation of Edward de Bono's, "Six Thinking Hats"," which they've been exposed to, "and the Yellow Hat, which is the logical positive, why is this such a great idea? Listen, explain five potential logical, positive benefits of incentives, which would explain why they would be implemented in a ME Organization." And so what's seen is I have them put themselves in a ME Organization, put on the Yellow Hat and think about what would be so exciting about this. And so logical, positive number one. "Incentives can serve as a powerful motivator for individuals within the organization, driving them to achieve higher levels of performance and productivity. When employees are offered rewards for their efforts, they're more likely to be motivated to excel in their roles," Andrew. Logical positive number two, enhanced performance. Explanation, "by tying incentives to specific goals or targets, organizations can encourage employees to focus their efforts on key priorities and objectives.   0:16:46.9 BB: This can lead to improved performance across various aspects of the business, ultimately driving better results." Number three, attraction and retention of talent. Oh, yeah. Explanation, "offering attractive incentives can help organizations attract top talent and retain existing employees. Attractive incentives can serve as a key differentiator for organizations seeking to attract and retain skilled professionals." Now, let me also say, this is an undergraduate class. As I mentioned, this is the second of two that I offer. Many of these students are working full-time or part-time. So this is coming from someone who is working full-time, probably mid to late 20s. So these are not... They're undergraduates but lifewise, they've got a lot of real-world experience.   0:17:44.0 BB: All right. Logical positive four, promotion of innovation and creativity. Explanation, "incentives can encourage employees to think creatively and innovative in their roles. By rewarding innovative ideas and contributions, organizations can foster..." Ready, Andrew? "A culture of creativity and continuous improvement, driving long-term success and competitive advantage." And the last one, positive organizational culture. "Implementing incentives can contribute to a positive organizational culture characterized by recognition, reward and appreciation. When employees feel valued and rewarded for their contributions, they're more likely to feel engaged, satisfied, and committed to the organization." But here's what's really cool about this test for understanding, I get to position them in the framework of a ME Organization with the Yellow Hat.   0:18:40.9 BB: Now question three, in appreciation of Edward de Bono's, "Six Thinking Hats" and the Black Hat, what Edward calls a logical negative, list and explain five potential aspects of incentives, which would explain why they would not be implemented in a WE Organization. And this is coming from the same person. This is why I think it's so, so cool that I wanna share with our listeners. The same person's being forced to look at it both ways. Negative number one, potential for... Ready, Andrew? "Unintended consequences." Oh my God. "Incentives can sometime lead to unintended consequences such as employees focusing solely on tasks that are incentivized while neglecting other important aspects of their roles. This tunnel vision can result in suboptimal outcomes for the organization as a whole."   0:19:30.7 BB: "Number two, risk of eroding intrinsic motivation. Explanation, offering external rewards like incentives can undermine intrinsic motivation leading employees to become less interested in the work and more focused on earning rewards. Number three, creation of unhealthy competition. Explanation, incentives can foster a competitive culture within the organization where employees may prioritize individual success over collaboration and teamwork. This competitive atmosphere can breed..." Ready? "Resentment and distrust among employees." Can you imagine that, Andrew? Resentment and distrust? That seems like it would clash with my previous positive thought, but it really just points out how careful management needs to be.   0:20:19.0 AS: Yes.   0:20:19.2 BB: All right. Cost considerations. "Implementing incentive programs can be costly for organizations, particularly if the rewards offered are substantial or if the program is not carefully managed. Organizations may be hesitant to invest resources and incentives, especially if they're uncertain about the return on investment if budget is of concern." And then number five, "short-term focus over our long-term goals." Explanation, "incentives often improve short-term gains rather than long-term strategic objectives. Employees may prioritize activities that yield immediate results, even if they're not aligned with the organization's broader goals or values."   0:21:02.7 BB: And then question four, here's the kicker. "In appreciation of your evolving understanding of the use of incentives, share, if you would, a personal account of a memorable attempt by someone to use incentives to motivate you, so that so many pizza parties or bringing a small box of donuts or coffee in for working a weekend I was supposed to have off." And then question five, "in appreciation of your answer to question four, why is this use of incentives so memorable to you? They were very ineffective. I often felt insulted that my boss thought that $20 worth of pizza or donuts made up for asking me to give 50% of my days off that week."   0:21:55.5 AS: Here's a donut for you.   0:22:00.6 BB: Here's a doggy bone, here's a doggy bone. I just wanted to share that this time. Next time we'll look at more.   0:22:09.3 AS: One of the things that...   0:22:10.6 BB: There are other examples of Test for Understanding. Go ahead, Andrew.   0:22:12.3 AS: One of the things that I wanted to... What you made me think about is that you and I can talk here about the downside of incentives but we have to accept the world is absolutely sold on the topic of incentives.   0:22:27.2 BB: Absolutely.   0:22:27.8 AS: A 100, I mean, 99.999% and if you're not sold on it, you're still gonna be forced to do it.   0:22:34.5 BB: Well, you know why they're sold on them, 'cause they work.   0:22:39.7 AS: It's like a shotgun. One of those pellets is gonna hit the target but...   0:22:47.7 BB: That's right.   0:22:48.4 AS: A lot of other pellets are gonna hit...   0:22:50.6 BB: And that's all that matters. And then what you get into is, you know what, Andrew, that that one person walks away excited, right? And that's the pellet that I look at. And I say, yep, and what about those others? You know what I say to that, Andrew? Those others, you know what, Andrew, you can't please everybody.   0:23:07.8 AS: Yeah.   0:23:07.9 BB: So this is so reinforcing. There's one person that gets all wrapped up based on my theory that this is a great thing to do and I hone in on that. And everything else I dismiss as, "ah, what are you gonna do? You can't please everybody." But what's missing is, what is that doing to destroy their willingness to collaborate with the one I gave the award to?   0:23:33.1 AS: Yeah, I'm picturing a bunch of people and laying on the ground injured by the pellets but that one black, or that one... Let's say the one target that we were going after, that target is down but there's 50 other people down also.   0:23:50.6 BB: No, but then this is where I get into the white bead variation we talked about early, early on, is that if all I'm doing is measuring, have you completed the task and we're looking at it from a black and white perspective and you leave the bowling ball in the doorway for the next person, meaning that you complete a task with the absolute minimum requirements for it to be deemed complete. Does the car have gas? Yes. You didn't say how much but when people then... When those people that were summarily dismissed didn't receive the award, when they go out and don't share an idea, don't give somebody a warning of something or not even maliciously leave the bowling ball in the doorway but believe that the way to get ahead is to do everything as fast as possible, but in doing so, what you're doing is creating a lot of extra work for others, and then you get promoted based on that. Now you get into... In episode 22 we talked about, as long as there's no transparency, you get away with that. And then the person at the end of the line gets buried with all that stuff and everybody else says, well, my part was good and my part was good. How come Andrew can't put these together?   0:25:26.8 AS: In wrapping this up, I want to think just briefly about how somebody... So we're talking about understanding transformation, but we're also talking about incentives.   0:25:39.8 BB: Yes.   0:25:40.5 AS: And I would like to get a takeaway from you about how somebody who lives in a world of incentives, how do they, after listening to this, go back to their office and how should they exist? It's not like they can run away from a structure of incentives. Maybe when they become CEO, they decide, I'm not gonna do it that way, but they're gonna go back to their office and they're gonna be subjected to the incentive system. Obviously, the first thing is we wanna open up their mind to think, oh, there's more to it than just, these darned employees aren't doing what I'm telling them, even when I'm giving them incentives. But what would you give them as far as a takeaway?   0:26:27.1 BB: Well, I'll give you some examples of what some brilliant colleagues did at Rocketdyne, as they became transformed, as they became aware, and one is politely decline. Say, I don't, I don't need that. Just again you have to be careful there. There could be some misinterpretations of that. So you have to be...   0:27:03.2 AS: What if you're required to put an incentive system on top of your employees?   0:27:09.5 BB: Well, first, if it's coming down to you to go off and implement this, then one thing you could do is create a system which is based on chance. Everyone who contributed an idea, their name goes into a lottery for free lunch the first Wednesday of the month, and everybody knows. So then we're using the incentive money but using it in a way that everyone deems as fair. So that's one thing. And you just say, I'll... So then if your boss asks, have you distributed the incentive money? You say, yes, but you're distributing it based on a system of chance of which everyone realize they stand an equal chance of winning.   0:27:56.9 AS: Okay. So let's address that for a second. So your boss believes in incentives. They ask you to implement this system. Now you proposed one option, which is to do something based upon chance, but now let's look at your employees under you that have been indoctrinated their whole life on the concept of incentives. And you give them a system of chance and they're gonna come back and say, wait a minute, you're not rewarding the person who's contributing the most here? Now obviously you have a teaching moment and you can do all that, but is there any other way that you can deal with this?   0:28:33.7 BB: No, it could be tough. You've got to... You may have to go along until you can create a teaching moment. And what I did with the colleagues, when there are these a "great minds doing great things" events, and an announcement would go out as to who are the privileged few that got invited to these events, and I would tell people that if you go to the event, then that's what I would say. You can decline, you can politely decline. There's some things you can decline.   0:29:17.4 AS: I guess the other thing you could do, you could also... When you have to, when you're forced to reward, you can celebrate everybody's contribution while you're also being forced to give that incentive to that one person that has been deemed as the one that contributed the most.   0:29:36.9 BB: Well, I'll give you another example that a colleague did, a work colleague. He didn't do it in a work setting. Not that it couldn't be done in a work setting, but he signed up to be as a judge in a science fair in a nearby school. It was a work-related thing. And as it got closer, he realized... It was a... It would involve... What is a science fair without the number one science experiment? And my theory is you can't get a bunch of adults and a bunch of kids together in any organized way without giving out an award that just, it's like, oh, we got everybody together. We got to find a way to single somebody out. So when he realized what was going on, instead of not going, what he did, he took it upon himself to interact with every kid whose science experiment he watched and asked them lots of questions about it, about what inspired them? What did they learn?   0:30:30.6 BB: So what he wanted by the end of the day was that they were more intrigued that someone came and really wanted to know what they learned and less inclined to listen to who won the award. And I've seen that in a work setting, again, where we had events and the next thing you know there's an award and I thought, well, what can we do? Well, we can go around and really engage in the people who's got tables set up for the share fair knowing at the end of the day, we have this. We just can't break this, we just can't break this.   0:31:08.2 AS: Yeah. All right. So...   0:31:10.3 BB: But the other thing I've seen, I've seen people who received rewards, use that money. Literally, one guy in the quality organization at Rocketdyne received an award. It might have been for a $1000. He used the money, Andrew, to buy copies of The New Economics for everyone in the organization.   [laughter]   0:31:31.7 AS: Well, that brings us to another possibility, is that you convince your boss that you at least want to give... You want to reward the whole department.   0:31:40.5 BB: Yes.   0:31:40.9 AS: Any reward that you do, you want to reward your whole department. And so that could be something that your boss would say, "Okay, go ahead and do that." And they're not gonna go against it as opposed to trying to, say, no, I won't do it this way, but...   0:32:02.1 BB: Well, towards that end, I've seen people that are rewards crazy. At Rocketdyne, there's one guy in particular in a machine shop manufacturing environment and some big program wanted to thank five out of the 50 people in his organization with t-shirts. And he said, "You either give me 50 t-shirts or no t-shirts."   0:32:27.6 AS: Yeah.   0:32:28.8 BB: And I thought that was really cool 'cause this... And I don't know to what degree his exposure to what we were doing, but I thought that's what we need more of. Come back with 50 shirts and we'll take them.   0:32:44.1 AS: Okay. Let's wrap this up by doing a brief wrap-up of why you're saying... Why you've titled this Test for Understanding and what can the listeners take away.   0:32:56.6 BB: The idea is again, if in a seminar learning event situation is one thing, but if you're involved in leading in a transformation within your respective organizations, what I'm suggesting is that you think about how to Test the Understanding of that transformation's progress with your audience. And we talked in the past about leaving a coffee cup in the hallway, see if it's still there. That's a Test for Understanding of the culture of the organization. And that's what I'm suggesting here, is there are simple things you can do such when somebody says, come see what my son did. You can say, your son? Or is it, was there a spouse involved? And just as you become aware of the nuances of this transformation, you could be looking at somebody look at two data points and draw a conclusion and they're just a day out of some seminar with you about understanding variation and they're looking for a cause of one data point shift.   0:34:13.0 BB: So it's just, what can you do day in and day out, just your little things to test the organization or test an individual's understanding of this transformation process that we're talking about, which is, how are you seeing things differently? Are you becoming more aware of incentives and their destruction, more aware of theories? That's all. What just came to mind is... And the other aspect of it was this idea that very deliberately with the foundation of ME and WE, Red Pen/Blue Pen, then you can build upon that by saying to somebody, how might a Blue Pen Company go off and do this? How might a red pen company go off and do that? And that's not a guarantee that either one of them is right, but I find it becomes a really neat way on an individual basis to say, as you just pointed out, Andrew, so how would I as a manager in a Blue Pen Company deal with that awkward situation?   0:35:19.2 BB: Well, if I was in a red pen, this is what I would do. And so it's not only testing for understanding, but also the power of this contrast. And that's what I found with a group recently, especially the students. If I give them the contrast, I think it's easier for them to see one's about managing things in isolation and all that beckon such as belief in addition and root cause analysis, and one's about looking at things as a system. So it's not just Test for Understanding, but a test of both foundations is what I wanted to get across.   0:35:57.0 AS: Okay, great. Bill, 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. If you wanna keep in touch with Bill, hey, you can find him on LinkedIn and he listens. This is your host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming. I mean, I say this quote every time until I will be bored stiff of it, but "people are entitled to joy in work."

How can you make lasting change at your organization? Recruit your friends! In this discussion, Bill Bellows lays out his experience recruiting and working with a small group to make big changes in a large company.  0:00:02.5 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 Bill Bellows, who has spent 30 years helping people apply Dr. Deming's ideas to become aware of how their thinking is holding them back from their biggest opportunity. Today is episode 21, and the topic is Transparency. Bill, take it away.   0:00:27.1 Bill Bellows: Thank you, Andrew, and welcome to our audience. And I wanna thank a handful of people who have reached out to me on LinkedIn and elsewhere to talk about the podcast, what they're getting out of it, and which has been very interesting meeting people from around the world. And that's led me to a couple opening remarks for clarity on some of the things we've discussed in the past. And then we'll get into our feature topic. And so I say, [chuckle] is that in my early years at Rocketdyne, the Rocket Factory, a few of us started to see the synergy of what we were absorbing and integrating from, primarily from Dr. Deming and Taguchi, not just them, there were others. And we're 10 years away from really beginning to see what Russ Ackoff was able to offer us. At one point, there were eight of us. It started off with one, then another, then another. Next thing you know there's eight of us. We were what Barry Bebb and his cloud model would call advocates. Advocates of a change, of a transformation. We've been using that word. And I started to refer to us as the Gang of Eight 'cause this is the early '90's. And I think in China there was a group known as the Gang of Eight. Maybe that was the '80's. And I remember thinking, "Oh, we're like the Gang of Eight."   0:01:54.7 AS: I thought that was a Gang of Four in China, is that the Gang of Four.   0:01:58.9 BB: Well, there was a Gang of Four, then there was a Gang of Eight. There were both.   0:02:02.4 AS: Okay.   0:02:03.1 BB: But anyway, but I remember hearing that word, and then I thought, "Well, so okay, a gang of eight." We started to meet regularly, perhaps every other week, sharing ideas on how to initiate a transformation and how we operated, again, inspired by Deming. So at first we met quietly, we would meet in another building, not wanting to call attention to our efforts, not wanting to be visible for those who might have been adversaries again to borrow from Barry's model. 'Cause Barry's model was, there's, for every advocate there's a few more adversaries. So we were keeping our heads down. And this is before I knew anything about Barry, but I, we were just kind, a little bit paranoid that people would see what we're doing. And so who were the ones that were the adversary? Well, those were promoting rewards and recognition. Those were promoting individual cash incentives for suggestion programs including, as I mentioned a previous podcast, an individual could submit a suggestion award, get up to 10% of the annual savings in a onetime lump sum. They were giving out checks for $10,000, Andrew. And I would kid people, if the company's giving out checks for $10,000, do you think we've got photographs of me receiving a check for 10,000? You betcha.   0:02:03.5 BB: And there it is in the newspaper, me receiving a check, not that me, [chuckle] but somebody receiving a check for $10,000, a big smile with the President. And it's in the newspaper and did that cause issues? Yes. But anyway, it wasn't obvious for some of us that we might have been, sorry, it wasn't obvious for some time that those we might have considered the adversary to our efforts were very likely not meeting to plan how to stall our efforts. [chuckle] Right. And, but it took a while to realize this, so here we are trying to be very discreet, meeting discreetly. And then it, at some time it dawned on me and some of the others that, those of us that were inspired to learn, think, and work together on transformation efforts as we've been exploring these podcasts, we have the benefits of positive synergy. And the adversaries at best operate without synergy as they're not likely to be inclined to do much more than participate in what some at Rocketdyne called, you ready, "Bill Bellows' Bitch Sessions." [laughter] And they come back from a class with me and they start bitching about me. And then the local people in that area would come by and tell me, and they said, "Anything we can do?" I said, "Yeah," I said, "Ask them what part of Rocketdyne moving in the direction of a Blue Pen Company do they not like." Right? It's just arrrgggggh.   0:02:04.2 BB: And I say, anyway. But once we had more and more results from our efforts, results from applying these ideas with very visible improvements in quality and costs leading to improved profits, it was all the harder for the adversaries to slow our efforts. Again, we were most fortunate to be working on challenges, we had challenges in fighting fires, but we also had challenges in designing hardware that achieved "Snap Fit" status, which translates to dramatically easier to integrate higher performing as well, as we shifted from parts to systems, challenges that required, guess what? A different lens inspired by Dr. Deming. That's, [chuckle] again, listening to the previous podcast, 'cause I thought, "Well, I wanna clarify a few things." Did we have ups and downs, Andrew? Yes, we did. We had days when we're excited, we had days when we were down. But what really worked out well, [chuckle] and the running joke was, there was variation in our excitement.   0:02:04.7 BB: So I may have been down, you'd be up, so you'd lift me up and then when you're down, I lift you up. And so the running joke we had amongst us was, thank God for variation in our moods. Because if we were all depressed at the same time, we'd go off the cliff. [chuckle] But we just took turns as to the ups and the downs. And we're very fortunate to have weekends 'cause that gave us time to not wanna choke some people. So, [chuckle] but come Monday we're relaxed. And then, but another thing that I wanted to point out from things we talked about previous podcasts, years ago, 30, nearly 30 years ago, I met a senior structural analyst from Boeing, Al Viswanathan, who was on the Boeing Commercial side. And he somehow got involved in the commercial side.   0:06:52.1 BB: Well, I don't know if it was the commercial side or military side. Anyway, Boeing had, there were both sides and one side was pro-Deming and the other side was anti-Deming. So he must have been on the defense side. And why would the defense side be pro-Deming? Because the Pentagon was pro-Deming. And so the defense side people would have been watching that. Anyway, Al somehow got involved in studying Deming's work and being a mentor within the organization. And I met him, I know when he worked there, when he retired. Anyway, Al, coming from Al, what I want to share is something he would say relative to Dr. Deming's funnel experiment. There's rule one of the funnel, rule two, rule three, and rule four. So rule one is you have a funnel and you drop marbles from the funnel onto the floor, and you get a pattern of where the marbles lay.   0:07:49.1 BB: And that's called variation. You're holding the funnel, you drop the marble, it lands in a different spot each time. And then rule two is you, if the marble is off a little bit to the right of the target that you're trying to hit, then you move the funnel the other direction. So two and three have to do with compensating. If it doesn't go where you want, then you shift it accordingly. Rule four, remember rule four of the funnel?   0:08:17.4 AS: I don't remember that.   0:08:18.9 BB: And this is... I think it's chapter eight. I know it's in The New Economics. Chapter 8, I'm sorry, rule four of the funnel is wherever the marble lands, position the funnel for the next drop. So in rule one, you keep it where it is and you get a pattern. Rules two and three, you compensate for where it lands. You either go left if it goes right and you compensate. And in compensating, it becomes worse. But what becomes really bad is when you put the funnel in rule four over where the last marble landed, and you end up getting farther and farther from the target leading to, remember the expression Dr. Deming used for that?   0:09:00.9 AS: Well, I remember the word tampering. But it meant when you get way off the target. What was that?   0:09:06.6 BB: He called it going off to the Milky Way. [laughter] And there are computer simulations where if, some people have done, you know, created.   0:09:16.0 AS: You do it in California and you end up in New York.   0:09:17.8 BB: Yep. And you, and you, and you keep getting further and further. Well, so in conversations with Al, and it could have been me and him and Dave Nave, Dick Steele and others, and at some point, Al would say, "How do we know we're not going off to the Milky Way?" Which translates to, how do we know that what we're interpreting from Deming is not getting further and further and further and further away from what he was trying to say? How do we know that we aren't wacky? How do we know? Because we think, "Oh, we're getting, we're understanding this better and better." And what I would say is, how do we know we're not going off to the Milky Way? “Actually,” I say, "We don't know." But part of having a community of people that work closely with Deming, people that know more than me about Dr. Deming's work is you can tap into that community and maybe lessen the chance that we go off to the Milky Way. Now, again, is that a guarantee? No, it's not a guarantee.   0:10:25.9 BB: But I would say, what I appreciate about Al saying that is, it's just a reminder that how do we know that what we're interpreting is true? So we're here, you and I are having these conversations, we're sharing interpretations, lessons learned, are we, is what Dr. Deming would say, "Is this worker training worker?" So, each of us are ignorant, and we think we understand Deming, and we're sharing it with others "well, I know, I know." Now, we can all be right, we can all be going off to the Milky Way. So I just wanted to say that, when I'm talking about diffusion from a point source and getting smarter and smarter and having these conversations within our organization. How do we know we aren't fooling each other? We don't know.   0:11:18.7 AS: I have a couple follow ups here. First of all, the 1991 Washington Post called it the Gang of Eight, as opposed to the Gang of Four, which was before that time, during the Cultural Revolution. And the Gang of Eight included seven men and one woman. And the Gang of Four, of course, included Mao's wife. So there's a little clarification.   0:11:44.6 BB: I wasn't sure if she was part of the four or part of the eight. I knew her name was in there somewhere.   0:11:49.0 AS: And the second thing you talked about the volatility of your feelings, your moods, right. And I just wanted to introduce the concept of volatility in finance, which is that volatility in itself is not bad. What's bad is correlation of volatility. So if all of you are upset on the same day, then it's just an absolute crash. But if one's upset on Monday and another one's happy and productive on Monday, then it starts to balance. And that's what we do in the world of finance is we combine correlation with volatility. And Harry Markowitz got a Nobel Prize in economics for coming up with the concept that risk can be reduced by understanding the correlation between assets and adding a highly risky asset to a Portfolio could, in fact, reduce the risk of the Portfolio overall, if the correlation between that asset and the Portfolio was, let's say negative or very low.   0:12:55.5 BB: Wow what you're talking about is the benefit of not being synchronous, being asynchronous.   0:13:04.2 AS: Correct.   0:13:05.1 BB: So you're up, I'm down, and I'm up, you're down, and then we can get through these periods. And yeah, and that's exactly what we're talking about. But you're right, I'm glad you brought that up because I've heard people talk about that as well. But that's exactly the point we're trying to make is, so for all those who think we ought to shrink variation to zero, I'd say, well, maybe there's value in variation, value in diversity of opinions. And also I have had people in the past say, "Well, so a Blue Pen Company is a bunch of people that go along to go along." I said, "No, it's a bunch of people that have strong disagreements on things and they share those disagreements."   0:13:49.5 BB: Now, at the end of the day by Friday, we've got to make a decision as to releasing this album whatever it is, because we've gotta ship. And we may arm wrestle, we may vote however we're gonna do it. So there can be disagreement. We have the ability to articulate where we're coming from. Borrowed from Edward de Bono, we can use a black hat and I can give you reasons why you don't think it'll work. You can call me on it and say, "Bill, how do I know it's your black hat and not what de Bono would call your red hat, which is my intuition."   0:14:26.4 AS: So if I say it doesn't work, you could say, "Bill, is that you don't feel it'll work or you know it won't work?" And I say, "Andrew, you're right. I have a bad feeling about it." I say, "Well, let's just be honest about it." But again, at the end of the day, we may vote. But we're gonna move forward. And what's not gonna happen is if you decide to take however we decide to make that decision, what there won't be a lot of room for is a bunch of "I told you so."   0:14:58.8 AS: Right.   0:15:00.4 BB: And we just we just dispense with that and just say this time, maybe the idea I had, we'll just have to wait till later and we're just gonna move on. So it's not to say it's a bunch of happiness and we're always in agreement. No, very strong relationships can have very strong disagreements. They just don't result in a civil war. Years ago, when my wife and I got married, she said I was just, it was lucky for me that she liked cats. I said that was non-starters. I said liking cats was a requirement. [laughter]   0:15:44.3 BB: So there's a few things that were non-starters. And if she didn't like cats, I'd have had a hard time with that. But on everything else, there's things we can disagree with. That's okay. All right. So given that I wanna talk about tonight is something that's come up in some other conversations recently. And it's about transparency. And then I have a quote that I've used in the past. I've once in a while attributed to Peter Senge, because I can't remember is actually Robert Fritz, a close associate of Peter Senge. And Fritz's comment is, “It's not what the vision is that is important. It's what the vision does.” And what I like about that is if you have a shared mental model of a Blue Pen Company. And I just began to appreciate how powerful it is that we have a shared vision. And relative to transparency, what I was sharing with some people is the transparency that exists in a Blue Pen Company, a Deming organization, a WE organization, an All-Straw organization and the transparency that which is as simple as me saying to you.   0:17:05.5 BB: Well, I say let's talk about the lack of transparency. I can meet a requirement, as we've talked about, an infinite number of ways to meet any set of requirements. And the letter grade is not A plus. It is not 100. It could be a D minus. I could leave for you the bowling ball on the doorway. And in a non-Deming Organization. I could meet any requirement you give me, Andrew, with the minimal amount of effort. Because all that we're measuring is that it met requirements. And so I give it to you and, and all you do is you look at the measurement and it says, "Yep, the car has gas." You're like, "Hey, I'm excited."   0:17:45.2 BB: Well, the black and white thinking allows me to hide a whole bunch of things. So if I said the car has gas. And you complain because it only has a quarter of a tank, I said, "Andrew. It has gas." But I thought in a Deming organization, I don't think we're gonna play those games. I think we're gonna have a lot more transparency relative to when I meet a set of requirements. Am I gonna leave the bowling ball on the doorway for you unilaterally? I don't think so. Maybe once I learn my lesson because I'm a new hire. I'm bringing something from where I used to work. But I think in a Deming environment, I think the transparency is gonna bring out the best in us.   0:18:33.8 BB: So I just want to throw that, that's part of where I'm coming from with transparency. You know, we don't have this murkiness as to, you know, where are they coming from? And. also we're going to be, you know, as Ackoff was, we're going to go to great lengths to be precise with language, and understand that efficiency is not effectiveness, that management is not leadership. And I think the better we have that clarity, I think that's a trademark of what that environment is about.   0:19:02.2 AS: It's interesting because, you know, the ultimate clarity is doing a run chart or a control chart on a process and seeing the outcome. And that's transparent and clear. And I've done a lot in my own management career by just getting data into a format that people can, you know, go back to and look at and think about. And just the transparency of that data can make a huge difference to the way people interpret what's going on in that unit.   0:19:38.9 BB: You're right. As opposed to the transparency of two data points, quality, I'm sorry, I think I've used this example. You can remind me of, you know, when I was at Rocketdyne once upon a time, and there was a meeting where the safety metrics, number of accidents, per employee in the first quarter was a certain level. Then in the second quarter, it went down. And I mean, the number of accidents per employee went down. Safety got better. And as you know, in this meeting with a bunch of directors and the VP and somebody says to the VP, why is safety improved? And their response was, because “We've let them know safety is important.” Well, who's the we? Who's the they? So, and, but imagine the transparency for somebody hearing that we've let them know. That's a way of saying, so you're, you're believing that because it went down, it's because of things we said, and they're not interested in safety.   0:20:45.3 BB: And then if it goes the other way, we're going to claim what? That they're not listening? So you're right. I mean, the ability, the transparency of looking at a set of data on a control chart and the realization that the process is in control. Then we look at the ups and downs and say, no reason for alarm here.   0:21:12.2 AS: The other thing that I thought relates to transparency is fear. In the sense that what is fear? Fear is, you know, a concern that something is going to happen is about to happen is in the process of happening, or, you know, something's happening to you and you're not being able to see, you know, what's going on. So I was just thinking, you know, another angle on transparency is, you know, reducing fear in an organization by being, you know, let more transparent.   0:21:41.5 BB: Yes. And, and I can even imagine, what's funny is that, a co-worker in my office, once upon a time. And. And she was upset with a decision made by the president at that time was my boss. And so she, so for about two years or so, she reported to me, lovely lady, lovely friend, great friend. So anyway, she was upset. She comes in. Did you hear the decision made? And I said, no, I didn't know. And she says, and she was really upset. And I don't know what it was that she was upset. And at some point she said something like, “I don't know what I'm going to do. I just don't know what I'm going to do.”  I turned to her and I said, if I were you, I would take this personally. Which caused her to laugh. And when I told her, again I get back to transparency, I said, "I may not agree with a decision, but I may never know the choices he had." And so in that situation, Andrew, there may be situations in a Deming company where for whatever reason, there is no transparency, we don't know the options, we don't know what was on the table, all we know is the outcome, and it could be because of, you know, Security and Exchange issues relative to, you know, stock prices, there's, there's all kinds of reasons we may not know.   0:23:03.4 BB: But in that environment, we may, we have to live with it. We just have to say, well, and when I look at it as, and I'm glad you brought that up. Because when I look at it as, there may be decisions, we don't know the choices, we don't know the criteria, we may never know. Instead of agonizing over it, I'd like to think that if we were in the room and knew what they knew and the options they had, we might well make the same decision. And that's something that I became excited about at Rocketdyne was, I didn't have to be in the room for a bunch of decisions, a whole bunch of decisions, I didn't have to be in the room. And what I thought was, if I can help people develop a better and better sense of what a Deming organization, how that operates. And then, and then practice, perhaps, you know, how might they handle a given scenario, and in fact, Kevin's mom, Diana Deming Cahill reached out to me in the late '90s, you know, late '90s, and asked if I would resurrect a Deming Study group for Los Angeles, which existed when Deming was alive, they used to meet at the LA Times.   0:24:51.4 BB: They had invited speakers. And after Deming died it dissolved, and she saw what we're doing within the Boeing sites and asked if I would, you know, work with her to resurrect that. I said sure, I said but here's the deal. When she explained to me how it used to work, invited speakers every month and I thought, that's a lot of work finding a speaker every month. And I said, and it's so easy to be, you know, sit in the back of the room and watch somebody talk I thought. I'm not, I'm not, I don't like that format. And so, a few of us spent a good deal of time coming up with a format. And we went from three hours to two hours and, and then came down to a really neat format that we held for a couple years. We met in two different sites. We met in Canoga Park. We met in the other group met in Huntington Beach where Diana would show up we first we looked at a location there LAX, that wasn't going to work. So we spent the first hour talking about reflections how we're seeing the world through a Deming lens, things that had happened since the last month that we're seeing, that we're seeing differently.   0:26:08.6 BB: That's the first hour. And then the second hour someone would introduce a topic and the topic would be, "How would a Deming organization do X." And what was neat was just to brainstorm. How would a Deming organization go about doing something, that may be way beyond our, our personal responsibility and it just allowed us to play in this space. And, and just, you know, wonder what is, what is going on there. And I throw that out in the spirit of transparency is, it was just to me it was just fun to just practice. How would you deal with, how would you deal with, how would you deal with. And that's what got me thinking that, now going back to, I think that if you get a diverse enough group of people with different experiences and perspectives I think the better they understand, yeah, where Deming and the others are coming from.   0:27:02.5 BB: I think we're going to see a lot of common decision making. And that was for me was very relaxing, that I didn't have to worry about "now they're going to make the right decision." I just thought, if they understand the process, and they use, you know, Edward de Bono's ideas to go through ideas. I thought, the best I can do is say, how did you reach this conclusion, what options did you consider who was involved in the decision making? I can ask those types of questions. I can ask, you know, did you include the supplier did you include... I can ask that. And once I understand that I'd say, if I trust the process. Then I have to trust the result, which goes back to transparency. So I no longer. I mean, that's what parents do - you trust. You raise your kids in a way that you help them develop a sense of a process. And then you just have to live with the results.   0:28:00.8 BB: And same thing as sports. You, I've seen coaches. When I was a youth referee, they're trying to micromanage every minute of the game and I thought it's too late for that you've got to do that at practice. And then once they're playing you just let them go. And that's a demonstration of how well you've prepared them.   0:28:21.6 AS: That's a great, you know, a great one. It's so, it's so amazing to see a team in action and a coach being able to kind of sit back and say now it's up to you. And, you know, I've trained you and everything I can. How would you, how would you wrap this up and provide people with how a Deming organization would apply transparency and maybe give, you know, some one or two ideas about how someone can leave this conversation and bring more transparency back to their organization.   0:29:00.8 BB: I think it's, goes back, to me it goes back to, as a point source within your respective organizations, listening to our podcast, you know, reading articles on, I mean, watching things on DemingNEXT and learning more. And, and yeah. Reaching out and finding people that are, you know, perhaps more knowledgeable than you about Deming's work or Ackoff work. And then Deming once said something about everyone's entitled to a master or mentor or someone, and I was very fortunate to be associated with some brilliant people that worked closely with Deming and Ackoff, and Ackoff himself and Taguchi. I would say, one is, what can you, what can you be doing to improve your understanding, with the appreciation of going off to the Milky Way.   0:29:51.6 BB: And then how can you then practice sharing that with others? Like we did going back to this Gang of Eight and what can be done within your respective organizations to create this group of one, group of two, group of three, group of four. And how might you work together to better appreciate what you think Dr. Deming and Ackoff and others are saying, how you might apply them? How can you support one another? And then, and at least, again, you're gonna have ups and downs, but I don't think there's any substitute for that. And many people I've mentored are solo people within their respective organizations. And what I keep telling them is you've got to find someone else to help you. You can't be the only one in that meeting lobbying for working on things that are good when everybody else is working on things that are bad.   0:30:46.4 BB: It's just gonna sound foolish but imagine being in a situation where you're lobbying for working on something which is good because you want to prevent it from going bad or improve integration. And then someone hears that remark and says, Bill, with all these challenges we have, I can't believe you're going off and doing that. Then imagine you're there in the meeting. And then after that person tries to sidetrack it, you say, "Bill, is that what you were trying to say?" And I say, "no, Andrew, that's not at all what I was trying to say." So you can come to my rescue. And when I'm being shoved aside, I've been in those sessions where I get shoved aside and it takes someone like you to be able to step in and say, Bill, did you say you wanted to do that? I don't think that's what you said.   0:31:10.5 BB: And that's what I would say is, increase the transparency amongst a small group, and then try to increase that transparency. And what becomes a lot of fun is, there are a handful of people at Rocketdyne, we can go into an office of any number of people and take turns exchanging things and reading. And we could see where things are going. And two of us, two or three of us can have a room of 10 and change the course of that conversation because we were incredibly transparent amongst each other. So I just leave it with that, Andrew.   0:32:21.8 AS: Well, Bill, on behalf of everyone at The Deming Institute, I want to thank you again for this discussion. And for listeners, remember to go to deming.org to continue your journey. If you want to keep in touch with Bill, just find him on LinkedIn. As you can see, he responds. This is your host, Andrew Stotz. And I'll leave you with one of my favorite quotes from Dr. Deming. People are entitled to joy in work. And, are you enjoying work?  

La economía en una lección, de Henry Hazlitt, es un análisis brillante de los sofismas económicos que siguen rigiendo la política económica de gobiernos sin número por todo el mundo. Actualmente, no existe uno solo que no siga recurriendo a las falacias y a la lógica económica defectuosa que Hazlitt desenmascara con claridad y rotundidad en esta obra, todo un clásico en su género. La raíz del problema, como expuso Frédéric Bastiat en el siglo XIX, es que se tiende a tener en cuenta exclusivamente las consecuencias inmediatas de una política y sus efectos sobre un sector particular, sin reparar en las que produciría a largo plazo y sobre el conjunto de la comunidad.  Henry Hazlitt fue un brillante periodista económico, colaborador y columnista de importantes diarios como el Wall Street Journal o el New York Times. Durante más de 20 años fue director asociado de Newsweek. También fue autor prolífico de numerosos ensayos sobre economía y política, como The Failure of New Economics, Man versus Welfare State, The Foundation of Ethics y The Conquest of Poverty. Hazlitt ha sido considerado el periodista económico más importante del siglo XX en Estados Unidos y uno de los más destacados paladines de la libertad.    Daniel Fernández es licenciado en Administración y Dirección de Empresas por la Universidad Rey Juan Carlos de Madrid. También es máster de Economía de la Escuela Austriaca y doctor en Economía aplicada por la misma universidad. Actualmente es profesor de la Facultad de Ciencias Económicas de la Universidad Francisco Marroquín y director del observatorio UFM Market Trends de la misma institución. También mantiene una intensa actividad como divulgador desde su propio canal de YouTube. 

Almost three million people in the UK are unemployed and unable to work because they are ill or disabled. According to the right-wing media, these people aren't nearly as unwell as they claim. Meanwhile a UN committee warned that disabled people in the UK are subjected to a “traumatising” benefits system. We have a social security system that's been stripped to the bone and millions of people are struggling to afford the essentials as a result, yet both of the main political parties are desperate to be seen as “tough on benefits”. So what's gone wrong with our social security system? Why are politicians so intent on alienating those who rely on it? And how can we build a system that gives everyone the support they need? Ayeisha Thomas-Smith is joined by Kaliya Franklin, freelance disability policy expert and campaigner, and Mikey Erhardt, campaigner at Disability Rights UK. ------- Music: Thoughtful by Lee Rosevere, Free Music Archive: https://freemusicarchive.org/music/lee-rosevere/music-for-podcasts-serious/thoughtful-2/, used under Creative Commons licence: creativecommons.org/licenses/by-nc/4.0/. Produced by Katrina Gaffney, Margaret Welsh and James Rush The New Economics Podcast is brought to you by the New Economics Foundation. Find out more about becoming a NEF supporter at: neweconomics.org/donate/build-a-better-future New Economics Foundation is a registered charity in England and Wales. Charity No. 1055254

Henry Hazlitt's The Failure of the New Economics remains the best criticism of J.M. Keynes's General Theory.Original Article: Hazlitt Against Keynes on Unemployment and Wages: A Lesson for Modern Macroeconomics

Dr. Deming developed his philosophy over time and in conversations with others, not in isolation. As learners, we tend to forget that context, but it's important to remember because no one implements Deming in isolation, either. In this conversation, Bill Bellows and host Andrew Stotz discuss how there's no such thing as a purely Deming organization and why that's good. TRANSCRIPT 0:00:02.2 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 discussions with Bill Bellows, who has spent 30 years helping people apply Dr. Deming's ideas to become aware of how their thinking is holding them back from their biggest opportunities. Today is episode 20, entitled, System of Profound Wisdom. Bill, take it Away.   0:00:31.6 Bill Bellows: But not just for 30 years. I forgot to say I started when I was 12.   0:00:36.6 AS: Yes. [laughter] Yes. And you've got the hair to prove it.   [laughter]   0:00:43.7 BB: All right. Now, actually, I was thinking the proposal and the title, I thought... I mean, System of Profound Wisdom is cool, System of Profound Questions. Either one of those is good. Let's see which title comes out.   0:00:57.6 AS: Yeah. And I think we'll have to also understand that may some listeners that may not even know what System of Profound Knowledge means, they've been listening. They do. But if today's their first episode, we also gotta break that down, just briefly.   0:01:10.9 BB: Yeah. Okay, let's do that. All right. Well, let me give an opening a quote from Dr. Deming from chapter three, and then we can explain this SoPK, System of Profound Knowledge, thing. But in chapter three of Dr. Deming's last book, The New Economics, the last edition, edition three, came out in 2018. And chapter three, Dr. Deming says, "We saw in the last chapter, we are living under the tyranny of the prevailing style of management. Most people imagine that this style has always existed. It is a fixture. Actually, it is a modern invention a trap that has led us into decline. Transformation is required. Education and government, along with industry, are also in need of transformation. The System of Profound Knowledge to be introduced in the next chapter is a theory for transformation." So you wanna...   0:02:15.4 AS: That's good.   0:02:16.7 BB: So let's say something. Let's just say something about SoPK. How would you explain that?   0:02:23.1 AS: Yeah. Well, actually, I wanna talk very briefly about what you just said, because it's just...   0:02:27.1 BB: Oh, sure.   0:02:29.6 AS: At one point, I thought, "It's a system of knowledge." But he just said it was a system of transformation.   0:02:38.7 BB: It's a theory for transformation.   0:02:40.1 AS: A theory for transformation. Okay, got it. I see. And one of the things that I... I look at Toyota so much just 'cause it's so fascinating and how they've survived all these years, the continuity in the business, the continuity and the profitability of the business, the continued march to become the number one auto producer in the world, and having faced all the ups and downs and survived. And I just think that what they have is a learning organization. No matter what the challenge is, they're trying to apply learning tools, like System of Profound Knowledge, like PDSA, to try to figure out how to solve this problem. And I think that many companies, including at times my companies, [chuckle] we sometimes will scramble and we'll lose knowledge and we won't gain knowledge. And so the System of Profound Knowledge, to me, is all about the idea of how do we build a base of knowledge in our business and then build upon that base of knowledge rather than destroy it when the new management comes in or when a new management idea comes in.   0:04:00.7 AS: And that's something I've just been thinking about a lot. Because I do know a company that I've been doing some work with, and they basically threw away a huge amount of work that they did on System of Profound Knowledge and stuff to go with the prevailing system of management, is like going back. And now, they just produced a loss in the first quarter, and I just think, "Interesting. Interesting."   0:04:27.6 BB: Well, a couple things come to mind based on what you said. One is I would propose that Toyota, I'm in agreement of "Toyota's a learning organization." And that'll come up later. I've got some other thoughts on learning organizations. And we know that they were influenced by Dr. Deming. To what degree, I'm not sure of. Shoichiro Toyoda, who is one of the sons of the founder of the Toyota Motor Car Company, was honored with a Deming prize in 1990. And I believe it came from JUSE, as opposed to the American Society for Quality. One or the other. He was honored with a Deming Prize.   0:05:32.0 AS: Yep.   0:05:33.5 BB: Again, I don't know if it's Deming Prize or Deming Medal. But I know he was honored. What's most important, the point I wanna make is, upon receiving it he said, "There is not a day that goes by that I don't think about the impact of Dr. Deming on Toyota." But, if I was to look at the Toyota Production System website, Toyota's Toyota Production System website, which I've done numerous times, I'd be hard-pressed to find anything on that page that I could say, "You see this word, Andrew? You see this sentence, Andrew? You see this sentiment? That's Deming." Not at all. Not at all. It's Taiichi Ohno. It's Shigeo Shingo. I'm not saying it's not good, but all those ideas predate Deming going to Japan in 1950. Taiichi Ohno joined Toyota right out of college as an industrial engineer in 1933, I believe. The Japanese Army, I mentioned in a previous episode, in 1942, wanted him to move from Toyota's loom works for making cloth to their automobile works for making Jeeps. This comes from a book that I would highly recommend. Last time we were talking about books. I wanted to read a book, I don't know, maybe 10 years ago. I wanted to read a book about Toyota, but not one written by someone at MIT or university. I didn't wanna read a book written by an academic. I've done that.   0:07:15.1 BB: I wanted to read a book by somebody inside Toyota, get that perspective, that viewpoint. And the book, Against All Odds, the... Wait I'll get the complete title. Against All Odds: The Story of the Toyota Motor Corporation and the Family That Changed it. The first author, Yukiyasu Togo, T-O-G-O, and William Wartman. I have a friend who worked there. Worked... Let me back up. [chuckle] Togo, Mr. Togo, born and raised in Japan, worked for Toyota in Japan, came to the States in the '60s and opened the doors to Toyota Motors, USA. So, he was the first person running that operation in Los Angeles. And it was here for years. I think it's now in Texas. My late friend, Bill Cummings, worked there in marketing. And my friend, Bill, was part of the team that was working on a proposal for a Lexus. And he has amazing stories of Togo. He said, "Any executive... " And I don't know how high that... What range, from factory manager, VPs. But he said the executives there had their use, free use, they had a company car. And he said Togo drove a Celica. Not a Celica. He drove a... What's their base model? Not a...   0:08:56.2 AS: A Corolla?   0:08:57.7 BB: Corolla. Yes, yes, yes. Thank you. He drove a Corolla. He didn't drive... And I said, "Why did he drive a Corolla?" Because it was their biggest selling car, and he wanted to know what most people were experiencing. He could have been driving the highest level cars they had at the time. Again, this is before a Lexus. And so in this book, it talks about the history of Toyota, Taiichi Ohno coming in, Shigeo Shingo's contributions, and the influence of Dr. Deming. And there's a really fascinating account how in 1950, a young manager, Shoichiro Toyoda, was confronted with a challenge that they couldn't repair the cars as fast as they could sell them. This is post-war Japan. They found a car with phenomenal market success. Prior to that, they were trying to sell taxicabs, 'cause people could not... I mean, buying a car as a family was not an option. But by 1950, it was beginning to be the case. And the challenge that Shoichiro Toyoda faced was improving the quality, 'cause they couldn't fix them as fast as they could sell them. And yet, so I have no doubt that that young manager, who would go on to become the chairman, whatever the titles are, no doubt he was influenced by Dr. Deming. But I don't know what that means.   0:10:23.4 BB: That does not... The Toyota Production System is not Deming. And that's as evidenced by this talk about eliminating waste. And those are not Deming concepts. But I believe, back to your point, that his work helped create a foundation for learning. But I would also propose, Andrew, that everything I've read and studied quite a bit about the Toyota Production System, Lean, The Machine That Changed The World, nothing in there explains reliability. To me, reliability is how parts come together, work together. 'Cause as we've talked, a bunch of parts that meet print and meet print all over the place could have different levels of reliability, because meeting requirements, as we've talked in earlier episodes, ain't all it's cracked up to be. So I firmly believe... And I also mentioned to you, I sat for 14 hours flying home from Japan with a young engineer who worked for Toyota, and they do manage variation as Dr. Taguchi proposed. That is not revealed. But there's definitely something going on. But I would also say that I think the trouble they ran into was trying to be the number one car maker, and now they're back to the model of, "If we are good at what we do, then that will follow."   0:11:56.8 BB: And I'm gonna talk later about Tom Johnson's book, just to reinforce that, 'cause Tom, a former professor of management at Portland State University, has visited Toyota plants numerous times back before people found out how popular it was. But what I want to get into is... What we've been talking about the last couple episodes is Dr. Deming uses this term, transformation. And as I shared an article last time by John Kotter, the classic leadership professor, former, he's retired, at the University... Oh, sorry, Harvard Business School. And what he's talking about for transformation is, I don't think, [chuckle] maybe a little bit of crossover with what Dr. Deming is talking about. What we talked about last time is, Deming's transformation is a personal thing that we hear the world differently, see the world differently. We ask different questions. And that's not what Kotter is talking about. And it's not to dismiss all that what Kotter is talking about, but just because we're talking about transformation doesn't mean we mean the same thing.   0:13:10.6 BB: And likewise, we can talk about a Deming organization and a non-Deming organization. What teamwork means in both is different. In a Deming organization, we understand performance is caused by the system, not the workers taken individually. And as a result of that, we're not going to see performance appraisals, which are measures of individuals. Whereas in a non-Deming organization, we're going to see performance appraisals, KPIs flow down to individuals. [chuckle] The other thing I had in my notes is, are there really two types of organizations? No, that's just a model. [chuckle] So, really, it's a continuum of organizations. And going back to George Box, all models are wrong, some are useful. But we talked earlier, you mentioned the learning organization. Well, I'm sure, Andrew, that we have both worked in non-Deming organizations, and we have seen, and we have seen people as learners in a non-Deming organization, but what are they learning? [chuckle] It could be learning to tell the boss what they want to hear. They could be learning to hide information that could cause pain. [chuckle] Those organizations are filled with learners, but it's about learning that makes things worse. It's like digging the pit deeper. What Deming is talking about is learning that improves how the organization operates, and as a result, improves profit. In a non-Deming organization, that learning is actually destroying profit.   0:14:51.8 BB: All right. And early, spoke... Russ, Russ and Dr. Deming spoke for about three hours in 1992. It got condensed down to a volume 21 of The Deming Library, for which our viewers, if you're a subscriber to DemingNEXT, you can watch it in its entirety. All the Deming videos produced by Clare Crawford-Mason are in that. You can see excerpts of volume 21, which is... Believe is theory of a system of education, and it's Russ Ackoff and Dr. Deming for a half hour. So you can find excerpts of that on The Deming Institute's YouTube channel.   0:15:37.0 BB: And what I wanted to bring up is in there, Russ explains to Dr. Deming the DIKUW model that we've spoken about in previous episodes, where D is data. That's raw numbers, Russ would say. I is information. When we turn those raw numbers into distances and times and weights, Russ would say that information is what the newspaper writer writes, who did what to whom. Knowledge, the K, could be someone's explanation as to how these things happened. U, understanding. Understanding is when you step back and look at the container. Russ would say that knowledge, knowledge is what you're using in developing to take apart a car or to take apart a washing machine and see how all these things work together. But understanding is needed to explain why the driver sits on the left versus the right, why the car is designed for a family of four, why the washing machine is designed for a factor of four. That's not inside it. That's the understanding looking outward piece that Russ would also refer to as synthesis. And then the W, that's the wisdom piece. What do I do with all this stuff? And what Russ is talking about is part of wisdom is doing the right things right. So, I wanted to touch upon in this episode is why did Dr. Deming refer to his system as the System of Profound Knowledge? Why not the System of Profound Understanding? Why not the System of Profound Wisdom? And I think, had he lived longer, maybe he would have expanded. Maybe he would have had...   0:17:28.4 BB: And I think that's the case. I think it's... 'Cause I just think... And this is what's so interesting, is, if you look at Dr. Deming's work in isolation and not go off and look at other's work, such as Tom Johnson or Russ, you can start asking questions like this.   0:17:45.7 AS: One thing I was going to interject is that I took my first Deming seminar in 1989, I believe, or 1990. And then I took my second one with Dr. Deming in 1992. And then soon after that, I moved to Thailand and kind of went into a different life, teaching finance and then working in the stock market. And then we set up our factory here for coffee business. But it wasn't until another 10 years, maybe 15 years, that I reignited my flame for what Dr. Deming was doing. And that's when I wrote my book about Transform Your Business with Dr. Deming's 14 Points. And what I, so, I was revisiting the material that had impacted me so much. And I found this new topic called System of Profound Knowledge. I never heard of that. And I realized that, it really fully fledged came out in 1993, The New Economics, which I didn't get. I only had Out of the Crisis.   0:18:49.9 BB: '93.   0:18:49.9 AS: Yeah. And so that just was fascinating to go back to what was already, the oldest teacher I ever had in my life at '92, leave it, come back 10, 15 years later and find out, wait a minute, he added on even more in his final book.   0:19:10.4 BB: Well, Joyce Orsini, who was recruited by Fordham University at the encouragement of Dr. Deming, or the suggestion of Dr. Deming to lead their Deming Scholars MBA program in 1990. Professor Marta Mooney, professor of accounting, who I had the great fortune of meeting several times, was very inspired by Dr. Deming's work. And was able to get his permission to have an MBA program in his name called the Deming Scholars MBA program. And when she asked him for a recommendation, "Who should lead this program?" It was Joyce Orsini, who at the time I think was a vice president at a bank in New York. I'm not sure, possibly in human resources, but I know she was in New York as a vice president.   0:20:10.0 BB: And I believe she had finished her PhD under Dr. Deming at NYU by that time. And the reason I bring up Joyce's name, I met her after Dr. Deming had died. Nancy Mann, who is running a company called Quality Enhancement Seminars with, a, at the beginning one product, Dr. Deming's 4-Day seminar, when Dr. Deming died, and I had mentioned, I was at his last seminar in December '93, she continued offering 4-day seminars. And I met her later that year when she was paired with Ron Moen and they were together presenting it, and others were paired presenting it. And at one point, as I got to know Joyce, she said, "His last five years were borrowed time." I said, "What do you mean?" She said, "He started working on the book in 19'" evidently the '87, '88 timeframe, he started to articulate these words, Profound Knowledge.   0:21:11.0 BB: And I know he had, on a regular basis, he had dinner engagements with friends including Claire Crawford-Mason and her husband. And Claire has some amazing stories of Deming coming by with these ideas. And she said, once she said, "What is this?" And he is, she took out a napkin, a discretely, wrote down the, "an understanding of the difference between intrinsic motivation and extrinsic motivation. Difference between understanding special causes versus common causes." And she just wrote all this stuff down, typed it up. When he showed up the next week, she greeted him at the door and said, and she said, he said, This is Claire. And Claire said, he said, "What's that?" He says, "Well, I took notes last week."   0:21:54.2 BB: And he says, "I can do better." [chuckle] And so week by week by week. And as he interacted with the people around him, he whittled it down. And I'm guessing it put it into some, there's a technique for grouping things, you, where on post-it notes and you come up with four categories and these things all go over here. There's one of the elements of that, one of the 16 had to, or 18 or so, had to do with Dr. Taguchi's loss function. So that could have gone into the, maybe the variation piece, maybe the systems piece. But Joyce said, basically he was frustrated that the 14 Points were essentially kind of a cookbook where you saw things like, "cease dependence on inspection" interpreted as "get rid of the inspectors." And so he knew and I'd say, guided by his own production of a system mindset, he knew that what he was articulating and the feedback were inconsistent.   0:23:01.9 BB: And I've gotta keep trying. And she said, "His last five years on borrowed time as he was dying of cancer, was just trying to get this message out." So I first got exposed to it 19, spring of '90 when I saw him speaking in Connecticut. And I was all about Taguchi expecting him to, I didn't know what to expect, but I knew what I was seeing and hearing from Dr. Taguchi when I heard Dr. Deming talk about Red Beads. I don't know anything about that, common cause and special cause, I didn't know anything about that. And so for me, it was just a bunch of stuff, and I just tucked it away. But when the book came out in '93, then it really made sense. But I just had to see a lot of the prevailing style of management in the role I had as an improvement specialist, become, [chuckle] a firefighter or a fireman helping people out.   0:24:01.5 AS: I noticed as I've gotten older that, I do start to connect the pieces together of various disciplines and various bits of knowledge to realize, so for instance, in my case, I'm teaching a corporate strategy course right now at the university. Tonight's, in fact, the last night of this particular intake. And my area of expertise is in finance, but now I see the connection between strategy and finance, and how a good strategy is going to be reflected in superior financial performance relative to peers. And of course, I know how to measure that very well. So I can synthesize more and more different areas of things that I know things about, that I just couldn't do when I was younger. So I can see, and he was always learning, obviously. So I can see how he, and also I can also see the idea of, I need bigger principles. I need bigger as you said, theory for transformation. I need, I need to be able to put this into a framework that brings all that together. And I'm still feeling frustrated about some of that, where I'm at with some of that, because I'm kind of halfway in my progress on that. But I definitely can see the idea of that coming later in life as I approach the big 6-0.   0:25:37.3 BB: The big 6-0, [chuckle] Well, but a big part, I mean, based on what you're talking about, it ended up... Previously we spoke about Richard Rumelt's work, Good Strategy/Bad Strategy, and I mentioned that I use a lecture by Richard Rumelt, I think it was 2011 or so. It was right after his book, Good Strategy/Bad Strategy came out. He spoke at the London School of Economics, and our listeners can find it if you just did a Google search for Richard Rumelt, that's R-U-M... One M. E-L-T. Good Strategy/Bad Strategy. LSE, London School of Economics. Brilliant, brilliant lecture. And I've seen it numerous times for one of my university courses. And he is like Deming, he doesn't suffer fools. And, it finally dawned on me, Deming organizations, if we can use this simple Deming versus non-Deming or Red Pen versus Blue Pen, and as, George Box would say, all models are wrong, some are useful. If we can use that model, I think it's easy to see that what frustrates Rumelt is you've got all these non-Deming companies coming up with strategies without a method.   0:27:00.0 BB: What Rumelt also talks about is not only do you need a method, but you have to be honest on what's in the way of us achieving this? Again, Dr. Deming would say, if you didn't need a method, why don't you're already achieving the results? And so it just dawned on me thinking the reason he's so frustrated, and I think that's one word you can use to describe him, but if he is talking to senior staff lacking this, an understanding of Deming's work, then he is getting a lot of bad strategies. And organizations that would understand what Dr. Deming's talking about, would greatly benefit from Rumelt's work. And they would be one, they'd have the benefit of having an organization that is beginning or is understanding what a transformation guided by Dr. Deming's work is about. And then you could look up and you're naturally inclined to have good or better strategy than worser strategies.   0:28:02.2 BB: And then you have the benefit of, profit's not the reason, profit is the result of all that. And, but next thing I wanna point out is, and I think we talked about it last time, but I just wanted to make sure it was up here, is I've come across recently and I'm not sure talking with who, but there's this what's in vogue today? Data-driven decisions. And again, whenever I hear the word data, I think backed in Ackoff's DIKUW model, I think data-driven. Well, first Dr. Deming would say, the most important numbers are unknown and unknowable. So if you're doing things on a data-driven way, then you're missing the rest of Dr. Deming's theory of management. But why not knowledge-driven decisions, why not understanding-driven decisions And beyond that, why not, right? How long... [laughter] I guess we can... Part of the reason we're doing these Andrew is that we'd like to believe we're helping people move in the direction from data-driven decisions to wisdom-driven decisions, right?   0:29:13.1 AS: Yeah. In fact, you even had the gall to name this episode the System of Profound Wisdom.   0:29:24.0 BB: And that's the title.   0:29:24.9 AS: There it is.   0:29:28.9 BB: But in terms of, I'll give you a fun story from Rocketdyne years ago, and I was talking with a manager in the quality organization and he says, "you know what the problem is, you know what the problem is?" I said, "what?" He says, "the problem is the executives are not getting the data fast enough." And I said, "what data?" He says "the scrap and rework data, they're just not getting it fast enough." So I said, "no matter how fast they get it, it's already happened."   [laughter]   0:30:00.0 BB: But it was just, and I just couldn't get through to him that, that if we're being reactive and talking about scrap and rework, it's already happened. By the time the... If the executives hear it a second later, it's already happened. It's still old news.   0:30:14.7 AS: And if that executive would've been thinking he would've said, but Bill, I want to be on the cutting edge of history.   0:30:23.1 BB: Yeah, it's like...   0:30:24.6 AS: I don't want information, I don't want old information, really old. I just want it as new as it can be, but still old.   0:30:32.9 BB: Well, it reminds me of an Ackoff quote is, instead of... It's "Change or be changed." Ackoff talked about organizations that instead of them being ready for what happens, they create what's gonna happen, which would be more of a Deming organizational approach. Anyway, we talked about books last time and I thought it'd be neat to share a couple books as one as I've shared the Against All Odds Book about Toyota.   0:31:08.8 AS: Which I'll say is on Amazon, but it's only looks like it's a used book and it's priced at about 70 bucks. So I've just...   0:31:16.2 BB: How much?   0:31:16.8 AS: Got that one down? 70 bucks? Because I think it's, you're buying it from someone who has it as a their own edition or something. I don't know.   0:31:23.8 BB: It's not uncommon. This is a, insider used book thing. It's not uncommon that you'll see books on Amazon for 70, but if you go to ThriftBooks or Abe Books, you can, I have found multi-$100 books elsewhere. I don't know how that happens, but it does. Anyway, another book I wanted to reference in today's episode is Profit Beyond Measure subtitle, Extraordinary Results through Attention to Work and People, published in 2000. You can... I don't know if you can get that new, you definitely get it old or used, written by, H. Thomas Johnson. H is for Howard, he goes by Tom, Tom Johnson. Brilliant, brilliant mind. He visited Rocketdyne a few times.   0:32:17.1 BB: On the inside cover page, Tom wrote, "This book is dedicated to the memory of Dr. W. Edwards Deming, 1900-1993. May the seventh generation after us know a world shaped by his thinking." And in the book, you'll find this quote, and I've used it in a previous episode, but for those who may be hearing it first here and Tom's a deep thinker. He's, and as well as his wife Elaine, they're two very deep thinkers. They've both spoke at Rocketdyne numerous times. But one of my favorite quotes from Tom is, "How the world we perceive works depends on how we think. The world we perceive is the world we bring forth through our thinking." And again, it goes back to, we don't see the world as it is. We see the world as we are. We hear the world as we are. I wrote a blog for The Deming Institute. If our listeners would like to find it, if you just do a search for Deming blog, Bellows and Johnson, you'll find the blog. And the blog is about the book Profit Beyond Measure. And in there, I said, “In keeping with Myron Tribus' observation that what you see depends upon what you thought before you looked, Johnson's background as a cost accountant, guided by seminars and conversations with Dr. Deming, prepared him to see Toyota as a living system,” right? You talk about Toyota.   0:33:53.9 BB: He saw it as a living system, not a value stream of independent parts. And that was, that's me talking. I mean, Tom talked about Toyota's living system. And then I put in there with the Toyota Production System, people talk about value streams. Well, in those value streams, they have a defect, good part, bad part model that the parts are handed off, handed off, handed off. That is ostensibly a value stream of independent parts 'cause the quality model of the Toyota Production System, if you study it anywhere, is not Genichi Taguchi. It's the classic good parts and bad parts. And if we're handing off good parts, they are not interdependent. They are independent. And then I close with, "instead of seeing a focus on the elimination of waste and non-value added efforts, Johnson saw self-organization, interdependence, and diversity, the three, as the three primary principles of his approach, which he called Management By Means." And so what's neat, Andrew, is he, Tom was as a student of Deming's work, attending Dr. Deming seminars, hearing about SoPK, System of Profound Knowledge, and he in parallel developed his own model that he calls Management By Means. But what's neat is if you compare the two, there's three principles. So he says self-organization.   0:35:31.0 BB: Well, that's kind of like psychology and people. So we can self-organize interdependence, the other self-organized, but we're connected with one another. So that's, that's kind of a systems perspective there as well. And the third one, diversity. So when I think of diversity, I think of variation. I can also think in terms of people. So that what I don't see in there explicitly is Theory of Knowledge. But Tom's developing this model in parallel with Dr. Deming's work, probably beginning in the early '80s. And part of what Tom had in mind, I believe, by calling it Management By Means, is juxtaposing it with that other management by, right? You know the other one, Andrew, management by?   0:36:33.8 AS: You mean the bad one or the good one, Management By Objective?   0:36:37.8 BB: Or Management By Results. Or Dr. Deming once said, MBIR, Management by Imposition of Results. But what's neat is, and this is what I cover and with my online courses, Tom is really, it's just such insight. Tom believes that treating the means as the ends in the making. So he's saying that the ends are what happen when we focus on the means, which is like, if you focus on the process, you get the result. But no, MBIR, as we focus on the result, we throw the process out the window. And so when I've asked students in one of my classes is, why does Tom Johnson believe that treating the means as an ends in the making is a much surer route to stable and satisfactory financial performance than to continue as most companies do? You ready, Andrew? To chase targets as if the means do not matter. Does that resonate with you, Andrew?   0:37:44.1 AS: Yes. They're tampering.   0:37:46.8 BB: Yeah. I also want to quote, I met Tom in 1997. I'm not sure if this... Actually, this article is online and I'll try to remember to post a link to it. If I forget, our listeners can contact me on LinkedIn and I'll send you a link to find the paper. This is when I first got exposed to Tom. It just blew me away. I still remember there at a Deming conference in 1997, hearing Tom talk. I thought, wow, this is different. So, Tom's paper that I'm referencing is A Different Perspective on Quality, the subtitle, Bringing Management to Life. Can you imagine? “Bringing Management to Life.” And it was in Washington, DC, the 1997 conference. And then Tom says, this is the opening. And so when Tom and his wife would speak at Rocketdyne or other conferences I organized.   0:38:44.0 BB: Tom read from a lectern. So he needed a box to get up there and he read, whereas Elaine, his wife, is all extemporaneous. Both deeply profound, two different styles. So what Tom wrote here is he says, "despite the impression given by my title, Professor of Quality Management, I do not speak to you as a trained or a certified authority on the subject of quality management. I adopted that title more or less casually after giving a presentation to an audience of Oregon business executives just over six years ago. That presentation described how my thinking had changed in the last five years since I co-authored the 1987 book, Relevance Lost, the Rise and Fall of Management Accounting, and the talk which presaged my 1992 book, Relevance Regained." And this is when he... After he wrote, Relevance Lost, he went on the lecture circuit, he met the likes of Peter Scholtes and Brian Joiner, got pulled into the Deming community.   0:39:45.4 BB: And then he wrote this scathing book called Relevance Regained and the subtitle is... I think our audience will love it, From Top-Down Control to Bottom-Up Empowerment. Then he goes on to say, "in that I told how I had come to believe that management accounting, a subject that I had pursued and practiced for over 30 years." Over 30 years, sounds familiar. Then he says, "could no longer provide useful tools for management. I said in essence that instead of managing by results, instead of driving people with quantitative financial targets, it's time for people in business..." And this is 30 years ago, Andrew. "It's time for people in business to shift their attention to how they organize work and how they relate to each other as human beings. I suggested that if companies organize work and build relationships properly, then the results that accountants keep track of will what? Take care of themselves."   0:40:50.8 AS: It's so true, it's so true.   0:40:54.1 BB: Yeah, it sounds so literally Tom was writing that in 1999, 2000. Well, actually no, that was 1997, that was 1997, but the same sentiment.   0:41:03.4 AS: It just makes me think of the diagram that we see and that Deming had about the flow through a business, it's the same thing as of the flow from activity to result.   0:41:20.6 BB: Yes.   0:41:21.9 AS: And when we focus on the result and work backwards, it's a mess from a long-term perspective, but you can get to the result. It's not to say you can't get to the result, but you're not building a system that can replicate that. But when you start with the beginning of that process of how do we set this up right to get to that result, then you have a repeatable process that can deliver value. In other words, you've invested a large amount in the origination of that process that then can produce for a much longer time. Um, I have to mention that the worst part of this whole time that we talk is when I have to tell you that we're almost out of time 'cause there's so much to talk about. So we do need to wrap it up, but, yeah.   0:42:09.3 BB: All right. I got a couple of closing thoughts from Tom and then we'll pick this up in episode 21.   0:42:21.3 AS: Yep.   0:42:22.9 BB: Let me also say, for those who are really... If you really wanna know... I'd say, before you read The New Economics... I'm sorry, before you read Profit Beyond Measure, one is the article I just referenced, “Bringing Quality to Life” is a good start. I'd also encourage our readers to do a search. I do this routinely. It shouldn't be that hard to find, but look for an article written by Art Kleiner, Art as in Arthur, Kleiner, K-L-E-I-N-E-R. And the article is entitled, Measures... The Measures That Matter. I think it might be What Are The Measures That Matter? And that article brilliantly written by Kleiner who I don't think knows all that much about Deming, but he knows a whole lot about Tom Johnson and Robert Kaplan, who together co-authored "Relevance Lost" and then moved apart. And Tom became more and more Deming and Kaplan became more and more non and finally wrote this article.   0:43:35.6 AS: Is this article coming out in 2002, "What Are The Measures That Matter? A 10-year Debate Between Two Feuding Gurus Shed Some Light on a Vexing Business Question?"   0:43:46.4 BB: That's it.   0:43:47.2 AS: There it is and it's on the...   0:43:47.4 BB: And it is riveting.   0:43:50.8 AS: Okay.   0:43:50.8 BB: Absolutely riveting. Is it put out by...   0:43:54.0 AS: PwC, it looks like and it's under strategy...   0:43:58.5 BB: Pricewaterhouse...   0:43:58.8 AS: Yeah, strategy and business.   0:44:00.2 BB: PricewaterhouseCooper? Yeah.   0:44:01.3 AS: Yeah.   0:44:03.1 BB: And 'cause what's in there is Kleiner explaining that what Tom's talking about might take some time. You can go out tomorrow, Andrew, and slash and burn and cut and show instant results. Now what you're not looking at is what are the consequences? And so... But... And then... But Kleiner I think does a brilliant job of juxtaposing and trying to talk about what makes Kaplan's work, the Balanced Scorecard, so popular. Why is Tom so anti that?   0:44:37.9 BB: And to a degree, it could be for some a leap of faith to go over there, but we'll talk about that later. Let me just close with this and this comes from my blog on The Deming Institute about Profit Beyond Measure and I said, "for those who are willing and able to discern the dramatic differences between the prevailing focus of systems that aim to produce better parts with less waste and reductions to non-value-added efforts," that's my poke at Lean and Six Sigma, "and those systems that capitalize on a systemic connection between parts. Tom's book, Profit Beyond Measure, offers abundant food for thought. The difference also represents a shifting from profit as the sole reason for a business to profit as the result of extraordinary attention to working people, a most fitting subtitle to this book."   0:45:35.9 AS: Well, Bill, on behalf of everyone at The Deming Institute, I want to thank you again for the discussion and for listeners, remember to go to deming.org to continue your journey. If you wanna keep in touch with Bill, just find him on LinkedIn. This is your host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming, "People are entitled to Joy in work" and I hope you are enjoying your work.    

Henry Hazlitt's The Failure of the New Economics remains the best criticism of J.M. Keynes's General Theory. Narrated by Millian Quinteros.

What happens if you transform HOW you think? In this episode, Bill Bellows and host Andrew Stotz discuss the problem of thinking in one dimension at a time (as we were taught in school) and its impact on our ability to solve problems. BONUS: Book recommendations to broaden your understanding of Deming and more. TRANSCRIPT 0:00:02.1 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 Bill Bellows, who has spent 30 years helping people apply Dr. Deming's ideas to become aware of how their thinking is holding them back from their biggest opportunities. The topic for today is, well, episode 19, Transforming How we Think. Bill, take it away.   0:00:29.9 Bill Bellows: And good evening, Andrew.   0:00:35.8 AS: Good evening.   0:00:36.2 BB: And, but just as a point of clarity, I view it as transforming how we think about our thinking. And that's what I've been focusing on for the, since the mid, the early '90s is not how we think, but what is our awareness of our thinking, and I think that ties in well with SoPK. So first in late breaking news, I am seeing with new eyes, Andrew. Literally, I've got new monofocal lenses in both eyes. The left eye three weeks ago, the right eye, a week ago. I was told about five years ago, eventually I'll have to have cataract surgery. And I spoke with a few friends who had it done, and they said, oh, it's easy. And what was so amazing was it was easier than they said. It was.   0:01:41.0 BB: But one neighbor who's had it done, and kind of a sad note is he claims, and I've not double checked this, he's a sharp guy. He claims 80% of the world's population would benefit from cataract surgery that they don't have access to and eventually go blind. And I don't know, I can believe, and he is in fact he's quoted me twice on that. But I am literally seeing with new eyes. The grays are now, shades of gray, are now shades of blue. When I look at the sky. My depth perception's a whole lot better. And so it ties in well with all this vision therapy stuff. So.   0:02:36.8 AS: Aren't you glad that those machines are high quality and the operations that they do are high quality?   0:02:41.6 BB: Oh, yeah.   0:02:42.4 AS: Just one little mistake on that one. And, that's...   0:02:46.2 BB: Well, and I'm signing the documents and there's a little bit of a flutter when I'm signing, in terms of the liability. And one friend's mom had a bad cataract procedure, so it doesn't always go. And I shared this with Kevin. Kevin's had the same, as likewise had the procedure done. And we shared the anxieties and then it worked out well. But yeah when I signed that form that there was in the event, and I thought, whoa, that'd be, anyway, it worked. All right, so where I want to pick up in episode 19 is where we left off with episode 18. And there near the end, I referenced from Dr. Deming. He says Dr. Deming says in chapter three of The New Economics, and he says, "we saw in the last chapter that we're living under the tyranny of the prevailing style of management. Most people imagine this style has always existed. It is a fixture. Actually," he said, "it's a modern invention, a trap that has led us into decline. Transformation..."   0:04:03.0 BB: You remember that word from last time? Okay. "Transformation is required. Education and government, along with industry are also in need of transformation. The System of Profound Knowledge will be introduced in the next chapter. To be introduced in the next chapter is a theory for transformation." So I've got some bullet points and I want to get into the additional chapters and references from The New Economics on Dr. Deming's use of the term transformation. 'Cause I think what he's talking about... SoPK is a theory for transformation. So I think it's just not enough to talk about SoPK without understanding how does that fit in with what Dr. Deming's talking about?   0:04:49.0 AS: And for the listeners who come out of the blue here, SoPK stands for the System of Profound Knowledge.   0:04:56.1 BB: Yes. And system then gets into elements and the four elements that Dr. Deming proposed in The New Economics, going back to the late '80s when he started to put these thoughts together. We need to think about the elements of Profound Knowledge are looking at things as a system and understanding of variation and appreciation of psychology. That's the people aspect. And then theory of knowledge, which gets into what he would explain as how do we know that what we know is so. So the one thing I wanted to bring up on the System of Profound Knowledge is conversations with Dick Steele. And a neat way of looking at the System of Profound Knowledge is to say, well, what if we were to look at some data points, one element, we look at variation, and we see some data the output of a process.   0:06:00.0 BB: We see it go up and down. Well, if that's the only element we have, then we can't ask what caused that, 'cause that's the upstream system. Well, that's the system piece. We cannot talk about what does this variation do downstream? That's the system piece. We cannot talk about how might we change that. That might get into the theory of knowledge or would get into the aspect of the theory of knowledge and some theories as to how we can go about changing the average, changing the amount of variation. And then what that leads us immediately to is, where do those ideas come from but people.   0:06:44.7 BB: So it's kind of, I think it's interesting. So Dr. Deming says the elements, but it's as connected to each other. So what I explain to the students in my courses is, in the beginning, and I remember when I'm looking at this, I'm looking at the elements. I'm thinking, okay, that variation, that's the Control Chart stuff. Common causes, special causes, well, it also includes variation in people. Oh, now we're talking about the people stuff. And then, so I find it interesting is it is easy to look at them as separate, but then in time they meld together really well. So it's not to say that we shouldn't start out looking at things as the elements 'cause I think that's what our education system does. In fact, there's a great documentary I watched a few years ago with Gregory Bateson, who was born in 1900 or so, passed away in the 1980s.   0:07:52.6 BB: And when I ask people have you ever heard of Gregory Bateson? They say, no. I say, well, have you heard of Margaret Mead? Yeah. Well, they were married once upon a time. That was her, he was her first husband. And so Bateson gives a lecture in this documentary that his daughter produced. And he says, and he is at a podium. You don't see the audience. You just see he's at a lectern. And he says, you may think that there's such a thing as psychology, which is separate from anthropology, which is separate from English, which is separate from... And he goes on to imply that they really aren't separate. But then he says, "Well, think what you want."   0:08:38.1 AS: Think what you want.   0:08:39.7 AS: And I thought that's what the education system does. It has us believe that these things are all separate. And so that's what's kind of neat. Yeah. And, but again, I think when you go to school, you're learning about history, then you learn about math. But one thing I noticed later on, many years later was the history people never talked about, if they talked about the philosopher who was well known in mathematics, we didn't hear that mathematics piece, nor in the math class did we hear about this person as a historical figure. We just learned about... And so the education system kind of blocks all that out. And then years later when we're outta school, we can read and see how all this stuff comes together and it does come together. So the one big thing I wanna say is that, is I think it's neat to look at something with just one of those elements and then say, how far does it go before you need the others to really start to do something?   0:09:47.0 BB: And that gets into the interactions. And by interactions, I mean that when you're talking about variation and you're thinking about people are different, how they feel is different, how they respond is different. Now you're talking about the interaction between psychology, at least that's one explanation of the interaction between people amd psychology. I wanna share next an anecdote. I was at a UCLA presentation. A friend of mine turned me on to these maybe once a month kind of deal to be an invited speaker. 70 people in the room. And these were typically professors from other universities, authors, and there is one story I wanna share is a woman who had written a book on why really smart kids don't test well in secondary schools. And there were a good number of people there.   0:10:45.6 BB: And I'm listening to all this through my Deming lens, and she's talking about how kids do on the exams. That goes back to an earlier podcast. How did you do on the exam? And so I'm listening to all this and she's drawing conclusions that these students are really smart, but they freak out. And then how might they individually perform better? As if the greatest cause by them all by themselves. And so afterwards, I went up and stood in line and I had a question for her that I deliberately did not want to ask in front of the entire room. 'Cause I wanted her undivided attention, and I really wanted to see where she'd come with this. 'Cause perhaps it could lead to an ongoing discussion. So I went up and introduced myself and I think I said something like, are you familiar with W. Edwards Deming? And I believe she said she was. I think she was a psychologist by background. And then I moved into the... Essentially the essence of what if the grades are caused by the system and not the student taken separately, which she acknowledged. She's like, yeah, that makes sense. And I remember saying to her, "Well then how might that change your conclusions?"   0:12:11.2 BB: And so I throw that as an example of... Deming's saying you could be an expert in, you know, you just look at something. Actually, when that comes to mind is Deming is saying something like shouldn't a psychologist know something about variation? Well, shouldn't a psychologist know something about systems? And I didn't maintain a relationship with her, but it was just other things to do. Next I wanna share a story. And I wrote this up in an article. Then when this is posted...   0:12:49.0 BB: Typically these are posted on LinkedIn. Then I'll put a link into the article. And it's a classic story that Russ Ackoff was very fond of saying, and I heard the story told quite a few times before I started to think about it a little bit differently. So the story is he was working for General Electric back in the 1960s. He is in a very high level meeting. And in the room is this, the then CEO of GE, Reginald Jones and all of the senior VPs of General Electric are in the room. And Russ... I'm guessing he was doing, I know Russ did a lot of work with Anheuser-Busch, and he did a lot of work with GE. So Russ says he is in the room. There's maybe a dozen of these senior VPs of plastics of all the different GE divisions.   0:13:41.2 BB: And there's, Russ said there's one of them that was relatively new in a senior VP position, now over plastics or over lighting or whatever it was. And at one point he gets up. And one by one he raises a question with each of his peers. Something like, "Andrew, I noticed last year you installed a new software system." And you would say, "yeah, yep, yep." And I said, "I noticed you went with..." Let's say Apple, "you went with Apple Software", and you're like, "yeah," "that's what I thought. Yeah, you went with Apple." And then you might say something like, "why do you ask?" And he says, "well, the rest of us use Microsoft products. And it just seems kind of odd that you would go off and buy something different."   0:14:41.0 BB: And the point, and Russ didn't get into these details, the essence was every single one of them he'd figured out over the last year had made a decision, pretty high level decision that that senior VP felt was good for that division, but not good for General Electric. And Russ said what got his attention was, he wasn't sitting in that room hearing those conversations and he hears one decision then another, now he's got a whole list. So Russ says, he goes around the room and calls out every single one of his peers. So, and Russ shared this in one phone call, the Ongoing Discussions that I've mentioned. And people said, Russ, do you have that documented? And he is like, well, I don't think I have that any anymore. But somebody else asking.   0:15:35.3 BB: And then no sooner was the call over I had some friends call me up, said, "Bill, can you ask Russ if you have that, if he can get a copy of that? It's probably on his shelf. You're in his office". I said to one friend. I said, "so you'd be surprised that a member of Parliament does what's best for his district and not what's best for the United Kingdom. You think, you'd be surprised that a congressman from Los Angeles is gonna do what's best for Los Angeles, not what's best for the country.   0:16:07.2 BB: So you're telling me you're surprised by that?" Well, "no, no, no." I said, "well then why do you have to have the documentation?" So that's one aspect of it. So I heard that story again and again. And so finally it, I said, wait a minute, wait a minute. So I said, "Russ, on that story, you being in the room with GE?" He says, yeah. He says, I know you don't have the documentation, I said, "but what happened after this guy called them all out? How did that go down?" He says, "one of the peers looks at this guy and says, so what's your point?"   0:16:42.3 BB: And the meeting moved on. And I wrote that for an article for the Lean Management Journal called, "You Laugh, It Happens". And when I look at that through the lens of the System of Profound Knowledge, is that surprising that that goes on? No, not at all. I wanna reference a couple books that I don't think I've mentioned at all. And I share these because for the Deming enthusiasts, these books have some brilliant examples of in different arenas that I think you absolutely love and you can use in your classes, use in your education, whatever. All fairly recent. The first one is "The Tyranny of Metrics" written by a historian. He is an American University historian, Jerry Mueller, and he has, I mean, Dr. Deming would just love this. Oh, bingo! Bingo! Bingo! Thank you.   0:17:48.4 AS: Yep. There it is. "The Tyranny of Metrics".   0:17:50.1 BB: Right?   0:17:50.7 AS: Yep.   0:17:51.3 BB: Right. Is that a great one?   0:17:53.2 AS: That's a great book. And you can follow him on Twitter also. He does do a lot of posts there.   0:18:00.4 BB: Now I reached out to him 'cause I relished the book 'cause the stories were just, you just can't make up all those stories. I mean the story that I shared with Russ is nothing in comparison to what Muller has in the book. I just don't believe that Muller has a solution that can... I don't think, I think the only thing missing from the book is if he had an understanding of the System of Profound Knowledge, he'd have a far better proposal as to what to do.   0:18:31.8 AS: Yeah. I read that and I felt similar that there was something that was missing there. It was, it was great stories as you say, but how do we connect that? How do we apply that? And what's the root cause here? And how do we, this, there was just... That was missing from it. And maybe that should be his next book.   0:18:53.9 BB: Oh, enormously. But it's worth reading regardless.   0:18:57.3 AS: Yeah. Agreed.   0:19:00.1 BB: But I was, I was, I wasn't surprised. I'd say this. He honestly tried to offer a proposal, but I just looked at it and said, Professor Muller, you would just love it. In fact, I believe I reached out to him. I don't know that I heard from him. Alright, that's one book.   0:19:17.1 AS: That reminds me of what Dr. Deming said. "How would they know?"   0:19:21.3 BB: Exactly. Exactly.   0:19:22.4 AS: So if he hadn't been exposed to the System of Profound Knowledge...   0:19:25.3 BB: Oh, no. No, no, no.   0:19:25.7 AS: Then it would be hard to pull it all together. Yep. Okay.   0:19:28.8 BB: Yeah. So the next book, which is somewhere behind you in your bookshelf, is "The End of Average" by Todd...   0:19:36.8 AS: Actually, I don't think I have that one.   0:19:39.4 BB: By Todd Rose, who's a research fellow at Harvard. It's a riveting book. Oh, Andrew, you would absolutely love it. Just, he goes back ages. I mean, hundreds of hundreds of years and looks at how lost we became... How lost civilizations were dealing with trying to make, deal with averages. And the book opens with the most riveting story. And I started reading this and immediately I started thinking, "Okay, okay, okay, okay." And I figured it out. So in the opening paragraph, he says, In one day in 1949, there were 17 military planes crashed. In one day. 17 military planes crashed in one day. And this was... It would have been after the Air Force separated from the Army Air Corps. And so I started thinking, okay, late '40s, planes are going faster. The US industry has German technology, and... Because the Germans had jet engines in the late '40s. So I'm thinking it's about speed. It's about something about speed, something about speed. And there's more and more planes flying.   0:21:06.6 BB: So they grounded the fleet. They had a major investigation, brought in this young guy as a data researcher. And he passed away a few years ago, I did some research with him recently. And what he found was the cockpits were designed, you're writing, Andrew, for the average size pilots. Everything in the cockpit was fixed for the average arm length, the average hand length, the average finger length, the average height, the... Everything about... All these measurements on the torso, the cockpit had, everything was fixed. And that's exactly what I thought was going on. As the planes are going faster and faster, reaction times need to be faster and faster. And they're not. So his research was, they went off and measured thousands of pilots and found out that there was no pilot met the average.   0:22:11.2 AS: Oh, God.   0:22:11.3 BB: And the conclusion was... And again, until the plane started flying faster, that was not an issue. And that's what I was thinking with all my training in problem solving, decision making, what is going on there? What is going on there? And that's what changes the... I mean, the speed was accelerating, but compounded by the fixed geometry. So the solution by the government Pentagon, to the contractors was, add flexibility to the cockpit, allow the seat to move up and down, and then the auto industry picked up on that evidently. And so this is one example of how a fixation on average and a number of other stories outside of engineering it's just fascinating.   0:23:01.4 AS: Let me just summarize. The End of Average by Todd Rose. And it was published in about 2016. It's got a 4.5 out of 5 review on Amazon with 1,000 ratings and has a very high for Goodreads review of about 4.1. So I'm definitely getting that one. I don't have it and I'm buying it.   0:23:22.1 BB: Yeah. And it's again, he, I believe in there he offers what we should do instead, which again, I think would be, benefit from an understanding of SoPK. And so, again, for the Deming enthusiast, there is stuff in those two books, which you'll just love. And the third book came out at, I think, 2020 during the pandemic, The Tyranny of Merit, that tyranny word again, by Michael Sandel from Harvard. And I believe we've spoken about him before. And it's the tyranny of meritocracy, which is the belief that I achieved my success all by myself. I earned the grade all by myself. Everything I've done, I've done all by myself. There is no greater system. And I've written... In fact I sent an email to Michael Sandel complimenting him for the book and trying to point out that everything he's talking about fits in very well with Deming's work and that the issues are bigger than that.   0:24:34.4 BB: And I have not yet heard back, but he's a busy guy. But those three books are I would say, must reads. Then I go on to say that, because I used earlier that Dr. Deming talked about we are living under the tyranny of the prevailing style of management. So then I looked. I wanted to, so what exactly is this tyranny stuff? I mean, I'm so used to the word, so I wanted to go back and get a definition. "Tyranny is often synonymous with cruelty and oppression." And I said, that's... Yeah. Yeah. Oh, absolutely. All right.   0:25:26.4 BB: So, next, I wanna talk about... In previous podcasts I talked about work at Rocketdyne, what we called an... In the beginning it was called A Thinking Roadmap. And then as we got turned on to thinking about thinking, we changed that to An InThinking Roadmap. And that constituted roughly 220 hours of training over a dozen or so courses. So we had a one day class in Edward de Bono's Six Thinking Hats, a one day class in his, in other, actually two days in some of his other. So anyways, we had a number of courses on de Bono's work. I had a 40-hour intro course to Taguchi methods and a 40-hour advanced class in Dr. Taguchi's work. We had a 9-hour session called Understanding Variation. We had a things we were trained in that were developed by others, and then things we designed ourselves.   0:26:36.6 BB: And in the courses are tools and techniques. So tools are a cell phone, a slide rule, a computer. And the technique is how do we use it? And they provide what Ackoff would call efficiency, but also a number of these courses were inspired by Dr. Deming and Russ Ackoff were about improving effectiveness. And I got into concepts and strategies. And then what I wanted to mention that I don't think I've mentioned before is the whole concept of an InThinking Roadmap, and in this thinking about our thinking, which is a big part of the theme for tonight is, as that was inspired by, in the early '90s, Rockwell, Rocketdyne was then part of Rockwell, every division of Rockwell had a technology roadmap. And that had to be presented to higher and higher levels.   0:27:33.3 BB: What technologies are developing? What's the roadmap? And so more and more and more I heard this tech roadmap, tech roadmap. And then with colleagues, we started thinking about thinking, we thought, we need to have a thinking roadmap to combine with the technology roadmap. So the technology roadmap is gonna be helping us enormously in terms of efficiency, but not effectiveness. And I thought to integrate those two is quite powerful, which is, again another reminder of why Dr. Deming's work is a brilliant foundation for the use of technology. Otherwise, what you end up doing in a non-Deming company is with a cell phone you can increase the speed of blame.   0:28:21.4 BB: All right. So then I went back since last time I did some more research into transformation and came up with some great thoughts from Russ Ackoff. Again, our dear friend Russ Ackoff. And this is from an article that Russ wrote on transformations. And he says, "transformation is not only require recognition of the difference between what is practiced and what is preached. He says a transformation called four years ago by Donald Schön in his book Beyond the Stable State," and this is a 1991 book, he said, "it requires a transformation in the way we think.”  “Einstein," Russ says "put it powerfully and succinctly." He says, "without changing our patterns of thought, we'll not be able to solve the problems we created with our current pattern of thought."   0:29:08.2 BB: Russ continues. "I believe the pattern of thought that is required is systemic. It is difficult if at all possible to reduce the meaning of systemic thinking to a brief definition. Nevertheless, I try. Systemic thinking," again from Russ, "is holistic versus reductionist, synthetic versus analytic. Reductionist and analytic thinking derived properties from the whole, from the parts, from the properties of their parts. Holistic and synthetic thinking derived properties of parts, from the property of the whole that contains them." So I thought it was neat to go back and look at that. And then I want, more from Russ. "A problem never exists in isolation. It's surrounded by other problems in space and time. The more of a context of a problem that a scientist can comprehend, the greater are his chances of truly finding an adequate solution."   0:30:11.4 BB: And then, and so when I was going through this over the last few days, thinking, boy, I wish Dr. Deming defined transformation, it would've been, if he had an operational definition. But I thought, but wait a minute. 'Cause part of what I'm finding is, in my research, an article I came across years ago, Leading Change in the Harvard Business Review, a very popular article, 1995, by John Kotter, Why Transformations Fail. So Kotter uses that word and the title is Leading Change: Why Transformations Fail. And he is got establishing... Eight steps of transformation. "Establishing a sense of urgency, forming a powerful guiding coalition, creating a vision, communicating the vision, empowering others to act on the vision, planning for, and creating short-term wins." And under that step, Andrew, he's got a couple of steps, I'd like to get your thoughts on. One is "recognizing and rewarding employees involved in the improvements." So I thought, but of course this is transformation in the realm of the prevailing system of management. And so what that got me... Tossed around on it. I thought, well, wait a minute. There's a bunch of words that Dr. Deming uses that others use, but we know they mean something different. So Dr. Deming...   0:31:56.6 AS: Like I'm thinking, improvement is what he may be talking about.   0:32:02.4 BB: Well, but Dr. Deming talks about teamwork and the need to work together. Everybody talks about that.   0:32:08.1 AS: Yep.   0:32:09.2 BB: But just that we know, in a non-Deming environment, it's about managing actions, completing those tasks in isolation. I can meet requirements minimally, hand off to you, and that in a non-Deming environment, we call teamwork. So what I was thinking is, well, it's not that we need a new, 'cause I was even thinking, maybe we need a new word. Maybe in the Deming community, we should stop using the word transformation and come up with another word. Well, the trouble is, there's a whole bunch of other words that we use from teamwork to work together, to leader, quality. We talk about performance. We talk about root cause versus root causes. We talk about system. And so it's not that we need a new word, we need a new foundation. And that goes back to this notion as you read The New Economics or Out of the Crisis, you're hearing words that Dr. Deming uses that others use like John Kotter, but they're not used in the same context.   0:33:26.2 AS: How would you wrap up the main points you want people to take away from this discussion about transformation?   0:33:38.1 BB: Big thing is, we are talking about transformation. We are talking about seeing with new eyes, hearing with new ears. So the seeing, we talked about last time, is it's not just the systems. We're seeing systems differently. We're seeing variation differently. We're thinking differently about people and what motivates them and inspires them. The psychology piece, the theory of knowledge piece, we're challenging what we know. And then we have to think about all those interactions between two of them, between three of them, between four of them. And so I'd say that it's, the essence is transformation is essential. It is about rethinking our thinking. And I just wanna leave with two quotes. One fairly recent, one a little older. And the first quote, the more recent one from Tom Johnson, "How the world we perceive works depends upon how we think. The world we perceive," Andrew "is a world we bring forth through our thinking."   0:34:44.9 BB: That's H. Thomas Johnson, a dear friend in his 1999 book, Profit Beyond Measure. And my advice to people in reading that book is, do not attempt to read it laying down in bed. It's just, now you can read those other books we talked earlier. I think you can read those lying in bed. But Tom is very pithy. You wanna be wide awake. The last quote I wanna leave is from William James, born in 1842, died in 1910. He was an American philosopher, psychologist, and the first educator to offer a psychology course in the US. He is considered to be a leading thinker of the late 19th century, the father of American psychology, one of the elements of Profound Knowledge. And his quote that I wanna leave you with, Andrew is, "The greatest discovery of my generation is that human beings can alter their lives by altering their attitudes of mind."   0:35:45.2 AS: Whoa. Well, Bill, what an ending. On behalf of everyone at The Deming Institute, I want to thank you again for the discussion. For listeners, remember to go to deming.org to continue your journey. And if you want to keep in touch with Bill, just find him on LinkedIn. This is your host, Andrew Stotz, and I'll leave you with my favorite quote from Dr. Deming. "People are entitled to joy in work."  

In this episode, Bill Bellows and host Andrew Stotz discuss seeing organizations as holograms—3D images. Holograms show all parts from different views at once. Learn how using the lens of the System of Profound Knowledge lets you see the problems and opportunities for transformation. TRANSCRIPT 0:00:02.5 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 Bill Bellows, who has spent 30 years helping people apply Dr. Deming's ideas, to become aware of how their thinking is holding them back from their biggest opportunities. The topic for today, which we call Episode 18, is, Wouldn't It Be Nice? Bill take it away.   0:00:28.9 Bill Bellows: Wouldn't it be nice if [chuckle] we were older and we wouldn't have to wait so long? Okay. So Episode 18, greetings, Andrew. So as I mentioned in the past, I like to go back and listen to the past previous podcasts and as well as hear from people and their feedback on them. And I have a few points of clarity on the last one, and then we'll get into today's feature. So the last one which we refer to as Diffusion From a Point Source. And I talked about being in a bathtub, you start off at room temperature water and, or you fill the bath and you went and got distracted and came back, and now it's not warm enough, so you crank up, let's add some more water, and you feel that heat coming towards you from the... And then the diffusion equation is about how that, all the water ends up about the same temperature, and then you turn off the water and you drop back to room temperature.   0:01:41.1 BB: But another aspect of the point source that I wanted to clarify is, is if you have in the bathtub some, a source of energy, a heat source, which is not, you know, is different than the source of the water coming out of the faucet. But imagine you've got a little generator in there pumping out heat, then the bathtub, depending on the temperature of that, the amount of energy being released, then the bathtub is going to get warmer, warmer and warmer and warmer and warmer and warmer, and what keeps it going back to room temperature is how much energy is coming out of that. And that's what I was referring to as what it takes to maintain a transformation either individually within an organization, is something which continues to churn. Else you end up by the world we're in, you're watching the news, you're hearing about some accident and people are looking for the singular source, or they're looking at two points in a row, a downturn or upturn and looking at two data points to draw a conclusion. So there's all these everyday reminders of how, of the prevailing system of management at work in terms of how people are treated, how we manage systems. And our challenge is, how do you fight that?   0:03:14.7 BB: And so even within your organization, if you're trying to get people excited by Deming's works, what you have to appreciate is when they go home, the rest of their lives, they're being immersed in a culture of blame of individuals, not the system, and that's part of what we have to deal with. So I just want to mention that what I meant by that source term is, what does it take individually that we can do within our organizations to try to keep things going and not get sucked back down, knowing you've got all this normality around us that we're trying to move beyond. So the next thing I want to talk about is transformation. [chuckle] And then as that leads into, Wouldn't It Be Nice. And I was looking at The New Economics, my Kindle version, and found out that there were 73 references to transform in The New Economics, 73. And the first one is in the forward written by our good friend Kevin Cahill, and in there Kevin references, this is in the 3rd edition of The New Economics, which is the white cover if you have it in print. And it came out 2018. In there, Kevin references Out of the Crisis. And Kevin says, "The aim of the book," again, Out of the Crisis, "was clearly stated in the preface."   0:04:48.1 BB: This from Dr. Deming now, "The aim of this book is transformation of the style of American management, transformation of American style of management is not a job of reconstruction nor is it revision, it requires a whole new structure from foundation upward. The aim of this book is to supply the direction." Okay? Now back to Kevin, then Kevin says, "Out of the Crisis supplies direction for any and all types of organizations, while many people focused on its application in manufacturing, it was a call to action for every organization from education, to healthcare, to non-profits and startups of all sizes." Okay. So now we get to the preface for The New Economics. And so this is from Dr. Deming, what I just shared with you is Kevin quoting his grandfather. So now going back to 1993, the 1st edition, Dr. Deming said, "The route to transformation is what I call Profound Knowledge. The System of Profound Knowledge is composed of four parts all related to each other, appreciation for system, knowledge about variation, theory of knowledge, psychology. The aim of this book is to start the reader on the road to knowledge and to create a yearning for more knowledge." He adds to that,   0:06:07.3 BB: "What we need is cooperation and transformation... " there's that transformation word again. "To a new style of management, the route to transformation is what I call Profound Knowledge. The System of Profound Knowledge is composed of four parts all related to each other." And I'll just pause here and I, just thinking of a friend a couple years ago is inviting me to go to his company and do an in-house program. And he wanted to know how I would start the program, would I open up with the System of Profound Knowledge? I said, "No." I said I would build up to that, and he says, "Well, why not just start with it?" I said, "Because it's a solution to a problem you don't know you have." I said, "I would rather first give a sense of the nature..." now, and he said, "Well, how are we going to start?" And I said, "I'm going to start with the Trip Report, having people compare the ME versus the WE or the All Straw versus the Last Straw. And then use Profound Knowledge as a means by which to understand how you go from one to the other." I said, "But without that understanding of the problem we face... " again, it's an elegant... [chuckle] Every time, the System of Profound Knowledge is an elegant solution to a problem you don't know you have. So I look at it as, let's first create a sense of the problem/opportunity. Okay.   0:07:38.0 BB: So we're going to come back to transformation, but now I want to go back to the title, Wouldn't It Be Nice. And what I'll do is, when this is posted on the institute webpage, I'll put a link to an article I wrote in September, 2015 for the Lean Management Journal, entitled, Wouldn't It be nice. And that article includes in the opening, it says, "My appreciation of Brian Wilson on the Beach Boys has grown significantly in the past month," okay, and this was written in 2015, "after viewing the Brian Wilson Biopic “Love and Mercy," which for you, Andrew, and everyone listening, it's a fascinating, fascinating film. And it got me turned on to Brian Wilson and all these things about the Beach Boys I really underestimated. All right, so then I wrote, "Through this blast from my past, I was reminded of another Beach Boys classic, Wouldn't It Be Nice. And the yearning "wouldn't it be nice if we were older then we wouldn't have to wait so long." And then I closed the opening with, "And reflecting on this adolescent wishfulness, I propose a wishfulness that organizations, public and private and even governments, improve their understanding of variation in how it impacts the systems they design, they produce and they operate."   0:09:00.7 BB: And so when I was going back and looking at that, 'cause I was thinking about transformation in this article, and I thought the transformation I talked about last time was the transformation... We talked about the transformation going from an observer, me as a professor used a student, I'm an observer of your learning versus a participant, and that's just a systems perspective. What Dr. Deming is talking about is not just how we look at systems, but the transformation involves how we look at variation. Do we move past two data points and look at variation in the context of common causes and special causes? A transformation of how we engage people, do we engage them with carrots and sticks? Do we understand when we blame them as the willing workers, what that creates in our organizations? And then the last element of Profound Knowledge, theory of knowledge. How do we know that what we know is so? And so I was just looking back at that article, and the article was written about, what if we had a better understanding of variation as one element of a transformation? And what I wanted to highlight today is talk more about transformation, but also look at transformation from not just one aspect of the System of Profound Knowledge, all of them.   0:10:32.2 BB: And it may well be, we're going to need another episode to go through this. But the next topic I want to do as we go down this path. Some time ago somebody made reference to a hologram, and I have seen holographic pictures, and so I went back and I was trying to think, why did that strike me? What about this hologram got my attention? And I started to remind myself of it. And Kevin and I were in Idaho a few months ago meeting with an audience. And I was again reminded by this hologram thing, because people were saying, "How come people in operations are so antiquated?" And I said, "Well, it's not just operations, it's more than that." So first, holograms, so what is a hologram? So I found a dictionary definition. "It's a three-dimensional image produced by a pattern of interference produced by a split coherent beam of radiation, such as a laser." That's for the physicists in the room.   0:11:38.5 AS: I'm not sure if that helped me but...   0:11:40.6 BB: [laughter] But I also found on a website, the Institute for the Advancement of Service, and the website is, www.showanotherway.org. And there I found something I think it's a little bit easier to digest. And the text says, if you turn a photograph over and you see a blank white surface," so far so good. "A photograph shows the image only on the front, thus only from one side, a hologram is a three-dimensional image created by interacting light sources, it shows the same image from all angles regardless of how it's being viewed. When a hologram is divided into pieces, the text says, each part still contains the entire image within it, although each new image is from a slightly different perspective." And then, again, from this website, and this leads us into the transformation piece, is "how does a concept of a hologram apply to organizational structures?" And I thought, "Okay. Now we're getting some place." "Because when people come together, share a vision for an organization, each person has his or her own unique perspective of the whole." I said, "Okay." "Each shares responsibility for the whole, not just his or her piece, but the component pieces aren't identical, each represents the whole picture from a different point of view.”   0:13:08.0 BB: “When we add up the pieces, the image of the whole does not change fundamentally, but rather the image becomes more intense. When more people share the common vision, the vision may not change fundamentally, but it becomes more alive, more real in a sense of the mental reality that people can truly imagine achieving." And to me, what I say is, the role of the ME/WE Trip Report is in part to create a common mental model, a common 3D view of an organization. But depending on who you're talking with in an organization, they see only one aspect of it, they see what it means in finance, they see what it means in HR, they see what it means in, from engineering. And the beauty of, what I have found is, is when you look at organizations from Dr. Deming's perspective, we're able to appreciate that these views are different, but it is the same thing we're looking at. So the next thing I want to get into of the work we're doing at Rocketdyne, working harder in a ME organization at a non-Deming company, working harder is the mantra, working smarter, as you and I have talked about, is what does that mean? Think about things from a Deming perspective. What does that mean? So what you get is a lot of working harder. And in which case, you have KPIs and we're working harder to achieve these KPIs.   0:14:46.9 BB: Well, I was very fortunate, Rocketdyne in the mid '90s, the Air Force came up with a brand new program for a next generation rocket with a set of KPIs that a few of us believed were impossible. Now what's the relevance of that? As long as, my theory is, as long as a non-Deming organization can achieve the KPI in how it currently operates, then just get out of the way. And they will work harder, a lot of brute force will be done to meet those KPIs. And Dr. Deming would remind us, anyone can accomplish anything if they don't count the cost. So, I mean, it will destroy people's lives and marriages and all that, but as long as those KPIs are met, just get out of the way. Well, what I loved about the Air Force requirement, was I was convinced that it couldn't be met. And part of the challenge was to convince executives at Rocketdyne that we can't get there from here. And that then, what I thought was, "This is our moment." We, so again, if you're in an organization and everything can be done, how the organization currently operates, then I say try to find something that can't be done with the current system. It can't be done in the schedule, it can't be done at the cost, but if it can be done by the current system, then that's not your opening. But for us, it was the opening. So the Air Force in the mid '90s had a couple billion dollars to develop a next generation series of rockets.   0:16:30.7 BB: And so we're, nowadays we think of SpaceX launching rockets. Well, this is the mid '90s, which is 20 years or so before SpaceX. And so the requirement was, that everything in the entire rocket, everything in the entire rocket, that's a lot of parts including the engine. Everything had to meet requirements, everything had to be a White Bead, no Red Beads. In the past, if there were Red Beads, which the Air Force accepted, and we know you get Red Beads, we know how you get Red Beads. And if they have Red Beads, then you would get paid to repair them, extra. And a friend of mine who was the brainchild of the effort within the Air Force to eliminate the purchase of Red Beads, he said, "The entire rocket will not have Red Beads." And when I heard of that I thought, "ME organizations don't know how to do that." They just, all they know how to do is create Red Beads. And the strategy we had already developed was, if we look at the variation in the White Beads, as you and I have talked about, then that's a great means to prevent White Beads, Red Beads in the first place, let alone improve integration. So we started getting senior management on board with things we have done to explain to them, here's a strategy, as we heard this flow down from the Air Force.   0:18:04.6 BB: Well, the existing system, how bad it was, was... And I learned this from the brain, this Lieutenant Colonel in the Air Force who pushed this incredible KPI, which was, everything must meet requirements. And it translated to something called "No Material Review Board, where a material review board in the industry, in the aerospace industry, is a situation where you've got a Red Bead that may be a very expensive Red Bead that the contractor wants to sell the Air Force, but it doesn't meet requirements. And then the contractor gets together with the Air Force and they schmooze over it, and what Lieutenant Colonel Ciscel explained is, you've got the contractor that really wants to sell that, even though something is not quite right. And what makes it work for the Air Force is when the contractor says, "Well, the bad thing about not using this is, it's going to take a couple of months to have a new one." And that time delay starts to bug the Air Force. Next thing you know that white, that Red Bead starts to look pretty good. But worse than that, what Dave explained is, he said, it's like going to the car dealership and finding that beautiful car you want. Then I, the sales person, tell you, "Andrew, okay, we're going to have it for you tomorrow, all ready to go."   0:19:36.0 BB: And then you come back the next day and I say... And you say, "Well, where's my new car?" And I say, "Well, Andrew, I told you we were going to wash it and wax it. Yeah, well, when we put it through the car wash we scratched it." And you're like, "You scratched it." And I say, "Well, yeah but we buffed out that and we're only going to charge you a little bit more for that. We're going to charge you for this and this and this." And they said, "That's what the Air Force does." And so what he was pushing for in the mid '90s was to get rid of all of that inspired by, you're ready Andrew? Inspired by his undergraduate education that the Air Force paid for when he was an officer, and he learned about Dr. Deming's work on control charts. And so when I heard that I thought, "We've got a requirement that can't be met." This is the, this is our means, our opening for initiating a transformation. 'Cause working harder, convincing the executives was, we can't get there from here. But boy, if you can get there from here, get out of the way. So now I'm going to go back to chapter two of The New Economics. Dr. Deming says, "Somehow the theory for transformation that's been mostly applied in the shop floor, everyone knows about statistical control of quality, this is important, but the shop floor is only a small part of the total. Anyone could be a 100% successful."   0:20:54.1 BB: Well, what I want to share there in terms of the situation we were dealing with in the mid '90s, if we started to talk to the executives about statistical control of quality, control charts, common causes and special causes. Well, as soon as we started to talk about the process being "in control," to the majority of our executives that translated to "everything met requirements." And so our starting point was just for that, just what does "in control" mean? And it was just so amazing how that got translated to meets requirements. And we're like, "No, no, no. We need to have the process in control, understand common cause variation and control charts and, let alone being on target." But that was our starting point, was just trying to get these ideas across on the shop floor. And chapter three... I've got a couple of things from each chapter, at least from some of the opening chapters. We'll cover the rest later. Dr. Deming says in chapter three, "We saw in the last chapter that we are living under the tyranny of the revealing style of management. Most people imagine that this style has always existed, it is a fixture. Actually, it is a modern invention, a trap that has led us into decline. Transformation is required. Education and government, along with industry, are also in need of transformation. The System of Profound Knowledge to be introduced in the next chapter is a theory for transformation."   0:22:25.5 BB: And this is what we're trying to do with this NO MRB initiative, we are just trying to get executives to realize that if we keep doing what we're doing, we're not going to be able to achieve this goal. What I'll also say is, there was such a commercial demand for space at that time, that the Air Force didn't have to pay for the entire program. So they came in with a couple billion dollars. They asked the contractors to bring their money with the idea that these rockets would be used, like Elon Musk is using, for launching all these commercial satellites. So the Air Force excitement was, we can lay out these requirements of no Red Beads, but the reason we're going to make it work is, there's such a commercial demand for a military product. And so Dave referred to this, his push for everything must meet requirements. He called it a $2 billion ambush. And I said, "What do you mean by that?" He said, "I knew they couldn't achieve what we wanted without a transformation. And I knew they wouldn't... We knew they wanted the money. But we knew they couldn't do it without a transformation." And I was like, "Oh, that's ingenious. That is just ingenious." And he so loved what we were doing at Rocketdyne, when he retired from the Air Force, as the program was transitioning from one phase to another, he retired and came to work at Rocketdyne. And he became a huge asset for our efforts to initiate a transformation.   0:24:06.1 BB: Then Dr. Deming says, "The transformation affects family life. Parents who will not rank their children nor show special favors or rewards. Would parents wish for one child to be a loser? Would his brothers and sisters be happy to have a loser in the family? Transform the family will be a living demonstration of cooperation in the form of mutual support, love and respect." At home, Andrew, at home. All right, "The prevailing style of management must undergo a transformation, the system cannot understand itself. The transformation requires an outside view." This is chapter four. And then "The aim of this chapter is to provide a lens, an outside view, a lens that I call a System of Profound Knowledge." Well, here I want to get into the hologram. And this, so I was... Kevin and I were at a Idaho Manufacturing Alliance conference right after Thanksgiving. And we had a session with some people. And in one group I was working with, they said, "Why is that engineering just doesn't get it? It always seems to be engineering. It's always engineering." And I said, "No." I said, "Each part of the organization has their own... " And I tried to explain to them, they each fall into a different trap, but the traps are very similar.   0:25:27.6 BB: I said, "So engineering sets the requirements on each part, they create the silos. Manufacturing then runs off with those instructions and produces the parts as if they're separate, quality then inspects them, finance adds up the savings, adds up the cost." And I don't know to what degree we've discussed this yet, but addition is the belief, adding up the savings comes from a belief that these elements are separate, that if we save $10 here, save $10 here and $10 there, then as an organization we save $30. No, the savings only happen... You only get a $30 savings if those activities don't interfere with one another. So I explained to them, finance has issues. And then HR, they're the ones behind performance appraisals. And that's where this hologram thing came to mind, is that each of them might think, as they get exposed to Deming's work, that we got this figured out. But it's all of them required to tie together to transform the organization. And then more from chapter 4, the transformation. "The first step is transformation of the individual. Transformation is discontinuous. It comes from understanding of the System of Profound Knowledge. The individual transformed will perceive new meaning to his life, through numerous interactions between people. Once the individual understands the System of Profound Knowledge, he'll apply its principles in every kind of relationship." There's Siri.   [chuckle]   0:27:13.6 BB: "Once the individual understands the System of Profound Knowledge, he'll apply its principles in every kind of relationship with others. He'll have a basis for judging his own decisions and transformation of the organizations that he belongs to. The individual, once transformed," this is what we talked about last time. I said, "No. The individual, once the transformation begins...will set an example, be a good listener, but not compromise. Continually teach others, help people pull away from their current practice and beliefs and move into the new philosophy without guilt about the past." And here I just want to add. A person I was mentoring three or four years ago, and she went through a one-day program I was leading, and I then started to mentor her on a regular basis. And one of the first calls we had, she was distraught over looking at herself as being incredibly selfish. She said, "The way I treated my siblings, the way I treated my classmates when I was in college." she said, "It was all about me." And I said, so I showed her this, I said, "You have to move into the new philosophy without guilt about the past." I said, "I used to think I caused the grades all by myself," I said, "We each go through this transformation differently with this bit of... " I mean 'cause we're brought up in a world thinking that we caused the grades and all these other things, and I said, "You got to move past that." And I'm not saying it's easy.   0:28:41.5 AS: Well, we did the best we could with what we had at the time, I always like to remind myself...   0:28:45.1 BB: That's right.   0:28:45.4 AS: Myself that.   0:28:48.2 BB: So a couple of other things, then I'm going to... Then I'll just pause, we can close. But what I would tell the executives early, early on, we had from the Air Force this major program, a whole lot of money at Rocketdyne, we were developing the engines. McDonnell Douglas was acquired by Boeing. They got the contract for the vehicle. So eventually we were all under Boeing, and it was really, really cool to be able to get the engine people smart about all the things we're talking about in these calls, and then the vehicle people excited. And then there was a production schedule. We're going to ship the first vehicle X years out, and then it's going to go from a couple a month to a lot a month on and on. And one of the things I would tell the executives, if you want to know every day, how are we doing every day. So you want to know if we're making progress as an organization. So I just gave them a couple of visuals. And I said, "One thing you get... " 'Cause there's one thing, "Well, how are we doing, how are we doing?" I said, "Well, let me tell you what you can measure." I said, "Every time you walk into the restroom, count how many paper towels are on the floor next to the trash can, that can't quite get into the trash can, and let that be a measure of how we're doing on the shop floor in our ability to not deliver Red Beads."   0:30:15.7 BB: And that then becomes an everyday reminder within our respective organizations is, we can't get the trash into the trash can, we can't leave the conference room as we found it, we can't get rid of the science experiments in the refrigerators. And I don't know if I mentioned it to you, but one experiment I would have people do when they would come to class at Rocketdyne, visitors and whatnot. During a break, they need an escort to walk to the restroom a few minutes away, and I'd say to them, "Here, run an experiment to how we're doing as an organization." I said, "Take your empty cup of coffee and put it on top of a file cabinet somewhere between here and the restroom, and then see if it's still there during the next break. Or crumble a piece of paper, put it on the floor, and see how many people walk past that." And I just throw that out as everyday things people can do to get kind of a finger of the pulse. As you're trying to transform your organization one person at a time, what are the things you can look for in the organization, long before we're focusing on common causes versus special causes. What are we doing with performance appraisals? Are we looking at things in the system? There's a bunch of everyday indicators you could start to look at with a sense of, this is a hologram.   0:31:51.8 AS: So we started this off with wouldn't it be nice? And we've been through a lot of different topics in relation to that, how would you summarize the key takeaway that someone can now bring to their business or their life in relation to this topic?   0:32:08.4 BB: Well, let me, and I got some bullet points on the holograms and then the close from the article that I wrote for the Lean Management Journal. And from the hologram, holographic model from the showanotherway.org website, it says, "What do we need to be mindful of when working with this holographic model?" It said "in this model, we need to be aware of the whole, with the parts, their relationships, and the context." Okay? So that's, part of this transformation is keep looking at things and try to imagine what's the greater context for these decisions. That one part of the organization reflects the philosophy of the whole organization. So the idea that, stop thinking that it's just those people in operations that don't get it. Each part of the organization has taken the prevailing system of management and put it into their DNA. So it's everywhere, that members of the organization reflect the whole of the organization and their behaviors. And the idea is, how do we get them to think about the whole? And I think a lot of progress can be made just by sharing with people a common... Having them reveal their appreciation of the contrast between ME and WE organizations, and they'll be pretty obvious where they'd rather work.   0:33:41.3 BB: And then the, what I closed the Brian Wilson article for the Lean Management Journal with is, "wouldn't it be nice if we manage the variation in the parts as being the parts of a system. In the spirit of Brian Wilson's adolescent wishfulness, wouldn't it be nice if the great illusion of independent parts and components modules was replaced by the realism of unity and interconnectedness in amazing prospects for teamwork within any organization." And I think that's a nice way of talking about transformation, not just looking at systems, but understanding people, psychology, and the theory of knowledge.   0:34:25.1 AS: Well, that's a great place to wrap. Bill on behalf of everyone at the Deming Institute, I want to thank you again for this discussion. And for listeners, remember to go to deming.org to continue your journey. And if you want to keep in touch with Bill, just find him on LinkedIn. This is your host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming. And people wonder, why do I repeat the same quote over and over again. Try to get it through our thick heads that people are entitled to joy in work.      

In The New Economics, Deming said “The individual, transformed, will perceive new meaning to his life…” (3rd edition, page 63) But are we ever completely transformed? Discover why Bill Bellows believes that transformation is an ongoing process and how you can keep your learning journey going. TRANSCRIPT 0:00:02.2 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 Bill Bellows, who has spent 30 years helping people apply Dr. Deming's ideas to become aware of how their thinking is holding them back from their biggest opportunities. And the topic for today is, in this episode 17, Diffusion from a Point Source. Bill, take it away.   0:00:29.6 Bill Bellows: And the title coincidentally, was the focus of my Master's thesis. We'll look at that later.   0:00:37.1 AS: It wasn't a rock and roll song. Yes, correct.   0:00:39.9 BB: No, not a rock and roll. [chuckle] Actually, Diffusion from a Point Source. Was that Mick Jagger or Keith Richards? Maybe it was Taylor. Maybe it was Taylor Swift. Okay. So some opening remarks, and then we'll get to today's feature. And I mentioned in the past, I go back and listen to the podcast, read through the transcripts, and it's very much like “Production Viewed as a System” - is to talk with people that have listened to it, listened to it myself and ask, have I... Are there holes in the explanation? Can I add some more clarity to it? The process I use for these podcasts is, some title comes to mind. I've got a long list that we started with at the very beginning, and then some other topics come up for any of a variety of reasons.   0:01:35.3 BB: And we'll have a title, have an outline, but then as we get involved in the conversation, something I say leads to something that you say leads to something that's not on the list. And sometimes some of those ad-libs, I go back and listen to and say, "Well, I don't know that sounded right. I just wanna add a little bit more clarity". Another thing I wanna say at the outset for those listening, is [chuckle] there is... Somebody posted somewhere on social media that one of the sessions was a total waste of time to listen to which I think is unfortunate. But what I like to say is, where I'm coming from to support The Deming Institute, as your ambition is as well, is to help individuals in respective organizations learn about Dr. Deming's ideas, try to apply them, deepen their understanding, explain them to others, and that's the target audience.   0:02:48.0 BB: So, for those who find that boring, well maybe this is not the podcast for you. And so, and the other thing I wanna say along those lines is, for the majority of my time at Rocketdyne, I had the responsibility of being a transformation agent or transformation person was part of my job. Now, I was brought in, I didn't have that job to begin with. The job I had to begin with was to lead the effort to provide training, facilitation of applications of Dr. Taguchi's ideas. And what I've shared in these podcasts is a lot of what I was doing early on was helping people put out fires.   0:03:38.2 BB: And that's not what Dr. Taguchi's ideas are about. His ideas are about improving the robustness of the performance of a product or service. Whereby what robustness Dr. Taguchi means is "it performs as an athlete incredibly well in spite of differing weather conditions." So the ability of a marathoner to run very consistent fast times in spite of the weather, in spite of the altitude. And so you're getting consistently high, or consistently faster and faster times. That's what Dr. Taguchi meant by, means by, his work means by "robustness."   0:04:16.2 BB: And what I was doing was using tools and techniques associated with his ideas to fight fires. And then, I got frustrated by that. And that led me to Dr. Deming's work, led me to revisit Dr. Deming's work. I had met him in 1990 and The New Economics came out in '93, and I had a couple of years of this frustration. The exciting thing was solving, getting involved, working with some really exciting people, and solving some very high visibility issues. But it wasn't breaking in as much as I would've liked into the, into the robustness piece. And when I came across Deming's work, I started to understand, it gave me a lot of food for thought as to why that might be the case. Now what is meant by transformation? And Dr. Deming uses that term, an individual transformed.   0:05:07.8 BB: And I had asked people that were close to him like, what is his operational definition of transformation? And when I explained it to them, I said, this is what I think he means this. And typically people say that's, they agree with that. And so my simple explanation of what I think Deming meant by transformation is as simple as, me saying to you, the professor to the student, “Andrew, how did you do on the exam?” Whereas I've said in the past, that makes me an observer of your learning to changing the question to how are, how did we do on the exam, where I become a participant? So I look at, so to me, the transformation Deming's talking about is that I no longer look around at things and see myself as separate from them. I look at myself as connected to them, and others being transformed or likewise seeing themselves as integral to what's going on, not watching it go by. Another reason I wanna bring that transformation agent piece up is part of my job, not part of my job, so I went from being mostly about Taguchi's work to mostly about Deming's work because I felt it was far more vital to focus on what Deming's talking about, the transform, how the organization and transform how the individuals operate. Another thing I wanna say there is what I think is interesting, if you look at the forward to Out of the Crisis and The New Economics.   0:06:48.1 BB: In Out of the Crisis, which I think was 1986 or so timeframe, Deming talked about the aim of this book is to help transform organizations. And then in The New Economics, he talks about the aim of this book is to help transform individuals. So he went through, he's shifted his focus from I'm trying to help organizations to I'm trying to help individuals. And that's what I'm hoping to do, interacting with you in these podcasts. So, on the one hand, I'd say to those listening, I don't know what your role is. If you're a transformation agent, that's one role. You may be an individual contributor, a senior software person, a marketing person, which means your job title does not include transforming the organization.   0:07:37.8 BB: So, what does that mean? It means some of what we're talking about may not apply to you. You may be personally excited about the Trip Report and, but it may not be your job to hold seminars within your respective organizations and go off and explain that to people. You may alienate people who think that's their job. So, I just wanna say, ask people, to be careful about what your role is in your organization. I've mentored many people and I'm used to going in and being the transformation person. And, one person I was working with, and she was all excited to wanna go share the Me-We Trip Report with her peers in this company doing software. And I said, "You can't do that". And she's like, "Well, why?" I said, "It's not your job". I said, "One is if you call a meeting to talk about transformation of the organization, or you get into that territory. I said, you're stepping on the toes of people who have that responsibility, perhaps. Or somebody's gonna say, wait, I thought we paid you to be a software engineer. Now you're over here. So, now you sound like you're astray, you're a loose cannon".   0:08:56.8 BB: Now I said, to this person, I said, now if you... There may be a place for you to say, "Hey, I wanna show you this neat solution.” If you think they're interested, ideally they ask you to show you how you did that. So, I think there's a difference when it comes to implementing these ideas, I would just advise some caution to people to not overstep their bounds and what it means to bring these ideas to the organization. So, I just wanted to say that.   0:09:32.4 AS: Yep. I just wanted to highlight the word transformation for a second. And the dictionary definition says, "transformation is a thorough or dramatic change in form or appearance. A transformation is an extreme radical change." And that's interesting, 'cause they say in form or appearance that you could have someone do a facelift that dramatically changes their face and the way they appear. But, has it been an internal transformation? Maybe, maybe not.   0:10:10.9 BB: Well, what's funny is, I mentioned that in previous podcasts, 'cause once a month for 17 years, I hosted an Ongoing Discussion where there'd be... I could have you on as a Thought Leader on a topic near and dear to you. And we send the announcement out and people would call in and it took a few years for Russ to agree to do it. And then, he eventually did, and he did it every January. Typically people would, every month be somebody different. But once I saw Russ's excitement by it, then I said, "Russ, every January we're gonna have you", we did it for four years, and every January I'd fly out to Philadelphia and be with him. So, the last time I did it with him, we were in his apartment. We were sitting pretty close together over the small desk. And in the sessions, the term transformation came up. So, the last session ends, we did four one-hour sessions over two days. The last session ends. And I turned off my recorder. And I said, "Russ, it just dawned on me that you and Deming, you and Dr. Deming both talk about transformation".   0:11:26.8 BB: And I said, "Dr. Deming talks about a personal transformation - I see the world differently.” And Russ looks at transformation as an attribute of a solution. That “we used to do it this way, now we do it this way.” And so, his is not transformation of an individual, but transformation of a solution. And I said, I just... I threw it out as I just, "You both used the word, but you use it differently". And I said something like, now I was waiting to see what he would say with that. And he looks at me and he says, "I see no value in that conversation", which followed by "let's go get lunch."   [laughter]   0:12:22.8 AS: Exactly.   0:12:24.0 BB: And so I thought, oh, I was really looking forward to exploring that space with him. And I shared that conversation with one of his peers later that night. And he said, "He said that?" I said, "Not only did he say that", he said, "You know what? I really wasn't surprised". 'Cause Russ was... It seemed to be a little bit too abstract for him. Anyway, but it's, but he would've put it, "What is this transformation stuff?"   0:12:51.0 AS: That, it's interesting because sometimes we talk about the why isn't Deming more widely accepted and that type of thing. And I think one of the things is that he's driving for transformation versus I think majority of people are providing information and here's how you do Lean, here's how you do this, here's how you do statistics or whatever, and here's all the information. And then you use that to to make better decisions. I think Dr. Deming was never about being better in our decisions but about how do we transform the way we think.   0:13:33.9 BB: Yes.   0:13:34.8 AS: And also the second part is that the idea of shifting from transforming an organization to transforming an individual. I guess an organization doesn't transform unless the leadership has already transformed or is in a process of transformation. So, therefore targeting the individuals for trying to help them get a transformation ended up being the most important or first step, I'm guessing.   0:14:00.2 BB: Oh yeah. No, I thought it was just so neat to see that shift. I don't know if we've talked that much in these podcasts about transformation. I'll have to go back and check. But what we were doing within Rocketdyne to help differentiate, 'cause language is so important. What do we mean by transform? Because it's a very casually used term and I was trying to, you know, with colleagues at Rocketdyne trying to differentiate what Deming's use of that term. 'Cause we liked the term but the challenge became if we used it did it adopt a meaning that he didn't have in mind in which case we're off to the Milky Way.   0:14:48.8 BB: But what we did was try to differentiate physical change from mental, a physical shift from a mental shift. I guess to me a big part of what he is talking about is going from seeing parts to seeing systems to seeing things as being connected to start thinking about as Edgar Schein would as Peter Senge quoted Peter Schein, Peter Senge quoted Edgar Schein, "Culture are the assumptions we cannot see".   0:15:21.5 BB: And, so I was focusing on is we talk about, there's culture, culture comes from the assumptions. The assumptions come from beliefs and that's associated with our thinking. And that's the space that I think has... is the space to be to really believe, to really implement what Dr. Deming's talking about for all those benefits we've been talking about. And so the word, so in the training we were doing in our InThinking Roadmap, we differentiated reforming and we said "reforming is a physical change. Giving things a new name, adding more steps to the process. It's change you can, it's rearranging the deck chairs on the Titanic." And there's nothing wrong. You can move people together to be closer physically but that doesn't move them together mentally. So, there's a sense of we want everyone to be in the same room physically but they're... But you can hear they're in separate rooms mentally.   0:16:22.7 BB: And we've talked about this in a Me Organization I hand off something which is good to you and if it's not good, you give it back to me. If it is good, you say thank you and I'm separated. I am physically and mentally separated and there's nothing wrong with being physically separated I have to hand off to you. But how about an environment where I am mentally, we are mentally connected because we're thinking together. So if you come back to me and say, "Bill I'm having trouble getting these things together". And I say, "Well, hey I can, I..." not only do I understand that I caused that but I can possibly do something about that. That's the mental transformation piece. So there's... I look at it as there's nothing wrong. I look at it as there's a place for transforming, reforming, moving things to be closer, minimizing number of steps. Nothing wrong with that. But that's not what Deming was talking about. He was talking about transforming which is a change of how we see the world. How we hear the world.   0:17:25.3 AS: Yeah. And when I look at the System of Profound Knowledge and we look at Appreciation for a System, look at Knowledge about Variation and Understanding the Theory of Knowledge and then Psychology, I would say the one you mentioned about Appreciation of a System is the one that brings true transformation because we are taught to look so narrowly. And when we start to look at the bigger system it just blows your mind.   0:17:58.9 BB: Well, it's...it... No, I absolutely agree. I can remember in the early ‘90s I had met Dr. Deming once and I thought that's fascinating. And, I put it aside and got buried in the Taguchi stuff and then began to see the issues as I had mentioned in previous podcasts as well as today. And I started thinking there's, there's something missing. And, in the Taguchi school it was, we need more tools, more advanced tools. That's not about transformation. There's nothing in Taguchi's work that was about the transformation that Deming's talking about. And I'm not aware of that mindset. Well, I've not come across that mindset in many places. I don't see it in all the...a lot of the traditional improvement techniques whether it's Lean or Six Sigma or Operational Excellence. I don't see that, that focus. I agree.   0:19:07.6 AS: And, I bought this book Guide to Quality Control by Kaoru Ishikawa.   0:19:11.2 BB: Yep, yep.   0:19:12.6 AS: I got it in 1990. And, but it's a great example of, the objective wasn't a transformation. The objective was understand these tools and maybe that leads to a transformation, maybe not. That wasn't what he was aiming for. He was saying, "Here's the tools and here's how you can apply them".   0:19:32.2 BB: Well, I used to debate with some co-workers and his, one co-worker in particular. And his mindset was, focus on the tools, and the language, in the conversation we're having, his theory was, "Get people to apply the tools and the transformation will eventually happen". I had the same thought.   0:20:00.1 AS: If that was the case, we'd all be transformed already because we're all applying tools every day.   0:20:04.7 BB: And 'cause we, I had heard a comment, I was at a Taguchi conference and I heard a comment. And as soon as I got back to my office, and this gentleman we're both at work really, really early, we'd go down and get coffee at a quarter to six, go back and sit in his office for a couple hours and just have some great, great, great conversations. And I shared with him, I was at a Taguchi conference and somebody said, the reference was, "You wait for the... " It was something, "The journey begins after the transformation starts". And as soon as I said that, he said, "I think it's the other way around", that the transformation happens after. And I thought to myself, I knew you'd say that, because that was his attitude. Get 'em to use the tools, get 'em to use the tools, get 'em to use the tools. And I kept looking at it as, no, that does not. Yeah. I mean it doesn't mean you don't do it, you don't do something. But I think when you begin to see the world and hear the world differently as we're trying to convey, to me that's when the rubber really begins to hit the road. That's when you move. And again, as we talked, there's nothing wrong with tools and techniques, but tools and techniques are guided by your understanding of the system and the other things. And it's just not enough to be a tool head.   0:21:48.7 BB: Other things I wanted, oh, okay. [laughter] So let's go back the cloud model from number 16. And what I did not reference again, 'cause I went back and looked at it and there's what we shared, but what I wanted to add to it was, one is the idea learned from Barry Bebb that you're an individual contributor trying to get ideas up to the cloud, the cloud being the executives in their meeting space, and the idea of handing off to somebody above you. And then the idea that that transfer is going to take a few times from person to person to get someone in the cloud transformed with an appreciation. And relative to Deming's work, it involved the transformation.   0:22:34.9 BB: If it involves trying to get Dr. Taguchi's up to the cloud, ideas to the cloud, manner involve what we're talking about relative to Deming's work, fine. But the other aspect that I then neglected to mention is what Barry's talking about is, is once it gets to the cloud, then what rains down on the organization is the beginning of, in our case, transforming the organization. That's the raining down. So the cloud is not just that place on high that things get up to, but the idea of a cycle that things then start to flow down. And so, I mentioned, you know, I got back from that very first meeting with Barry and went into my boss's boss's office and that I had had that meeting, and little did I know what I was gonna learn from Barry.   0:23:26.8 BB: And learning from Barry, you either go back to... You have to be in your organization, find somebody higher, and immediately I thought I wanted that person to be Jim for his influence. And so I would meet with him on a regular basis. And, and what I was looking for is, what could he and I do together? Because some things take time and some things can be done tomorrow. So I would go into him once a month with some ideas, give him some status of what's going on. So one time I went in and I had an idea, I'd mentioned to him that after every launch of a rocket with a Rocketdyne engine, there'd be a loud speaker announcement. And the loud speaker announcement might say, "Congratulations to the Space Shuttle Main Engine team for a job well done.” Congratulations to the Delta team for the engines made for the Delta vehicle or to the Atlas program.   0:24:24.3 BB: And what I shared with Jim is that I had mentioned that loud speaker announcement to a friend in facilities who was a manager in facilities. And I said, "How does it feel when you're in facilities and you hear that announcement?" And her comment was, "You get used to it."   [laughter]   0:24:43.9 BB: You get used to being ignored. Well, I mentioned to a friend in HR, and he shared with me every time he would hear that announcement in HR, he said he and the guy on the other side of the cubicle wall would stand up and give each other a high five and say, "Way to go", 'cause they were not in the announcement. So I went in to see Jim and I said, I mentioned the woman's name. I said, she said, "You get used to it." And he looks at me and he says, "I want everyone in this organization to identify with every launch." He said, "I don't care if you're in janitorial services cleaning the restrooms." He said, "I want everyone to identify." Well then I said, "Well, that announcement doesn't." And I said, "Could we change the announcement?" And he was about to write it down and he says, "Well, we can do that right now." I'm thinking, "Oh, baby." [laughter] So he calls up the Director of Communications who sits across the hall from him and says, "Would you mind coming to my office for a minute?" Okay. So the person comes into the office, he says, "Do you know Bill?" And the person said, "Yeah, I know Bill". And Jim says to this person, "Could we change the loudspeaker announcement to say from now on, "Congratulations to Team Rocketdyne?" And she goes, "Sure, Jim, we could do that." [chuckle]   0:26:17.9 BB: And so, I had a Taguchi class later that afternoon, and somehow I mentioned the announcement. I didn't mention what I had done, but I somehow made reference to it. And people were used to that. And I remember saying to them, so what if you aren't on one of those teams? And people just said... This is how we operate. It's part of the culture to celebrate those individual teams. And I remember saying to them something like, "Well, if that announcement ever changes, call me," or something like that. It was something like that. And sure enough, when the announcement was made within a week, but I felt it was something, I was looking for things that I could do to influence the culture. Little things that ideally could be, and you know, I was also appreciative of what could Jim do? Now, several years later, the announcements went back to what they were. I'm not quite sure why, Jim had moved on. For all I know the programs were tired of “Team Rocketdyne” where, Team Rocketdyne, it's Team Space Shuttle Main Engine. And so some of the people complained to me that the announcement had shifted, and I turned to one of them and I said, "You go and fight that battle". I said, "If you want it to change, you go, go let the communications person, you go fight for it". And the thing I'd like to, a couple other things I want to point out before we get into the features is...   0:27:55.9 AS: Just so you know, we only got, we got less than 10 minutes, it's a tight show today.   0:28:00.7 BB: Alright. Let's jump. Let's jump to Diffusion From a Point Source, Andrew.   0:28:04.2 AS: Yep.   0:28:05.4 BB: So my Master's thesis back in the, was right around the time of Three Mile Island, I was writing my Master's thesis. And for those who may not recall, Three Mile Island and somewhere in the hills of Pennsylvania was a nuclear reactor that nearly melted down and diffused. [chuckle] If things had gone worse, it would've diffused a lot of bad radioactivity downstream from a stack, from a point. And so, my Master's thesis was looking at diffusion, how very much like that. And what was funny is I would explain to aunts and uncles and family members, "What is your thesis about?" And I say, "Well, remember Three Mile Island? I said, what I'm trying to do is model how it is, how does that radioactivity spread out downstream? How does it go wider and wider and higher and higher? How does it spread like smoke does if you blow out a match and how does that spread?" That's diffusion from point source. And part of what I had in mind with that topic for the audience is for each of us being a point source on our respective organizations and how are we diffusing what we're aware of within the organization, which in part has to do with being a transformation agent or an agent of, playing a role in the organization.   0:29:32.7 BB: The other thing I wanted to point out is in, in my engineering studies, and the equations that we would use about diffusion, um, has a role here. And if you think of a bathtub, so I imagine you're in the bathtub, you've got hot water coming in and the heat from that water coming in. And I'm trying to think, yeah, imagine the water is lukewarm and you're laying in there and you want it to be warmer, so you crank up the temperature. And then you can begin to feel that hotter water hitting your toes and then spreading it - diffusing. And there are mathematical equations I was studying that have to do with that. And what the equations are about is how does the temperature at any point in the tub change, and how does it change throughout the tub? So there's two aspects of change, at a given point, how is it changing over time? And then how is that change spreading until it starts to fill the entire tub? And so it could be you've got a 100 degree water coming out or 120 degree water, and in time the entire bathtub is 120 degrees, in time, which means the diffusion has stopped because it's all the same.   0:31:04.0 BB: And then, a couple hours later, it's all about the room temperature. Well, the analogy I wanna make is imagine going off to a Deming seminar all excited by what you've learned, and you go into your organization and you try to diffuse these ideas or, or another way of looking at it is, I would be invited into an organization and present Dr. Deming's ideas. It's kind of a point source. And so the ideas come out and people feel that spread across the organization. But what tends to happen is within a week, everything's back to room temperature.   [laughter]   0:31:47.8 BB: And that's, and that's the idea being, Deming's ideas come in or whatever the ideas come in, and then they're spreading in space and in time, and then we're back to where we were before. What I was very excited about, most fortunate about, and what we were doing at Rocketdyne is that what's missing from that equation that I just explained to you is a point source. And so when you're modeling, when you go back to the thermodynamics laws that I was modeling, if in the bathtub, there's a... If you've got a source of heat, you're generating energy in that environment, then the bathtub's going to get hotter and hotter and hotter and hotter and hotter. But without that point source, that source of transformation, which is constantly going on, everything goes back to room temperature. So what we were trying to do at Rocketdyne was, how do we take the ideas we're given, integrate them with Ackoff's ideas and Taguchi's ideas and try to create...   0:33:04.1 BB: Not let things go back to room temperature, but what would it take in conversations amongst ourselves and sharing that with others, that we had a constant source of energy, which gets things hotter and hotter and hotter and hotter and hotter. When it comes to Three Mile Island, the point source was an out-of-control reaction. But what we were trying to do is create a, have an environment where a lot of energy was being created, and that led to rethinking what these ideas are about, bringing others into the room, whether it be Ackoff or others. And I find without that, eventually things just go back to normal. And so what is...   0:33:50.8 AS: And what is that back... The back to normal thing, is that, like if we think about gravity as a law, it's naturally gonna pull things back to Earth.   [chuckle]   0:34:04.7 BB: If you go back to room temperature, you go back to where you were.   0:34:09.3 AS: What is it that brings humans back? Is it the...   0:34:12.2 BB: Well, you end up, you go back to blaming the willing workers for the red beads. You go back to all the things that Dr. Deming's trying to pull us away from, and there's this natural force to pull them back to that, you end up with a change in management. Dr. Deming's 14 points of lack of constancy of purpose. And so what we're talking about with Deming's ideas is a source of ideas, energy to transform. And what we're fighting is, individually that we stop learning, individually we stop sharing, individually we stop doing something with it. And so you just unplug the point source and you'll be back to room temperature pretty quickly.   0:34:55.5 AS: So how would you... What is the main message you wanna get across to the audience about this as we wrap up?   0:35:03.0 BB: Message is, find a peer group that you can discuss these ideas with. And that's what's missing is find people you can discuss, listen to the podcast, pay attention to DemingNEXT, find people to share the ideas with, and out of it will come more energy. And, but the idea is that don't stop learning. Don't stop sharing. I am very fortunate that every day I have conversations with people around the world, and it's causing me to reflect on things that happened. And to me, it's helping me stay engaged, keep rethinking what the ideas we're talking about. And so the idea is that I think without that, then individually we go back to room temperature, we go back to where we were before we started exercising. And, but I think what I would like to think is that people listening to this podcast can find again peers to share it with and on a recurring basis. And so again, I'm talking with people around the world every week, and to me that's, part of this is what we're doing at Rocketdyne with these monthly phone calls is just staying engaged, staying in the game, staying in the game, staying in the game. So that's the diffusion from.   0:36:24.7 AS: And to bring it back to the beginning of our conversation, I think that, I guess transformation is when you don't go back to room temperature.   0:36:36.0 BB: It's an ongoing transformation. And this is... There's very few things Deming said I disagreed with. One of them is, and [chuckle] he said, "An individual transformed will create an example". I don't think there's any such thing as an individual transformed, I would say an individual, once their transformation begins but I don't... But thinking in terms of, "once transformed," and I think I mentioned on the podcast, 'cause I had a student in Northwestern years ago, and they're doing presentations at the end of the course on how the course hass impacted them, taking notes from their daily journals. And there were a group presenting that night. The other group was gonna present the next night. So one was anxious, one was calm, and I went up to one of the calm students and I said, "Yeah, so what's new?" And he turned to me and he said, "I'm fully transformed".   [chuckle]   0:37:34.3 BB: No, what we're talking about Andrew, is there's no such thing as... Because there's, if you understand the point source concept, there's no "fully transformed."   0:37:43.1 AS: Yep, that sounds...   0:37:44.6 BB: So then the question becomes, how do we enter and individually stay in that group?   0:37:51.4 AS: So transformation is an ongoing journey. Bill, on behalf of everyone at The Deming Institute, I wanna thank you again for the discussion. And for listeners, remember to go to deming.org to continue your journey. And if you want to keep in touch with Bill, just find him on LinkedIn. This is your host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming, "People are entitled to joy in work.”

Tory landlord backbenchers are reportedly looking to water down the renters reform bill. We speak to Rebecca Winson – a senior organiser with the New Economics foundation who has spent years campaigning against no-fault evictions. Plus: James Cleverly says Palestinian protestors have “made their point” and should stop protesting; and a shocking example that demonstrated […]

It's 2024 and in Westminster an election is at the forefront of everyone's minds. Step back a little further and across the UK millions of us are more concerned with how we'll afford to pay their sky-high rent or energy bills. Zoom out further again and we see a world where billions of people are reckoning with the threat of the climate crisis. For the first episode in a new series of the New Economics podcast, Ayeisha is joined by the new chief executive of the New Economics Foundation, Danny Sriskandarajah, to discuss the biggest challenges facing the world and how we can win a new global economy. ----- Music by Podington Bear, used under Creative Commons licence: https://creativecommons.org/licenses/by-nc/3.0/. Produced by Katrina Gaffney, Margaret Welsh and James Rush The New Economics Podcast is brought to you by the New Economics Foundation. Find out more about becoming a NEF supporter at: https://neweconomics.org/donate/build-a-better-future New Economics Foundation is a registered charity in England and Wales. Charity No. 1055254

In this episode, Bill Bellows and host Andrew Stotz talk about where and how to start using your new knowledge when you're learning Deming.  TRANSCRIPT 0:00:02.1 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 Bill Bellows, who has spent 30 years helping people apply Dr. Deming's ideas to become aware of how their thinking is holding them back from their biggest opportunities. The topic for today in episode 15 is Start Where You Are. Bill, take it away.   0:00:25.0 Bill Bellows: Thank you, Andrew. And for our audience, you may notice there's a different background. This is not a green screen. This is actually a bedroom at my in-laws in upstate New York. Hey, Andrew, I've been listening to some of the podcasts, and I've collected some data on each of them. Would you like to see it?   0:00:53.0 AS: Yeah, definitely.   0:00:54.2 BB: I've got a control chart, I've got a control chart for each of the 14 sessions for how many times I say, holy cow.   0:01:02.9 AS: Holy moly.   0:01:04.4 BB: In each episode. Yeah, and the process is stable. [laughter] So I say holy cow, I think the average is 2.2, and the upper control limit is... I'm just kidding.   0:01:25.4 AS: You're a sick man.   0:01:27.7 BB: But I think outside of this podcast, I don't know if I use that expression. And I don't know where it comes from, I just, it must be...   0:01:37.7 AS: Did you grow up around cows? You said you're near where you grew up.   0:01:44.4 BB: Yeah, I am staying at my wife's sister's place. And my wife's father, when I met her, had cows in his backyard. And we used to chase the cows. When they got out, we would chase them. And let me tell you, they move fast. [laughter] And I came down several times, severe cases of poison ivy, trying to herd this one cow that was always escaping. And I thought, oh, I'll tell my father, let me go out and I can scare this cow back. Now, no the cow got the best of me. I got covered with mud and went home with poison ivy. Those things, they move fast. So that's my only personal experience with cows. [laughter]   0:02:33.5 AS: Did the cows ever go to a nearby church?   0:02:38.9 BB: No.   0:02:39.2 AS: To become holy.   0:02:40.1 BB: That's a good point? I don't... Yeah, how do those words tie together? I don't know.   0:02:43.4 AS: I don't know.   0:02:45.4 BB: I have to go find out who I got that from. So what I thought we'd talk about today is this, Start Where You Are, Start Where You Are. And first share where I... One context for that expression was the first time I saw Russ Ackoff speak, well, first where I met Russ. I had seen him speak before at a Deming conference, but I didn't get a chance to talk with him. But I saw him a few years later, and he was doing a one-day program in Los Angeles as part of a management series that he would do around the country. And there are about, I don't know, 150 people in the room, 25-30 from across Boeing sites in Southern California that I had invited. And at the end of the day, with about an hour to go, Russ says, okay, I'm going to give you a break. I'm going to give you time to formulate some questions and we'll spend the last hour discussing wherever you want to go. Well, I took the time to go up to Russ and ask him a couple of questions. I had met him earlier in the day. He knew that most people in the audience were there from across Boeing and that I had arranged them.   0:04:06.3 BB: And so I had a chance to talk with him. So I went up and said, I said I've got two questions for you that are not relevant to the audience, but I'd like to ask you one-on-one. He said, sure, go ahead. Well, no, I said knowing that you've known Dr. Deming for, since the early '50s, I said, over that period of time, what do you think he would say he learned from you that would stand out? And vice versa, what did you learn from him over those years that you would say stands out? And he looks at me and he says, well, I don't, I don't know what he learned from me. Then he says, then he answers the question and he says, he says, I think Ed, and he liked to say Ed, 'cause he liked to brag that, yeah, everybody calls him Dr. Deming. I call him Ed. I've known him since 1950.   0:05:05.2 BB: But Russ, by the comparison, if I ever introduced him to you as Dr. Ackoff, he would say, Andrew, call me Russ. So he says, relative to what he learned, what Dr. Deming learned from him, first he says, "well, I don't know what he learned from me. But I think his understanding of systems is very implicit and I helped him develop a better explicit understanding." And I think that makes a lot of sense. I think Dr. Deming's understanding of systems is a lot of what he talks about in The New Economics is what he learned from Russ. It's a very, I think you know when Dr. Deming shared the Production as a Viewed as a System that flow diagram in 1950, he always talks about systems, what comes around, goes around. But Russ was a master at systems from an academic perspective, and that was not Dr. Deming's forte. Now, when it comes to variation, that was Dr. Deming's academic forte. And that's where I would find Russ's understanding of variation, I would find to be very implicit, whereas Deming's was explicit. But anyway, he said he thought it gave him a better understanding of systems, that it was very implicit, very intuitive, and it helped him develop a better, a more academic sense of it. So I said, okay, so what did he learn... What did you learn from him? And he says, "well, I never gave that much thought to the whole quality movement.”   0:06:38.7 BB: “But he... I got a better, a warmer feeling of it." Russ would talk about quality of work life, and there's parallels with what Russ has talks about quality of work life that resemble Dr. Deming's work very well. And I'll give you one short story which ties in well with the Deming philosophy. Russ says he was at an Alcoa plant once upon a time, and he happened to be there on a day in which two workers were honored on stage in front of a bunch of coworkers with an award. Now, we both know what Dr. Deming thinks about giving people awards. So, but the fun part of the story is, Russ says he went up to these two guys afterwards, after they came down off the stage and he says, hey. And he says, and Russ was so precise with language. I mean, he walks up to these two guys and he says, ready Andrew? He says to them, I caught them at their point of maximum puffery. I mean, have you ever heard anyone use the word puffery...   0:07:56.7 AS: No.   0:07:57.1 BB: In a sentence? So he says, I walk up to these two guys and I said, I caught them at their point of maximum puffy. Right? And then he punctures them with the following question. "For how long have you two known about that idea that you were awarded for?" And they looked down at their feet and he said, "Come on, for, for how long have you had that idea before you shared it with management?" And they said, "20 years." And then Russ says, why did you wait so long to share it? And Russ says, he says to him, "Those sons of bitches never asked."   0:08:51.8 BB: And so, and Russ would talk about that as a quality of work life issue. Now, I've heard him tell that story many times, and I once asked him, I said, so what was the idea they came up with? And he said they would take these four foot wide rolls of aluminum foil off a machine, and these are the types of rolls that get used to make aluminum cans. And the roll may be, you know, so it's four foot tall. It's a, it could be easily a foot in outer diameter. And he said when they, when they're taken off a machine, they stand them on the concrete floor. And then to move them, the workers would tilt them back a little bit and then roll them.   0:09:43.9 AS: Which damages...   0:09:47.0 BB: The edge.   0:09:47.7 AS: Yeah.   0:09:47.8 BB: Exactly. So their idea was to, instead of putting them on a the concrete floor, to put them on a piece of plywood. So, what Russ saw was, which very much resembles a... The prevailing system of management where you're gonna wait 20 years before somebody asks you a question, until there's a program, until there's an award, then I'll come forward. All right, so let's go back to the audience. So I went up and asked Russ those questions, and now he is fielding questions from the audience. And one question really struck me and he says, Dr. Deming, not Dr. Deming, the guy says, "Dr. Ackoff," he said, "what you're talking about all day makes a lot of sense. And most organizations have little understanding of it, where you're just talking about, you know, managing interactions, the system, whatnot." He says, "but don't we have to wait for senior management to get on board before we do something with it?   0:10:54.2 BB: Don't we have to wait?" Right. And I'm listening to this, and I don't know what Russ is gonna say, but I'm hearing where the guy's coming from. And Russ turns right at him and he says, "Andrew, John, Sally, you have to start where you are." And I told him later, I said, I could've run up and given him a big hug, because if you're gonna sit back and wait for your management to get on board, you know how long that's gonna take? And so I just love that perspective of starting where you are. Now, let's flip to Dr. Deming, and a great quote that I like to use with students and clients with his work is "The smaller the system, the easier to manage. The bigger the system, the more complicated, but the more opportunities." Right? Now we'll go back to Russ.   0:11:54.0 BB: Russ would say, if you're a school teacher, like our daughter's an eighth grade teacher, start in your classroom. Why? Because you're not gonna start at the elementary school level or the junior high's, that's bigger than you. You're not gonna smart start smaller than that because then that's minimizing what your impact could be, but start where you are and then expand. Now, what that also means is it may be that when you start where you are, as you expand the size of the system, you might need to go back and change what you did now that you're looking at a bigger system.   0:12:37.8 BB: And so that's a great likelihood that what is optimum for you in the classroom may not be optimum when you're starting to think about the elementary school. But even if you start at the elementary school, what is optimum may not be optimum if you have the school district. So there's, no matter where you start, there needs to be an appreciation that in hindsight, what you did before may not be what's best for the bigger system. And the same thing applies when you're talking about integration. You know, Dr. Taguchi's loss function and the ideal value of a given characteristic, well, what I tell people is the ideal value depends upon the size of the system. And so if I'm designing two things to come together and I'm looking at the clearance between them, well, there's a clearance that makes it easy for these two things to come together if you're Andrew doing assembly. But let's say downstream of you is somebody who's using that product, you know, where that clearance is important, so the clearance that makes it easy to go together may not be the clearance that improves the functionality.   0:14:00.2 BB: And that will always be the case that you, that what is optimum where you are, may not be optimum when you expand the size of the system. So you have a few choices. One is, don't do anything. You know, for fear of making it worse, do nothing. Or, run a small scale experiment, use the PDSA model, try some things. But, that is still not a guarantee. 'Cause that small scale experiment still could be with me in my classroom and I run that experiment for a month, two months, three months.   0:14:44.4 BB: So even if I use that model, I can't know everything. And that's the... I mean, those are the complications of viewing things as a system, is to know that the system is not closed, it's open. I met a professor years ago at a conference and he had a model in his presentation that was very much a closed system. You know, they're working within this model, looking at these factors and these factors and these factors. And he went up after us. And I said, yeah, there's factors outside of that system. And he says, "Well, yeah, but we're just looking at this in scope." I said, "You have to frame it to a given size, but you know there's always the possibility that what's outside [chuckle] that you're not including, could haunt you for some time to come." And I didn't get the impression... I mean, it was almost like in engineering we talk about a free body diagram where you take whatever is your list you're looking at and you draw a line around it and you say, "That's the system I'm analyzing."   0:15:58.1 BB: But there's always a system which is bigger than that. And then again, bigger. So no matter where you start, again, and I look at the options are, if you're fearful of not including everything, well, then you're gonna do nothing. And that's easily what Deming and Ackoff were not saying. What they're saying is start where you are. Run experiments. Now, what I expect to be the beauty of a Deming-based organization, a "we" organization, is flexibility.   0:16:29.9 BB: And the flexibility is when things don't go as planned and we learn something, that we have the ability to reflect, note what we've learned, share it with as many people that we think could... would benefit from that. Get back on the horse and try again. I've worked with groups who were quite willing to do that. I worked with groups that were quite... They wouldn't get back on the horse. We were running some experiments dealing with hole machining of some small drills, you know, like on the order of a 16th of an inch, very small. And the experiment was, let's say eight... Seven different factors at two values each, eight experiments. And I don't know, they might've been machining in each experiment, 10 holes, say. And I wanted them to measure diameter of the top and the bottom of each hole, something like that.   0:17:29.3 BB: And I get the data prior to meeting with them. They sent me the data and I had enough experience running fractional factorial experimentation using Doctor Taguchi's ideas that upon first blush looking at the data, I either get a warm feeling or I get a queasy feeling. So in this case, I get a queasy feeling and there's... I'm looking at the data and immediately I knew this is... But I didn't know why. I just knew that, I'm not... And I'm wondering how am I gonna say this to them in the meeting? 'cause they're all excited. For a couple of them it wasn't their first study; they had done this before with great success. So I'm in the meeting and I'm listening and then one of them says, you know, in the experiment we're looking at starting each experiment with a new drill. And the experiments we're looking at different speeds of the drill, different cutting fluids, different parameters associated with machining these holes. And one of them says, they didn't... In hindsight, they didn't use a brand new drill for each experiment. So now I'm thinking, okay, say some more.   0:18:50.0 BB: Well, the drills we used in the experiment had all been used before and were resharpened to be like new, I mean, not new, but like new. And I said, "So say more." And then he said, "Well, when they looked at them under the microscope, the very tip of the drill was not in the center of the drill." 'Cause if you look at a drill, there's a cutting edge on the very top, you can say that near the left side or the right side. And those two cutting edges weren't the same length. So when the drill is cutting, it's not... The hole is not gonna be round, it's gonna have an oblong... So now I'm thinking, kind of explains the data. So he says, one of them say, "Can we salvage the data?"   0:19:45.3 BB: I said, no. And they said, why not? I said, because the assumption we had was that that the drills were reasonably the same. I mean, of course, even eight brand new drills are not identical, but now what you're telling me is the biggest source of variation is in the drills that we thought were the same. And that is wiping out the variation that we introduced. That's the issue, is that the signal coming from the drills that we didn't ask for is bigger than what we asked for. "So you mean we have to run all the experiments again?"   0:20:26.9 BB: And now they're, and I said, well, let me ask you this. So here's the good news. The good news is we didn't spend more time than we did on this experiment. That's the good news. I said, the good news is, we now know that the sharpening process needs to be relooked at. And as it turned out, probably the biggest thing we learned in the experiment, was that it ain't worth resharpening the drills. At that size, throw them away. But what I was hoping is that they would get back on the horse and go back to what we originally planned to do with eight brand new drills. It never happened. But we learned something, but what we learned is not what we had planned to learn. And that gets me to what I would tell people, is if you don't look, you won't find. But then you have to be willing to take the existing system and what is...   0:21:39.3 BB: Do anything, but that just means it stays the way... So if you don't look, you won't find. And if you do look, there's no guarantee. So that was a situation where I was very bummed. And every time, I mean, what I, one of the things I learned early on was preparing management and the team for such situations.   0:22:02.6 BB: That everybody was expecting, you know, a grand slam every single time. I said, no, that's not the way it works. In the real world, you try, you fail, you try, you fail, you learn, hey, you learn what we did here is that the sharpening process doesn't make sense. Had another experiment where, and I don't know which is, which was the bigger disappointment, but in the other one, there were 18 experiments with a lot of hard work, oh my God, and incredible precision as to how each of 1080 holes would be machines. So there were 1080 holes in a ring that was about eight feet in diameter. So there are holes about three tenths of an inch in this ring. The holes were all numbered one through 1080. Every hole had a different recipe. Somehow, the machinist wasn't informed of that.   0:23:08.5 BB: And the manufacturing engineer went to a meeting and he came back only to find out that the instructions, so machinists didn't know. And I said, "So, so what'd you learn?" He said "I learned not to go away to a meeting." So these things happen. Another thing I say in terms of starting where you are, my boss at one time knew I was involved in half a dozen to a dozen different Taguchi studies. And he calls me in one day and he says, "So how many studies are you working on?" I said, half a dozen to a dozen. He said, "Which of them is gonna have the biggest improvement?"   0:23:55.8 BB: So like the biggest... So I said, "So you mean like the biggest percent gain?" He says, "Yeah, which one's gonna have the biggest percent gain?" I said, "I guarantee you that we'll be smarter about everyone after we're done, I guarantee you that." He says, "But which one's gonna have the biggest percent improvement?"   0:24:17.2 BB: I looked straight at him, I said, if I knew the answer to that question, would I be working here? I'd be doing what you do, Andrew, I mean, financial forecasting. But he's like, "Well, don't give me that." I said, "I don't know which is gonna have the biggest gain, but I know we're going to be smarter. And I know all the things we try that don't have an improvement, we're smarter about it." But I said, "if you don't look, you won't try." So you have to start where you are. Another thing I want to point out is, and I wrote an article about this for the LEAN Management Journal, and if any of our listeners want a copy of the article, they can reach out to me on LinkedIn, and the article is about the, gosh, pragmatism. And viewing things with pragmatism.   0:25:15.3 BB: And I uh, and the possibilities of pragmatism, anyway, there was a lot of alliteration at the time, there was a lot of P's, 'cause what started dawning on me is this need to be practical, pragmatic. And I've got a dictionary definition, "pragmatic, dealing with things of sensibility, and dealing with things that are sensible and realistic in a way which is practical rather than theoretical," right? And where that comes from, in terms of starting where you are, is...   0:26:04.2 BB: Everyone is right. And there's a philosopher years ago that came across this. He says, everyone is right. And so everyone works in an organization where they believe, firmly believe that what they're doing is right, is practical, is pragmatic. And so in a non-Deming organization, would you work on things, Andrew, that are good and going well, that arrive on time, would you spend any time on those things, Andrew?   0:26:33.0 AS: No.   0:26:33.8 BB: And why not, Andrew?   0:26:37.0 AS: If it ain't broke, don't fix it.   0:26:42.1 BB: And that's very practical and pragmatic of you, isn't it?   0:26:46.6 AS: Exactly. I've got limited time. I gotta put out fires.   0:26:51.2 BB: Yeah. And that started to dawn on me, is that in a non-Deming "me" environment, working on things that are good doesn't add value. And so I thought, I mean, how do you argue with that? Now, in a Deming organization, it'd be pragmatic to work on the things that are not broken to either prevent them from breaking or to improve integration. And to not do so would not be practical. So there's two different environments of practicality depending on how you see the world. Um, oh, and last time I named the company, this time I'm not gonna name the company. So I was in an environment with a very well-known consultant.   0:28:00.6 BB: I was invited to travel with this consultant several times over a few years. I could take notes, I was given access to a lot of information on how these ideas were being used in the organization, but I can't talk about where it was, what they were doing, but it was really cool. So in one of the first scenarios, a team came in, led by this guy, and he presented to the consultant over the course of two hours a situation that he was dealing with. And teams would come meet with a consultant for a couple hours. This is one of the very first meetings, so that the engineer came in and said, here's where we are. We've got this issue. And the issue involved a commercial product with a... Let's just say, something about the product, how the customer interacts with it was very laborious. Let's just say like banging it together.   [laughter]   0:29:08.7 BB: It was very laborious. And the resulting warranty claims were on the order of $10-20 million a year in warranty claims. And the solution was kind of like giving the customer a bigger hammer, and actually along those lines. So that scenario was presented and that 10-20 billion at that time was a fraction of the total warranty claims for the company, which was on the order of 2-3 billion. So this was not the biggest issue, but it was a lot of $10-20 million issues. So the engineer proposes a solution, which I would paraphrase as: Spending, hiring someone to manage the variation in the parts that went together to mind the gap. And his theory was that if we minded the gap, we could make these things go together as the customer used it and get rid of all those warranty claims. So I'm thinking, hiring the person to collect the data because it definitely involved hiring someone to give them responsibility. Let's just say putting in place the use of control charts on the respective parts, minding the gap that, you know common cause variation and whatnot. So at that time I'm thinking, salary and benefits, that's maybe a $100,000. Saving the corporation $10 to $20 million. How's that sound, Andrew?   0:30:42.6 AS: Sounds good.   0:30:44.3 BB: Spent a $100,000, save $10 million. So the consultant says to the engineer, so what did the plant manager say? And he said, the plant manager says no. He said, why did the plant manager say no? He said, the plant manager said, why should I spend my budget to save the corporation?   [laughter]   0:31:08.4 BB: Now, if I told you the consultant's response, then you would know the name of the company. So I'm not gonna tell you what the consultant's response was other than the paraphrase would be, I thought you were looking at things as a system. Isn't that the company's slogan? He says, well, not quite. But if you're the plant manager, you're being practical. You're saying, why should I spend my budget to save the corporation? Does that get me promoted? Does that give me visibility or does it make my boss angry? In terms of starting where you are, this is a story you're gonna love. I had an intern one summer, his father was a coworker, he came to a class I was offering twice. 'Cause we allowed employees to bring family members and our vision was to get these ideas out there, fill the empty seats in the classroom. So one is we're filling empty seats, two is, the thought was if we bring in volunteers from the community, and that was a... The training was open to what we called members of the community. Members of the community are people who are working full-time, part-time to serve society. The fact that they work for, you know, General Electric or Lockheed Martin, that was not the issue.   0:32:28.1 BB: So you get to come in because you're a soccer referee, you're a Girl Scout leader, you sing in your church choir, we're gonna fill the empty seats. So this was not taking the space of employees. This is, we have employee space, we have customers, space for customers, place for suppliers, but we still have extra spaces. Let's fill those seats. Boeing's vision was to help the communities in which we live. So I went to my boss with this proposal and he said, go right ahead. And so the operational definition was we invited members of the community. A member of the community is someone who works full-time, part-time to benefit the community.   0:33:05.5 BB: So this, and also we invited family members. And so this guy brings his son in and it was an evening class and which, you know, second shift, which means it ends around midnight. And the one who came in, the son was a, graduated from high school two years early, one of the brightest people I've ever met in my life. And he's an economist by training. So he starts asking economic questions. And he brings up, because hears me talking about how, you know, this movement within Rocketdyne that moved from being a "me" to a "we" organization, the progress we're making, the improvements we're, you know, that we could at least properly talk about. And he says says in economic theory there's this thing called the freeloader principle. Have you heard of it? And I said, no. I said, how does that work?   0:34:00.8 BB: And he says, well, economists will talk about, there'll be people that do the work, and then people who want to ride the train for free. So in your effort for Rocketdyne to move in the direction of being, you know, more of a "we" organization, how will you prevent people from freeloading? And I said, it's easy. I said, everyone will see them and they will know we see them. [laughter] So what you have at Deming organization is, if I leave the bowling ball in a doorway without asking you, you have the visibility to see that. So anyway, he threw that question out. He contacts me a month or so later and he says, Hey, Bill, he says, I'm, I'm gonna be home from college for the summer. I'm looking for a summer job. If you don't, I dunno if you have budget, if you don't have budget, I'll work for free. So I said, I don't have budget. So I made a deal with him. I said, you can come and attend all this training that we're offering over the entire summer. In exchange, here's some things I'd like you to do. So I arranged for him to get a badge. He came in every day.   0:35:10.0 BB: Everywhere I did training across Southern California, he would come with me, be a fly on a wall. And he got to see some really cool stuff. Well, towards the end of the summer, around middle of August, he comes to me and he says he's gonna quit. He's done. Next week is my last week. He says, did I tell you about my other job? I said, no, what other job? He says, oh, I told, I guess I didn't tell you. He said I wanted to see during my last summer in college, 'cause once I graduate, I'm gonna go get a real job. So this is my last summer in college and I figured if the ideas I'm learning from you are worth anything, I wanna go see now. So I says, so what'd you do? He says, I've had a summer job applying these ideas, starting where he is.   0:36:02.6 BB: And I said, okay. And he says, I got a job at a Western Wear store, in Thousand Oaks, that had a sign, walked into the mall, saw a sign at the door looking for a salesperson. So I hired in as a salesperson. I said, so how'd that go? He said, well, the way it works is the salespeople rotate as to who gets the next customer. So there's like three salespeople at any point of time. While I'm working on this one, you sit behind the counter with the others,   just sitting there, you know, twiddling your thumb. So, I said, so, so what'd you do? He said, well, what I started to do was, instead of just sitting behind the counter, if I saw the person waiting on the customer needed a calculator, I'd have it ready for them. If I thought they needed a stapler, I'd have it ready for them.   0:37:00.0 BB: I said, holy cow. I said, what'd that lead to? He said, well, next thing you know, there's, we're doing that for one another. Well, he ended up, after about a month of working there, he was named manager of the store, as a walk-in. I said, how'd that work?   [laughter]   0:37:01.5 BB: How did you after a month become salesperson, you know, moved from being a salesperson to being a manager? He said, well, they keep track of who sells how much each week. You know, it's not a commission system, but they keep track. And because I had the most sales, I got promoted. I said, well, how did you get the most sales? He said, I started asking questions that I learned from you and Tim and the others in the training. I started asking questions about, so somebody comes in, they're looking for a suit, I'm asking them, what's the engagement? And the better I understand where they're coming from, the better I know, you know, you don't need to buy this, you can rent this. And so I started asking questions. The better I understand the questions, the better I'm serving them. So one is, I'm helping my coworkers.   0:38:08.3 BB: Two is, I have been named manager because I'm helping the clients understand...we're better understanding their needs. So he starts off as a salesperson, wins over his colleague and start mimicking his behavior, gets promoted to manager. Now, what he starts to do, in the manager role, is he, there's a, there's... He in the manager's role gets like 10% of all the sales above a certain value. So he starts sharing that profit with all employees on a prorated basis. And there's, the overall sales for the store have improved dramatically.   0:38:56.6 BB: Now he's gonna go off and work on this other big project which was his senior thesis, which also involved taking Deming's ideas and Ackoff's ideas and putting them into a company that he wanted to start. But before he did that, he hired another student, turns out a Stanford graduate, and brought him to class such that this guy could take over for him and keep this thing going. And I said, so are you gonna bring the owner of the store? And he says, no. He says, they have no interest. I say, so what's gonna happen after you leave and after Sam leaves? He says, this is gonna go back to zero. But he walked away having just tried to do what he could with what he learned that summer and made a difference from where he was.   0:39:45.7 AS: Well, that's a great point to end on. And the idea being that when you look around at your company, at your school, at your job, at your life, and you wanna start implementing these ideas, it can get overwhelming as you look at the bigger and bigger systems or other things. So the objective really is just start small and start where you are. Anything you would add in a wrap-up?   0:40:11.6 BB: Yeah. Another thing I'd like to add to that, have you heard the expression, management works on the system, people work in the system?   0:40:24.8 AS: Yeah.   0:40:27.6 BB: Okay. That's attributed to Myron Tribus. And people have said to me, Bill, management works on the system, people work in the system. Well, I've heard people use that expression as a means of saying, if you aren't in management, then you can't... Then just wait. Just wait. Because if you're a willing worker, Andrew, you're just a machinist in the factory, well, Andrew, you're not, that's not management. I mean, you're working in the system. The people in management work on the system. And so a disagreement I've had with some people is that if I was to believe that expression, then I would wait for management to take action. And that may take forever. And so...   [laughter]   0:41:23.7 BB: In fact, I had a guy who was working with Deming, or a guy who was somehow affiliated with some Deming consultants, and he came to a class at Rocketdyne years ago and he says, so Bill, how often do you meet with the president of Rocketdyne? I said, not very often. He said, does he support what you're doing? I said, of course he does. If he wasn't, you wouldn't be here and I wouldn't be here. But how often do you meet with him? I said, not very often. He says, you know what Myron Tribus says, I say, oh, no. What did Myron say? He says, Myron says, management works on the system, people work in the system. He says, you need to be meeting with him all the time. I said, he's in Washington DC trying to get us next generation contracts, and I think that is far more important a point of work for him than anything else. And he says, oh, no. He says, I think you're wrong. And I said, I look at him, I said, so actually, I said, I think there might be a bigger system.   0:42:27.0 BB: You know, it's something more important to do. "More important than working with the president of your company, Bill?" I said, "What if I am meeting with people at NASA headquarters? What if I am meeting with the Army's first [woman] four star general," which I had. I said, what if that? I said, "So you just want me to start, you think the system is constrained to me just getting the president smart?" And so there I would say is, one is, if you follow the belief, and Myron was brilliant, and I don't... But I think if you take that verbatim, management works on the system, people work in the system, now you're back to Russ Ackoff and that student asking the question, where do I... Yeah, don't I have to work for management to get on board? And I said, no. What I try to do in my classes and with clients is help people on any level get smart about these ideas, try to give them everyday examples that they can share with their peers relative to givng an everyday example of Dr. Taguchi 's loss function.   0:43:40.1 BB: Giving an everyday understanding of the difference between managing actions and management systems, so that individuals can become more articulate in explaining to others. And simultaneously, what Ackoff would say, the best way to learn something is teach it to others. And so, my hope is that people listening to our podcast, don't think you have to wait for senior management to get on board, start to make a difference from where you are, practice your understanding of these ideas, explaining them to people outside of work where you might be given more time to explain it than somebody at work.   0:44:18.3 BB: Use that experience to try to do something with it. Maybe the experiments you run are at home, in some manner. And hopefully that then inspires you to go a little bit further. And another thing I'll point out is in a future podcast, I'll talk about what I learned from a good friend on how to create change within an organization starting at the bottom of the organization, which gets into some more detail, but it's still based on the premise of starting from where you are with a theory and understanding that what people call practical, there's Deming practical and there's non-Deming practical. So if they're saying they're being practical, they are truly being practical, don't be dissuaded by that.   [laughter]   0:45:04.4 AS: Boom. Well, Bill, on behalf of everyone at the Deming Institute, I want to thank you again for this discussion. For listeners, remember to go to deming.org to continue your journey. And if you wanna keep in touch with Bill, just find him on LinkedIn. This is your host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming, "People are entitled to joy in work."

Over the past few decades, economists have gathered a lot of empirical evidence supporting the underlying truth of middle-out economics: that a thriving middle class is the cause of economic growth. Our friends at the Roosevelt Institute have produced a new report which outlines the events that led to our new understanding of how the economy really works. Suzanne Kahn, Vice President of the Think Tank at the Roosevelt Institute, joins us to talk about what's in the report and share how the progressive economic policies of the Biden Administration could mark a lasting shift away from neoliberal, trickle-down economics and toward a new era of middle-out economics. Suzanne Kahn serves as the Vice President of the Think Tank at the Roosevelt Institute, where she oversees and manages projects to develop critical research and policy to rebalance power in our society and economy. Previously, Suzanne was Roosevelt's director of education, jobs, and worker power and the Great Democracy Initiative. Her research and writing focus on building a network of robust public goods—for example public higher education—and labor organizations that together can empower workers to counter corporate power in the labor market and public sphere. Suzanne Kahn @SuzMKahn Roosevelt Institute @rooseveltinst Think Tank at the Roosevelt Institute @RooseveltFwd   Sea Change: How a New Economics Went Mainstream https://rooseveltinstitute.org/publications/sea-change  Website: http://pitchforkeconomics.com Twitter: @PitchforkEcon Instagram: @pitchforkeconomics Nick's twitter: @NickHanauer

Who wins when teams and team members compete with each other? In this final episode in the Role of a Manager in Education series, David Langford and Andrew Stotz discuss why cooperation beats competition, particularly in schools. TRANSCRIPT 0:00:02.5 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 David P. Langford, who has devoted his life to applying Dr. Deming's philosophy to education, and he offers us his practical advice for implementation. Today we continue our discussion of Dr. Deming's 14 items that he discusses in The New Economics about the role of a manager of people after transformation. And we're talking about the 14th of these different 14 items. And this one I want to read out, it is, "He understands the benefits of cooperation and the losses from competition between people and between groups." We decided to title this one: "Do you think you're winning from competition?" David, take it away.   0:00:53.7 David Langford: That sounds great. Great. It's good to be back again, Andrew.   0:01:00.4 AS: Yeah.   0:01:00.6 DL: Yeah. This is a great point, and it really is the basis for Deming's philosophy about everything that he brought to management and it got people to think differently. When I would give seminars with educators around the world and stuff, and we'd start talking about the differences between competition and cooperation, I'd often get people speaking very strongly that, "Competition is the way the world works and you have to have competition to get people to do stuff. And sports teams are always competing." And when you start to think about it, sports teams that, that usually have a sole focus of just beating the, the other team, generally don't have multi-year winning streaks, [chuckle] because you're not building a program, you're not building a whole philosophy, a whole basis to how you do things.   0:02:06.0 DL: And I've made it a point to really listen to all kinds of interviews with coaches over time. And one common theme I usually hear over and over and over from really good teams is they'll talk about the next game that they're playing. They don't talk so much about, "We're gonna beat these people." They talk about, "This will be a really good test for us." Or they'll say something about, "We're probably gonna really learn a lot this weekend [chuckle] at this game." Well, to me, those are really good coaches because they're lowering the fear level, they're lowering the anxiety. And the better we... The irony of this statement, this point number 14, is the better you cooperate, the better you compete. [chuckle]   0:03:04.0 DL: And when you're not doing that, you potentially could just go down in flames. And the same thing happens in a classroom. If you set up a classroom so everybody's competing against each other, or what Deming called the artificial scarcity of top marks, you'll end up with a whole bunch of people that are just basically at each other's throats, not cooperating, not getting along. You'll have all kinds of discipline problems and behavior problems and things that are going on in classrooms like that because it's all just set up on a competition level. So grading on a curve is a scarcity, artificial scarcity of top marks. So if there can only be three top marks or three A's or whatever it might be in this class, and people that are actually struggling in the class and actually trying to learn, they're gonna quickly learn, "There's no point in me actually trying because there's no way I'm ever going to get to that point. There's only gonna be three people that are gonna get the A."   0:04:14.2 DL: And that's the biggest thing about this, is getting to the point where you're understanding the losses of setting up artificial competition for, whether it be grades or points on a soccer field, or whatever it might be. Deming often used the analogy of the difference between a bowling team and a orchestra in terms of cooperation. So people that go bowling, they're generally just out for your own score and whatever you're trying to work through, and it's not really a team activity. Even if you're on a bowling team, it's still... You're just doing your own thing and doing your own score.   0:05:07.8 DL: So they have a very low level of interdependence in that environment. But I used to be a band teacher and orchestra leader and things like that. And so when Deming used the analogy of an orchestra about that being the pinnacle of interrelationships, it really struck home for me that like he said, "A 1OO people in an orchestra or a band, they're not there to compete [chuckle] who can play the loudest or who could play the biggest solo or... " Right? 'Cause that'd be a terrible thing to listen to if you went to a concert like that.   0:05:47.3 DL: But the reason we give people standing ovations, is because we recognize the interdependence and the cooperation it takes to reach a pinnacle performance. Even in a very small group, maybe just three or four people in a band or something, it takes a tremendous amount of cooperation to get to that level of performance. And just imagine some of our famous rock bands and stuff, if everybody on the stage was competing against each other, it would sound terrible. [chuckle]   0:06:24.9 AS: Yeah. It's interesting about the orchestra concept. I like to talk... When I'm speaking to audiences about Deming's teaching, I say, "Imagine that we have a new generation of leaders that are KPI managers, and they sit down with every person in the orchestra and say, 'You've got a KPI, we've got a limited pool of bonus here, and we're gonna distribute it amongst all the players based upon who was the A players, and C players you're going to get zero.' And so now you need to think about what is your contribution here. And then you pull up... The curtain goes up and you rise up and everybody claps. And then everybody in the orchestra stands up and plays to their best ability."   0:07:03.6 DL: Yeah. You'd have chaos.   [laughter]   0:07:07.5 AS: It's interesting in this one that he sees the need to highlight that it's... He's talking about competition between people and between groups. Why did he have the need to say that rather than just competition in general?   0:07:25.1 DL: He did talk about competition in general a lot. He also talked about... He made statements like, "It's really good to have a good competitor." And that seems like it's the opposite of what this statement is about, but I think there's a difference between competition and comparison. So if you have another company, another school, another grade level. So let's say I'm a fourth grade teacher in an elementary school or something, and there's maybe three other fourth grade teachers in that same building. Well, I'm not trying to compete to [chuckle] win in that situation, I'm actually trying to cooperate. And the more that we all three cooperate together, share ideas, maybe even share kids and make a very fluid situation, everybody wins. The number of people that get to higher and higher and higher levels of performance increases and increases and increases.   0:08:35.9 DL: You may never get to a 100% of the people learning a 100% of the material a 100% of the time, but you're gonna get closer and closer and closer, the higher, the more that you cooperate. And the more that you set up competition, we're not talking about games, Deming talked about the difference between games that everybody knows it's a game. You go to a soccer game, everybody knows this is a game. We even call them games. [chuckle]   0:09:07.8 AS: Games.   0:09:09.4 DL: Something we can play, but that's not real life. And that's why I always try to explain to teachers that you can't set up your classroom as a game, because really what you're doing is teaching life and death situations. Somebody that can't learn to add is gonna have a tough, tough time in the rest of their life. So we can't just reduce it down to a simple game, or do this and you get a lolly or an M&M or a piece of candy or something. And we often have teachers that would say things like, "Oh, well, kids like that." "Okay. Well, I like that." [chuckle] But don't tie it to something so critical as performing well on fractions, [chuckle] that if you do really well on this, then you're gonna get a prize or you're gonna get something out of that. I remember, 'cause we're talking about the orchestra thing, as a band teacher, I had to learn the hard way when I was teaching young kids how to play, say, "Look, you need to be practicing 20 minutes a night. And that's the firm rule, is just you need to be doing that."   0:10:23.9 DL: Well, it was really pretty foolish on my part because they have a system too, and they have all kinds of things going on in their lives, that was what was happening. And when I really pushed it really hard, and they'd get little cards that they'd have to fill out how many times they'd practice, and their parents had to sign it and all this stuff. Well, what I found out is I had a bunch of kids cheating, writing down times even though they didn't practice. Some of them would even forge their parents' signatures, [chuckle] all kinds of stuff. And it's really easy to blame the individual and say, "Wow, look how ineffective kids these are. If I can get some better kids, we'd have a better program here."   0:11:05.7 DL: But after learning about Deming and studying all this, I made just one simple change. I just gave them a little run chart and I said, "All I want you to do is just mark down how many minutes a night you practice, that's it. And all you have to do is just, I don't care if it's one minute or no minutes, or whatever it might be, you just put that on this chart." And then we would turn that into a little run chart for a whole week's performance. And lo and behold, the average number of minutes per night that kids were practicing just went up and up and up because they wanted to see their chart get better. [chuckle] It's a human phenomenon that Deming tapped into, that people want to improve. And when they could just see the number of minutes going up.   0:12:00.5 DL: And I'd have really good conversations with them and sit down and say, "Hey. Well, how do you feel about that? Look at this. Look at your chart?" And you didn't have to have anybody verify it or anything else, but it was just you keeping track of your own performance within that. And then when we come together as a group, that's our time to optimize the situation. And Deming talked a lot about that. Sometimes people or groups would have to be sub-optimized, they may not be working to their full potential, so that the whole group or the whole system will work more efficiently. That's a hard concept to get somehow. But again, back to the orchestra thing, there's a lot of people in an orchestra when you play a piece that they're sub-optimized, [chuckle] they're just playing one little part of the whole big piece. [chuckle]   0:12:57.7 AS: Yeah. The cymbals.   [vocalization]   0:12:57.9 DL: Yeah.   0:13:00.8 AS: There's a moment.   0:13:02.7 DL: But it's necessary. [chuckle]   0:13:04.7 AS: There's a moment. T And just because the cymbals guy is sitting there and not participating, as long as he's contributing that moment, that's really performance in that sense. There's a quote that I like by what Dr. Deming said that's somewhat related to this, and I see this in my work with companies here in Thailand. And that is, "A company could put a top man or woman at every position and be swallowed by a competitor with people only half as good, but who are working together."   0:13:40.1 DL: Absolutely. Yeah, exactly. [chuckle]   0:13:43.4 AS: Yeah. I think that really says it all, as to what...   0:13:46.2 DL: Yeah. That's what he is getting at here. The more you cooperate, the better you're gonna compete, even though competition was not... Were really never your goal to start with.   0:13:57.9 AS: Yeah.   0:13:58.9 DL: Well, this made me think about when I was a high school teacher, and I tapped into how much the students really loved learning about Deming and everything. And we started going out and doing presentations actually, and going to the universities, corporations, all kinds of places to do presentations. And every person that did a presentation had to have like four or five people that were helping them, making sure that their video was working and making sure that the sound was right and all kinds of things. And the idea being so that they could concentrate on their presentation. And I'll never forget, we were at a state department somewhere, and somebody at the end got up and said, "The information you shared with us and everything is very [chuckle] profound and very wonderful, but the real show was the high degree of cooperation going on amongst all the students as things were happening." So somebody just didn't get up and do their thing and then just go sit down in a corner somewhere and just wait, everybody had an interrelated job to help people put on a really good performance, basically.   0:15:15.5 AS: Well, what a great way to end our discussion on the role of managers of people. And this was 14 items that Dr. Deming talked about in his book, The New Economics. And this final one, I think really stands out to me, and that is the idea of today, starting right now, stop pitting individuals and groups against each other and start figuring out how we can get people cooperating and how we can coordinate effort, because the coordination and the cooperation is where the real value is created and the real experience is created, whether that's in a classroom, whether that's on a factory floor, or whether that's in an office. All of those spaces, the idea of cooperation is so valuable for performance and getting the most out of people, but also, gosh, it makes it a happier day. [laughter]   0:16:17.8 DL: Absolutely. And not just limited to businesses and organizations, family works the same way. I have five children and I used to always tell people in my seminars, "How do I go about figuring out who amongst them is the greatest child?"   [laughter]   0:16:38.0 AS: Child of the month.   0:16:38.1 DL: Yeah. And out of five kids, what? Two or three of them were gonna be below average probably. [chuckle] And so, if you start thinking about it that way, you start thinking about, "Oh, we wouldn't wanna do that." But I had the opportunity to take our family to Europe, we went to Singapore, we went to all kinds of places. And I remember when we went to Singapore to visit relatives there, we had 15 pieces of luggage [laughter] that we flew with for the seven people that were all going on this trip. Well, no one person can be responsible for all that, it has to be an interrelated related system. And everybody's working for the common aim of to pull this off and make sure that we can go on another trip. And it's really enjoyable and everybody had fun. And so... That's my final comment.   0:17:32.0 AS: Well, let's wrap it up there. David. On behalf of everyone at Deming Institute, I wanna thank you again for this discussion. And for listeners, remember to go to deming.org to continue your journey. And listeners can learn more about David at langfordlearning.com. This is your host Andrews Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming. "People are entitled to joy in work."

What are unhurried conversations, and why should managers prioritize them? In this episode, David Langford and host Andrew Stotz talk about the kinds of conversations managers should be having with their team members. TRANSCRIPT 0:00:02.5 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 David P. Langford, who has devoted his life to applying Dr. Deming's philosophy to education, and he offers us his practical advice for implementation. Today, we continue our discussion of Dr. Deming's 14 items that he discusses in The New Economics about the role of a manager of people after transformation. In the third edition, that's page 86. And in the second edition, that's page 125. So we are talking about item number 13, and in that point, I wanna read it to you. It says, "Number 13, he will hold an informal unhurried conversation with every one of his people at least once a year, not for judgment, merely to listen. The purpose would be development of understanding of his people, their aims, hopes and fears. The meeting will be spontaneous, not planned ahead." We're calling today's conversation the unhurried conversation. David, take it away.   0:01:17.5 David Langford: Thank you, Andrew. It's good to be back again. So always fun to discuss these points and talk about the depth of what it means and how to work through that. So once again, this all sounds really simple. You know, hey, just have this unhurried conversation with people at least once a year. When I talked to Dr. Deming about this years ago, he was recommending more like once a quarter, if you can do that, to work that through. But what are we really talking about? So in this world of managing with data and KPIs, key performance indicators and, you know, holding people's feet to the fire and really making them toe the line and all that kinda stuff, Deming is sort of just pretty much kind of the opposite. Those things all have their place and time, but that's not the kind of conversation that he's hinting at here or he's talking about here.   0:02:24.4 DL: I find it really interesting that he says, you know, it shouldn't be... The meeting will be spontaneous and not planned ahead. And so what he's getting at is that you're not, you're now coming in with an agenda for what you wanna hear from somebody. And on the opposite side, as an employee or somebody that you're working with, they're not prepared with some kind of an agenda where they're telling you what they think they... Where they're telling you what they think you want to hear, kind of thing. And I think that's what he is talking about why it needs to be spontaneous. He also goes deeper and he talks about, you know, find out people's aims and hopes and their fears and what's happening. And I was just thinking about that movie The Intern where the guy is hired in the company and he is 80 years old, and so they're doing the interview with him. And this young kid asked him the question, where do you see yourself in five years? I think, he looks at it and says, "You mean when I'm 85?" So, different...   0:03:47.4 AS: Dead.   0:03:48.1 DL: Yeah. Different points of life, different ways to think about it. So yeah. But he's just talking about, hey, just set up a time, be spontaneous, come in, sit down with somebody, and just not necessarily talking about business. Right? What are your hopes and fears and where do you see us going? And do you think we're on the right track? And...   0:04:13.2 AS: I'm curious, why do you think that... I mean, in some ways it seems like such an obvious thing. Why do you think he even needed to say this?   0:04:18.7 DL: Because it's not happening and it's even even worse today, I think, than in Deming's time in the 1990s when all this, all the computer technology, KPIs, all that stuff was just coming into being. Well, nowadays, it's sort of just a way of life to have all that kind of stuff. And I, I hate the phrase about being data managed or managing with data or data-driven. That's what it is. Well, we're a data-driven school district, and we make all of our decisions. Well, there's a lot of problems with that, just the word "driven" kind of drives people a little bit crazy about stuff. And really, the data is just there just to be informed. So you could still make informed good decisions, but I think Deming even talked about if you just make decisions just based on the data, you're probably gonna go out of business because you're not really paying attention to the people and what's really going on in the organization, what's happening and that type of thing.   0:05:34.4 DL: So it can also be really intimidating if you're the boss, and you're just popping in and saying, hey, you got a few minutes, you wanna sit and talk for a while? Because especially if you're in an organization where you've always... Or your predecessor, or you've always had an agenda for that meeting, it can be somewhat threatening for people. I know when I was a superintendent and I tried to do this with the principals that I was working with and stuff, and one of them, I'll never forget, she was just, she was just shaking the whole time. And I just had to say just, let's just sit here a minute and just calm down and what are you so nervous about? And just get to know her and everything else. Well, always before, the person before that had been the boss had come in and only time you had a meeting was when something was wrong.   0:06:42.7 DL: And she was gonna get ripped into. And so her fear was super great like that. Also found teachers just the same way that when as a new superintendent, I'd walk into their classroom just... I just wanted to sit and watch what's going on and maybe help out or participate or do whatever. And they'd just be almost shaking in their boots that the boss came in today. And what I found out is that it wasn't until at least six or seven months of doing that just spontaneously popping in, observing, watching what's happening, et cetera. Maybe chatting with them a little bit afterwards or doing something like that, that pretty soon that started to go away and people started to sort of function on a normal level. So one of Deming's 14 points in Out of the Crisis was pretty simple, drive out fear.   0:07:42.8 DL: And I think that's also what he's alluding to here is, here's a way that you can drive out fear, you know? And at the same time, just really get to know people. I've done a lot of study with neuroscience and the science of how do we actually think and et cetera. And there's a lot of that in neuroscience as well, that if you have a very fearful situation, you actually downshift and your brain actually shuts down. It goes into the survival mode of... And you're not gonna think creatively about a different option. You're simply trying to find out, what do I have to do to get out of this situation? And I think that's a lot of what Deming's talking about here is, hey, you gotta have these meetings and spontaneous and make it a joyful experience and just talk to people about what they wanted to have happen.   0:08:41.3 DL: Other thing I'll never forget in his seminars, he used to talk about this point or these points and stuff, and he said the purpose of the conversation is not for me to find out how you're doing. He said, I wanna know how I'm doing. And I remember the first time as a superintendent, sitting down with people and say, tell me about how I'm doing. They would look at me just kind of blankly like, what? Yeah. Well, how do you think I am doing with this job? And what do you think I need to be doing differently? And I always found those conversations really interesting, and again, it wasn't until like the second or third time having conversations with people that they actually started to tell you stuff that was useful. Because they don't wanna tell you something and then you end up firing them. So they have to have trust that you really do wanna find out how to improve, how to get better, so.   0:09:48.8 AS: Yeah, it's interesting. When I worked for Pepsi, when I first got out of university, it was three years I worked at Pepsi, and I would say we probably never had one company outing that I could remember. And in Thailand, I remember when I worked at one of my first jobs as a broker, and I was an analyst, and there was a questionnaire passed around, this was 25 years ago, that was questionnaire passed around, "Would you like to wear a company uniform to work?" And I said, well, obviously no. I was like, yeah, no.   0:10:27.9 AS: And then, I was stunned to see the results that majority of people said yes. And that's when I realized like, what Thais value in work is the comradery and the connection and the closeness. And they appreciate the relationship. And so therefore, you also have outings and things that we do and parties and go bowling or go hiking. And those things are where some of these unhurried conversations happen. Oh, well, yeah, this is what's going on at my home and with my family, and this is why I'm struggling and all that. And so what I realized in American culture, it's just not that common. You go into work, work's work.   0:11:14.4 DL: Yeah. So I'd say my last comment on this is that it's really not so much about work. I mean, it is work related, and obviously, there's an employee employer relationship going on, et cetera, but it's more about what you just talked about, really getting to know somebody, really getting to understand them. And again, back to neuroscience, I used to advise teachers all the time to try to do the same thing or at least do an exercise with kids. What's your aim? And have kids actually set aims and hopes and fears? And if you can do that very same thing. Where do you aim to be? And et cetera. Because if you have a second grader who wants to be an astronaut, and soon as you find that out, well, there's all kinds of ways you can tie everything that they're learning to eventually becoming an astronaut. And suddenly, everything that they're learning becomes relevant, and relevance is the key.   0:12:20.3 AS: Yeah. And the next year, they may say they want to become such and such, and then take that and run with it. You know? One of the last thing I would say about this that I always say when my students are giving their final presentations in my Valuation Masterclass Bootcamp, is I say, okay, now the last thing I want to tell you before you present is we're on the same team. Which I'm trying to convey to them that although I'm gonna critique you and I'm gonna challenge you and all that, we're here together for the same purpose.   0:12:54.6 DL: Yeah. I'm gonna give you feedback, but yeah, we're both here to accomplish the same aim, so.   0:13:01.4 AS: Yeah. So I love the unhurried conversation. So any last thing you wanna add to this before we wrap up?   0:13:08.9 DL: No, that's pretty much it. So I think we don't wanna make it too much out of it. I mean, it is on face value, it is pretty much what it says, have these conversations and understand who people are. And you'll find out that pays off in multiple ways down the road.   0:13:29.7 AS: So I'll wrap up by just saying to the listeners and the viewers out there, start today. Start today to have an unhurried conversation that's not connected to performance, compensation, company goals. It's an unhurried conversation to have two human beings sit down and take an interest in each other. And that's really the challenge I think that we got from this discussion. David, 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. Listeners can learn more about David at langfordlearning.com. This is your host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming. People are entitled to joy in work.

Listening to understand and learn is often harder than not-really-listening because you're thinking about what to say. Dr. Deming emphasized learning and was excited about ideas he heard from others every day. In this episode, David Langford and Andrew Stotz talk about why and how managers, including teachers, should listen to staff or students. TRANSCRIPT 0:00:03.4 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 David P. Langford who has devoted his life to applying Dr. Deming's philosophy to education and he offers us his practical advice for implementation. Today, we continue going through Dr. Deming's 14 items that he discuss in New Economics about the role of a manager of people after transformation. In the third edition, that's page 86. In the second edition, that's page 125. And we're talking about point number 12 and that is "he listens and learns without passing judgment on him that he listens to." And we decided to title this one, Do You Listen to Speak or Listen to Learn? David, take it away.   0:00:56.8 David P. Langford: Yeah. Well, thanks. It's good to be back, Andrew. Yeah, I was just, I was just thinking that when I was at Deming's conferences and a couple of times sat with him either after the end of the day or even at lunchtime, etc. Or just watching him interact with other people, it was often pretty amazing that he'd be chatting with somebody and then he'd pull out these little notebooks and he's all of a sudden just writing down something that somebody told him or that somebody said or... And later in the day, a lot of times he'd pull out the notebook and say to somebody, "Look what I learned today." And I was always just so impressed with that. And I don't know how many four-day conferences I was at with him, at least half a dozen, and always the same, always swan with that little notebook, always writing stuff down.   0:02:02.9 DL: And so this point comes to mind about how special that made you feel that here you have the master of the third industrial revolution, writing down what, what you say, people that he doesn't really know that well or something, but just a point that somebody made and how important that was to him and to keep track of that. And a lot of times I think we've lost that skill. And I like the title of this session because a lot of times when people are having even casual conversations, they're not really listening to what the person is saying. They're thinking about what they're going to say next or how they're going to respond to a point that was made. And when I really started taking these points to heart and thinking about it, even as a classroom teacher, I began to realize that I really wasn't listening to my students. I was preparing to talk at them. [laughter] I remember...   0:03:16.0 AS: And they were preparing to be talked at.   0:03:18.6 DL: Yeah. They're ready to take notes, and you know, but they weren't ready to think and offer opinions and to go through that whole process of working through it. I'll never forget my friend Dr. Myron Tribus, he was a professor at Dartmouth, I think in the engineering school. And for some reason, his whole lecture that he was going to do one day was just either lost or something just before he was ready to walk out in his classroom of 200 kids, students that he was working with and everything. And he thought, "Oh my God, what am I going to do? I don't have my notes. I don't have all this stuff and everything else." Anyway, he just started asking them questions and put them into groups and had the groups discuss things and then come back and pose questions and debate each other and talk and work through. And he told me he'd never had so many students on the way out of classes. "Wow, that was the best class we've ever had." [laughter]   0:04:21.7 AS: Such a great, a great opportunity when you come unprepared, but you've got a group of people in front of you with all kinds of opportunities to pull out discussions.   0:04:37.3 DL: It's sort of like, are you prepared to be unprepared? [laughter] So there's a difference, there's incompetence where you just come in and you don't know what you're doing and, you know, you're lost, or you're prepared, this is a plan that you're going to come in and actually listen to people and present and go through things. I remember even in a high school class that I had, one of the most successful things we did is, I may have told you this story before, but anyway, the library would get all the newspapers and then after a day they're no good. And so coming into class, I would just get all the newspapers from the previous day. And the challenge for the students was to go quickly through the newspapers and pick out relevant events happening around the world and be prepared to discuss that in small groups and stuff. At first, I just thought of it as an activity. And it turned into be so profound that students really thought deeply about stuff.   0:05:43.1 DL: And then they would take Deming principles and apply that to that situation, whether you're talking about world wars, or you're talking about the economics or business or education or whatever it might be. And I remember even just a few years ago, a student of mine, 35 years ago, ran into me and said, "I still remember doing that. I still remember those discussions going through." And most of the time, I was just sitting and listening to them discuss about things. And maybe I'd ask a few questions now and then about things or try to get them to think differently about something. But it was, there were no right or wrong answers, it was just getting people to think.   0:06:30.9 AS: There's so many different things going on in my head as you're talking about this. The first thing is I was thinking... I was thinking about three things. The first is, in order to achieve what he's talking about, first, you have to stop talking. And the second thing is what I've learned over the years is, the best way to stop, the next thing you have to do is stop thinking, because my mind's racing to think about what am I going to say next. And the best way to stop thinking is to take notes of what the person is saying, from my experience. Yesterday, I went to visit a, a prospective client, and I asked him to tell me about his pain that he's feeling in his business and why he's asked me to come. And I have in my notebook here, I've got it all listed out. And then I went back and I read them back to him. And it was kind of funny because I said, "Unfortunately, I just don't think this is enough pain." [laughter] But I don't think I could have said that if I hadn't really understood what his pain was. And so, we had a further conversation going deeper.   0:07:42.5 AS: But then the third part that Dr. Deming is talking about is not passing judgment. Wait a minute. Come on. I'm all about judgment. I know what's right. I formed my beliefs over many years. And you can also say that Dr. Deming passed some pretty tough judgment, you know. So, I'm just curious, as I think about those three things, how do you put that all together in your mind?   0:08:09.2 DL: Well, I was just thinking about one of the conferences that we were at. He always had an education day after one of his conferences. And so, there'd be educators from all over the state would come to his one-day conference. And I'll never forget the room was filled with like 300 school administrators, principals, some teachers, et cetera. And then there was a time to ask Dr. Deming questions. And this fairly young man got up and described the high school that he was a principal of, and there were 52 different languages spoken, and the gang violence that he was dealing with, and all just really detailed and clear. And he had data, and he really understood what was going on. He says, "So Dr. Deming, I need your advice about what, where I should go from here, what I should do." And Dr. Deming is sitting up on this big stage. He's probably 89 years old at the time, and he's got his arms folded, and he looks down, and he looks up at the ceiling.   0:09:14.1 DL: The silence is just deafening with 300 people there. And started to think, well, maybe he didn't hear the question or realize he's supposed to [laughter] he's supposed to answer or something. And finally, the guy couldn't stand it anymore at the microphone. He says, "Well, Dr. Deming, do you have an answer to my question?" And Dr. Deming said, "It's not the answer that's important. It's the question. And you've got that right." [laughter] Next question. [laughter] And there was just this ripple in the audience, like, "What does that mean? Oh, my gosh." Yeah. So when you're able to actually ask the right questions, then you're probably on the right track of figuring out what to do yourself. It's the people that aren't listening and aren't thinking about what is the next question? Or what question should I be answering?   0:10:10.3 AS: And what do you think about when he says... Now, we have to understand that, we're talking about managing your people here. So it's not like he's talking about when you're going out and speaking in the public necessarily, but he's talking about how you're developing your people and interacting with your people. And he's saying, without passing judgment. And I guess the first thing he said, if the way you interact with the people that you manage is to pass judgment on them, you're probably going to lose trust right away. And we've already seen that trust was number 10. So I guess what he's trying to say is, you know, listen and accept what you hear. I don't know.   0:10:55.2 DL: Yeah, I think what I've often taught teachers a lot is to learn to be comfortable with silence, too. You think you're the leader of people so you have to fill all the silence all the time. And you may ask a question, and then you have to just wait. And I'll never forget when I was working with Alaska Native students in Alaska, high school students, read a study that said the average time it takes for an Anglo Saxon teacher to ask a question and then answer their own question is like three seconds. You know, not really listening at all. The average wait time, response time for Alaska Native students was something like 20 seconds. So, here you have all these teachers that have come in from the outside that are starting to work with Alaska Native kids. And they, I remember vividly teachers saying, "Well, these kids just don't respond. They just don't talk. They just don't." Well, give them time. [laughter] It's not in their culture just to respond instantly every time you ask a question or like a game show host or something like that of how many questions can we get through in one hour or something.   0:12:19.3 DL: And I just noticed for myself that I had to do little things like learn to put my hand on my watch, while I, as a cue just ask... I asked somebody a question just to wait until I got that response. And sure enough, when I would wait, I would get really good thought out well...good responses. I didn't wait and I get just cheap answers that people are trying to give you what they think you want to hear.   0:12:53.8 AS: I just thought about how being a podcast host has helped me a lot in listening because, I'm doing two things, one is I'm shutting up. And there's so many times that I feel like, you know I think my discussions with you are a little bit different from my discussions I do on my other podcasts where here I think there's a lot more... We're going back and forth on a lot of things, which I really enjoy. But still, it's just, it's a lesson in being quiet. And what you just said reminded me of something I always said to people that came to Thailand, either managers or teachers, and I said, "Just because Thai people don't respond to your question doesn't mean they don't have an opinion." And I think it's the same thing as what you're saying. And therefore, you've got to use different ways. So in the case of Thailand, one of the ways you do that is you have... And I just saw a presentation recently by a Thai person and they messed up themselves because what they did is they asked the audience, "Raise your hand and ask a question."   0:14:05.0 AS: Which they knew that that's not how Thai people respond. They're not so brave as to do that. But luckily, that person also had a little venue that they could type in a question. And instead of in, they could have saved time by just not even saying, "Shout out your question," they could have just said, "Go to the app, type in your question now." And then people would have really... Eventually they got it. But it was just interesting to see even a native person not really realizing the way people respond.   0:14:39.4 DL: I just know, even in my own family have five children. Well, my wife and I have five children. [laughter] But when they were really little, by the time we got to probably the third one, we had to sort of just hold back the older kids, because we found out that they were just filling in all the blanks for the little ones that couldn't answer or couldn't answer incomplete sentences, or they were actually just completing their thoughts for them and things and just had to explain to them, "Look, you just have to wait and let them formulate an answer and let them talk, let them speak." Because they didn't realize that they didn't have that problem when they were that age. [laughter] They just had parents that were just doting on them and there weren't any other children around. So.   0:15:31.6 AS: Let the process happen.   0:15:33.8 DL: Yeah, it worked out really well because then we'd have fantastic dinner conversations in which all five of them at different ages could enter in and talk about it and enjoy experiences.   0:15:48.3 AS: One other thing I recently did in one of my classes that maybe I would talk about because there's an aspect of listening to it. Originally, this is my ethics in finance class, and it's a 15 hour class. And I can teach for 15 hours on the ethics material, but after COVID happened, it's like, why not just put it all on video. And so what I'm teaching is exactly mirrored to what's in the videos. So now what I did is I told the students, "Look, you're responsible for going through this material. I'm going to carry you through a portion of it. But from day one, I'm telling you, it's all in the videos. And then there's practice questions and things like that." So now what I do is I did... Originally, what I did is I taught for half the three hour session I would teach and then I would have them do case studies. But I realized that I wasn't happy with what the case studies were bringing out and so I switched it to debates.   0:16:47.4 AS: And now I give them topics and they have teams that debate. And I still had the problem that the audience wasn't participating or asking really great questions, it's almost like, it's the other team. So I required all teams to submit one, let's say two arguments with some sort of link to some evidence and two arguments against linked to some evidence, and they all have to submit that by Monday. And then I release that to the whole group, so that the teams that were preparing for Wednesday can see even wider view before they get up on stage. But the key thing is that what's happened now is that I don't have to ask any questions at the end. So I'm just listening. And it's fantastic, because the audience now, they've got good questions. And I just feel like when you talk about listening for me to be able to spend the second half of the class, I don't say anything.   0:17:44.3 DL: Yeah, so it seems like such a simple point. But I think when you really think about it, there's just a lot of depth there and reasoning. And you also made me think about, because you were referring back to the one of the previous points to and trust and stuff, but all of Deming's work was always an interrelationship of parts to the whole. So whether you're talking about the 14 points in his New Eco... Or the Out of the Crisis book, or you're talking about these 14 items for managers or whatever it might be. I was always so impressed that he always saw these things as an interrelated parts to the whole. So it's not like, "Hey, if you just start listening and just do this, then everything is just going to be great." Well, that's a piece of the puzzle, that's not the whole puzzle.   0:18:31.0 AS: It's a progression. Well, is there anything that you would add in wrapping up about listen and learn without passing judgment on the person that you're listening to?   0:18:46.5 DL: I think, I think the last thing is that as a manager of people, whether it's a teacher in a classroom or whatever it might be, you have to actually formally make time to do that. And I know that's really hard to do, but you think of a normal like classroom teacher, like K through 12 classroom teacher, maybe you have 30 kids in a class, how are you going to set up a system so that you're actually getting some time to listen and learn from individual students? And that's really hard to do. It can be done if you think about, "Okay, well, I got 25 kids, if I set up a time to listen to five a day, by the end of the week, I've actually got some one-on-one time with everybody involved with that." Or we've talked about too, in moving to small groups or even whole group kinds of sessions. But the whole point is that you are listening, and think how proud it makes people that you are listening.   0:19:56.3 DL: That's why I told that story about Dr. Deming, because I always felt really proud that he was really listening to what I was trying to say or explain or ask a question about.   0:20:07.9 AS: Yeah, I can't help but add to that, that I do one-on-ones with every one of my students in the Valuation Masterclass Bootcamp. Now, it's a 70% pass rate. So, I don't do those until the end of the course, but people line up video meetings, and we do it virtually because it's kind of, it's easier. But what I have is I have a series of about eight questions that I ask them. And then what I do is I just get them on the line and I say, "Okay, let's look at your first question I asked you, and here's your answer." And I read it back, and then I say, "Tell me more about that." It's incredible.   0:20:47.2 DL: And you have to be real quiet and listen. [laughter]   0:20:51.1 AS: Just tell me more about that. That's all you have to do. And I think that's what your last wrap up there just reminded me. And I think for all the listeners and the viewers out there, you know, "tell me more about that." Well, David, on behalf of everyone at the Deming Institute, I want to thank you again for this discussion. And for listeners, remember to go to Deming.org to continue your journey. Listeners can learn more about David at Langfordlearning.com. This is your host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming, "People are entitled to joy in work."

On What's Your Work Fit we pose this viewer question: What are the New Economics of Workplace? Answering that question and others is our guest Stanford University Professor of Economics Nick Bloom. In his teaching and research Nick captures the ever-evolving nature of workplace and describes knowledge workers' growing embrace of remote and hybrid venues. … Continue reading What are the New Economics of Workplace? →

What causes fear in an organization? How is fear hurting employee morale, productivity, and overall performance? What great things can happen when you remove fear? In this episode, John Dues and host Andrew Stotz talk about fear, and how managers can get rid of it. TRANSCRIPT 0:00:02.6 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. This is Episode 14, and we are continuing our discussion about the shift from management myths to principles for the transformation of school systems. John, take it away.   0:00:32.9 John Dues: Andrew, it's good to be back. Yeah, we've been talking about these principles. We've sort of shifted from the myths to the principles that, you know, especially education systems leaders can use to guide their transformation work. I think we're up to Principle 8 today, and most recently I think last time we did, "institute training on the job" and "adopt and institute leadership." So we'll move on to Principle 8, which is "Drive Out Fear." So I'll start with just reading the principle verbatim from the book. So Principle 8: "Drive out fear so that everyone may work effectively for the school system. No one can perform their best unless they feel secure to express ideas, ask questions, and make mistakes." So I think maybe for me, when you look at the 14 principles, I haven't done this analysis, but I would venture a wager that Dr. Deming spent more time on this particular principle and related topics than any of the other ones.   0:01:44.6 JD: He discussed it numerous times in Out of the Crisis, numerous times in The New Economics. And one of the quotes that really stands out for me on this topic was in Out of the Crisis where Deming said, "Where there is fear, there will be wrong figures." And I don't think that... I don't think people sort of fully appreciate just how much sort of... "Writing fiction" is sort of how I've framed this in the past in one of our earlier episodes, but just sort of how much made-up data there is in every organization. And that can be wrong figures in the form of qualitative descriptions of important work, it can be quantitative data. But in either case, it makes it nearly impossible to improve our organizations. Because how would you even know where to start improvement if the figures and the descriptions of the work are inaccurate? So that'd be a good topic for today.   0:02:53.3 AS: Sometimes this one about fear is, sometimes it's easy for people to understand and sometimes it's hard. You know, like, when you think about fear, you can think about physical fear like, "Well, okay, am I in physical danger here?" Like, what are we talking about? Or, "Am I in fear that I'm gonna lose my job?" And some people may think that that's a good thing. And one of the first things I want to just think about is, what are the specific things in a school or in a school environment that causes people to be fearful? Maybe we could identify what you see, because you've talked about the outcome of fear is made-up data, wrong figures. It's all kinds of outcomes from fear, but what are the sources of fear?   0:03:47.2 JD: Yeah. Well, one thing I think of is you certainly can have sort of a tyrannical boss or manager. That certainly exists where there's actual fear, they yell, they threaten, passive-aggressive, those types of things. So that certainly can exist.   0:04:05.4 AS: Yep.   0:04:05.9 JD: I've definitely witnessed that in my almost 25 years in terms of career, you're gonna witness things like that. But I think more often what I'm talking about is sort of more subtle versions of fear that permeate throughout organizations. So sources, there can be different sources. I think they can come internally from some of the systems and processes you've set up in your own school or school system. Some of them are external, so, I mean, a go-to source of fear for a lot of people is, "How do my kids that I'm teaching perform on the state test?" That can be a source of fear, for sure. There is sort of internal to your system. I think the fear... I think a lot of people have sort of apprehension when the principal comes to your classroom to observe your class, and then there's sort of the ratings and rankings that go with a typical performance evaluation. So I think that can be another source of fear in a school system. And there's probably many other sort of versions of that. But I was thinking of...   0:05:25.4 JD: A lot of times when you hear people talk about driving out fear, you sort of get the negative stories. I think, not related to schools, but I think of a classic example of fear in the form of an unwillingness to speak up and say something is the Challenger space shuttle explosion. I think that's a classic sort of example of where people did see issues along the way and really nobody spoke up. So I think that's a sort of a classic example. But I was thinking of... And I was thinking about driving out fear in my own organization. At United Schools Network, one of the anecdotes in the book that I tell is actually a sort of a more positive example. So I was gonna maybe share that and talk about some of the details there. And it's sort of a combination of Appreciation for a System and Driving Out Fear, sort of working together.   0:06:32.0 JD: But I'm going back to the summer of 2013. So I was a school director or principal at that time of a middle school. And to put that in context, we were grades six through eight. I was entering my sort of fifth year leading Columbus Collegiate Academy. It's a fully built out middle school, six, seven, eight, serving the East Side of Columbus. And I was sitting in my office with my colleague, her name's Kathryn Anstaett. She was the principal on the other side of town. Kathryn and I had a working relationship because she previously had served on my team as a teacher and then as sort of an assistant principal for curriculum and instruction. So we knew each other well. And then she had been tapped to lead our new middle school on the West Side. And she had just wrapped up that first year. It was growing from just serving sixth grade, and now they gonna serve sixth and seventh grade for the 2013-14 school year.   0:07:37.1 JD: And just like today, 10 years ago, sort of similar, limited pool of prospective teaching candidates. And sometimes Kathryn and I, we would interview a person and we'd both want to hire that same teacher. And we had come to the sort of agreement where across the hiring season, for us, the fairest approach was just to alternate turns. So Kathryn would get first choice on a particular set of interviews, and then I would get first choice on the next set. But on this particular day, we both wanted to hire this same reading teacher, and it was my turn in that rotation. Kathryn and I were sitting and looking at both school's staff rosters, and we literally said, "In order to sort of make a decision that's best for the system, this hire should really go to Kathryn." I wanted the person, I needed the person, but I also had this capable group of reading and writing teachers, despite the one teacher opening, but she was just building this new team. So she really needed a really outstanding reading teacher.   0:08:53.4 JD: And I think thinking through this sort of whole system's lens gave my turn to Kathryn. And I think it's important to say here, I actually hadn't heard of the Deming philosophy at this point. I hadn't been exposed to this idea for appreciation for a system, but really the decision making was pretty simple. Kathryn and I were colleagues, we were on a small team working to build this new network of schools, and one of the best ways to sort of bring that network to fruition was to, you know, allow her to hire this particular teacher for her school across town.   0:09:31.4 AS: Now where this connects with Drive Out Fear is that there were a number of things in place that sort of gave me the confidence as a school director or principal to make this decision. I was employee Number 2 in our organization, so I was sort of on that founding team. That gave me some, I guess, some standing in the organization. By this time I had been there for five years, and I was pretty well established as a leader. I had a close working relationship with our staff. I had a close working relationship with our founder and superintendent. But even in that context, if I was being honest, this sort of whole system thinking was not easy because we're still a relatively young organization. We're just five years old. Really the question for a startup in its fifth year is still survival. Are we gonna survive as an organization? And there was a lot of pressure on me as a school leader to achieve high test scores and really establish the reputation of the school as a strong option on the East Side of the city.   0:10:44.9 JD: And thankfully, I had the backing of my superintendent, I had the backing of our board to make this decision, but I was fearful. I was fearful because it is very possible that even with that support, what would happen if I had been held accountable for our reading results, let's say, after this decision had been made? Unless I reminded people a year from now when kids take the state test and they get their scores back, they might not even remember that, "Hey, remember when we had sort of collaborated and made this decision?" They're likely, and some organizations are gonna come to me and say, "Hey, John, what's up with the reading scores?" That's not actually what happened, but that certainly was a plausible possibility.   0:11:40.7 JD: But my point is, and I think most organizations, it is really hard to make decisions like that. Was I fearful of my boss? No, of course not, not in this situation. Was I fearful of my colleague across town? No. Of the board? No. But in the back of my mind, I'm sitting there thinking, "I'm gonna make this decision. I really wanted this teacher. It was actually my turn. But I think it's the best thing for the whole system if this particular teacher goes across town and helps this new school."   0:12:18.0 JD: I think I feel better today making that decision 'cause we've more explicitly made the Deming philosophy and these 14 principles a part of our system. However, I can imagine, for many people sitting there thinking if they're a school leader, could you make this same decision in the absence of having these principles in place beforehand? So I thought that was a good example of Drive Out Fear. Again, with all these things in place, even with all those things in place, a startup early employee close relationship with the superintendent, board, I was still sort of wondering if I should make that decision as a young leader.   0:13:04.8 AS: So it's interesting because I was thinking about, what is the source of fear? The source of fear is that we are personally going to be injured. If we think about the source of physical fear of an animal or of a human when we're in a dangerous situation, it's that we're gonna personally be injured. Now you could also extend that to the family. If you are a pride of lions or you're a group of animals and the mother or father instinctively knows to try to protect itself but also its family. But it's this, it's the ultimate selfishness for survival. And that's where... One of the things I was thinking about when you were talking is like, why does Deming use this word "fear?" I mean, it's a pretty intense word. It is something that's visceral.   0:14:00.2 JD: Yeah.   0:14:00.3 AS: You know, to be fearful is a scary thing. And...But what you're describing is the idea that if we don't think about the business or the school or the education as a system, then what we're gonna be doing is everybody for themselves.   0:14:24.0 JD: Yeah.   0:14:24.6 AS: Protecting themselves and rewarding the protection of themselves and their areas. And when you view things as a system, then you have to give space for people to do the not necessarily natural thing. I mean, it's strange to say "not natural" 'cause I also think that people want to work together. People do not wanna be pitted against other people. Nobody wants that. Nobody has that as a natural instinct. If that instinct to be pitted against other people is in someone, it's quite possible it's in them because of something that maybe happened in their past where they realized, "To survive in this situation, I've gotta be pitted against other people and gotta overcome that." But I would say that people naturally wanna work together, and it's like we come in and we put in structures that we think are good management, but actually cause people to be pitted against each other.   0:15:28.9 JD: Yeah. I think you have to draw this out a lot of times in terms of... Because I think a natural reaction for someone listening to this, for some people, some leaders may say, "There's no fear in my organization. I'm a good guy," or, "I'm nice," those types of things. But as soon as I would hear a leader say that, that would be a dark pink flag, if not a red flag for me. Because there is, without a doubt, there is fear in every single organization. Now, the level of that fear is gonna vary based on the culture at that particular organization. But there is some form of fear in every organization. If you've ever sat in a meeting and you have withheld a thought that you think that was important to share because you are afraid of what the response is gonna be from the people in that room or a person in that room, then there is fear in that particular organization.   0:16:30.8 JD: And I think a lot of it has to do with people are making judgements all the time based on the system that they are living in. They observe what happens to other people that make similar decisions or behave in a similar way. So that's why something like Appreciation for a System and Driving Out Fear, these things have to work in concert with each other, right? Because if I was gonna be held accountable at all costs, if the board and the superintendent that I were reporting to in that situation, that hiring situation, were solely focused on management-by-results or management-by-objective, and I had this let's say a performance evaluation tied to that, I'm not sure even in retrospect if I would've made the same decision. 'Cause all those things have to work together to facilitate the individual's being willing to collaborate like this. The system has to facilitate it. I think that's sort of the point that all these principles have to work together hand in hand in order to bring something like Drive Out Fear to fruition.   0:17:45.9 AS: And I think one of the hardest things for people that are new to this thinking is that almost everything that we do drives in fear.   0:17:55.4 JD: Yeah. [chuckle]   0:17:57.2 JD: It's "I want results. We're about accountability around here." And there's plenty of schools I'm sure that put up a sign like "Personal Accountability," and, "We want measurable results and I don't want to hear excuses and you're not responsible for another department. You're responsible for your department." And it's just everything that we are given, and everything... We are rugged individualists, particularly in the American sense. That's kind of the foundation. So to come and say, "I'm not so concerned about your individual, I'm concerned about your contribution to the whole team," it just doesn't happen that much.   0:18:41.0 JD: Right. Yeah. Yeah. I mean, I think the first thing you have to do as leaders is recognize that fear is present in your organization, and then the next step is sort of figuring out the pervasiveness or severity of that fear. And a lot of that's, again, determined by the culture of your organization. But I think it is a natural byproduct. If you're doing anything that's the management-by-objective, management-by-results, performance appraisal, rating and ranking; if you are doing any form of those things, then there's no doubt that fear is pervasive in your organization. Because you're incentivizing people to optimize their individual classroom or their corner of the organization, whether that's classroom, grade level, an individual school building within a system, a department within the system, whatever it is; you are optimizing that behavior versus optimizing the aim of the the total organization.   0:19:39.0 AS: And the last part of this that I just wanted to think about was, when someone first hears this and then they start seeing the connection between personally incentivizing people through performance appraisals and merit pay and these types of things related to individual performance, the first question is, what do I do instead? I got performance appraisals and I've got pay for performance and I got beliefs about accountability and all that. And maybe a good way to wrap up this Drive Out Fear is kind of, what are some steps that you can do instead of or in replacement of or maybe you don't even necessarily have to replace something? What are your thoughts about how you can help somebody who's just coming aware of all this stuff but is a little bit overwhelmed because they're used to the traditional structures?   0:20:39.0 JD: Yeah. That's a good question. I think one thing is this idea of you have to... If you are a management or a leader or set of leaders, you have to stop blaming employees and looking at problems as systems problems instead of problems of individuals sort of serving in the system. So that may be one of the hardest things is that, then if that's true, which I think it is, then faults of the system are the responsibility then of management 'cause they're the ones that have the authority to design the system, redesign the system, change the system. I think that there has to be some type of concrete mechanism by which, in a school system whether it's teachers or students, that they can ask questions and offer suggestions for improvement. There has to be that mechanism in place.   0:21:31.7 JD: It doesn't mean that every suggestion necessarily leads to a change in the system, but there has to be a system in place that elicits those suggestions, and then some type of follow up. "I heard this. I studied it with you. We're not gonna make this change but here's the reason why." Or, "We looked into this. We studied it together over time. We gathered some data and this is actually a really good idea and we're gonna change that." So one very concrete, small thing that I do for every improvement team and every committee I lead in an organization, there's always sort of a meeting tracker document. And one of the tabs within that is just a Google Sheet. Each meeting is on a tab. One of the tabs is always a parking lot, where that every member of that committee or every member of that improvement team can drop in suggestions for improvement all along so we could make improvements in real time if we need to. So that's one very simple thing that I do. And then I also have a written record and for committees that I lead year in and year out, I just constantly, continually improve them over time based on those suggestions. So that's one concrete thing.   0:22:44.7 JD: A bigger thing for management, I think, is because things get hard when you get into a time crunch or a high stress situation, it is easy to sort of make decisions based on, "It is just easier short term to do this." So ahead of that, what I would strongly suggest is have a written set of guiding principles. That's why I like the 14 principles so much because they are a concrete written set of principles you can fall back on and you can then... You can test any idea or any direction that you're moving against those sort of foundational principles. And if the principles are violated, then you know you're moving in the wrong direction. But it's much harder to sort of do that in the high stress situation where you're reacting to something. In the absence of those foundational principles, you're more likely to sort of take the easy way out. So that's a little bit of longer process to put those principles in place. And I think that's probably a concrete thing that a leadership team or a superintendent and the board can do, so that you can facilitate having the Deming philosophy take root in your organization.   0:24:03.0 AS: So let me summarize what we've talked about in this Principle 8 about Drive Out Fear. The idea of course is to drive out fear for the effectiveness of the system, the school system, the business, whatever that is. And you talked about having the ability for people to... People to have the ability to express ideas and ask questions and make mistakes. And you mentioned that Dr. Deming said, where there is fear, there will be wrong figures. And you said, a lot of made-up data.   0:24:35.2 JD: Yep.   0:24:36.1 AS: That you see a lot of made-up data or that's what we end up. And we talked about sources of fear and we talked about tyrannical boss and possibly yelling and threatening. Those are like overt types of fears. But you also talked about subtle versions like internally driven, maybe ratings and rankings. People are fearful of speaking up. Or maybe they're externally driven by the test scores that your students get in maybe state tests as an example. And then we wrapped up by trying to think about, what are some ways to improve the situation, particularly for someone relatively new to this. And one of the things you mentioned is allowing employees or teachers to make suggestions on how to improve. And you also talked about having the written set of guiding principles which is what you've created through your book.   0:25:29.2 AS: And I like that one because that also is a longer term way of building some constancy in the business. But I just really want to end my summary by saying, for those people who are listening that think, "I haven't heard of this Deming stuff and I'm dealing with all these different problems but it's a bit overwhelming," so I think the best way to end my summary of this is - if that's the case, if you're in that situation where you're just starting to adopt this type of stuff, just start with stop blaming employees.   0:26:01.8 JD: Yeah.   0:26:03.5 AS: Anything you would add to that?   0:26:05.0 JD: Yeah, just taking that mindset of, most of the things that you're seeing are not a result of individual employees but rather they're created by the system itself. So three words. When you run into a problem, what's the system? What's the system? In the vast majority of cases, 95% plus, it's the system that is producing those results, not the individuals working in the system.   0:26:32.5 AS: Well, John, on behalf of everyone at the Deming Institute, I wanna thank you again for this discussion. And for our 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'll leave you with one of my favorite quotes from Dr. Deming, "People are entitled to joy in work."

Perfection may be your goal, but unless you create an artificial environment, you're not going to get it. David Langford and host Andrew Stotz discuss how good managers/teachers let go of perfection and, instead, understand variation, then work on the system to produce better and better outcomes for everyone. TRANSCRIPT 0:00:02.6 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 David P. Langford, who has devoted his life to applying Dr. Deming's philosophy to education, and he offers us his practical advice for implementation. The topic for today is a discussion and a continuation of our discussion of Dr. Deming's 14 items that he discusses in The New Economics about the role of a manager of people after transformation. Today we're talking about point number 11. And that is, "he does not expect perfection." So we titled this one, "Are You Expecting Perfection?" David, take it Away.   0:00:51.8 David Langford: Great. Good to be back again, Andrew. Thank you.   0:00:53.7 AS: Indeed.   0:00:54.9 DL: So, yeah. Five simple words for a whole podcast. So what, what is Deming talking about here? Well, I think underneath these five simple words about expecting perfection is the whole concept of understanding variation and understanding systems, and understanding psychology and understanding how do you implement new theories and come up with new ideas and innovation. And that's Deming's concept of Profound Knowledge. And if you don't have some Profound Knowledge and understand basic statistical variation, then you do go about thinking, "Well, I can just, I can just expect perfection." I remember Deming talking about this point and saying, "I don't... " And I don't know if I have this exactly right. But he said, "I don't demand perfection, but I'm happy when I get it" or something to that effect.   0:02:04.0 DL: Meaning that when something just turns out perfect, you know, that's fantastic, but that doesn't take into account the variation in people and systems and process and everything that goes into a system. So basically in a school, in a classroom, I mean, one of the ways you can, you can get perfection, have everybody score 100% on a test or something like that, is to have students cheat. [chuckle] Because then everybody can get the same answers and do the exact same thing and there's no variation and there's no reason to have any discussion or anything like that. And actually, that actually happens in classrooms.   0:02:55.4 DL: If you make the expectation so high and then you create an artificial scarcity of top marks by grading on a curve or, or there's only one, one winner of a system, then the only way some people can get there is to cheat, is to do something. I remember a friend of mine got his MBA, Master's in Business Administration, and the environment was so competitive that when the teacher would give an assignment, the students would immediately run over to the library and check out all the books that had to do with that assignment, so other people wouldn't be able to learn. [chuckle] And because you know they're expecting perfection, expecting you to master this to get this. And it's really interesting because when people do things like that in systems, we often wanna blame the people without first blaming the system and basically, you as the manager of that system. So a teacher in a classroom, if you're not getting the perfection that you wanna have, you want to think about you know, "What am I doing? What can I be doing differently that might get us closer and closer to more and more people getting those top marks?"   0:04:31.5 DL: So when I first started learning about this, and this point actually really goes to Deming's work in education about grading, grading systems, and him talking about eliminating grades and so on and so forth. I went through the same process, because I couldn't stop giving grades, or I wouldn't have a job any longer. So I had to think about, "Well, I could stop...I could create processes whereby more and more people could get that A or could get that perfection or could get that top mark." So I actually went to my principal and asked him, I said, "Is there any state law or school rule or anything else that prevents all students from getting an A in my class?" And he laughed at me [laughter] and said, "Oh, no, it's not possible, but we'd love to have all the kids getting A's." Well, at the end of that year, I think out of the 134 students, I saw that I had I think about 132 A's. And as soon as I pushed that button and turned in my grades, the principal was in my room in about 10 minutes.   0:05:41.7 AS: Ding, ding, ding, ding, ding.   0:05:42.8 DL: "What are you doing?" [chuckle] "What are you doing?" And the academic counselor was right with him, and he said, "You're destroying the whole grading system." I said, "Well, thank you very much. That was my aim." But yet you'd have to think about if you want more and more students to get top marks, or whether you call it an A or whatever you wanna call it. By the way, sometimes I work with districts, they say, "Oh, we don't have grades anymore, so we just rank kids, four, three, two, one." [laughter] So it doesn't...   0:06:18.0 AS: That's smart.   0:06:19.6 DL: It doesn't matter. Yeah. It doesn't matter what you call it, yeah, you're still doing the very same thing. But you have to think about, "What would I have to do if I was to get every year more and more and more students to get those top marks?" Well, I would have to manage differently. I would have to let people... If they got something wrong, I would have to let them learn about it, right? And go back and fix it, and make it right. I remember talking with Dr. Deming about his own classes at New York University, and I said, "Well, what do you do?" And he said, "Well, you know, you're supposed to write a paper on something. And I read that and sometimes I'm a little concerned about what people have written or what they've done, and I'll say, 'We need to have a chat about this and talk about it.'" He said it's also a very good chance that they've come up with a different way of looking at things and a new idea that you didn't even think about, right? So it's not a matter of just doing it exactly the way, you know, the teacher wants it done. So anyway, that's my take on this.   0:07:40.2 AS: While you were speaking, I went on the Google, which is now our new brain. And I'm afraid that I feel like the definition of perfection or perfect has been changed. I haven't looked at it for a while, but it says, "Make something completely free from faults or defects." Okay? That kinda makes sense. That's what I always thought was perfection, but it has a further part. It says, "Or as close to such condition as possible."   0:08:12.2 DL: Ah, yeah. That's very Deming-esque, free of fault or defect. And Deming used to lamb-blast programs that were trying to teach people to be defect-free. And and I think that goes a lot to this very same point of thinking that you're gonna get perfection on things, not understanding that the normal variation that's in every system.   0:08:38.5 AS: So I think I've got my interpretation is for this one, "he does not expect perfection, he expects a distribution of outcomes."   0:08:52.1 DL: Yes.   0:08:54.6 AS: That's the way I would see it. That we understand that it has nothing to do with perfection, it has to do with understanding the outcomes of a system and the distribution or the variation of those outcomes. And when you truly understand that, it's much more valuable and important than understanding or sitting there and going, "I want perfection." So that, that... You talked about variation and stuff, to me, that's really a key thing that I interpret from this.   0:09:28.3 DL: Well, if you take any process, whether that's in a school or company or military or anything, and you implement this process and you have some kind of data on how did it go? What was that distribution of who did it really well, and the people in the middle, and some people at the end. Basically you look at the average performance and say, "Am I happy with the average," right? And I always tell teachers, "If you're happy with your average and you know it, clap your hands," which is [laughter] basically what you have to do. It's just to take a look at and using some Profound Knowledge. You look at the situation and you realize, "Yeah, I am happy with that average." Let's take for example, maybe you gave a test or you did something and everybody scored between 85 and 95, and the average was 90, right?   0:10:22.6 DL: But you know that you're probably going to revisit the same material two or three times coming up. Well, it, it doesn't make sense for you to spend a whole bunch of time trying to get everybody to get a higher score right now, because you know that your Profound Knowledge tells you that you're gonna be revisiting this later on. And that's what Deming's talking about here. And basically if you're not happy with your average and you know it, okay, then don't blame the students, because 98% of the reason you're getting the results you're getting is coming from the system itself.   0:11:06.6 AS: I was just thinking about a rocket that I believe Russia recently sent a rocket to the moon, and it ended up crashing, from what I remember reading. And it made me think about aiming for perfection and aiming for that one absolute outcome, when in fact there's a range of outcomes. And particularly when you're shooting something to the moon [chuckle], you know, like, and it may just be that there's a little mountain...   0:11:34.7 DL: Complexity of that, yeah.   0:11:36.2 AS: Yeah. There's a little mountain right there that you hadn't planned for, and how are you adjusting for various potential outcomes and understanding that rather than just pinpointing and saying, that's where we're gonna be 'cause chances are you're not gonna be there, so.   0:11:53.5 DL: Yeah, it's probably a good analogy. I imagine if you ask people that had been around NASA for what, 40, 50 years, et cetera, and ask them, how many perfect flights did you ever have? I would bet a large amount of money that they would say zero, [chuckle] because there was variation and complications of every single flight.   0:12:19.8 AS: Yep. Yep. So, I'll wrap this up by challenging the listeners and the viewers out there to focus on that distribution of outcomes. Someday one of those outcomes may be perfect but most days or almost every day, it's not gonna be, it's gonna be a distribution. And so if you do not expect perfection, rather focus on the distribution of outcome, I think you're gonna be in great position. David, on behalf of everyone at the Deming Institute, I want to thank you again for the discussion. As always, it's fun. For listeners, remember to go to deming.org to join, continue your journey and list...listeners can learn more about David at langfordlearning.com. This is your host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming, "People are entitled to joy in work."

When we answer a question with "it depends" we are asking for more information about the possible variables that will inform the answer. In this episode, Bill Bellows and host Andrew Stotz discuss how, in the Deming world, "it depends" can trigger improvements in processes or products and services. TRANSCRIPT 0:00:02.6 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 Bill Bellows, who has spent 30 years helping people apply Dr. Deming's ideas to become aware of how their thinking is holding them back from their biggest opportunities. The topic for today is, in this episode 10, It Depends, Rethinking Improvements. Bill, take it away.   0:00:34.6 Bill Bellows: Rethinking improvement, yes.   0:00:38.3 AS: You're always teasing us with your titles, Bill.   0:00:43.2 BB: I hate when that happens, I hate when that happens. No, I uh, what I would tell managers when I was doing these one-day seminars all over Boeing for year after year after year after year, and the managers would wanna know, so what should I expect from the people afterwards? And I said, or I would warn them, I said, here's what's gonna happen, just so you're ready. I'd say, you're gonna hear a lot more of people saying, "It depends." 'Cause to me, Andrew, "it depends" is the beginning of an appreciation of a system. So Andrew, you and I are going out to dinner and then you say, would you like to have some wine? And I say, sure. Then you say, red or white? And I say well, it depends Andrew, what are you having? Right, I mean, so to me, it depends is an understanding of what Ackoff would call interactions, that I cannot order the wine without knowing the meal. Planning a wedding, we can't order the food without knowing the guest list, can't order the music without going to the guest list. The colors of the flowers depend upon, the color of the tuxes depend upon it. And what is that? It is looking at things, not in isolation, but as a system. So when I tell my students, graduate and undergraduate is, you already manage systems, you already manage interactions.   0:02:09.0 BB: You don't use that word, but you couldn't plan a vacation without looking at things in context. You couldn't run errands on Saturday morning without knowing what time the store is open, what time... So, so I think we have a natural proclivity of looking at things as a system, quite often, quite often. It could be better. But I... So I just throw out, I just, I mean, if somebody asked me a question on a topic I've never heard about before, what I find is, one is I think, well, how would a red pen company, a me organization, a last straw organization look at that? And they'd look at things in isolation. Which reminds me of an Ackoff quote. He says, "getting less of what you don't want doesn't get you what you want." So we're gonna drive variation to zero, and when I was listening to the last podcast, it was talking about this driving variation to zero. You can't go to zero, 'cause Andrew, cloning does not produce identical, twins are not identical. So for those who think you could drive variation to zero, you can't. Get under a microscope and you're gonna see differences in snowflakes. The question behind reducing variation is, is it a worthwhile investment, which gets us into this continual improvement thing.   0:03:32.6 BB: But, so whether we're reducing variation to zero, reduce... Eliminating waste, eliminating non value-added efforts, what Ackoff asking is, he is challenging us saying, getting rid of what you don't want, what is it that we want? And here I had a great quote from a good friend, Dr. Deming, he says, "it would be better if everyone worked together as a system with the aim for everybody to win."   0:04:00.2 AS: He was saying, win-win before everybody was saying it.   0:04:06.3 BB: Well, what I like about that quote is, did the word quality appear in that quote? Did you hear the word quality anywhere in there, Andrew?   0:04:14.8 AS: No, I didn't hear it.   0:04:17.1 BB: Huh. And Dr. Deming was that quality guy, right?   0:04:20.9 AS: Mm.   0:04:22.4 BB: So he's got quotes that don't have to do with quality? [laughter]   0:04:25.0 AS: Yeah, and so that's one of the things that I think people come, when they first come to Deming, they're looking at, they're thinking of quality in terms of tools, you know...   0:04:35.6 BB: Tools, techniques, yeah...   0:04:36.8 AS: And then they find...   0:04:37.1 BB: And so part of the reason that I wanted to throw that quote out is, to reinforce my point, that I look at what Dr. Deming is doing, is providing guidance for how to manage resources, time, energy, money, space, equipment, tools and techniques, ideas, as a system. And the ideas as a system, is the idea that things are interdependent; I depend on you, you depend on me. And I think the better we understand that, you realize is that improved quality, what he would call quality, would come from that, improved safety would come from that, improved profit would come from that. Again, Ackoff would say, you know, profit is the result of how well we work together, which is how well we manage resources and the idea of being deliberately proactive, deliberately reactive, we talked about last time. And I also made reference last time through the term purposeful resource management, purposeful... And then also reflexive resource management, which is the "me organization," the non-Deming organization being reactive, why?   0:05:58.3 BB: I'm not thinking about it. [laughter] I just, why would I be proactive? I'm gonna be reactive. I'm not gonna work on things that are good. I'm gonna focus on the problems. I'm gonna focus on the defects. Whereas in a Deming organization, a "we organization,: I think there'd be, we're gonna be reactive, where it makes sense, it depends. When does it make sense? We're gonna be proactive when it makes sense, it depends. And another term I'm gonna throw out to build upon this purposeful resource management, which I would... I look at management as an activity, we're managing resources, we're thinking locally...   0:06:33.3 BB: Thinking globally, acting locally. And I think everyone in a Deming organization has that responsibility. You don't ask for twice as much resources as you need. So you don't, so you make sure you get things done as you would at a non-Deming company where you ask for way more than you need on everything, because you don't wanna be the bad guy, so you protect yourself. I would believe in a Deming organization, you would ask for what you need. But again, when I'm working on a project in the backyard, it involves going to the hardware store, you know, I'm gonna go there a few times that day. And, but I anticipate that. And in fact, now I get smart and instead of on one visit, and then going back, I'll say, I'll buy, if it's three different things I might need, I'll buy all three.   0:07:19.8 BB: I say it to myself, what am I doing? Managing resources. But a new term, to build upon purposeful resource management, so purposeful resource management is, "I know when I go to the hardware store, I buy more than I need. I can always return it next week and when the project is done." And that's how I manage projects. But I didn't always do it that way. So what I wanted to say is that purposeful resource management is how I currently manage resources. And then when you and I come up with a whole 'nother way of managing resources, I refer to that as purposeful resource leadership. And leadership is about creating a path for others to follow. And you say, holy cow, I should do the same thing, you know, in my part of the organization, again, where it makes sense.   0:08:05.2 BB: So whether that's focusing on an ideal value when it comes to improving integration or managing and improving how we manage interactions, purposeful resource leadership to me is everyone...I mean, someone coming up with a, then again, better way of doing it, and then we spread it around the organization, then somebody else takes the lead on their thing. The other thing I wanted to share with you is, is a quote from, quotes from two friends who spent a good deal of time with Dr. Deming, conversations. I met him twice, never asked him a question. The first time I didn't have a question to ask. And the second time he was health-wise, not in good shape. I just wanted his autograph. And I just wanted to just be thankful for being in the room. But Gipsie Ranney, who was the first president of the Deming Institute, and before that she was a professor at the University of Tennessee and a senior consultant at GM, she told me, she was a mentor for many years, she said she asked Dr. Deming once, she said, "so, um what are people getting outta your seminars?" And he said, he says, "I know what I told them. I don't know what they heard."   0:09:21.1 BB: And I think... And the more I thought about it, it's just I think that's part of the problem. So a big part, of what I was trying to do at Rocketdyne was to make it easy to read The New Economics. 'Cause I think there's, I think yeah, you can read it on your own, but I think the meaning you'll get being guided by others first, and that could be listening to the pod... You know, listening to these podcasts, watching videos on DemingNEXT. I think It's important to realize that there's words he's using that have perhaps a different meaning than you're using where you are at work. I just throw that out. And the other quote I wanted to share was from Bill Cooper. And Bill Cooper is approaching 90, he lives in San Diego, and he's a great guy.   0:10:07.7 BB: And I, I met him 20 some years ago and remained in touch. And he was a senior civilian officer, senior civilian at the US Navy's Overhaul facility in San Diego at a place called North Island, in the early '80s he came across Deming's work and became riveted, along with Phil Monroe, who was a senior military officer. And they went off to do Deming Consulting around the world. And, and Bill said he asked Deming once, Dr. Deming once, he said, "so what percent of people who attend your four-day seminars really walk out understanding what you said?" And his explanation, his answer to Bill was, "very few." And I think that's consistent with Gipsie, because I think you have to step back and realize that there's, there might be something more going on than what you're thinking. And I'm hoping these conversations help to spur that. Now, relative to teamwork, I had a colleague within Boeing, he was at Boeing Corporate, and somebody went by his office one day knowing that he was very fond of Deming's work and Taguchi's work. And the guy sticks his head out and he says to him, "you know the reason I don't like Deming, there's no equations, you know there's no equations.   0:11:30.0 BB: If you had equations, it means something." And so I told my friend, I said, next time the guy comes by and says that, say to him, "do you believe in teamwork? Is teamwork important?" 'cause at that time, within Boeing, Boeing's corporate slogan was "people working together as, as a one global aerospace companies"... But people working together. And I said, ask him, does he believe in working together? And he'll say yes. And then say, "so what's the equation? What's the equation?" And so I wanna share in advance of a, of another session where we get more into this, an example of teamwork. And I think, I think... I think if executives had an understanding of what teamwork is, that it improves profitability, no one would be against it. Now again, I've also come across people who think teamwork means everyone's involved in every decision, and they get turned off by that.   0:12:30.2 BB: And I'm not saying I agree with: everyone's involved in every decision. But what if, Andrew, in terms of a task, let's say you and I have to dig a trench that's 50 yards long. And I give you a shovel. That's a tool. I take a shovel. That's another tool. We start at opposite ends. And let's say we can each dig the trench at one foot an hour. So that means in one hour we're digging two feet, in two hours we're digging four feet. And so what is that? That's one plus one... One hour plus one hour equals two feet. That's addition, right, Andrew, addition. But if you're at one end of the trench and I'm on the other end of the trench, where's the teamwork? [laughter] There's no teamwork in that model. But Andrew, what if I came along with another tool called a pickaxe, and what if I get in there and start softening up the dirt? And then as it's softer, you can shovel faster. That's teamwork, Andrew. Teamwork is that you and I, again I'm changing tools, but what I'm showing is that you and I working together, my work depends upon yours, yours depends upon me. Two of us can be digging three feet an hour. So what's that Andrew? One plus one is three. My wife and I, a number of years ago, were scraping the spray off the ceiling in our hallway, and the work split was, I climbed the ladder and scraped off the acoustic spray. Right?   0:14:07.2 BB: And her job was to be ahead of me spraying it with water to soften it. And I use that example at class because we were doing far more together than the example I gave you. But if her ambition was to get to the end of the hallway before me, then the acoustic spray would be dry long before I got to it. That ain't helping. And so this is an example of would you like to be in an organization where two people are doing the work of two, or two people are doing the work of three, or two people doing the work of four or five or six. Or, or worse than that Andrew, would you like to have two people doing the work, falling behind [laughter] and get into the... 'Cause I also think people think, well, what's the worst case scenario? Two people equals zero? No, falling behind each day.   0:15:00.9 AS: Two people equal negative one.   0:15:02.7 BB: 'Cause they think well, how bad can it be? It can get better and better or worse and worse. And the other thing I'll add relative to the, "it depends" and the answer to every question. I think if you think of in a Deming organization, you're thinking about, "it depends." And so Andrew, if we're in a red... If we're in a non-Deming organization and I say to you, "Andrew, will that report be done by tomorrow?" How would you answer it in a non Deming organization, Andrew?   0:15:34.7 AS: In a non... Yes, sir.   0:15:36.1 BB: You're gonna salute and you're gonna say, "yes sir." All right. And I do this with my students and they'll be quick enough to figure out the answer is yes. Then I'll say, I'll call on a different person and I'll say, "Okay, let's say we're in a Deming organization, a 'we organization' will the report be done by tomorrow?"   0:15:55.5 AS: It depends.   0:15:57.6 BB: And they're like, it depends. It depends on what Andrew? It depends on what time tomorrow. It depends on those other five things you've asked me to do. And you might say, is this a five minute task or a 20 minute task or a two hour task? And so if you're unwilling to answer "it depends," then what's the chance the effort you're gonna apply? And so that's what I find is, I think the beauty of it is not, "it depends" is a smart-alecky response, it's trying to get a better sense of the system. And they, but I also say that I confess of thinking about "it depends" all the time. If my wife, of 40 years, was to ask me, do I have plans for Saturday morning? You know what my answer is, Andrew?   0:16:50.5 AS: For whatever you want, dear, I am free.   0:16:54.2 BB: I do not say, "it depends." [laughter] So it depends is the answer other than when your significant other says, do you have plans for...? And you say, no, I don't.   0:17:07.5 AS: Yes.   0:17:07.8 BB: All right.   0:17:08.3 AS: All right. So I got so many different things that you triggered.   0:17:12.2 BB: Good.   0:17:13.4 AS: The first one I wanted to mention was I have a friend of mine, Bevin in Bangkok, and he helped me edit my book, Transform Your Business with Dr. Deming's 14 Points. And he didn't know anything about Deming, so it's kind of fun to write it and have him going through it. And he actually worked with me side by side in my office and he was reading it and going through and editing and going back and forth chapter by chapter. And then after he was pretty deep into it, he looked at me and he says, I think I just figured it out. Dr. Deming is like is a humanist that cares about people.   0:17:49.8 BB: Yeah.   0:17:51.2 AS: And that was such a... And I think for the listeners and the viewers out there, you're gonna get to a moment where you move beyond tools and techniques into the way you think about getting the most out of a system, getting the most out of people. And that's really where you really get into the meaning to me, the most powerful part of the meaning of Dr. Deming.   0:18:14.5 BB: Well, when you start to think about the potential for one plus one, and then you realize that in a non-Deming organization, you deliver the report by, you know, without understanding the context, you deliver the part without understanding the context. You have the ability to, as we've talked, spoken before, meet requirements minimally, leave the bowling ball in a doorway and... 'Cause I say, Andrew was the task completed? And you're like, yes sir, it was completed. But to do so with the absolute minimal effort and then to realize that that then is creating a ripple effect for the next person. And what we end up doing is a one plus one is a big negative number, or you go off and get the cleaning solution, which is really, really cheap, but it doesn't cut whatever the grease is on the table. And we're saving a lot of money, but we're putting all this manpower. When you start to realize how easy it is to end up in a situation where one plus one is a big negative number, why would you treat people other than with the greatest of respect? And I've had people say, "Well, oh, so it's a feel good thing." I said, are we... Is the result at the end of the day to make... I'm not saying we're in business to make a profit, but I said if we wanna be sustainable, then the better we work together, the more sustainable we are. So, do we wanna be sustainable? And you get what you get.   0:20:00.0 AS: I had some other things that came up. First one is, for the audience out there, you may not know what Bill's talking about when he kept saying Ackoff, Ackoff. But what he's talking about is Russell Ackoff.   0:20:12.5 BB: Russell Ackoff. Yes.   0:20:15.7 AS: And I just wanna go back to an article that he wrote in 1994, and it's titled Systems Thinking and Thinking Systems. But what's critical for our discussion is his description of a system, which is very brief. So let me go through it.   0:20:32.4 BB: Yeah, please do.   0:20:33.5 AS: "A system is a whole consisting of two or more parts, one, each of which can affect the performance or properties of the whole, none of which can have an independent effect on the whole, and no subgroup of which can have an independent effect on the whole. In brief then, a system is a whole that cannot be divided into independent parts or subgroups of parts." Now, I just wanna talk briefly about my... One of my areas of expertise is in the financial markets. And I say something a lot like what you say, when I go into my class and I said it last night in my valuation masterclass boot camp, when you finish my class, you'll be less confident than when you started. If you are less confident when you finish this class, I have succeeded. Well, this is very painful and difficult for people to think about because we're going to school to become more confident. But the stock market is not like physics where we have immutable laws that we can...   0:21:52.2 BB: That's right.   0:21:52.7 AS: Grasp and understand and then watch the interplay of those laws. The world of finance is a messy ball of activity. And the fact is, is that the minute you touch that ball, you have now affected that ball. If you place a buy order, you have just affected that ball. If you maybe place a very big buy order, you've really affected it. Some people could even say that just by looking at that ball of activity, you could influence it. When you face a complex, constantly changing system, then you start to realize that we have so little...to expect definitiveness, I'm just gonna do this.   0:22:49.0 AS: I'm just gonna take care of my department, if... And you're talking about a company, you are ignoring that the system, in this case I'm talking about the stock market, but now let's take it into a factory or into a business or into an office environment. All of these component parts. And if you write an email, a scathing email and you send it into that group of people that is working in a system, congratulations, you have made an effect or an impact on that system. For better or for worse, that system must react to every interaction. It cannot be divided into independent parts or subgroups. And therefore, the typical manager nowadays, that's all they wanna do. "I got my KPIs, that's my subgroup."   0:23:39.2 BB: Yes.   0:23:39.5 AS: We'll take care of that. And they're missing the word that I love in... When I work with management teams, the word I love is "coordination."   0:23:49.9 BB: Yeah. Synchronicity.   0:23:52.2 AS: Yep. So there's a lot there. But I just wanna highlight one other thing. You made me think of a book and earlier I was looking around for that book. So I'm gonna get out that book 'cause my books are right here and for everybody that's in business that's looking at competitive strategy of your business, Michael Porter is the guy...   0:24:14.3 BB: Yes.   0:24:14.8 AS: That's the best of all. But what I can say is that Michael Porter can be a bit dry. And the lady who worked with Michael Porter is a lady named Joan Magretta and she wrote a book called Understanding Michael Porter, a simple, small book to teach all the main things that Porter teaches. But what he teaches, the most important thing is that to develop a competitive advantage in a company, you wanna build that competitive advantage in the supply chain of that business, the flow of that business. And then he talks about the importance of fit, of how different components of that supply chain fit together.   0:24:57.3 AS: That that's the right person running the right part and that they're coordinating their efforts. And when you build that competitive advantage in your supply chain through the coordination of efforts, it's almost impossible for the competitor to copy. A great example is if General Motors, if the CEO of General Motors came in and he says, what I wanna do is start building cars like Toyota. Good luck. It's never going to happen because they've built their whole competitive advantage in their supply chain and it's not something that you can just go out and replicate.   0:25:36.0 BB: Well, to add to that, and I have a...students in one of my classes watch a one hour lecture by Porter. And then I explained to them Porter's five... I think it's a five forces model.   0:25:49.9 AS: Five forces. Yep.   0:25:52.1 BB: And all of that, I think it's absolutely important to know about. What I learned from Tom Johnson, is a retired professor from Portland State University and we'll talk more about Tom in a later session. What Tom pointed out to me that I would have paid no attention to in Porter's model is, in Porter's model it's about "power over." Power over your customers. Where else are you gonna go, Andrew, for Internet? Right? Power over your suppliers, power over your employees. I think and when we get into this "power over" model, so we're gonna go to our customers, start demanding things, put a gun to their head, drive change and they're gonna respond by leaving bowling balls in the doorway when it... So what's missing in that model is... I mean, if the model's based on all white beads are the same, everything which is good, everything is, there is no variation, then it might work. But if you now go back to the humanist, if you've got people in the loop who have vested interest in their survival as an employee, their survival as a supplier, and you go to them and start wrenching them and squeezing them and driving them to...   0:27:18.4 BB: And they respond with things that are thinner and break more often or still meet requirements, it doesn't work out as well. To your point on Toyota, my sense is Toyota has a sense of relationships with suppliers, which is not mutually self destructive. I think there's a better understanding, I think, again, not that I've spoken and gone to visit Toyota's suppliers. But I'm thinking, in order to deliver what they deliver, there's got to be some sense of, shall I say win-win, because if it's win-lose... Boeing, when Rocketdyne was owned by Boeing, you know, severe downturn in the market, there was a lot of pressure within Boeing to improve things and it was a pretty stressful situation. And Boeing was going to suppliers, not only asking them to take back inventory, all those parts you bought from the last six months and we're having trouble selling airplanes. But the reason we want you to take them back, Andrew, is it's not so much that we need the space. We want you to buy them back from us. [laughter] Yeah. Are you okay with that, Andrew?   0:28:44.9 AS: Absolutely not.   0:28:45.6 BB: And I'm thinking, what's gonna happen when you go to that supply chain and say, we're ramping up, we've got customers, and we... Andrew, we need your help, we need your help. Are you there for us? And you're like, remember five years ago? Remember? You get into this rainy day friends kind of thing. It's one thing if we're mutually suffering or mutually benefiting, but anything short of that is not win... I wouldn't define it as win-win. I also want to point out the production viewed as a system, the loop, the loop model that Deming showed the Japanese in 1950. And what I've done in the past is, is I've taken a class and I said, okay, you over there, you are the beginning, the raw material comes to you and then you do your thing, hand off to the next person, off to the next person, off to the next person. Then you over there, I go around the room, and I just show the flow of work from the first person to the last person, last person is a customer. And I say, so, where's the best place to be in this situation? And everybody wants to be way upstream. And you say, why? I say, well, when people start leaving the bowling balls in doorway...   0:30:07.2 AS: What does that mean, leaving bowling balls in doorways?   0:30:10.7 BB: If they start delivering minimally, minimally meeting requirements as they hand off as they hand off as they hand off as they hand off, and that system, the last... The worst place to be is at the end. And I say, but what if what comes around goes around? What if it's actually a loop? [laughter] Now, where would you rather be? Then you begin to realize that whatever goes into the air, I have to breathe, whatever goes into the water, I have to drink. So I think what, going back to the humanist side, I think the better you understand others, and they understand you, this is not done invisibly. So when I'm in a Deming environment, leaving the bowling ball in the doorway, meeting requirements minimally without asking for your permission, you know that, others know that, and then you might call me on it.   0:31:10.3 AS: Yeah.   0:31:11.9 BB: Because instead of black and white thinking - it met requirements, we've got shades of gray thinking - you call me over and you say, "I don't know, you're kinda new here, right Bill?" And I said, "yeah." And he says, let me take you aside. You might be able to tap into the humanist in me. So one is I'd say, I think the better our understanding of what comes around goes around, the better the understanding of what a good friend, Grace used to call boomerang karma. [laughter] But let me also say that Dr. Deming came up with that model...   0:31:49.2 AS: There's a bit of redundancy in that.   0:31:49.3 BB: Say again.   0:31:49.3 AS: There's a bit of redundancy in that. Those words kind of mean the same thing. But yes.   0:31:54.5 BB: Yes. [laughter] That's right. It's like connected as a system. That's what system means. But when Dr. Deming showed the Japanese in 1950 production to view it as a system, and there's an idea of what comes around goes around. And it took me a while to figure this out. If everyone's meeting requirements minimally in that system and you end up with something where there are problems, then if your model is meeting requirements is okay, then it wouldn't dawn on you that some of the problems could be coming from how we meet requirements. And there's a story we'll look at in a future session of a transmission designed by Ford, built by Ford, also built by Mazda in the early '80s. And Ford somehow found out that the Mazda transmission had an order of magnitude fewer complaints, with the shifting of the transmission than the Ford transmission. It was the same design, but one was built with an understanding of managing the variation between the parts and how they work together.   0:33:09.8 BB: Very much as you would do if you're working in the garage, you're gonna get the pieces to come together, not just meet requirements any way. But I thought if Ford operated with a Deming model in everything, and they end up finding out that these transmissions are performing differently, well, if you go back in and check with quality and all the parts meet requirements, you couldn't explain what's going on. And you're left thinking, well, our transmission must have some bad parts. So part of the reason I throw that out is, in the world of improvement, when you shift from this black and white parts are good, what Ackoff would call managing actions, looking things in isolation, you might find that the requirements are met to one extreme or the other. And maybe if we started to mix and match how they come together, there's an opportunity for incredible improvement when you shift your thinking from the black and white...   0:34:10.1 BB: My parts are good, to how they work together. And also, how can you have continual improvement if your mental model, your mindset is things are good and bad, but if we look at things in a relative sense, then we could say our... If we look at understanding as relative, improvement as relative, then there's room for improvement. But if quality is defined as good and bad, there's no room for improvement. And relative to the title, what I want to bring out is, there's a sense among people in the Deming community, people like a few years into Deming, we can go off and improve everything.   0:34:51.4 BB: Now, what we have to be careful about is what does improvement mean? Does improvement mean having less variation? Does improvement mean having lower cost? The important thing is to look at things, right, Andrew, as a system, and then start to ask where can we spend some, where can... I look at it as a resource management model. Where might we spend an hour to save five hours, spend a dollar to save five? And that's what I refer to not as continual improvement, but rather continual investment. And so I look at in terms of managing resources is within an organization, we've got red beads, we've got things that are defective, things that are behind that are not quite good, and we can use a control chart or run chart to manage those, see those ahead of time. And so we have a fire, Dr. Deming, he said, of course we're gonna have fires.   0:35:41.9 BB: Let's put the fire out. We end up back to where we were before, which means the process is...we wanna get it from out of control to in control. But I think the better we are in responding to that, we don't end up shut down for long periods of time. That then gives us the opportunity as you would be as a homeowner... Again, as a homeowner it's the same thing. You end up with a leak, you gotta go fix it, whether it's the faucet, the toilet, but then every now and then you're thinking about, maybe I can improve how the watering system is done. Maybe I can improve how the air conditioner works. Maybe by cleaning the filter more often. And what is that to me, Andrew, paying more attention to the filter, because if I wait six months to change the filter in the air conditioner, now all of that dust is way up inside the coils and I'm gonna spend forever.   0:36:32.0 BB: But if I'm changing that filter on a more regular basis, what am I doing? I am overall reducing the amount of effort spent on this maintenance. And I just wanted to say, I don't look at that as improvement thinking. I look at that as investment thinking, and I just wanna go from, okay yes, we can go past "all the beads are white" and we know that we don't stop at a hundred percent white beads. So that means improvement is possible, it doesn't mean, I'm not suggesting let's go improve everything. What I'm next looking at in terms of, you know, how I interpret Dr. Deming's The New Economics is asking where's the stitch in time saving nine, where's an ounce of prevention worth a pound of cure? And that I refer to as not improvement thinking, but investment thinking.   0:37:22.3 AS: Yep.   0:37:23.4 BB: And that's what I was trying to say last time. I think reading to your kids is investment thinking, listening to these podcasts is investment thinking, going to a concert, I think everything we do is based somehow on, "I think that's a worthwhile use of my time."   0:37:39.0 AS: Yep. Okay. Let's wrap up. I just want to go back to the title, which was, It Depends, Rethinking Improvements, and what you said is that, if you're working in a Deming organization, it's not gonna be as definitive. When we ask questions, we're gonna get answers like, well, it depends. Everything's a trade off. We need to know...   0:38:03.7 BB: That's right.   0:38:03.8 AS: How many things... We need to know many things, as you said, before deciding what to do because we want to think about the impact of the system... On the system. And also I would argue, and I think you make this point, that this is hard and I think there's a rush to simplification in KPIs and things like that to try to corner people into little areas and little boxes. And that's destroying the system and... Or the potential of the system.   0:38:37.5 AS: And then I mentioned the word coordination, the idea. We talked about Porter and his idea of building competitive advantage happens through the supply chain. His example, one of them that he uses is IKEA that makes flat, it ships everything in flat boxes.   0:38:52.5 BB: Yes.   0:38:53.2 AS: And that has built something in the supply chain that's not easy to replicate. And so, but that also requires fits that you're designing your supply chain around a new way of thinking. And then you've talked about Russell Ackoff and also I discussed his definition of a system that's saying that nothing can be independently... Can act independently. Everything has an impact. I talked about the stock market and how that is an interacting system. And then I just wanna finish up my kind of review of what we've talked about by a discussion, Bill, that I had with my father before he passed away.   0:39:35.4 AS: And my father had a PhD in organic chemistry and he created a career all of his life at DuPont in selling, he was a salesman and a technical salesman. And he raised three kids; my mom was a housewife. And I asked my dad, what was your proudest accomplishment? And he said, I built a trusting family.   0:40:01.4 BB: Cool.   0:40:03.1 AS: And I didn't really... It hit me then, but it just hits me more and more whenever I think about that. My mom and dad never betrayed my trust. I never was in a situation where I could see that they were acting for their benefit and...   0:40:14.3 BB: Yeah.   0:40:16.8 AS: Not considering mine. So now I wanna go back to Toyota. One of the things that makes Toyota successful is that it's the quintessential family business. It is a family business that built certain values in the family business that are ongoing. Because what we're trying to do, and when we talked about Dr. Deming being a humanist, we're trying to build trust.   0:40:42.5 AS: He's telling us to build trust in the system. In other words, don't beat up your suppliers, work with them. Don't beat up your employees and make them fearful. Don't rank and rate your employees. Build a system of trust. And what I realized, I want to just go back to the story of my father, if my father had done something that was selfish only for him and neglected the impact on me and my mom or the family, he would have broken our trust. And it just takes one time to cause a system, like a family system, to be permanently broken, unless there's effort made to try to resolve that. And it's no different in a business. What would you like to add to end up this episode?   0:41:33.3 BB: No. I think that's a good point. A number of things is, and I really like the way you described that, because I thought about that recently as well as, it's one thing to have trust in others, but I think what you're saying is that a Deming organization we have trust in the system. And when you, when you lack that trust, what do you do, Andrew? You look out for yourself.   0:41:57.7 AS: Yep.   0:42:00.4 BB: Because you've learned. You've learned the hard way. You fool me once, shame on you, fool me twice, shame on me. But I think if you have trust in the system, then there may be a new direction. But you say, "I don't know where we're going, I just got the announcement, but I have trust in the system. I'm not gonna get tossed overboard." And I think you're right. When you have trust in the system of the company or of the family, then you know that you're being looked out for. And lacking that, when people say something to you, you're like, "what's their ulterior motive?" And when you start thinking about ulterior motives behind coworkers or friends, then they're really not friends for long when you start wondering about ulterior motives.   0:42:51.6 AS: And that stifles innovation.   0:42:53.3 BB: Oh, yeah. You say to me, Andrew, or you say to me, Bill, hey, what do you say we go do this? The first thing comes to mind is, what's Andrew up to now? But that's the humanist.   0:43:04.4 AS: Yeah.   0:43:04.8 BB: And what I love about what Deming is saying, and when you put psychology in the System of Profound Knowledge, is that it's an understanding that that psychology gets me to think about me and not the system. That psychology, then we're looking at also an understanding that each of us is different, that's the variation piece. Right, the theory of knowledge piece or am I willing to share my theories or hide my theories? But if you're not tapping into the... That people... I mean, the most flexible part of the system, once you pour the concrete, so yeah, the chairs are on rollers and you put casters on some machines.   0:43:40.6 BB: But at the end of the day, the potential most flexible part of the system is the people. And when you turn people into concrete, now you've got trouble. So I just wanna... And I know you've got a favorite Deming quote, so let me share with you my favorite Russell Ackoff quote, and then you could sign us off. And so to borrow from Russell Ackoff, "a system is never the sum of its parts. It's the product of the interactions of its parts. The art of managing interactions is very different indeed than the management of actions. And history requires this transition for effective management, not efficient management, effective management." And that's my closing quote, Andrew.   0:44:25.2 AS: Bill, once again, on behalf of everyone at The Deming Institute, I want to thank you again for our discussion. For listeners, remember to go to deming.org to continue your journey. And if you want to keep in touch with Bill, just find him on LinkedIn. Oh, wow, we have a lot of good discussions there and all of this stuff is posted there. Share your ideas and opinions. This is your host, Andrew Stotz. And I'll leave you with one of my favorite quotes from Dr. Deming: "People are entitled to joy in work."

"Trust me!' We've all heard it, and probably said it. But how do you build a culture of trust at work, or in a classroom? David Langford and host Andrew Stotz talk about how inclusive decision-making inspires trust, and leads to better outcomes. TRANSCRIPT 0:00:02.5 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 David P. Langford, who has devoted his life to applying Dr. Deming's philosophy to education, and he offers us his practical advice for implementation. Today we continue our discussion of Dr. Deming's, 14 items that he discusses in New Economics about the role of a manager of people after that manager has been through the transformation. This is on the third edition of The New Economics on page 86, and in the second edition on page 125. Now, today we're talking about point 10, which is a simple and short point, and it reads as follows, "He creates trust, he creates an environment that encourages freedom and innovation." So we decided to title, this one, "Trust Me." David, take it away.   [laughter]   0:01:02.3 David Langford: Thanks, Andrew. Good to be back again. So, yeah, this point it seems simple when you just read through it, and it seems logical like all managers of people would want to create trust with their people, but it's not like it happens automatically, [chuckle], and I think a lot of managers of people do things inadvertently, hopefully they're inadvertently, where they create distrust and stress, etcetera. One of those most obvious things is performance evaluations, "Trust me, and then I'm going to rank you amongst people in the department, and then we're going to have a prize for the top person and/or a bonus or something else within that."   0:02:03.6 DL: And people learn that you're not really interested in improving the product, the service, the classroom, the function of what's going on, you're really interested in who's pleasing you. [chuckle] And that's how you get a promotion, and that's how you move up is like, they'll... The old saying, "It's not what you know, it's who you know." And, I think that's really the heart of what Deming's getting at here, that you're supposed to create an environment of trust. And it doesn't just... It's not a pill you take and where you just all of a sudden you can say to people all you want to "trust me," [laughter] but it's over time, when you find out, "Are you trustworthy?" And if you prove not to be trustworthy, either you can't keep things confidential or you talk behind people's backs, or you, you know, any of those kinds of things, over time people start to realize you're not somebody to be trusted.   0:03:16.3 DL: I often heard Deming say things like, "If you create an environment where people can't trust you, pretty soon you're only left with the people who can't get another job." [laughter] "Can't go someplace else, because you're just not trustworthy." Well, the same thing happens in a classroom, a classroom teacher that is not trustworthy and can't build trust among a classroom of students, won't get the very best from those students. Pretty soon they'll only do what the teacher wants to be done, and then that's it. They won't think on their own. They won't... Deming is talking about they won't become innovative in what they're doing, because you're not a trustworthy person managing the class. And so how do you do that? How do you build trust over time? Well, a big part of that to me is involving people in the decision-making process. On the previous points, in this section that we're working through, Deming talked about, the role of a good manager and a leader and etcetera, and those kinds of things. Ultimately, you still have the formal position, right?   0:04:43.2 DL: And it's your job or in some cases, you're next on the line, if you don't make a good decision. But the more you can involve people in that process of making decisions, number one, you're going to come out with a better decision, because you just get more brains looking at a situation in ways that you just never thought about before. And number two, it's sort of a double-edged sword, not only did you get a better decision but whatever decision you do come up with gets implemented to a higher degree. So when I'm teaching teachers to do this with classrooms with students, I always tell them, you know, if you involve students in a decision-making process, and let's say that it doesn't turn out well, it wasn't a good decision.   0:05:42.8 DL: You win both ways, right? Because it wasn't just your decision. And it's the same way with a manager in a company. If it's just your decision and something doesn't work, people will just let it fail, they'll just let it not work because they had no part in it. They don't really care if it works or not. And they'll just let you, gladly let you fail in some cases and not bail you out. But if it's our decision and we all use some tools and processes and took the time to actually work through and figure out the best solution to something, then if things start to go wrong, people, because they have such strong trust in you and the organization, they're going to pick up the pieces. They're going to do stuff to make even a bad decision work, because they have ownership in it, and they're a part of that process.   0:06:45.3 AS: I wanted to briefly talk about trust because, it's such a interesting word and concept that I think we may just brush over. I remember reading a book by Dr. William Glasser called "Reality Therapy", and he worked with prisoners and others through his psychiatry. And one of the things he always talked about is that a key sign of mental illness, which he didn't... He actually said there was no such thing as mental illness. He said basically the issue was that that person did not have a trusting relationship with anybody, and therefore it was so hard... So then all the mental problems and emotional problems they went through were coping mechanisms.   0:07:29.8 AS: And that really rang true. And I think about my friendships with my best friend, Dale, who we run - he runs the coffee business. And I think about the relationships with my mom and dad and my sisters, and I can say none of them ever betrayed my trust. And I think I thought that was normal. But when I talked to my father just before he died, I asked him, "What is the accomplishment" of many accomplishments, including getting his PhD and being successful and all that? And he said to me... I said, "What is your number one? What are you most proud of?" And he said, "I built a trusting family." And now as I've grown, you know, and I've looked at that more, I really realized that is rare. And I want to just highlight that trust is rare.   0:08:19.2 AS: And the second way I want to highlight that is that, I teach in my ethics course, which I just teach ethics and finance all the time at university and for CFA, what I say... I ask people to raise their hand. I ask them, think about how many people you truly trust. If you had a really... And I want everybody who's listening and viewing, let me ask this question. How many people do you truly trust? If you had a secret, something that you did not want to get out to the world, but you felt like you needed to tell somebody, how many people would you trust? And the answer to that after asking thousands of people that question is about one or two. And my point, and I say academic research can oftentimes be interpreting surveys. That's a survey. That's some research. And what does it tell us? It tells us that trust is rare. And so when I hear the word trust, and I think about what he's saying, "He creates trust, he creates an environment that encourages freedom and innovation." I think that's extremely hard thing to do, and it's not happening much in this world.   0:09:38.5 DL: Well, you want that freedom and innovation because in a company that's creating new products or new ideas or things like that, and people are freely distributing or giving you those ideas. And so unless you have that sort of fertile ground for creating new ideas and innovation, you're just not going to get there. It pretty much means that everything has to be a top-down decision-made process of doing something. And you want tremendous growth. It's the same way in a classroom. It's interesting that we think that, "Oh, we have to do great trustworthy kinds of things." But it happens in such simple ways. Like a teacher might say, "Oh, well just take 10 minutes to finish this." And, uh, then a half an hour later they return back to what they were working on and stuff. Students quickly learn, you're not trustworthy, [chuckle] 10 minutes means 10 minutes. And I often tell teachers, just have a little stop watch or a little timer or something, and when you do something like that and you say, "Okay, we're going to take 20 minutes to work on this," then just set a timer. It'll keep you on, trustworthy, and it'll keep them on track as well and people will know, okay, we're there.   0:11:15.5 AS: Yeah. And I think the other thing I would say is when you're standing in front of a group of students teaching you have to really understand that they trust almost no one. And so...   0:11:26.1 DL: Yeah, that's true.   0:11:26.3 AS: They're observing your every action. And I say that they trust almost no one from my survey of people that I've been surveying asking this question. And maybe even ask your students, ask them a question such as, "How many people do you trust?"   0:11:44.2 DL: Yeah. Well, I've been involved as a student myself, and an assignment was given or a timeline, "Have this by Friday or be ready to discuss this by Friday." And then you get to Friday and the teacher doesn't follow through. And you've put in all this work and effort to be ready for Friday. And it's, "Oh, well, we'll just put that off until Monday." Well, you're not building trust, you're actually taking trust away. Stephen Covey says, "You're not adding to the bank of trust." [chuckle]   0:12:17.5 AS: And it is a bank and it is cumulative. One last thing about trust that I was thinking about is, you know, for managers right now in businesses, and I'm sure it's the same in education, it's all about KPIs and measurements. And one of the real destructive things of these measurements is they destroy trust, because the manager of people is sitting behind a desk looking at a chart and graph and not understanding a person's situation and basically blasting them. I think that it's possible if we could get to where some managers want to be, that you could implant some sort of electrical stimulus, so that if somebody doesn't hit their KPI, you just give them a volt, you give them a shot of electricity and say, "That's a reminder that you haven't, didn't hit your KPI." And I think about the relationships that I have of trust, and none of them were built through KPI. So I like the...   0:13:23.8 DL: No point, they already you have it.   0:13:26.1 AS: Yep. Maybe a good ending point. Anything you would add?   0:13:30.5 DL: Yeah. No, it's just on the surface this seems so simple. But what Deming often talked about Profound Knowledge, and the word profound means deep knowledge and understanding. So it's taking these points that he accumulated basically over a hundred years. And he makes it so simple, "Hey, just think about this, just do this and things will get better." So, trust me.   0:14:00.8 AS: Trust me. So I'm going to wrap this up by first asking the listeners and the viewers, how many people do you trust? And I want you to think about the people around you. Are they any different than you? They probably trust one or two people. And some people will say, "I trust no one." And an important part of this point, number 10, is to recognize that trust is rare and rare is valuable. David, on behalf of everyone at the Deming Institute, I want to thank you again for the discussion. And for listeners, remember to go to deming.org to continue your journey. Listeners can learn more about David at langfordlearning.com, and this is your host, Andrew Stotz. And I'll leave you with one of my favorite quotes from Dr. Deming. I just never get tired of this quote. "People are entitled to joy in work."

Most of the time, variation between students or workers is the result of common cause situations, but sometimes you find folks who consistently aren't performing at the same level. Does more punishment work? What should you do instead? In the episode, David Langford and host Andrew Stotz discuss how managers (or teachers) should approach these "special cause" situations. TRANSCRIPT 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 David P. Langford, who has devoted his life to applying Dr. Deming's philosophy to education, and he offers us his practical advice for implementation. Today we continue our discussion of Dr. Deming's 14 items that he discusses in his New Economics book about the role of a manager of people after the transformation. This is on page 86 of the third edition, or page 125 of the second edition. And this is point number nine. Let me read it to you before we get started. So again, for a, the role of a manager of people, this is the new role of a manager of people after transformation. Point number nine, he will try to discover who, if anyone, is outside the system in need of special help. This can be accomplished with simple calculations. If there be individual figures on production or on failures. Special help may be only simple rearrangement of work. It might be more complicated. He in need of special help is not in the bottom 5% of the distribution of others. He is clean outside that distribution. And Dr. Deming presents a normal distribution and some other things, in this chart that he presents in this one. And we're gonna call this episode: Who Needs Special Help? David, take it away.   0:01:40.5 David Langford: Okay. Yeah, this is always a topic of discussion because, there's all kinds of management theories out there, right? About, how we manage, I can't remember who, was a proponent of just getting rid of the bottom 10% of your...   0:01:57.9 AS: Jack Welch.   0:01:58.0 DL: Organization every year. Jack Welch, yeah. Notoriously wrong, with that. And, or well, "if you can't cut it, out you go." And that all sounds good until it becomes so expensive to constantly be hiring new people and replacing people. And the fear level goes up so high that you can't get anything done because nobody wants to take any risks because you really can't take a risk because you might be gone. So Deming is saying a lot really in this point, he talks about the distribution of people. Well, so first thing is you have to figure out what is that distribution, right? So how are you calculating that? Or how are you figuring out what that performance level is? Well, as a teacher in a classroom, obviously, you have tests that you're giving, you have projects that are happening, etcetera. It is actually pretty easy to see that distribution of performance in a classroom. You give a simple test on something and then you look at the test results and you start to see, okay, everybody scored on this test from 70%-100% on this test, right? So you can say, okay, that's an average of about 85 or so for the whole class.   0:03:31.5 DL: When you look at it on a histogram scale like that, what Deming is really talking about, he's not talking about just the people that were scoring at the lower end of that distribution. People that were getting 70, 75, 80, etcetera. They were all at the lower end of the distribution of that system. But what it's showing is that's the capability of the system. You did something, you did a process with people, you tested the process, the process produced that curve, and on average, it gives you an average of 85. Now deciding whether or not that's good, is good, is good good enough, that's a whole different really discussion than what really Deming is talking about here. So he's not talking about people just on the lower end of a distribution of performance. He's really talking about somebody that's completely outside of that distribution. So in a classroom, if I did something like that and we did a project or a test or whatever, and everybody is scoring from 70%-100% except for maybe two people that got 10 or 5, right?   0:04:46.6 DL: Obviously these are two people completely outside of the system. And what he is really talking about is probably no amount of adjusting the system is going to help those two people. They are so far outside of the distribution that they really do need special help. So in a classroom that can mean, this could be children with special needs, they could be hearing defects, they could be the eyesight that, I don't know how many times I thought somebody was an understanding problem. And then we find out, oh, they couldn't see, either they couldn't see to read or they couldn't see the...   0:05:31.8 AS: Something very simple.   0:05:32.3 DL: The whiteboard in front of them. Yeah. And they got tested and got glasses and everything and wow, it just made a huge difference. But obviously when you have people in a special category, it's gonna take much more time and effort individually to deal with them. Right? And that's why it's called special, special needs, right? Because you are gonna take the time and effort individually to deal with those individuals. If you don't have anybody completely outside of the distribution of performance, then you're gonna go back and look at the system itself. So in my example, everybody is scoring from 70%-100% on some test that you give them. And the average is 85. Then you have to decide is good good enough, is that a good enough distribution on this? And as a teacher a lot of that has to do with understanding where does this fit in the entire curriculum.   0:06:40.2 DL: So is this a critical skill, that if these students don't have this skill and they don't have it just down pat, and are acing it, it's gonna cause huge problems later on. So it might be worth the time to go back and sort of rework that for the entire class and see if we can get a higher average. On other things, you might look at that and say, "Oh, okay. Only I know really the whole curriculum for the year, and I know that we're gonna be revisiting the same concept probably four more times throughout the year. So this average at this time of the year is probably good enough." I often joke with teachers and say, "If you're happy with your average, and you know it, clap your hands," so.   [laughter]   0:07:31.0 DL: But if you're not happy with your average and you know it, then you have to think about, okay, well what am I gonna do about it? Do I have the time to go back and rework this? And Deming in his example in figure 12, that he's showing there, is actually talking about moving in the entire system forward. So shrinking the variation so that it's not nearly as wide as it used to be, and more people are getting a higher average within that. So how do you get that higher average? Well, prevention is the key to quality. So every time you're doing a lesson that you've done before and you're taking that feedback that you've gotten before, folding that in. And this time when I did it, ah wow, we got an average of 89, or we got an average of 93, or...Excuse me. It's really difficult when you're improving a system and you're moving that average up, each time you go through something, when you start to get up and really high levels performance, going from 93 to 94 is a really big effort.   0:08:57.4 DL: There's gotta be something really happening there to get that next level result. And do you really have the time right now to get that? Or is it a problem of tomorrow that we have to figure out, okay, what are we gonna do in this system, in the future, to get a higher average? But I didn't believe, really, this when I started working with Deming, but then I went back and looked at all the grades and scores that I had given people, and I was so predictable. Every year I had the exact number, the same number of people getting A's or doing top-level work. I had the same level of percentage of kids that were failing I had... But of course it was always their fault, not my fault, so. And so that was really eyeopening to me that all I had been doing is just basically, for five or six years I had been doing the same thing over and over, and over, and expecting a different result. And it just doesn't work like that.   0:10:05.2 AS: Yeah, this one is interesting because first of all, he's presenting us with a distribution. We can see a normal distribution, and he's presenting also a more narrow distribution, saying that the goal is to try to, maybe in this particular case that he's showing to, he says, "You wanna work to improve the system by narrowing that distribution so that..." And shifting it, as we can see, as we've talked about. But I think also in this one, if you don't understand the system, you can get caught up in chasing performance in individuals that actually are just a normal outcome. And you miss the time that you need to spend to fix that special cause that needs to be fixed. So that was one of the things I took away from it. What do you think about that?   0:11:02.6 DL: Yeah, that's why he hated practices like grading on a curve. Which is notorious, it is still is notorious in many universities, grading on a curve. And... Because that shows no understanding of performance and distribution and average performance and it takes no accountability. And for you as the teacher, it just all blame on the student. "Well, if you tried hard, you could do that." Well, no, that's not true. There's only gonna be so many A's, so many B's, etcetera. So you're not gonna ever get there, so. But really this is about... Go ahead.   0:11:43.8 AS: To understand that a little bit more, so is the problem about grading on a curve that you're constantly... You're not necessarily improving? You're just like, "Well, this group had a curve that was here on the continuum and this group had a little bit better, they were better." And what is it? 'Cause I'd say grading on a curve is something that people on initial blush would think, "Isn't that what Deming is talking about?" I mean, we see normal distributions, we see curves. Explain that in more detail.   0:12:15.1 DL: You're creating an artificial scarcity of top marks. So only... No matter how well we do as a class, there's only gonna be so many top marks or people that are gonna get the top grade, right? And so you're gonna create all kinds of competition and you're gonna create all kinds of weird behaviors that go on. You're actually encouraging people to cheat. And I can't remember if I told you this story or not, but one of my children, she was in a advanced chemistry class or something, I think it was. And she comes home the first day of school and she said, "Dad, I think this teacher would be really interested in talking with you about what you do and improvement, and everything else." And I said, "Why?" And she said, "'Cause he said, well, everybody in here can achieve, everybody in here can get an A, can do well."   0:13:14.1 DL: She comes home the second day of school and she said, "I think I'm gonna drop this chemistry class." And I said, "What happened in two days?" She said, "He came back today and he spent the whole hour of the class explaining how he grades on a curve. So there's no way in the world that everybody in here is gonna get an A," right? You're creating an artificial scarcity of top marks and it's just not gonna happen. And I said, "Okay, well, just let me know what you decide to do with that." Well, she comes home the next day and she said, "I think I'm gonna stay in the class. I'm pretty sure I'm gonna be one of the people on top of the curve." And this was an honors chemistry class and in that class, half of the kids in that class had had straight A, 4.0 averages to that point. So, there was a bunch of kids that quit, 'cause they could not risk getting even a B in a class like that.   0:14:18.0 DL: But my daughter stayed in the class, at the end of the first semester, she comes home laughing one day and she said, "Dad, you'll never guess what happened." I said, what? And she said, well, this is a very, very smart group of kids. And not only did kids keep track of their own scores, they actually kept track of other kids' scores in the class as well. And I think there were one or two kids that found out that there were a bunch of kids that were just right on the line between a B and a C or something. But if those kids failed, it wouldn't make any difference to them. They're still gonna get the same grade at the end of the semester. Even if they didn't even take the final, it's not gonna affect them one way or the other, they're still gonna get that B or a C grade that was in that. But if they did fail it would mean it would change the curve and these other top kids could move up into the top echelon.   0:15:13.3 DL: And so they paid these kids $20 to fail the final. Well, somehow the teacher found out about it and then the principal found out about it. And there was a Spanish inquisition that was taking place and then they were talking about expelling kids and all kinds of stuff, I couldn't stand it, I had to go and talk to the principal and I said, how do you like it? He said, what do you mean? I said, "They're better at managing your system than you. They figured out how to play your game better than you. And you gotta be rewarding these kids not... And recognizing amazing statistical analysis and capability, not punishing them through that process, so." I think it was the same principal that said, "I know I'm having a bad day when your car is in the parking lot," so.   [laughter]   0:16:06.6 AS: Exactly. You should have said, you should have been... You didn't even realize you were teaching 'em a double major AP chemistry and AP statistics.   0:16:17.6 DL: Yeah, absolutely. So.   0:16:19.3 AS: Well, let's wrap this up by... I think the key thing of what Dr. Deming is telling us in this is about understanding your system and then identifying if someone is outside of the system, and that person or result outside of the system is... You know, warrants some special attention or special help and that that, you can't really know that without understanding the system and also not being too distracted by the variation that's natural from that system. And therefore, ultimately, once you understand that, then you really can clearly identify that some outcome or some individual is a special cause and then you can focus in on that and fix it. And so that's how I would summarize it. Is there anything else you'd add to that?   0:17:12.9 DL: Yeah. I was just was recalling that you are... Deming explaining several times that if somebody is outside of the systems that, far outside of the system, further rating and ranking are not gonna help them at all. Giving them more failures, more Fs, docking their pay. Whatever you're thinking of doing to somebody that's completely outside the system it's really not gonna help them at all in that process. And that... That's not help. Rating and ranking and bribing people to do better is not actually helping them. You actually have to study cause or the reason why that person is special cause and then do something about it. And in a classroom, and it could very well be that this person really doesn't belong in this class. They don't have the prerequisite skills that the other 98% of the class has. And so therefore they really don't even belong in this class. So that just means you have to get them in a different class or help them in some way to get caught up or, and it's gonna take more time and effort. Special causes take more time and effort. That's why they're special. So.   0:18:31.3 AS: Well, David, on behalf of everyone at The Deming Institute, I want to thank you again for this discussion. For listeners, remember to go to deming.org to continue your journey and you can also learn more about David at langfordlearning.com. This is your host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming, "People are entitled to joy in work."  

In this week's episode, host Kristin Hayes talks with Milan Elkerbout about how the European Union has responded to the Inflation Reduction Act. Elkerbout will join Resources for the Future as a fellow in October, transitioning from his role as head of the climate policy programme at the Centre for European Policy Studies. Elkerbout discusses the ongoing conversation about the Inflation Reduction Act among EU policymakers, climate policies that the European Union has proposed since the passage of the US law, and global trends in industrial and trade policy. This conversation with Hayes and Elkerbout comes on the heels of the one-year anniversary of the Inflation Reduction Act, which became law in August 2022. References and recommendations: “The New Economics of Industrial Policy” by Réka Juhász, Nathan Lane, and Dani Rodrik; https://drodrik.scholar.harvard.edu/publications/new-economics-industrial-policy

When things go wrong, who gets blamed? When things go right, who gets the credit? Dr. Deming wrote that good managers don't play the blame/credit game. Instead, they "study results [of feedback] with the aim to improve  performance." In this episode, David Langford and host Andrew Stotz discuss getting honest feedback, how to react, and why it's important. TRANSCRIPT 0:00:02.7 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 David P. Langford, who has devoted his life to applying Dr. Deming's philosophy to education and he offers us his practical advice for implementation. The topic for today is improving performance. Who's at fault? David, take it away.   0:00:28.8 David P. Langford: Hello again. So we are at point number eight on Deming's role of a manager of people. And it says he will study results with the aim to improve his performance as a manager of people. So once again, Deming wasn't into all the pronouns that we use now and everything. So when he says he, he means he, she, anybody that's a manager of people. So, our aim is to improve performance and everything that we do. Right. So I think what's going on with this simple point that he's making is to get people to think about when things go right, or things go wrong, who's at fault, or who gets the reward or who gets the blame for that process.   0:01:29.1 DL: And as a manager, if things are going well, of course, everybody wants to take credit for that, whether you're a teacher or superintendent, business owner, or whatever, then it was, the same way in politics, right? Everything's going well. Oh, I did it all. And if things are not going well, then obviously it was somebody else's fault. Right. Or if you're a manager of people, like what Deming is talking about here, we have a tendency to blame the individual without first thinking about ourselves as the manager of that situation. So I was just coaching a group of teachers and talking to them about how difficult it is to really think like that as a teacher. Because you think, "Okay, I worked really hard on this lesson, I got everything prepared, I came in and I did it."   0:02:23.8 DL: And I don't know how many times I've heard teachers say something like, "Well, I taught them, but they didn't get it." [laughter] Well, that's probably the problem, you taught them, but they didn't learn it. [laughter] Well, that's probably the problem, right? You taught them, but they didn't they didn't learn it, which is two different things. It's possible to teach and get learning, but it's better to create actual learning experiences through that process. So you have to think about if I'm not getting good results I don't care what your position is as a manager of people I have to turn the finger of blame back towards me and start to say, “Okay, what am I doing differently?” And that's a hard pill to swallow when you start to think like that and because usually most people are trying to put in their best efforts. And Deming said many times we're being killed by best efforts, [chuckle] which is like a crazy thought to think about, wow, I shouldn't be trying hard. Well, you should be working in the right way. So if you're not getting the results that you want probably the very first thing is to go back to the people that you manage and ask them what you're doing right and what you're doing wrong or what could be improved. And I have seen this with just very little kids, like three, four, five-year-olds, when the teacher says, "We just went through that lesson and it seemed like some of you weren't interested, you know, what was the problem?"   0:04:05.4 DL: And they'll tell you, [laughter], "Oh, you went too fast, or we didn't have time to think about it, or we needed more time." Or they'll tell you exactly what the problem is. And it's usually a better way to go than having your supervisor come in and do an observation, because your supervisor probably isn't there every day watching how you're managing people, how you're communicating, how you're having conversations, et cetera. But the people are there every day. And if we're talking about education and kids in classrooms, they're the ones that are experiencing your management style. [laughter] And I've found out that the more you ask, the better they get at giving you advice, telling you what to do. And when you do it, then you get even better advice. So I remember I think I may have told this story before, but I remember I had a new student that came to class and I was in a project like that and I asked the students, I said just take out some sticky notes or whatever you want to, and write down a few thoughts about how you think this last project went. What could be improved, how we could have changed it what, I might do differently next year, et cetera.   0:05:27.7 DL: Just things like that. Well, this new student, he was just like blowing this off and he was not paying attention. He's screwing around everything else. And I'll never forget one of the students that had been there all year, she turned to him and she said, You better take this seriously 'cause he's gonna do whatever we tell him.   0:05:44.7 AS: [laughter], wait, what?   0:05:49.3 DL: Yeah, I'll never forget the look on that kid's face. It was just like, Oh. And then he did... He started to sit up and take it seriously. So.   0:06:00.0 AS: Yeah. Well that's, it's... One of the interesting points about that is, when you ask for feedback, how do you receive it? I asked... I have a bunch of interns working for me right now. And I asked them to go through one of my online courses, and write down feedback in a document, a shared document that they're all writing into. It's brutal, David. It's brutal! And then when I see some stuff, my first reaction, "Oh, I can't do that because, yeah, I can't fix that because of, yeah." And it's just so hard to, you know, it's hard enough to ask, but it's even harder to receive in a way that you're able to really use that to improve yourself.   0:06:42.7 DL: One time I kept getting feedback from the students saying, you're going too fast, or you're talking too fast or can't understand it, or we need more time to process what you're saying or... I said, well, okay, I've been doing this a long time, so I've got habits and so I don't always know [chuckle] that I'm doing that. So let's work out a signal or something that if that's happening you can just suddenly kind of signal me that, okay, we need some reflection time here, or something to happen. [chuckle] And so they came up with this idea that they would pull on their ear lobe if I was going too fast or working through stuff. It's very disconcerting to... I'm into something. I'm really explaining a concept and I think I'm really doing a good job. And you look out and you see about six people going like this, and you're like, oh, oh, okay, I'm doing it again. [chuckle] But...   0:07:46.1 AS: That's one of the things that was lost in the Zoom era. It's harder to read the audience too, just to even figure out if people are understanding.   0:07:52.8 DL: Oh, yeah, absolutely. But Deming often said, help comes from the outside and by invitation. So when you're inviting those students or workers or whoever you might be managing to give you that feedback, it's just really amazing what can be accomplished like that. There's almost no problem that can't be solved, [chuckle] by using the people actually doing the work to give you the feedback.   0:08:27.1 AS: You know, when we started this episode, the one thing I started thinking about was that great saying that we all probably heard when we were growing up is "You can lead a horse to water, but you can't make him drink." And my mom said that to me, and my dad or anybody, I'd heard it a lot, but I guess what I thought when I heard you kick off this episode, I thought to myself, yeah, but what if you led them to the wrong pool of water? [chuckle] or the wrong place? And that there's a responsibility on the side of the teacher or the administrator to make sure that it's not enough to absolve yourself, "Hey, I did it and they didn't drink it," that's not acceptable or that's not enough.   0:09:13.4 DL: Yeah, over the last 40 years, I've heard some awful things from teachers saying things about students about...you know... Privately or not, this kid just doesn't wanna try or doesn't care, or this kid isn't one of 'em that came to mind was "this student isn't even worth my effort." So how do you know that? [chuckle] And, Deming said, "Why would I give somebody a grade when I don't know who among them is gonna turn out to be great someday?" And I might be limiting them with a grade at that point in time, but a feedback information on feedback about how to improve what, wow. People really received that really well. I think that's really what he is talking about here in point eight and I think it's pretty simple, but it's tough to do.   0:10:16.4 AS: So let's wrap this up by... First I'm gonna just read point eight again, and this remember that for everybody, I forgot to say it at the beginning, but this is from the Role of a Manager of People section of The New Economics. And point number eight, "he will study results with the aim to improve his performance as a manager of people." And, I think one of the things that stands out is study results also. What is the result that we're getting? And some of the things that we talked about is like asking the question, what can I improve as a manager of people? How do I seek out information to do that? And you said, the more you ask, the more and the better advice that you get. And you also mentioned his quote that help comes from the outside and by invitation. And so I think the main thing is being on a path and a desire to improve yourself as a manager of people. Anything that you would add to that?   0:11:19.4 DL: Well, what he is after is how do we go about improving? The classic way we do stuff is we send somebody to a conference or where, go give them some training or now put 'em on an online thing that they go through, all those kinds of things. And what Deming is really saying is, look, study the results. You need to know how you are doing. [chuckle] And once you start to figure that out, then they are going to do a whole lot better.   0:11:50.0 AS: Fantastic. Well, David, on behalf of everyone at The Deming Institute, I wanna thank you again for this discussion. For listeners, remember to go to deming.org to continue your journey. Listeners can learn more about David at langfordlearning.com. This is your host, Andrew Stotz, and I'll leave you with one of my favorite quotes from Dr. Deming, "People are entitled to joy in work."

Steve Keen is a heterodox economist and author. Please support this podcast by checking out our sponsors: – Weights & Biases: https://lexfridman.com/wnb – Skiff: https://skiff.org/lex – Indeed: https://indeed.com/lex to get $75 credit – NetSuite: http://netsuite.com/lex to get free product tour – InsideTracker: https://insidetracker.com/lex to get 20% off EPISODE LINKS: Steve's Twitter: https://twitter.com/profstevekeen The New Economics (book): https://amzn.to/3zb4eg4 PODCAST INFO: Podcast website: https://lexfridman.com/podcast Apple Podcasts: https://apple.co/2lwqZIr Spotify: https://spoti.fi/2nEwCF8 RSS: https://lexfridman.com/feed/podcast/ YouTube Full Episodes: https://youtube.com/lexfridman YouTube Clips: https://youtube.com/lexclips SUPPORT & CONNECT: – Check out the sponsors above, it's the best way to support this podcast – Support on Patreon: https://www.patreon.com/lexfridman – Twitter: