The effort to help Japan rebuild after World War II included sending leading American management guru, W. Edwards Deming, to embed his Total Quality Management (TQM) ethic into that country’s manufacturing industries. Perhaps if Detroit’s Big 3 had simultaneously embraced Deming, we would see more Chevys and fewer Toyotas on our highways today.
TQM is based upon the idea that the performance of workers is dependent upon the system within which they work. Deming believed that managers apply all the wrong disciplines to the workplace – incentive pay plans, forced rankings, etc. – to control workers rather than focusing on the root causes of inefficiency and poor quality.
His 14 principles are striking in their contrast to our current management ethic.
Deming argued that businesses destroy value by focusing on short-term results and draconian performance measures. The main thrust of his philosophy was that leaders must build trust that emanates from a strong sense of purpose and shared values. These concepts are embraced by 21st Century management gurus like Simon Sinek and are mirrored in the Conscious Capitalism movement. Peter Senge, whose business philosophy advocates that sustainable competitive advantage only results when organizations can outlearn the competition, quotes Deming in his book “The Fifth Discipline: the Art of the Learning Organization”:
“Our prevailing system of management has destroyed our people. People are born with intrinsic motivation, self-respect, dignity, curiosity to learn, joy in learning. The forces of destruction begin with toddlers — a prize for the best Halloween costume, grades in school, gold stars — and on up through the university. On the job, people, teams, and divisions are ranked, reward for the top, punishment for the bottom. Management by objectives, quotas, incentive pay, business plans, put together separately, division by division, cause further loss, unknown and unknowable.”
I suspect we have lost track of Deming’s approach, in part, because of the influence of Milton Friedman on two generations of business leaders. While “classical liberals” in business circles easily embrace Friedman’s philosophy, Deming sounds more like a progressive. He seemed to have believed that people could remake themselves by improving their institutions, embracing philosophers from Aristotle to Rousseau.
In many ways, leading companies in Silicon Valley have revived these tenets. Perhaps because their profit margins are so high, they can afford to experiment with less hierarchical structures, different methods of incentivizing people, and more collaborative work environments.
It’s no secret that the capitalist system has been under attack since the financial crisis. There is a natural conflict between entrepreneurs who feel underappreciated because they risk all their assets and their families’ futures and workers who feel they have no options other than to work for middle class wages that aren’t keeping up with inflation (and, therefore, feel they have taken the same risk). But, it’s not capitalism in and of itself that creates a challenge to our society. It’s a leadership paradigm that stifles human creativity and leaves people feeling as though their livelihoods are threatened.
“Would you want your children to drink water that’s been polluted by the chemical plant you manage? Would you like members of your family to be treated shabbily by their employers? How can a corporate leader expect his company to thrive if the people in his or her community aren’t thriving?”
Excerpt From: John Calia. “The Reluctant CEO.” iBooks.
So, it’s not easy to conceive of a corporation as not just a means of earning a living but rather as an entity that engenders trust and contributes to its community. A revival of Deming’s principles may be the best way for our economic system – the source of our prosperity — to survive.