Continuous Improvement a.k.a How a Numbers Geek Saved the World

Richard Eaton

“A bad system will beat a good person every time.”

W. Edwards Deming

In another article – The Road to Hell: Organizational Dysfunction and how Good Intentions got us all into this Mess – I suggested that industrial age management, while enormously effective at helping nations thrive through increased production, fell far short when it came to addressing defective products during the 18th and 19th centuries. The antidote to poor quality, and bad customer service, emerged in the early 20th Century, becoming well known as Continuous Improvement.

The term Continuous Improvement (CI) is much used, and equally misunderstood. It’s become such a part of the fabric of everyday business life that few recognize it as anything special, let alone the world saving approach to innovation it really is. Emerging from the work of noted scientists, engineers and statisticians in the industrial America of the 1930s, CI theories, and their focus on quality, were designed to address some of the most damaging and unintended after effects of the division of labour principle and the production line: excessive defects, increasing costs and dissatisfied customers.

Ironically, though the theory was developed here, North America’s introduction to the power of CI was such a surprise that it resembled a punch in the face.

Part of that punch was delivered by Toyota. In the 1950s Toyota, now the largest and arguably best known car company in the world, was similarly famous…. for producing cheap, nasty vehicles, which epitomized the majority of Japanese industrial products. The after effects of a total war that flattened Japanese industry certainly didn’t help. As Peter Cheney notes: “After the Second World War, the Japanese car industry was crippled by the destruction of the nation’s infrastructure and weak demand. Toyota almost went bankrupt in 1949. In 1950, its production was limited to 300 vehicles.” Yet, by the 1970s, Japanese cars, and other consumer goods, were flooding North American markets with reliable, affordable, high quality products that seemingly came out of nowhere. Toyota’s vehicles, for example, with their dominance of the fuel efficient small car market, exploded in popularity with the onset of inflation, as well as skyrocketing gas prices, fuelled by the 1973 Arab Oil Crisis.

North American companies, like Ford, desperately tried to close the gap. In some cases they were tragically unsuccessful, as the case of the Ford Pinto – infamous for occasionally exploding if rear ended – proved. Finally, after years of taking a pounding in their own markets, Ford went to Japan to visit Toyota to discover the reasons for their success. Ford was partly spurred on by an NBC special aired in 1980, challenging North American industry to match Japan’s Quality Revolution, called ‘If Japan can, why can’t we?’. They were surprised to discover that the Japanese pointed to an American as the reason for their success: Dr. W. Edwards Deming (1900-1993).

Ford, and others, subsequently engaged Deming to help them implement CI in their businesses. At the age of 80 years, he obliged them with a ‘tough love’ approach to try and shake America’s Corporate Ivory Towers free from their Industrial Age mindsets. He introduced them to the Deming Way, leading with his 14 Points for Management. A kind of ‘10 Commandments for the Boss’, Deming urges leaders to, amongst other things:

“Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs; Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change; Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place; End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust; Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs; Institute training on the job; Institute leadership. The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers; Drive out fear, so that everyone may work effectively for the company; Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service; Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force; Eliminate work standards (quotas) on the factory floor. Substitute leadership; Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership; Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality; Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, inter alia, abolishment of the annual or merit rating and of management by objective; Institute a vigorous program of education and self-improvement, and; Put everybody in the company to work to accomplish the transformation. The transformation is everybody’s job.”

Taken as a whole, Deming’s methods were nothing short of a revolutionary departure from the way that North American industry had been managed for more than 150 years. And the results were astounding. For example, Ford implemented Deming’s approach with their introduction of the Taurus, introducing innovations such as:

  • Empowering and resourcing teams of front line staff to generate production and quality improvements in concert with scientists, engineers and other resources
  • Implementing statistical process control methodologies, and learning loops, throughout the manufacturing process
  • Engaging with customers via focus groups to hear what they would like to see in a new car
  • Reducing their supplier network from hundreds selected on the ‘lowest bidder’ basis, to a few trusted, certified partners selected based on proven track records

The Taurus realized over a billion dollars in profit for Ford between 1982 and 1985, an unheard of level of success at that time. It also went on to become Ford’s most successful car, ever.

Largely as a result of its success within the auto industry, Deming’s theories were adopted in many other sectors throughout North America: from Dunkin’ Donuts to Disney to the Department of Defense. Deming’s legacy has been perpetuated in Japan with the annual Deming Prize, a prestigious annual quality award, and copied in the US in the mid-80s as the Malcolm Baldridge Award. Further, organizations like Toyota and Motorola systematized Deming’s methods into certification programs such as Lean Six Sigma, which has helped realize huge gains in quality for thousands of organizations while investing in the workforce because it’s really a people process. Berlineaton has built a 23 year long business based on introducing continuous improvement to thousands of visionary clients in BC, and across Canada with some of them being awarded for their achievements.

So, at its heart, CI remains a front line delivered improvement methodology that depends for its success on empowering senior leaders who understand that, although CI was developed by a numbers geek, that geek realized it is people who really make the difference.

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