Ready, Steady, Manage: Book Review: The New Economics by W. Edwards Deming

This great little book acts as an introduction and summary to Deming's ideas:

his 'system of profound knowledge'

the purpose of management

removal of numeric targets and incentives

the Shewhart Cycle for learning and improvement

Variation

the Red Bead Game

control charts

A highly recommended read because ....

( amazon.co.uk | amazon.com )

Deming starts by looking at the complacency of the American workplace. His complaint? That even when on top, when the companies have the money to improve and better survive they don't. They may make individual elements more efficient but they don't look at how their company, and its products, fits into the wider environment. The production of quality goods does not mean survival. The organisations survival requires continued sales. And the leaders and managers have to look ahead and make the necessary changes to allow their company to survive for the future.

The staff on the ground can improve the system locally. But the management team have to set and direct the improvements for the future. Deming points out that quality doesn't just refer to the localised goods and products. Quality of the system, and its fitness within its environment requires looking after too.

Deming looks at some of the prevailing management practices that help compound this poor situation:

short term thinking - which people get rewards for doing

focus on a stock price and dividends instead of a long term view

failing to optimise through time

ranking staff and rewards based on ranking

incentive based pay

failing to view the organisation as a system

creating individual profit centres (encourages areas of the organisation to compete against each other rather than help the overall organisation)

setting numerical goals rather than improving the process

management by individual results instead of identifying variation and actions to take

delegation of quality to an individual or a group instead of making top management accountable for quality

Deming moves on to consider the elements of an effective system, a few highlights of this section include:

Create an aim for the organisation

Optimise to support the aim

Consider the future - lifelong learning for the employees, what should the business look like in 5 years? 10 years?

Increase the boundary of the system. Instead of teams or departments, increase the boundary to the company, the organisation, the industry sector. The bigger the boundary the bigger the potential benefits, but the harder to manage and plan for the future.

Consider working with your competitors.

Create job descriptions that describe how the job contributes to the aims

Managers resolve conflicts and remove barriers to cooperation between interconnecting elements.

Wikipedia contains a good summary of "The system of profound knowledge" so I shall make my summary very short:

Transform the individual to learn and apply the principles and they will act as exemplars, listening, teaching and helping move people forward.

Understand the system

Understand Variation - special and common

Understanding epistemology (theory of knowledge)

Understand psychology - the use and abuse of rewards and motivation

"The obligation of any component is to contribute its best to the system, not to maximise its own production, profit or sales..."

Leadership has an entire chapter dedicated to it. Wherein we learn that the leader transforms the organisation. Using their theories, persuasive powers, plans of actions, and predictions of results.

Following leadership, Deming considers Management of people:

Understand and communicate the aims of the system and how an individual's work supports those aims.

Help people see themselves as components in the system and work in cooperation with the rest of the system

Understand the individual needs of each staff member and optimise their unique strengths and attributes.

The manager constantly learns and encourages learning in their staff.

Coach and counsel rather than judge.

Understand a stable system and the interaction between people.

Uses the 3 sources of power judiciously: Authority of office, Knowledge, Personality and persuasive power.

Study results to improve their own management performance.

Look outside the system.

Create trust and environment that supports freedom and innovation.

Do not expect perfection. Listen and learn without passing judgment.

Develop understanding of the staff - their hopes, aims and fears.

Understand the benefits of cooperation and losses from competition.

Manage the system as a whole, do not optimize individual elements in isolation.

Management involves the use of the Shewart Cycle (John Seddon recommends starting at 'study' or 'check when looking at improvement of existing systems).

Move towards Joint or sole responsibility instead of divided responsibility.

Deming then discusses the Read Bead game, of which much description already exists.

The chapter on Control Charts discusses a simple way of tracking common and special variation. Again the internet has many descriptions of this topic.

The Funnel experiment description then examines the effects of tampering.

The final chapter 10 then discusses variation in more detail.

Summary

A very good book with many important lessons to incorporate into your management style and to remind you of their value if you have already started to use them. I shall certainly re-read this.

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